[Federal Register Volume 72, Number 86 (Friday, May 4, 2007)]
[Proposed Rules]
[Pages 25356-25481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-2167]



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Part II





Department of Health and Human Services





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Centers for Medicare and Medicaid Services



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42 CFR Part 484



Medicare Program; Home Health Prospective Payment System Refinement and 
Rate Update for Calendar Year 2008; Proposed Rule

  Federal Register / Vol. 72, No. 86 / Friday, May 4, 2007 / Proposed 
Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 484

[CMS-1541-P]
RIN 0938-AO32


Medicare Program; Home Health Prospective Payment System 
Refinement and Rate Update for Calendar Year 2008

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth an update to the 60-day 
national episode rates and the national per-visit amounts under the 
Medicare prospective payment system for home health services, effective 
on January 1, 2008. As part of this proposed rule, we are also 
proposing to rebase and revise the home health market basket to ensure 
it continues to adequately reflect the price changes of efficiently 
providing home health services. This proposed rule also would set forth 
the refinements to the payment system. In addition, this proposed rule 
would establish new quality of care data collection requirements.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on July 3, 2007.

ADDRESSES: In commenting, please refer to file code CMS-1541-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click 
on the link ``Submit electronic comments on CMS regulations with an 
open comment period.'' (Attachments should be in Microsoft Word, 
WordPerfect, or Excel; however, we prefer Microsoft Word.)
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-1541-P, P.O. Box 8012, Baltimore, MD 21244-8012.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1541-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-7195 in advance to schedule your arrival 
with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by mailing your 
comments to the addresses provided at the end of the ``Collection of 
Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Randy Throndset, (410) 786-0131.
    General Issues: Sharon Ventura, (410) 786-1985.
    Clinical (OASIS) Issues: Kathy Walch, (410) 786-7970.
    Quality Issues: Doug Brown, (410) 786-0028.
    Market Basket Update Issues: Mollie Knight, (410) 786-7948; and 
Heidi Oumarou, (410) 786-7942.

SUPPLEMENTARY INFORMATION:
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. You can assist us by referencing the file code 
CMS-1541-P and the specific ``issue identifier'' that precedes the 
section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on 
CMS Regulations'' on that Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Background
    A. Requirements of the Balanced Budget Act of 1997 for Updating 
the Prospective Payment System for Home Health Services
    B. Deficit Reduction Act of 2005
    C. Updates to the HH PPS
    D. System for Payment of Home Health Services
    E. Summary of Home Health Payment Research
II. Provisions of the Proposed Regulation
    A. Refinements to the Home Health Prospective Payment System
    1. Current Payment Model
    2. Refinements to the Case-Mix Model
    a. Analysis of Later Episodes
    b. Addition of Variables
    c. Addition of Therapy Thresholds
    d. Determining the Case-Mix Weights
    3. Description & Analysis of Case-Mix Coding Change Under the HH 
PPS
    a. Change in Case-Mix Group Frequencies
    b. Health Characteristics Reported on the OASIS
    c. Impact of the Context of OASIS Reporting
    4. Partial Episode Payment Adjustment (PEP Adjustment) Review
    5. Low-Utilization Payment Adjustment (LUPA) Review
    6. Significant Change in Condition (SCIC) Adjustment Review
    7. Non-Routine Medical Supply (NRS) Amounts Review
    8. Outlier Payment Review
    B. Rebasing and Revising the Home Health Market Basket
    1. Background
    2. Rebasing and Revising the Home Health Market Basket

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    3. Price Proxies Used To Measure Cost Category Growth
    4. Rebasing Results
    5. Labor-Related Share
    C. National Standardized 60-Day Episode Payment Rate
    D. Proposed CY 2008 Rate Update by the Home Health Market Basket 
Index (With Examples of Standard 60-Day and LUPA Episode Payment 
Calculations)
    E. Hospital Wage Index
    1. Background
    2. Update
    F. Home Health Care Quality Improvement
III. Collection of Information Requirements
IV. Response to Comments
V. Regulatory Impact Analysis
    A. Overall Impact
    B. Anticipated Effects
    C. Accounting Statement

I. Background

    [If you choose to comment on issues in this section, please include 
the caption ``BACKGROUND'' at the beginning of your comments.]

A. Requirements of the Balanced Budget Act of 1997 for Updating the 
Prospective Payment System for Home Health Services

    The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) enacted on 
August 5, 1997, significantly changed the way Medicare pays for 
Medicare home health services. Until the implementation of a home 
health prospective payment system (HH PPS) on October 1, 2000, home 
health agencies (HHAs) received payment under a cost-based 
reimbursement system. Section 4603 of the BBA governed the development 
of the HH PPS.
    Section 4603(a) of the BBA provides the authority for the 
development of a PPS for all Medicare-covered home health services 
provided under a plan of care that were paid on a reasonable cost basis 
by adding section 1895, entitled ``Prospective Payment For Home Health 
Services,'' to the Social Security Act (the Act).
    Section 1895(b)(1) of the Act requires the Secretary to establish a 
PPS for all costs of home health services paid under Medicare.
    Section 1895(b)(3)(A) of the Act requires that (1) The computation 
of a standard prospective payment amount include all costs for home 
health services covered and paid for on a reasonable cost basis and be 
initially based on the most recent audited cost report data available 
to the Secretary, and (2) the prospective payment amounts be 
standardized to eliminate the effects of case-mix and wage levels among 
HHAs.
    Section 1895(b)(3)(B) of the Act addresses the annual update to the 
standard prospective payment amounts by the home health applicable 
increase percentage as specified in the statute.
    Section 1895(b)(4) of the Act governs the payment computation. 
Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the 
standard prospective payment amount to be adjusted for case-mix and 
geographic differences in wage levels. Section 1895(b)(4)(B) of the Act 
requires the establishment of an appropriate case-mix adjustment factor 
that explains significant variation in costs among different units of 
services. Similarly, section 1895(b)(4)(C) of the Act requires the 
establishment of wage adjustment factors that reflect the relative 
level of wages, and wage-related costs applicable to home health 
services furnished in a geographic area compared to the applicable 
national average level. These wage-adjustment factors may be used by 
the Secretary for the different geographic wage levels for purposes of 
section 1886(d)(3)(E) of the Act.
    Section 1895(b)(5) of the Act gives the Secretary the option to 
make additions or adjustments to the payment amount otherwise made in 
the case of outliers because of unusual variations in the type or 
amount of medically necessary care. Total outlier payments in a given 
fiscal year (FY) may not exceed 5 percent of total payments projected 
or estimated.
    In accordance with the statute, we published a final rule (65 FR 
41128) in the Federal Register on July 3, 2000 to implement the HH PPS 
legislation. This final rule established requirements for the new PPS 
for home health services as required by section 4603 of the BBA, and as 
subsequently amended by section 5101 of the Omnibus Consolidated and 
Emergency Supplemental Appropriations Act (OCESAA) for Fiscal Year 
1999, (Pub. L. 105-277), enacted on October 21, 1998; and by sections 
302, 305, and 306 of the Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act (BBRA) of 1999, (Pub. L. 106-113), enacted on November 
29, 1999. The requirements include the implementation of a PPS for home 
health services, consolidated billing requirements, and a number of 
other related changes. The HH PPS described in that rule replaced the 
retrospective reasonable-cost-based system that was used by Medicare 
for the payment of home health services under Part A and Part B.
    For a complete and full description of the HH PPS as required by 
the BBA, see the July 2000 HH PPS final rule.

B. Deficit Reduction Act of 2005

    On February 8, 2006, the Deficit Reduction Act (DRA) of 2005 (Pub. 
L. 109-171) was enacted. This legislation affected updates to HH 
payment rates for CY 2006. The DRA also introduces home health care 
quality data and its effects on payments to HHAs beginning in CY 2007.
    Specifically, section 5201 of the DRA changed the CY 2006 update 
from the applicable home health market basket percentage increase minus 
0.8 percentage point to a 0 percent update.
    In addition, section 5201 of the DRA amends section 421(a) of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA) (Pub. L. 108-173, enacted on December 8, 2003). The amended 
section 421(a) of the MMA requires that for home health services 
furnished in a rural area (as defined in section 1886(d)(2)(D) of the 
Act) on or after January 1, 2006 and before January 1, 2007, that the 
Secretary increase the payment amount otherwise made under section 1895 
of the Act for home health services by 5 percent. The statute waives 
budget neutrality for purposes of this increase since it specifically 
states that the Secretary must not reduce the standard prospective 
payment amount (or amounts) under section 1895 of the Act applicable to 
home health services furnished during a period to offset the increase 
in payments resulting in the application of this section of the 
statute.
    The 0 percent update to the payment rates and the rural add-on 
provisions of the DRA were implemented through Pub. L. 100-20, One Time 
Notification, Transmittal 211 issued on February 10, 2006.
    In addition, section 5201 of the DRA requires HHAs to submit data 
for purposes of measuring health care quality. This requirement is 
applicable for CY 2007 and each subsequent year. If an HHA does not 
submit quality data, the home health market basket percentage increase 
will be reduced 2 percentage points.

C. Updates to the HH PPS

    As required by section 1895(b)(3)(B) of the Act, we have 
historically updated the HH PPS rates annually in a separate Federal 
Register document. In those documents, we also incorporated the 
legislative changes to the system required by the statute after the 
BBA, specifically the MMA. On November 9, 2006, we published a final 
rule titled ``Medicare Program; Home Health Prospective Payment System 
Rate Update for Calendar Year 2007 and Deficit Reduction Act of 2005 
Changes

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to Medicare Payment for Oxygen Equipment and Capped Rental Durable 
Medical Equipment; Final Rule'' (CMS-1304-F) (71 FR 65884) in the 
Federal Register that updated the 60-day national episode rates and the 
national per-visit amounts under the Medicare PPS for home health 
services for CY 2007. In addition, this final rule ended the one-year 
transition period that consisted of a blend of 50 percent of the new 
area labor marker designations' wage index and 50 percent of the 
previous area labor market designations' wage index. We also revised 
the fixed dollar loss ratio, which is used in the calculation of 
outlier payments. According to section 5201(c)(2) of the DRA, this 
final rule also reduced, by 2 percentage points, the home health market 
basket percentage increase to HHAs that did not submit required quality 
data, as determined by the Secretary.

D. System for Payment of Home Health Services

    Generally, Medicare makes payment under the HH PPS on the basis of 
a national standardized 60-day episode payment rate that is adjusted 
for case-mix and wage index. The national standardized 60-day episode 
payment rate includes the six home health disciplines (skilled nursing, 
home health aide, physical therapy, speech-language pathology, 
occupational therapy, and medical social services) and medical 
supplies. Durable medical equipment covered under home health is paid 
for outside the HH PPS payment. To adjust for case mix, the HH PPS uses 
an 80-category case-mix classification to assign patients to a home 
health resource group (HHRG). Clinical, functional, and service 
utilization are computed from responses to selected data elements in 
the OASIS assessment instrument.
    For episodes with four or fewer visits, Medicare pays on the basis 
of a national per-visit amount by discipline, referred to as a LUPA. 
Medicare also adjusts the national standardized 60-day episode payment 
rate for certain intervening events that are subject to a partial 
episode payment adjustment (PEP adjustment) or a significant change in 
condition adjustment (SCIC adjustment). For certain cases that exceed a 
specific cost threshold, an outlier adjustment may also be available.

E. Summary of Home Health Payment Research

    The objective of a prospective payment system that is case-mix 
adjusted is to predict resource costs of providing care to similar 
types of patients and to align payments to those costs. As MEDPAC 
points out in their December 2005 Report to Congress, if the case-mix 
is not aligned appropriately to resource costs, then the PPS may 
overpay for some services and underpay for others.
    Since the July 3, 2000 final rule, we have stated our intention to 
monitor the new PPS and make refinements to the system as needed. We 
believe refinements are now needed to improve the performance and 
appropriateness of the HH PPS, which has not undergone major 
refinements since its implementation in October of 2000. The general 
goal of any refinements would be to ensure that the payment system 
continues to produce appropriate compensation for providers while 
retaining opportunities to manage home health care efficiently. Also 
important in any refinement is maintaining an appropriate degree of 
operational simplicity. The analytic goals of our refinement research 
included improving the accuracy of the case-mix model, understanding 
the descriptive characteristics of the program and the use of payment 
adjusters, understanding variations in HHA margins, and the simulation 
of potential changes to payment methodology.
    We contracted with Abt Associates, Inc., of Cambridge, 
Massachusetts to conduct several analyses in order to achieve these 
objectives. In particular, the Abt Associates analyses focused on the 
resource needs of long stay patients; alternatives to the current 
therapy threshold; the potential for a more extensive set of variables 
to improve the accuracy of the Clinical on Top (COT) model used to 
define the HHRG; alternative ways to account for non-routine medical 
supplies (NRS); utilization and episode characteristics; and HHA 
margins. In order to conduct these analyses, Abt Associates primarily 
used data files created from a 20 percent sample of claims data 
collected between 2001 and 2004, Outcome and Assessment Information Set 
(OASIS) data linked to claims, and cost reports. For measures of 
resource use, Abt Associates used weighted minutes for the case-mix 
refinements research. For research on accounting for nonroutine 
supplies costs, Abt Associates analyzed supplies charges reported on 
claims after adjusting them using cost-to-charge ratios from selected 
cost reports. These analyses are described in more detail in section 
II.A.
    In addition to these analyses, two Technical Expert Panel (TEP) 
meetings were conducted, under contract with Abt Associates, on 
December 15, 2005, and March 14, 2006. These TEP meetings provided an 
opportunity for experts, industry representatives, and practitioners in 
the field of home health care to provide feedback on Abt's research 
examining the HH PPS and exploration of payment policy alternatives. 
Abt considered this feedback when developing recommendations for 
refinements to the HH PPS. The refinements to the HH PPS described in 
the following sections are the culmination of substantial research 
efforts focusing on several areas identified for possible improvements.

II. Provisions of the Proposed Regulation

    [If you choose to comment on issues in this section, include the 
caption ``PROVISIONS OF THE PROPOSED REGULATIONS'' at the beginning of 
your comments.]

A. Refinements to the Home Health Prospective Payment System

    The Medicare HH PPS has been in effect since October 1, 2000. As 
set forth in the final rule published July 3, 2000 in the Federal 
Register (65 FR 41128), the unit of payment under the Medicare HH PPS 
is a national standardized 60-day episode payment rate. As set forth in 
42 CFR 484.220, we adjust the national standardized 60-day episode 
payment rate by a case-mix grouping and a wage index value based on the 
site of service for the beneficiary. Since the July 3, 2000 final rule, 
we have stated our intention to monitor the new PPS and make 
refinements to the system as needed. We believe refinements are now 
required to improve the performance and appropriateness of payment for 
the HH PPS. After implementation of the HH PPS, we received a number of 
public comments suggesting ways in which the payment system could be 
improved. We took those comments into consideration as we proceeded to 
explore the HH PPS for potential areas for refinement. This proposed 
rule sets forth the first major refinements to the HH PPS since its 
implementation in October of 2000. This proposed rule identifies seven 
major areas of the HH PPS that were identified as possible areas for 
refinement. Those areas are: (1) The case mix model; (2) changes in 
case mix coding; (3) the PEP adjustment; (4) the LUPA; (5) the SCIC 
adjustment; (6) method of accounting for NRS, and (7) the outlier 
adjustment. While this proposed rule proposes to implement all of 
refinements discussed in this rule effective January 1, 2008, we 
recognize that there may be operational considerations, affecting CMS 
or the

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industry, which could necessitate an implementation schedule that 
results in certain refinements becoming effective on different dates (a 
split-implementation). We would like to solicit suggestions and 
comments from the public on this matter.
1. Current Payment Model
    On July 3, 2000, we published a final rule (65 FR 41128) in the 
Federal Register. In that rule, we described a system for home health 
case-mix adjustment developed under a research contract with Abt 
Associates, Inc., of Cambridge, Massachusetts. Using selected data 
elements from the OASIS and an additional data element measuring 
receipt of at least 10 visits for therapy services, the case-mix system 
projects patient resource use based on patient characteristics. These 
data elements were selected because they were shown to influence home 
health resource utilization upon statistical analysis of data from 
approximately 30,000 episodes. This model used data from first episodes 
only and a relatively small set of clinical, functional, and service 
utilization variables. Clinical judgment, the relative predictive value 
of potential case-mix variables, their susceptibility to gaming and 
subjectivity, and administrative implications were considered in the 
final resolution of the elements retained in the final model.
    The data elements are organized into three dimensions to capture 
clinical severity factors, functional severity factors, and services 
utilization factors influencing case-mix. In the clinical and 
functional dimensions, each data element is assigned a score value 
derived from multiple regression analysis of the Abt research data. The 
score value measures the impact of the data element on total resource 
use. Scores are also assigned to data elements in the services 
utilization dimension. To find a patient's case-mix group, the case-mix 
grouper software sums the patient's scores within each of the three 
dimensions. The resulting sum is used to assign the patient to a 
severity level in each dimension. There are four clinical severity 
levels, five functional severity levels, and four services utilization 
severity levels. Thus, there are 80 possible combinations of severity 
levels across the three dimensions. Each combination defines one of the 
80 HHRGs in the case-mix system. For example, a patient with high 
clinical severity, moderate functional severity, and low services 
utilization severity is placed in the same group with all other 
patients whose summed scores place them in the same set of severity 
levels for the three dimensions.
    We summarized the performance of the final PPS model for the PPS 
using the R-squared statistic. An initial episode was defined as the 
first home health episode of care for a given beneficiary in a sequence 
of adjacent episodes. For the purposes of our analysis, we defined a 
sequence of adjacent episodes for a beneficiary as a series of claims 
with no more than 60 days without home care between the end of one 
episode, which is the 60th day (except for episodes that have been PEP-
adjusted), and the beginning of the next episode. At the time, based on 
data from the model development sample, this model's R-squared 
statistic was 0.34. In other words, the model explained 34 percent of 
the variation in resource use.
2. Refinements to the Case-Mix Model
    Extensive research has been conducted to investigate ways to 
improve the performance of the case-mix model. We found that the 
addition of separate regression equations to account for later episodes 
and multiple therapy thresholds (replacing the current threshold of 10 
therapy visits) significantly improved the fit and performance of the 
case-mix model. Further, we expanded the set of variables to include 
new diagnosis groups, comorbidities, and interactions, yielding models 
that performed better in simulations. We feel that these changes would 
improve the HH PPS by allowing more accurate case-mix adjustment 
without providing incentives for providers to distort appropriate 
patterns of care.
    As with the original case-mix model, the general approach to 
developing a case-mix model was to use patient data and other 
appropriate data to create a regression model for resource use over the 
course of a 60-day episode. Case-mix refinement analysis focused on 
investigating resource use in episodes that occur later in treatment as 
well as the initial episode; testing additional clinical, functional, 
and demographic variables; exploring the effect of comorbidities; and 
testing new therapy thresholds.
    The basis for selecting these areas of analysis will be described 
in sections II.2.a., II.2.b., and II.2.c.
    As with our case-mix studies that resulted in the case-mix 
methodology discussed in the July 3, 2000 HH PPS final rule, the 
dependent variable in these refinement studies is an estimate of cost 
known as resource cost. To derive the resource cost estimate, the total 
minutes reported on the claim for each discipline's visits are 
converted to a resource cost. Resource cost results from weighting each 
minute by the national average labor market hourly rate for the 
individual discipline that provided the minutes of care. Bureau of 
Labor Statistics data are used to derive the hourly rate. The sum of 
the weighted minutes is the total resource cost estimate for the claim. 
This method standardizes the resource cost for all episodes in the 
analysis file.
    Based on the findings of our analysis of the case-mix adjustment 
under HH PPS, which we describe in section II.A.2, we propose that the 
case-mix adjustment be refined to incorporate an expanded set of case-
mix variables to capture the additional clinical conditions and 
comorbidities; four separate regression models that recognize four 
different types of episodes; and a graduated, three-threshold approach 
to accounting for therapy utilization. We refer to the four separate 
regression models in this proposed case-adjustment system as the four-
equation model. The first regression equation is for low-therapy 
episodes (less than 14 therapy visits) that occur as the first or 
second episode in a series of adjacent episodes (Episodes are 
considered to be ``adjacent'' if they are separated by no more than a 
60-day period between claims). The second regression equation is for 
high-therapy episodes (14 or more therapy visits) occurring as the 
first or second episode in a series of adjacent episodes. The third 
equation is for low-therapy episodes (under 14 therapy visits) 
occurring after the second episode in a series of adjacent episodes. 
And the fourth equation is for high-therapy episodes (14 or more 
therapy visits) occurring after the second episode in a series of 
adjacent episodes. As described in further detail below, these 
equations incorporate a graduated, three-threshold approach to 
accounting for therapy utilization. The 153 case mix groups created 
from the results of the four-equation model are also described below, 
as is the method we used to form the groups.
a. Analysis of Later Episodes
    As a starting point for our analysis, we examined the performance 
of our original model using data, derived from the National Claims 
History, reflecting the period after the HH PPS was initiated. These 
data from the period after the commencement of the HH PPS, a large 
random sample of claims from CY 2003, indicate the performance of the 
case-mix model differs from the original estimate, which reflected data 
from the time of the Abt case-mix study.

[[Page 25360]]

The more recent data reflect both the inclusion of episodes beyond the 
first episode as well as behavioral changes of health care providers 
under the HH PPS. The R-squared statistic estimated from the more 
recent data is approximately 0.21. An appropriate comparison with the 
initial R-square statistic (0.34) is the R-squared value estimated from 
the more recent data's initial episodes, which is 0.29. We therefore 
believe the data reflect a more modest reduction in model performance 
of 0.05. However, the value of the R-squared statistic calculated on 
all the data, 0.21, is an indication that the case-mix model does not 
fit non-initial episodes as well as it fits initial episodes. 
Therefore, one focus of our refinement work was to investigate resource 
use in episodes that occurred later in treatment as well as early 
episodes.
    Based on exploratory analysis, we defined ``early'' episodes to 
include, not only the initial episode in a sequence of adjacent 
episodes, but also the next adjacent episode, if any, that followed the 
initial episode. ``Later'' episodes were defined as all adjacent 
episodes beyond the second episode. When we analyzed the performance of 
the case-mix model for later episodes, we determined there were two 
important differences for episodes occurring later in the home health 
treatment compared to earlier episodes: higher resource use per episode 
and a different relationship between clinical conditions and resource 
use.
    Using a large, random sample of episodes, we found that the 
estimated resource cost of early episodes is approximately 7 percent 
lower than the estimated resource cost of later episodes. The current 
case-mix model weights all episodes equally.
    Furthermore, our exploratory regression models indicated that the 
relationships between case-mix variables and resource use differed 
between earlier and later episodes. This suggested that a scoring 
system that differed for earlier and later episodes could potentially 
perform better than a single scoring system. The system of four 
separate regression equations allows the scores to differ according to 
whether the episode is early or later. We recognize that this approach 
introduces more complexity into the case-mix adjustment system. 
However, less complex approaches that did not depend on separate 
equations did not perform as well in terms of predictive accuracy; for 
example, we explored using one equation in which we modeled additional 
lump-sum costs due to the timing of an episode in a sequence of 
adjacent episodes. This proved to be unsatisfactory because it 
addressed only one of the two important differences presented by later 
episodes, that is, their generally higher cost level.
    For the purposes of payment, we propose to make changes to the 
OASIS (see section III. Collection of Information Requirements), by 
adding a new OASIS item to capture whether an episode is an early or 
later episode. If an HHA is uncertain as to whether the episode is an 
early or later episode, we propose to base payment as though the 
episode were an early episode. Most patients do not have more than one 
episode in a year. Consequently, we believe that selecting early as the 
default is the best guess as to the eventual outcome of whether an 
episode is early or later.
b. Addition of Variables
    Since the system for case-mix adjustment was first implemented, we 
have received comments suggesting ways in which case-mix adjustment may 
be improved. Most of these comments requested that we add specific 
variables or conditions to the case-mix model. We were also asked to 
examine the appropriateness of including additional diagnosis groups, 
comorbidities in general and specific comorbidities, for instance, 
heart conditions, additional wound-related indicators, and other 
patient characteristics. We considered these comments as we proceeded 
to explore potential case-mix changes. We also considered comments 
received during the initial rulemaking process, such as comments 
pertaining to clinical issues and social characteristics such as 
caregiver availability.
    We evaluated variables for inclusion in a refined case-mix model in 
much the same way that we did for the 2000 final rule, in that we 
analyzed the relationship between resource use and patient 
characteristics. Whereas the original case-mix study required us to 
collect logs from a sample of episodes for the measure of resource use, 
for this analysis, we were able to measure resource use directly from 
the claims sample. The measures of patient characteristics come from 
OASIS assessments. Under a contract with Fu Associates of Arlington, 
Virginia, Standard Analytical Claims Files from the National Claims 
History were cleaned, edited, and linked to the OASIS assessment 
associated with the beginning of each claim period. Abt Associates 
subsequently used these analytic files to draw large samples of claims 
for analysis.
    In the course of refining the current case-mix model, we continued 
to monitor the performance of two special variables in explaining 
resource use. These variables are dual-eligibility for Medicare and 
Medicaid and caregiver support. The two variables are of interest to 
some agencies because of their perceived impact on resource use and 
overall profitability. Patients dually eligible for Medicare and 
Medicaid may have health care needs that exceed the average needs due 
to the health status and utilization differences associated with low-
income populations. Some agencies with caseloads containing large 
numbers of dual eligibles have commented that they are penalized under 
the HH PPS system because of their willingness to serve a disadvantaged 
population without payments explicitly recognizing such agencies' 
higher costs. We have also received comments that episodes involving 
patients without a caregiver were underpaid by the HH PPS, and that 
some agencies would be reluctant to admit such patients because of 
financial implications. These commenters believe that the low admission 
rate of patients without caregivers (about 2 percent of all episodes) 
is evidence of this reluctance.
    During our development of the original case-mix model implemented 
in the July 2000 final rule, using the Abt Associates case-mix study 
sample, we tested the Medicaid variable (which indicates whether 
Medicaid was among the patient's payment sources). At that time, we 
found that it did not contribute meaningfully in explaining variation 
in resource use. Similarly, we tested the caregiver variable and it did 
not contribute to explaining variation in resource cost, either. 
Regarding the caregiver variable, we recognized in the July 3, 2000, 
final rule that adjusting payment in response to the presence or 
absence of a caregiver may be seen as inequitable. To the extent that 
availability of caregiver services, particularly privately paid 
services, reflects socioeconomic status differences, we indicated that 
reducing payment for patients who have caregiver assistance may be 
particularly sensitive in view of Medicare's role as an insurance 
program rather than a social welfare program. Furthermore, we stated 
that adjusting payment for caregiver factors would risk introducing new 
and negative incentives into family and patient behavior. In the 
discussion in the July 3, 2000 final rule (65 FR 41145), we also 
indicated our belief that it is questionable whether Medicare should 
adopt a payment policy that could weaken informal familial supports 
currently benefiting patients at times when they are most vulnerable.

[[Page 25361]]

    In our analysis for this proposed rule, we again tested variables 
for dual eligibility and caregiver support. We operationalized the 
Medicaid variable from the OASIS, using the presence of a Medicaid 
number on the assessment as the indicator for Medicaid eligibility. We 
found that Medicaid remains a marginal predictor at best, with a very 
low score, after accounting for a broad range of clinical and 
functional variables that predict resource use. We believe adding a 
Medicaid variable is not justified in view of these results, especially 
considering the added administrative burdens for both agencies and 
Medicare that using such a variable would entail. These include costs 
of ascertaining whether the reported Medicaid number is correct and 
whether the eligibility status as reported on the assessment is 
current.
    We also operationalized a variable for support from a caregiver 
from the OASIS assessment, item M0350, Assisting persons other than 
home health agency staff. This variable identified patients without any 
caregiver. While analyzing the payment adequacy of the four-equation 
model (as explained further below) for patients without a caregiver we 
found that, on average, episodes without caregivers would be 
``underpaid''. However, the score to be gained by adding the variable 
is not large (5 to 13 points, depending on the episode), and the 
overall ability of the four-equation model to explain resource costs is 
improved only minimally by adding this variable.
    Therefore, we are not proposing that this variable be added to the 
case-mix model. We continue to believe that including this kind of 
variable in the case-mix system raises significant policy concerns. We 
maintain that a case-mix adjustment should not discourage assistance 
from family members of home care patients, nor should it make patients 
feel there is some financial stake in how they report their familial 
supports during their convalescence.
    We continue to believe that adjusting payment in response to the 
absence of a caregiver would introduce negative incentives with adverse 
affects on home health Medicare beneficiaries. Furthermore, we are 
doubtful that today's low rate of episodes without a caregiver (2 to 3 
percent) reflects access barriers for these patients and nothing more. 
We believe part of the reason for the low rate may be that under a 
bundled payment system agencies are more careful about ascertaining 
whether support is available and encourage use of caregivers within the 
beneficiary's home.
    For exploratory modeling of case-mix in our refinement work, in 
addition to using existing case-mix variables from the OASIS, new 
variables were created. Diagnosis codes reported on both the claims and 
the OASIS were used extensively to form new or revised diagnosis groups 
for inclusion in case-mix models. As a result, developmental models 
included many new variables, including an expanded set of primary and 
secondary diagnoses, as well as interaction terms that describe the 
effect of combinations of patient conditions or characteristics on 
resource cost. Using these new analytic files, it was possible to 
explore some conditions that were too infrequent to study in the 
original case-mix sample. For example, as suggested by commenters, 
Abt's analysis tested the impact on resource use of having multiple 
conditions from M0250, which reports on therapies received at home, 
including intravenous infusion, and enteral and parenteral nutrition. 
The results showed that a variable indicating the simultaneous presence 
of multiple conditions from OASIS item M0250 did not improve the 
accuracy of the case-mix model. However, we did find that having 
separate scores for parenteral nutrition and IV therapy were not 
necessary.
    Abt's case-mix analysis focused on various issues, such as changes 
to the list of conditions forming our diagnosis groups, additions of 
comorbidities, prediction of therapy resources, and interactions. The 
performance of each variable was scrutinized based on several criteria. 
First, variables were assessed for statistical performance. Variables 
that did not enhance the accuracy of the model were marked for 
exclusion.
    Variables were also assessed for policy appropriateness. Some 
statistically significant variables were excluded if they offered 
incentives for providers to distort patterns of good care or posed 
excessive administrative burden on HHAs. In addition, some 
statistically weak variables considered important for clinical or 
policy reasons were added back to the model for further analysis.
    We note we excluded a variable from this proposal, based in part on 
concerns of excessive administrative burden. We propose to exclude 
OASIS item M0175, which the case-mix system uses to identify the 
patient's pre-admission location, from the case-mix models. Under this 
proposal, there would be no case-mix score for M0175. Operational 
experience with M0175 revealed that some agencies have encountered 
difficulties in ascertaining precise information about the patient's 
pre-admission location during the initial assessment. These 
difficulties, suggestive of unforeseen administrative complexities, 
contributed to our proposal to eliminate M0175 from the case-mix model.
    In addition, the M0175 item did not perform well in the four-
equation model. We found that the results differed across the equations 
in ways that were difficult to interpret. Moreover, the results showed 
that the impact of including information from M0175 was small, both in 
terms of case-mix scores and the overall payment accuracy of the case-
mix model.
    In weighing the indications of administrative complexities due to 
M0175 against the limited performance of M0175 in our analysis, we do 
not find that the contribution of this item in explaining case-mix 
justifies the operational challenge of achieving perfectly accurate 
reporting for payment. Thus, as noted above, we are proposing to 
eliminate it from the case-mix model. However, we continue to believe 
that it is necessary for the conditions of participation and the OASIS 
to require that agencies establish the patient's recent history of 
health care before determining the plan of care. This determination 
must be made with sufficient accuracy to allow appropriate planning, 
even if precise dates and institutional certifications are not exactly 
known. For example, it will be important to know the amount and types 
of rehabilitation treatment the patient has received, the type of 
institution that delivered the treatment, and how recently it was 
delivered.
    The final set of proposed clinical conditions resulting from our 
exploratory series of analyses covers more types of conditions than 
were used in the original case-mix model (Tables 2a and 2b). We 
identified conditions from diagnosis codes on both claims and OASIS in 
a linked sample of claims from FY 2003 (OASIS items M0230 and M0240, 
Diagnoses and Severity Index). For example, heart and mental conditions 
are now assigned case-mix scores. More wound conditions are assigned 
scores, based on results from adding variables to indicate wound-
related diagnosis codes beyond those in the current HH PPS case-mix 
model. (See Table 2b for diagnosis codes that define each condition in 
the model.)
    We also propose to assign scores to certain secondary diagnoses, 
used to account for cost-increasing effects of comorbidities. An 
example is secondary cancer diagnoses, whose cost-increasing effects 
are not as large as those for primary cancer diagnoses. However, with 
most diagnosis groups, we did not

[[Page 25362]]

make a distinction in the final model between primary placement and 
secondary placement of a condition in the reported list of diagnoses. 
We made case-by-case decisions on this question based on differences in 
the impact on resource cost between the primary diagnosis and secondary 
diagnosis. If differences were small, we combined cases reporting the 
conditions, regardless of whether the listed position of the diagnosis 
was primary or secondary. We believe this is an important protection 
against unintended and undesirable incentive effects that could arise 
if agencies perceive opportunities to change the placement of the 
diagnosis due to nonclinical reasons. In a few instances, the reason 
for combining the primary or secondary diagnoses was to improve the 
robustness of the scores.
    Finally, we also propose that a small number of interactions--
combinations of conditions in the same episode--be assigned scores, to 
capture the synergistic effect on resource use of certain conditions 
that coexist in the episode. In some instances, a condition appears as 
an interaction with a functional limitation or a treatment variable 
such as parenteral therapy. In Table 2a, the interaction scores are 
added to the case-mix score whenever the two conditions defining the 
interaction occur together in the episode. Interaction scores, 
therefore, do not substitute for scores of other variables in Table 2a 
that involve either only one or the other of the two conditions.
    As noted earlier, we also found that, compared to early episodes, 
later episodes could exhibit a different relationship between resource 
costs and a condition. This is reflected in Table 2a by the absence of 
a condition-related score from one or more of the four equations, or a 
score that differs from one equation to another.
    During the later phases of testing alternative formulations of an 
expanded list of clinical conditions, we followed two rules in our 
formation of diagnosis groups. These rules would ultimately affect the 
operation of the case-mix grouper which would be created pursuant to 
the revisions being proposed in this proposed rule. First, if an 
episode record in our sample file listed both primary and secondary 
diagnoses from the same diagnosis group, the model estimation procedure 
recognized the primary diagnosis variable for that case but not the 
secondary diagnosis variable. This means that an episode would not be 
eligible to earn more than one score for the same diagnosis group. The 
primary reason for this rule is that we are aware of diagnosis coding 
conventions that would produce repeated instances of the same or 
similar codes in the diagnosis list, and these conventions would build 
redundancy into the modeling process. A major goal of the exploratory 
modeling process was to investigate the impact of comorbidities by 
recognizing secondary diagnoses, but redundancy inhibits our 
achievement of that goal. Consequently, we sought to reduce this type 
of redundancy. A further reason for adhering to this rule is to inhibit 
a future decline in model performance, which might come about through 
changes in coding behavior. If agencies were to perceive that redundant 
coding boosts the episode score, they might engage in it more in the 
future. The result would be a degradation in the ability of the case-
mix model to provide for accurate payment.
    The second rule we used affected how we define the interactions 
between conditions. The second rule is that, for purposes of forming 
diagnosis groups to test interactions between conditions, cases with 
either a primary or secondary diagnosis from the same diagnosis group 
are combined into a single group. This means that mention of a given 
diagnosis anywhere in the diagnosis list puts episodes in a single 
group for that diagnosis, for purposes of analyzing interactions 
between conditions. We believe this rule is consistent with our goal of 
isolating effects of comorbidities. Specifically, because the reason 
for studying interactions is to identify the effects of combinations of 
conditions, we believe it is appropriate to measure the combinations, 
regardless of the placement (that is, primary or secondary) of a 
diagnosis on the claim. Further, combining the primary and secondary 
diagnoses within groups increases the ability of the modeling process 
to uncover meaningful interaction effects. The second rule also works 
to keep the model as simple as possible. Simplicity helps to limit the 
risk that the model would not fit well for later data sets. Simplicity 
also limits the amount of added administrative burden that could come 
from using a more-complex model.
    Changes to the OASIS are needed to enable agencies to report 
secondary case-mix diagnosis codes. Specifically, the addition of 
secondary diagnoses to the case-mix system (see Table 2a, case-mix 
adjustment variables and scores) requires that the OASIS allow for 
reporting of instances in which a V-code is coded in place of a case-
mix diagnosis other than the primary diagnosis. A case-mix diagnosis is 
a diagnosis that determines the HH PPS case-mix group. Currently, the 
OASIS allows for reporting of instances of displacement involving 
primary diagnosis only (M0245). Consequently, because of the nature and 
significance of the changes needed, we are proposing to delete the 
OASIS item M0245 and replace it with a new OASIS item. (see section 
III. Collection of Information Requirements).
c. Addition of Therapy Thresholds
    As set forth in the July 3, 2000 final rule (65 FR 1128), patients 
were grouped according to their therapy utilization status in order to 
ensure that patients who required therapy would maintain access to 
appropriate services. Specifically, we defined a therapy threshold of 
at least 8 hours of combined physical, speech, or occupational therapy 
over the 60-day episode, to identify ``high'' therapy cases. The 8-hour 
threshold was converted to a threshold of 10 therapy visits because the 
average visit length for therapy noted in our data was approximately 48 
minutes. We instituted the threshold based on clinical judgment about 
the level of therapy that reflects a clear need for rehabilitation 
services and that would reasonably be expected to result in meaningful 
treatment over the course of 60 days.
    Since the implementation of the therapy threshold in the HH PPS, we 
have received comments from the public requesting that we study and 
refine this approach to accounting for rehabilitation needs in the 
case-mix system. Commenters have suggested that a single therapy 
threshold did not fairly reflect the variation in therapy utilization 
and need. Some commenters requested that we re-examine the 10-visit 
threshold. Other commenters recommended that we work to eliminate the 
therapy threshold, in part due to concerns that the therapy threshold 
might introduce incentives to distort service delivery patterns for 
payment purposes.
    Our data analysis revealed evidence of undesirable incentives from 
the 10-visit therapy threshold. Our analysis suggested that the 10-
visit therapy threshold might have distorted service delivery patterns. 
In our analysis sample, of all episodes at or above the threshold, half 
were concentrated in the range of 10 to 13 therapy visits. This range 
had the highest concentration of therapy episodes among episodes with 
at least one therapy visit. In contrast, a large analysis sample from a 
period immediately preceding the HH PPS indicated that the highest 
concentration of therapy episodes was in a range

[[Page 25363]]

below the 10-visit threshold--approximately 5 to 7 therapy visits. 
Under the HH PPS, there were two peaks in the graphic depiction of 
numbers of episodes according to the number of therapy visits delivered 
during the episode. One peak was below the therapy threshold and the 
other was the 10 to 13 visit peak above the therapy threshold. In the 
pre-PPS sample, there was only one peak in the depiction, and it was 
the concentration of episodes at 5 to 7 therapy visits--below the 
current 10-visit therapy threshold. All of these results suggested that 
the 10-visit threshold was responsible for a marked shift in 
rehabilitation services delivery under the HH PPS, a shift that we 
believe would probably not have occurred in the absence of the therapy 
threshold. Commenters have reinforced our belief that the impact of the 
single 10-visit threshold on therapy provision frequently distorted the 
clinically based decision-making that should drive the delivery of 
rehabilitation services.
    In our early efforts to address problems inherent in using a 
therapy threshold, we conducted analyses to identify new predictors of 
therapy resource use, with the goal of achieving large gains in 
explanatory power that would render the therapy threshold unnecessary. 
We used predictor variables including pre-admission status on 
activities of daily living (ADL), more diagnoses with a focus on 
conditions such as stroke, and more OASIS variables. However, models 
that included these particular explanatory variables predicted the 
probability of using therapy, but not how much therapy would be used.
    Successive studies to account for therapy resources followed the 
goal of reducing the impact of a therapy threshold on the payment 
weights. The main conclusion from these studies was that therapy 
resources cannot be predicted with sufficient accuracy to eliminate the 
need for therapy thresholds in the HH PPS case-mix system. Although we 
tried several alternative approaches, no approach added sufficient 
predictive power to the case-mix model. Therefore, continued analysis 
focused primarily on refining the therapy threshold approach to reduce 
undesirable incentives. This work involved experimentation with 
alternative sets of thresholds consisting of more than one threshold.
    After testing several sets of thresholds, and in consideration of 
the comments received, we proceeded to construct case-mix models with 
thresholds at 6, 14, and 20 therapy visits. We used these thresholds 
based on data analysis and, in part, on policy considerations.
    Data analysis suggested it would be appropriate to add new 
thresholds both below and above the 10-visit level. One reason was that 
our review of data from the HH PPS period showed agencies provided 
large numbers of episodes with therapy visits in an interval below 10 
visits. Moreover, data analysis suggested that, of all episodes with 
numbers of therapy visits below the 10-visit therapy threshold, some 
subsets did not receive an appropriate case-mix weight under the HH 
PPS. Specifically, episodes with 6 to 9 therapy visits had resource 
costs that seemingly exceeded the payment proxied in our analysis by 
the predicted resource cost under the current case mix model. However, 
we now believe that several common treatment plans require only about 6 
visits, for example, assessments and treatment of certain types of 
patients at high risk for falls. We are therefore proposing that one 
threshold be added at 6 therapy visits.
    In considering thresholds above the current 10-visit threshold, we 
observed that nearly half of episodes involving therapy comprise 
episodes with 6 to 13 therapy visits. Therefore, we are proposing a 
second threshold at 14 therapy visits, which would have two advantages. 
First, this range covers the two peaks (that is, the one we observed 
below the 10-visit therapy threshold and the one we observed above the 
10-visit threshold) in the distribution of therapy visits under the HH 
PPS. By avoiding a therapy threshold within this range, we hope to 
reduce the influence of payment incentives on treatment decisions. 
Second, we believe that the interval of 6 to 13 therapy visits 
represents a reasonable range of treatment levels for most 
rehabilitation episodes. For example, the range of 6 to 13 therapy 
visits encompasses typical treatment plans for both knee- and hip-
replacement patients. As we describe later in this section, we propose 
to use further steps to address payment accuracy, by adding payment 
gradations within the intervals bounded by the three thresholds we are 
proposing.
    We further observed that only a relatively small fraction of 
patients use 14 or more therapy visits. While no bright-line tests are 
available to distinguish a 14-visit case, we have received comments 
indicating that medical review staff at the fiscal intermediaries will 
have less difficulty judging appropriateness of treatment plans at this 
level, because such plans are intensive and not the norm.
    Additionally, although few episodes require 20 or more therapy 
visits, we set the third therapy threshold at 20 visits. Our concern is 
to ensure access to appropriate treatment in the rare cases where such 
intensive treatment is necessary. Our analysis suggested that these 
episodes are extremely costly for agencies, so a payment adjustment to 
accommodate this service level is appropriate. Furthermore, commenters 
indicated that, because only rare cases should warrant this high number 
of therapy visits, monitoring of claims to prevent abuse of this 
payment provision, using our medical review resources, is feasible 
operationally.
    Adding therapy thresholds in the revised case-mix regression model 
improves the ability of the model to predict resource use. The R-
squared values for a three-therapy threshold model increased 
substantially for both early and later episodes over the R-squared 
values for a single therapy threshold model. In other words, using 
additional therapy thresholds clearly improved the case-mix system's 
ability to classify episodes into homogeneous cost groups.
    The combined effect of the new therapy thresholds and payment 
gradations (to be described below) is expected to reduce the 
undesirable emphasis in treatment planning on a single therapy visit 
threshold, and to restore the primacy of clinical considerations in 
treatment planning for rehabilitation patients.
    During the analysis of the therapy threshold, we considered ways to 
provide for payment gradations between the therapy thresholds. We 
sought a way to implement a gradual increase in payment (see Table 1) 
between the proposed first and third therapy thresholds. We believe a 
case-mix model that increases payment with each added visit between the 
proposed first and third thresholds would achieve two goals. First, a 
gradual increase better matches payments to costs than the therapy 
thresholds alone. Second, a gradual increase avoids incentives for 
providers to distort patterns of good care created by the increase in 
payment that would occur at each proposed therapy threshold. However, 
as a disincentive for agencies to deliver more than the appropriate, 
clinically determined number of therapy visits, we are also proposing 
that any per-visit increase incorporate a declining, rather than 
constant, amount per added therapy visit. We implemented this in the 
case-mix model by decreasing slightly the added amount per therapy 
visit as the number of therapy visits grew above the proposed 6-visit 
threshold. Specifically, we began with a value determined from our 
sample--the estimated marginal

[[Page 25364]]

resource cost incurred by adding a 7th therapy visit to the treatment 
plan. This is the first additional visit above the proposed six-visit 
therapy threshold. The estimated marginal cost of adding a 7th therapy 
visit to an episode with six therapy visits was $36. Using this value 
as our starting point, we required the case-mix model to add a slightly 
lower value to the total episode resource cost with each additional 
therapy visit provided, up to the 19th therapy visit. This proposed 
approach imposes a deceleration of the growth in payment with each 
additional therapy visit. However, this proposed approach does not 
reduce total payments to home health providers, because the regression 
analysis still predicts the full resource cost of the episode. Table 1 
shows the values that we imposed in the four-equation model estimation 
procedure to implement a deceleration in the added resource cost for 
individual therapy visits between 6 and 20 therapy visits. The 
individual values begin at $36 and then decline at a constant rate of 
one resource cost dollar per therapy visit between 6 and 20 therapy 
visits. These values represent the score that was imposed in the model 
for adding each additional therapy visit. The case-mix model that 
incorporates the imposed scores is called a ``restricted regression 
model.'' The results of the restricted regression model of the four-
equation system, including scores for diagnoses and conditions, and R-
squared statistics, exhibited little change from imposing this pattern 
of deceleration in cost growth due to additional therapy visits.

   Table 1.--Resource Cost Values Imposing Deceleration Trend in Four-
                             Equation Model
------------------------------------------------------------------------
                                          Number of       Resource cost
  Equation and services utilization    therapy visits    values imposed
           severity level                in severity      in regression
                                            level           procedure
------------------------------------------------------------------------
1st and 2nd Episodes, 6-13 Therapy
 Visits
 
    S3..............................           7, 8, 9        36, 35, 34
    S4..............................                10                33
    S5..............................        11, 12, 13        32, 31, 30
 
1st and 2nd Episodes, 14-19 Therapy
 Visits
 
    S1*.............................                15                28
    S2..............................            16, 17            27, 26
    S3..............................            18, 19            25, 24
 
3rd+ Episodes, 6-13 Therapy Visits
 
    S3..............................           7, 8, 9        36, 35, 34
    S4..............................                10                33
    S5..............................        11, 12, 13        32, 31, 30
 
3rd+ Episodes, 14-19 Therapy Visits
 
    S1*.............................                15                28
    S2..............................            16, 17            27, 26
    S3..............................            18, 19            25, 24
------------------------------------------------------------------------
* For the second and fourth equations of the four equation model, S1
  includes 14 therapy visits, but no value was imposed in the regression
  procedure for a 14th therapy visit because the regression intercept
  estimate automatically includes the resource cost impact.

    The case-mix model at this stage was very detailed, because it 
included variables incorporating information about thresholds and 
therapy visit counts. We were concerned that, without streamlining the 
therapy-related information in the case-mix model, the ultimate system 
of case-mix groups would contain an excessive number of case-mix 
groups. We recognize an extremely large number of case-mix groups would 
make the HH PPS complex to administer. Because the therapy-related 
details of the case-mix model are based on numbers of therapy visits, 
another issue would be that many case-mix groups would be 
differentiated based on visit counts, thereby making the system 
dependent on visits and less of a bundled system of services. 
Therefore, in order to form case-mix groups from the results of the 
case-mix model, we grouped the individual levels of therapy visits into 
small aggregates (1, 2, or 3 visits) (see Table 1). By doing so, we 
avoided creating a per-visit schedule of payment to account for therapy 
visits. We implemented these aggregations as differing severity levels 
at a subsequent stage of payment system development, the payment 
regression, which is described later in this section.
    The proposed four equation model, with multiple therapy thresholds 
and payment graduation between those thresholds, adds a certain amount 
of complexity to the HH PPS. Consequently, in order to group 
beneficiaries into case-mix groups in this proposed four equation 
model, we propose to make changes to the OASIS to capture the projected 
number of total therapy visits for a given episode (see section III. 
Collection of Information Requirements), as opposed to indicating if 
there is a projected need for ten or more therapy visits (current OASIS 
item M0825). Each severity level of the services utilization dimension 
represents a different number of therapy visits (see also Table 3: 
Severity Group Definitions: Four-Equation Model).
    An additional aspect of our therapy threshold research addressed 
changing the unit of measurement of therapy thresholds from visits to 
minutes. In the July 2000 final rule, we indicated our intention to 
continue study of the appropriate unit of measurement for therapy 
services.
    An important finding of our initial analyses on this question was 
that the length of therapy visits in minutes, on average, exhibited 
little change between the period covered by the original Abt Associates 
case-mix study, and the HH PPS period, based on data through 2003. We 
also found that the distribution of average therapy visit lengths was 
highly similar under HH PPS, regardless of the total number of therapy 
visits in the episode. A possible exception was episodes with 1 to 4 
therapy visits, where a relatively high proportion of episodes (about 
16 percent) had average therapy visit lengths of 30 minutes or less; no 
more than 9 percent of remaining episodes (more than four therapy 
visits) had averages of 30 minutes or less. There was also a slight 
tendency for these short average visit

[[Page 25365]]

lengths to become less frequent as the total therapy visit count per 
episode grew. Overall, the data indicated that at least 85 percent of 
episodes with therapy visits involved visits averaging at least 41 
minutes. These results suggest that therapy practitioners tend to have 
consistent session lengths across many types of episodes.
    We are proposing no change in the current way in which we measure 
therapy thresholds, which is based on counting therapy visits, in light 
of our analysis indicating that individual therapy visits appear to 
vary little in their length, regardless of the frequency of visits 
during the 60-day episode, and our analysis indicating that average 
visit lengths have remained stable since the time of the Abt case-mix 
study. Additionally, we are concerned incentive issues would arise if 
we changed the definition. The low variability in visit lengths appears 
to be an indication that under current practices, therapy session 
lengths are fairly uniform, regardless of the time period or intensity 
of the rehabilitation course of treatment. These practices have arisen 
out of clinical experience in the rehabilitation professions. 
Introducing a minutes or time standard risks introducing new financial 
incentives that might influence these widely held practices. We are 
concerned that changing to a minutes standard might result in 
financially driven pressures on clinical decisions concerning the 
number of sessions in a patient's course of treatment, with potentially 
adverse effects on beneficiary outcomes.
    One of our original concerns in proposing a visit-based threshold 
was that minutes unit reporting on the claims, which was a relatively 
new requirement at that time, might be unreliable. (Section 1895(c)(2) 
requires the claim to report the length of each billed visit as 
measured in 15-minute increments.) Based upon our experiences using the 
claims data in our research, we have no reason to believe this is a 
problem. Moreover, we believe the dual requirements to report both 
visit dates and minutes of each visit on Medicare claims should remain 
in place because they provide important information for program 
integrity activities and future research.
    Based upon our analysis of the case-model described in section 
II.A.2, we propose to use four separate equations to derive scores for 
conditions including the proposed therapy thresholds. The proposed 
first equation is for early episodes below the 14-visit therapy 
threshold. The proposed second equation is for early episodes at or 
above the 14-visit therapy threshold. The proposed third equation is 
for later episodes below the 14-visit therapy threshold. The proposed 
fourth equation is for later episodes above the 14-visit therapy 
threshold. A threshold at 6 visits is accounted for by an indicator 
variable in the proposed first and third equations, and a threshold at 
20 visits is accounted for by an indicator variable in the proposed 
second and fourth equations. In addition, therapy visit count variables 
are added to the equations to model the graduated payment with each 
therapy visit between 6 and 20 visits. Finally, as we explained above, 
we imposed specific values for the coefficients of the therapy visit 
count variables. The resulting four-equation model has an improved 
statistical performance (an R-squared statistic of approximately 0.44) 
over the current model (an R-squared statistic of 0.21). The primary 
reason for the improvement in the proposed case-mix model fit (compared 
to the R-square statistic of 0.21 cited earlier) is the four-equation 
structure. This structure recognizes cost differences between early and 
later episodes, and between therapy treatment plans above and below the 
proposed 14-visit therapy threshold. Additional improvements come from 
adding other therapy variables to the case-mix model, specifically, the 
two additional thresholds (6 and 20 visits) and graduated payment--and 
from the new case-mix variables discussed in section II.A.2.a of this 
proposed rule.
    We believe that in addition to improved statistical performance, 
the proposed model would provide better incentives for the provision of 
high-quality home health care without an undue increase in 
administrative burden. For a more detailed discussion of the technical 
aspects of the four-equation model go to the CMS Web site (http://www.cms.hhs.gov/hha.asp) for a link to Abt's Technical Report.
    Table 2a presents the full set of case-mix scores (other than the 
imposed scores for therapy visits) and all clinical and functional 
variables we are proposing for the refined case-mix model. In Table 2a, 
the score is the value of the regression coefficient for the variable; 
it measures the impact of the data element on total resource cost of 
the episode. See Table 2b for an inclusive list of ICD-9-CM diagnosis 
codes applicable for each scored condition variable in Table 2a. These 
codes define the clinical condition variables in our proposed model. We 
intend to continue to evaluate the appropriateness of these diagnosis 
codes in Table 2b. We believe the HH PPS case-mix system should avoid, 
to the fullest extent possible, nonspecific or ambiguous ICD-9-CM 
codes, codes that represent general symptomatic complaints in the 
elderly population, and codes that lack consensus for clear diagnostic 
criteria within the medical community. We solicit detailed suggestions 
from the public concerning codes that threaten to move the system away 
from a foundation of reliable and meaningful diagnosis codes.
    Compared to the original four diagnosis groups in the case-mix 
model, the code groups in Table 2b incorporate additions and new group 
placements for individual ICD-9-CM diagnosis codes. Two variables from 
the original case mix system are not proposed: M0175, as noted earlier, 
and M0610, behavioral problems, which did not perform well in our 
studies. We believe that several additions to our diagnosis groups, 
namely, two groups for psychiatric diagnoses, account for the 
contribution of behavioral problems to resource cost variation.
    We are aware that some of the diagnosis codes listed in Table 2b 
are manifestation codes. The ICD-9-CM Official Guidelines for Coding 
and Reporting requires that the underlying disease or condition code be 
sequenced first, followed by the manifestation code. The underlying 
disease codes associated with the manifestation codes are not listed in 
Table 2b. However, appropriate sequencing was accounted for in our 
analysis. When reporting certain conditions that have both an 
underlying etiology and a body system manifestation due to the 
underlying etiology, the appropriate sequencing should be followed 
according to the ICD-9-CM Coding Guidelines.
    For purposes of determining final estimates on which to base the 
data set used in the final rule for CY 2008, we intend to update the 
dataset used for the four-equation model to CY 2005; as noted above, 
the proposal to use the four-equation model is based on linked claims 
and OASIS data from FY 2003. We are aware that adding data from a later 
period may result in some variations, including some significant 
changes, in the scores presented in Table 2a. Some changes may occur 
because, effective October 2003 (FY 2004), diagnosis coding 
instructions on the OASIS assessment changed to allow for the use of 
ICD-9-CM V-codes. V-codes, particularly those applicable to home health 
services, do not in general describe disease states; rather, they 
describe reasons for using services. The major use of V-codes in the 
home health setting occurs when a person with current or resolving 
disease or injury

[[Page 25366]]

encounters the health care system for specific aftercare of that 
disease or injury. For example, V-code V57.21 is reportable when the 
reason for the visit is ``encounter for occupational therapy.'' As 
such, V-codes are less specific to the clinical condition of the 
patient than are numeric diagnosis codes. A single V-code could 
substitute for various numeric codes, each of which describes a 
specific, different clinical condition.
    Medical review activities revealed an inappropriate utilization of 
V-codes following the effective date of V-codes on OASIS (October, 
2003). In response to RHHI reports of increased provider non-compliance 
with correct ICD-9-CM coding procedures related to V-codes, we posted 
OASIS diagnosis training on the CMS Web site and promoted RHHI provider 
educational efforts. Nonetheless, medical review activities continue to 
report an excessive utilization of the V-57 codes, signaling a possible 
non-compliance with correct coding practice related to the V-codes.
    We are concerned that more use of V-codes could reduce data 
adequacy for modeling the impacts of clinical conditions we are 
proposing to use to predict resource use. One result, for example, 
might be a markedly different score for some conditions with lower 
reporting rates under the V-code instructions effective October 2003.
    At this time, we do not know whether allowing V-codes on the OASIS, 
along with the over-use of V-codes revealed by medical review 
activities, significantly lowered the frequencies of non-V-code, 
numeric diagnosis codes for the clinical conditions we propose to use 
in the case mix model. Again, this could have occurred because of the 
way V-codes can displace a numeric code in the diagnosis list. If we 
find evidence that numeric codes' frequencies were reduced to the 
extent that it strongly influenced the scores we present in this 
proposal, we propose to base the refined system on the data from FY 
2003.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP04MY07.000


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[GRAPHIC] [TIFF OMITTED] TP04MY07.001


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[GRAPHIC] [TIFF OMITTED] TP04MY07.002


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[GRAPHIC] [TIFF OMITTED] TP04MY07.003


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[GRAPHIC] [TIFF OMITTED] TP04MY07.004


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[GRAPHIC] [TIFF OMITTED] TP04MY07.005

BILLING CODE 4120-01-C

      Table 2b.--ICD-9-CM Diagnoses Included in the Diagnostic Categories for Case-Mix Adjustment Variables
----------------------------------------------------------------------------------------------------------------
                                    ICD-9-CM
       Diagnostic category           code**        Manifestation*         Short description of ICD-9-CM code
----------------------------------------------------------------------------------------------------------------
Blindness and low vision.........       369.0  .....................  PROFOUND BLIND BOTH EYES
                                        369.1  .....................  MOD/SEV W PROFND IMPAIR
                                        369.2  .....................  MOD/SEV IMPAIR-BOTH EYES
                                        369.3  .....................  BLINDNESS NOS, BOTH EYES
                                        369.4  .....................  LEGAL BLINDNESS-USA DEF
                                          950  .....................  INJURY TO OPTIC NERVE AND PATHWAYS
Blood disorders..................         281  .....................  OTHER DEFICIENCY ANEMIAS
                                          282  .....................  HEREDITARY HEMOLYTIC ANEMIAS
                                          283  .....................  ACQUIRED HEMOLYTIC ANEMIAS
                                          284  .....................  APLASTIC ANEMIA
                                          285  .....................  OTHER AND UNSPECIFIED ANEMIAS
                                          286  .....................  COAGULATION DEFECTS
                                          287  .....................  PURPURA&OTHER HEMORRHAGIC CONDS
                                          288  .....................  DISEASES OF WHITE BLOOD CELLS
                                          289  .....................  OTH DISEASES BLD&BLD-FORMING ORGANS
Cancer and selected benign                140  .....................  MALIGNANT NEOPLASM OF LIP
 neoplasms.
                                          141  .....................  MALIGNANT NEOPLASM OF TONGUE
                                          142  .....................  MALIG NEOPLASM MAJOR SALIV GLANDS
                                          143  .....................  MALIGNANT NEOPLASM OF GUM
                                          144  .....................  MALIGNANT NEOPLASM FLOOR MOUTH
                                          145  .....................  MALIG NEOPLSM OTH&UNSPEC PART MOUTH
                                          146  .....................  MALIGNANT NEOPLASM OF OROPHARYNX
                                          147  .....................  MALIGNANT NEOPLASM OF NASOPHARYNX
                                          148  .....................  MALIGNANT NEOPLASM OF HYPOPHARYNX
                                          149  .....................  OTH MALIG NEO LIP-MOUTH-PHARYNX
                                          150  .....................  MALIGNANT NEOPLASM OF ESOPHAGUS
                                          151  .....................  MALIGNANT NEOPLASM OF STOMACH
                                          152  .....................  MALIG NEOPLSM SM INTEST INCL DUODUM
                                          153  .....................  MALIGNANT NEOPLASM OF COLON
                                          154  .....................  MAL NEO RECT RECTOSIGMOID JUNC&ANUS
                                          155  .....................  MALIG NEOPLASM LIVER&INTRAHEP BDS
                                          156  .....................  MALIG NEOPLSM GALLBLADD&XTRAHEP BDS
                                          157  .....................  MALIGNANT NEOPLASM OF PANCREAS
                                          158  .....................  MALIG NEOPLASM RETROPERITON&PERITON
                                          159  .....................  MAL NEO DIGES ORGANS&PANCREAS OTH
                                          160  .....................  MAL NEO NASL CAV/MID EAR&ACSS SINUS
                                          161  .....................  MALIGNANT NEO LARYNX*
                                          162  .....................  MALIGNANT NEO TRACHEA/LUNG*

[[Page 25373]]

 
                                          163  .....................  MALIGNANT NEOPL PLEURA*
                                          164  .....................  MAL NEO THYMUS/MEDIASTIN*
                                          165  .....................  OTH/ILL-DEF MAL NEO RESP*
                                          170  .....................  MALIG NEOPLASM BONE&ARTICLR CART
                                          171  .....................  MALIG NEOPLSM CNCTV&OTH SOFT TISSUE
                                          172  .....................  MALIGNANT MELANOMA OF SKIN
                                          173  .....................  OTHER MALIGNANT NEOPLASM OF SKIN
                                          174  .....................  MALIGNANT NEOPLASM OF FEMALE BREAST
                                          175  .....................  MALIGNANT NEOPLASM OF MALE BREAST
                                          176  .....................  KAPOSIS SARCOMA
                                          179  .....................  MALIG NEOPLASM UTERUS PART UNSPEC
                                          180  .....................  MALIGNANT NEOPLASM OF CERVIX UTERI
                                          181  .....................  MALIGNANT NEOPLASM OF PLACENTA
                                          182  .....................  MALIGNANT NEOPLASM BODY UTERUS
                                          183  .....................  MALIG NEOPLSM OVRY&OTH UTERN ADNEXA
                                          184  .....................  MALIG NEOPLSM OTH&UNS FE GENIT ORGN
                                          185  .....................  MALIGNANT NEOPLASM OF PROSTATE
                                          186  .....................  MALIGNANT NEOPLASM OF TESTIS
                                          187  .....................  MAL NEOPLSM PENIS&OTH MALE GNT ORGN
                                          188  .....................  MALIGNANT NEOPLASM OF BLADDER
                                          189  .....................  MAL NEO KIDNEY&OTH&UNS URIN ORGN
                                          190  .....................  MALIGNANT NEOPLASM OF EYE
                                        192.0  .....................  MALIGNANT NEOPLASM, CRANIAL NERVES
                                        192.8  .....................  MALIGNANT NEOPLASM OTHER NERV SYS
                                        192.9  .....................  MALIGNANT NEOPLASM, UNS PART NERV SYS
                                          193  .....................  MALIGNANT NEOPLASM OF THYROID GLAND
                                          194  .....................  MAL NEO OTH ENDOCRN GLND&REL STRCT
                                          195  .....................  MALIG NEOPLASM OTH&ILL-DEFIND SITES
                                          196  .....................  SEC&UNSPEC MALIG NEOPLASM NODES
                                          197  .....................  SEC MALIG NEOPLASM RESP&DIGESTV SYS
                                          198  .....................  SEC MALIG NEOPLASM OTHER SPEC SITES
                                          199  .....................  MALIG NEOPLASM WITHOUT SPEC SITE
                                          200  .....................  LYMPHOSARCOMA AND RETICULOSARCOMA
                                          201  .....................  HODGKINS DISEASE
                                          202  .....................  OTH MAL NEO LYMPHOID&HISTCYT TISS
                                          203  .....................  MX MYELOMA&IMMUNOPROLIFERAT NEOPLSM
                                          204  .....................  LYMPHOID LEUKEMIA
                                          205  .....................  MYELOID LEUKEMIA
                                          206  .....................  MONOCYTIC LEUKEMIA
                                          207  .....................  OTHER SPECIFIED LEUKEMIA
                                          208  .....................  LEUKEMIA OF UNSPECIFIED CELL TYPE
                                          213  .....................  BEN NEOPLASM BONE&ARTICLR CARTILAGE
                                        225.1  .....................  BEN NEOPLSM CRANIAL NERVES
                                        225.8  .....................  BEN NEOPLSM OTH SPEC SITES
                                        225.9  .....................  BEN NEOPLSM UNSPEC PART NERV SYS
                                          230  .....................  CA IN SITU--DIGEST
                                          231  .....................  CA IN SITU--RESP
                                          232  .....................  CARCINOMA IN SITU OF SKIN
                                          233  .....................  CA IN SITU--BREAST AND GU
                                          234  .....................  CA IN SITU--OTH
Diabetes.........................         250  .....................  DIABETES MELLITUS
                                        357.2  M....................  POLYNEUROPATHY IN DIABETES
                                       362.01  M....................  BACKGROUND DIABETIC RETINOPATHY
                                       362.02  M....................  PROLIFERATIVE DIABETIC RETINOPATHY
                                       366.41  M....................  DIABETIC CATARACT
Dysphagia........................       787.2  .....................  DYSPHAGIA
Gait Abnormality.................       781.2  .....................  ABNORM GAIT
Gastrointestinal disorders.......         002  .....................  TYPHOID AND PARATYPHOID FEVERS
                                          003  .....................  OTHER SALMONELLA INFECTIONS
                                          004  .....................  SHIGELLOSIS
                                          005  .....................  OTHER FOOD POISONING
                                          006  .....................  AMEBIASIS
                                          007  .....................  OTHER PROTOZOAL INTESTINAL DISEASES
                                          008  .....................  INTESTINAL INFS DUE OTH ORGANISMS
                                          009  .....................  ILL-DEFINED INTESTINAL INFECTIONS
                                          530  .....................  DISEASES OF ESOPHAGUS
                                          531  .....................  GASTRIC ULCER
                                          532  .....................  DUODENAL ULCER
                                          533  .....................  PEPTIC ULCER, SITE UNSPECIFIED
                                          534  .....................  GASTROJEJUNAL ULCER

[[Page 25374]]

 
                                          535  .....................  GASTRITIS AND DUODENITIS
                                          536  .....................  DISORDERS OF FUNCTION OF STOMACH
                                          537  .....................  OTHER DISORDERS OF STOMACH&DUODENUM
                                          540  .....................  ACUTE APPENDICITIS
                                          541  .....................  APPENDICITIS, UNQUALIFIED
                                          542  .....................  OTHER APPENDICITIS
                                          543  .....................  OTHER DISEASES OF APPENDIX
                                          555  .....................  REGIONAL ENTERITIS
                                          556  .....................  ULCERATIVE COLITIS
                                          557  .....................  VASCULAR INSUFFICIENCY OF INTESTINE
                                          558  .....................  OTH NONINF GASTROENTERITIS&COLITIS
                                          560  .....................  INTEST OBST W/O MENTION HERN
                                          562  .....................  DIVERTICULA OF INTESTINE
                                          564  .....................  FUNCTIONAL DIGESTIVE DISORDERS NEC
                                          567  M....................  PERITONITIS
                                          568  .....................  OTHER DISORDERS OF PERITONEUM
                                          569  .....................  OTHER DISORDERS OF INTESTINE
                                          570  .....................  ACUTE&SUBACUTE NECROSIS OF LIVER
                                          571  .....................  CHRONIC LIVER DISEASE AND CIRRHOSIS
                                          572  .....................  LIVER ABSC&SEQUELAE CHRON LIVR DZ
                                          573  M....................  OTHER DISORDERS OF LIVER
                                          574  .....................  CHOLELITHIASIS
                                          575  .....................  OTHER DISORDERS OF GALLBLADDER
                                          576  .....................  OTHER DISORDERS OF BILIARY TRACT
                                          577  .....................  DISEASES OF PANCREAS
                                          578  .....................  GASTROINTESTINAL HEMORRHAGE
                                          579  .....................  INTESTINAL MALABSORPTION
                                        783.2  .....................  ABNORMAL LOSS OF WEIGHT
Heart Disease....................         410  .....................  ACUTE MYOCARDIAL INFARCTION
                                          411  .....................  OTH AC&SUBAC FORMS ISCHEMIC HRT DZ
                                          428  .....................  HEART FAILURE
Hypertension.....................         401  .....................  ESSENTIAL HYPERTENSION
                                          402  .....................  HYPERTENSIVE HEART DISEASE
                                          403  .....................  HYPERTENSIVE RENAL DISEASE
                                          404  .....................  HYPERTENSIVE HEART&RENAL DISEASE
                                          405  .....................  SECONDARY HYPERTENSION
Neuro 1--Brain disorders and              013  .....................  TB MENINGES&CNTRL NERV SYS
 paralysis.
                                          047  .....................  MENINGITIS DUE TO ENTEROVIRUS
                                          046  .....................  SLOW VIRUS INFECTION CNTRL NERV SYS
                                          048  .....................  OTH ENTEROVIRUS DZ CNTRL NERV SYS
                                          049  .....................  OTH NON-ARTHROPOD BORNE VIRL DX-CNS
                                          191  .....................  MALIGNANT NEOPLASM OF BRAIN
                                        192.2  .....................  MALIG NEOPLSM SPINAL CORD
                                        192.3  .....................  MALIG NEOPLSM SPINAL MENINGES
                                        225.0  .....................  BEN NEOPLSM BRAIN
                                        225.2  .....................  BEN NEOPLSM BRAIN MENINGES
                                        225.3  .....................  BEN NEOPLSM SPINAL CORD
                                        225.4  .....................  BEN NEOPLSM SPINAL CORD MENINGES
                                        320.0  .....................  HEMOPHILUS MENINGITIS
                                        320.1  .....................  PNEUMOCOCCAL MENINGITIS
                                        320.2  .....................  STREPTOCOCCAL MENINGITIS
                                        320.3  .....................  STAPHYLOCOCCAL MENINGITIS
                                        320.7  M....................  MENINGITIS OTH BACT DZ CLASS ELSW
                                       320.81  .....................  ANAEROBIC MENINGITIS
                                       320.82  .....................  MENINGITIS DUE GM-NEG BACTER NEC
                                       320.89  .....................  MENINGITIS DUE OTHER SPEC BACTERIA
                                        320.9  .....................  MENINGITIS DUE UNSPEC BACTERIUM
                                        321.0  M....................  CRYPTOCOCCAL MENINGITIS
                                        321.1  M....................  MENINGITIS IN OTHER FUNGAL DISEASES
                                        321.2  M....................  MENINGITIS DUE TO VIRUSES NEC
                                        321.3  M....................  MENINGITIS DUE TO TRYPANOSOMIASIS
                                        321.4  M....................  MENINGITIS IN SARCOIDOSIS
                                        321.8  M....................  MENINGITIS-OTH NONBCTRL ORGNISMS CE
                                          322  .....................  MENINGITIS OF UNSPECIFIED CAUSE
                                        323.0  M....................  ENCEPHALITIS VIRAL DZ CLASS ELSW
                                        323.1  M....................  ENCEPHALIT RICKETTS DZ CLASS ELSW
                                        323.2  M....................  ENCEPHALIT PROTOZOAL DZ CLASS ELSW
                                        323.4  M....................  OTH ENCEPHALIT DUE INF CLASS ELSW
                                        323.5  .....................  ENCEPHALIT FOLLOW IMMUNIZATION PROC
                                        323.6  M....................  POSTINFECTIOUS ENCEPHALITIS

[[Page 25375]]

 
                                        323.7  M....................  TOXIC ENCEPHALITIS
                                        323.8  .....................  OTHER CAUSES OF ENCEPHALITIS
                                        323.9  .....................  ENCEPHALITUS NOS
                                          324  .....................  INTRACRANIAL&INTRASPINAL ABSCESS
                                          325  .....................  PHLEBIT&THRMBOPHLB INTRACRAN VENUS
                                          326  .....................  LATE EFF INTRACRAN ABSC/PYOGEN INF
                                        330.0  .....................  LEUKODYSTROPHY
                                        330.1  .....................  CEREBRAL LIPIDOSES
                                        330.2  M....................  CEREB DEGEN IN LIPIDOSIS
                                        330.3  M....................  CERB DEG CHLD IN OTH DIS
                                        330.8  .....................  CEREB DEGEN IN CHILD NEC
                                        330.9  .....................  CEREB DEGEN IN CHILD NOS
                                        334.1  .....................  HERED SPASTIC PARAPLEGIA
                                          335  .....................  ANTERIOR HORN CELL DISEASE
                                        336.1  .....................  VASCULAR MYELOPATHIES
                                        336.2  M....................  SUBACUTE COMB DEGEN SPINL CRD DZ CE
                                        336.3  M....................  MYELOPATHY OTH DISEASES CLASS ELSW
                                        336.8  .....................  OTHER MYELOPATHY
                                        336.9  .....................  UNSPECIFIED DISEASE OF SPINAL CORD
                                        337.3  .....................  AUTONOMIC DYSREFLEXIA
                                        344.1  .....................  PARAPLEGIA
                                        344.8  .....................  LOCKED-IN STATE
                                        344.9  .....................  PARALYSIS UNSPECIFIED
                                          348  .....................  OTHER CONDITIONS OF BRAIN
                                       349.82  .....................  OTH&UNSPEC DISORDERS NERVOUS SYSTEM
                                        336.0  .....................  SYRINGOMYELIA AND SYRINGOBULBIA
                                        344.0  .....................  QUADRAPLEGIA
                                          741  .....................  SPINA BIFIDA
                                       780.01  .....................  COMA
                                       780.03  .....................  PERSISTENT VEGETATIVE STATE
                                          806  .....................  FX VERT COLUMN W/SPINAL CORD INJURY
                                          851  .....................  CEREBRAL LACERATION AND CONTUSION
                                          852  .....................  SUBARACH SUB&XTRADURL HEMOR FLW INJ
                                          853  .....................  OTH&UNS INTRACRAN HEMOR FLW INJURY
                                          854  .....................  INTRACRAN INJURY OTH&UNSPEC NATURE
                                        907.0  .....................  LATE EFF INTRACRANIAL INJURY
                                        907.1  .....................  LATE EFFECT OF INJURY TO CRANIAL NERVE
                                        907.2  .....................  LATE EFFECT OF SPINAL CORD INJURY
                                        907.3  .....................  LATE EFFECT OF INJURY TO NERVE ROOT(S),
                                                                       SPINAL PLEXUS(ES), AND OTHER NERVES OF
                                                                       TRUNK
                                        907.4  .....................  LATE EFFECT OF INJURY TO PERIPHERAL NERVE
                                                                       OF SHOULDER GIRDLE AND UPPER LIMB
                                        907.5  .....................  LATE EFFECT OF INJURY TO PERIPHERAL NERVE
                                                                       OF PELVIC GIRDLE AND LOWER LIMB
                                        907.9  .....................  LATE EFFECT OF INJURY TO OTHER AND
                                                                       UNSPECIFIED NERVE
                                          952  .....................  SP CRD INJR W/O EVIDENCE SP BN INJR
Neuro 2--Peripheral neurological          045  .....................  ACUTE POLIOMYELITIS
 disorders.
                                          332  .....................  PARKINSONS DISEASE
                                          333  .....................  OTH XTRAPYRAMIDAL DZ&ABN MOVMNT D/O
                                        334.0  .....................  FRIEDREICH'S ATAXIA
                                        334.2  .....................  PRIMARY CEREBELLAR DEGEN
                                        334.3  .....................  CEREBELLAR ATAXIA NEC
                                        334.4  M....................  CEREBEL ATAX IN OTH DIS
                                        334.8  .....................  SPINOCEREBELLAR DIS NEC
                                        334.9  .....................  SPINOCEREBELLAR DIS NOS
                                        337.0  .....................  IDIOPATH PERIPH AUTONOM NEUROPATHY
                                        337.1  M....................  PRIPHERL AUTONOMIC NEUROPTHY D/O CE
                                       337.20  .....................  UNSPEC REFLEX SYMPATHETIC DYSTROPHY
                                       337.21  .....................  REFLX SYMPATHET DYSTROPHY UP LIMB
                                       337.22  .....................  REFLX SYMPATHET DYSTROPHY LOW LIMB
                                       337.29  .....................  REFLX SYMPATHET DYSTROPHY OTH SITE
                                        337.9  .....................  UNSPEC DISORDER AUTONOM NERV SYSTEM
                                          343  .....................  INFANTILE CEREBRAL PALSY
                                        344.2  .....................  DIPLEGIA OF BOTH UPPER LIMBS
                                          352  .....................  DISORDERS OF OTHER CRANIAL NERVES
                                        353.0  .....................  BRACHIAL PLEXUS LESION
                                        353.1  .....................  LUMBOSACRAL PLEXUS LESION
                                        353.5  .....................  NEURALGIC AMYLOTROPHY
                                        354.5  .....................  MONONEURITIS MULTIPLEX

[[Page 25376]]

 
                                        355.2  .....................  OTHER LESION OF FEMORAL NERVE
                                        355.9  .....................  LESION OF SCIATIC NERVE
                                          356  .....................  HEREDIT&IDIOPATH PERIPH NEUROPATHY
                                        357.0  .....................  ACUTE INFECTIVE POLYNEURITIS
                                        357.1  M....................  POLYNEUROPATHY COLL VASC DISEASE
                                        357.3  M....................  POLYNEUROPATHY IN MALIGNANT DISEASE
                                        357.4  M....................  POLYNEUROPATHY OTH DZ CLASS ELSW
                                        357.5  .....................  ALCOHOLIC POLYNEUROPATHY
                                        357.6  .....................  POLYNEUROPATHY DUE TO DRUGS
                                        357.7  .....................  POLYNEUROPATHY DUE OTH TOXIC AGENTS
                                       357.82  .....................  CRIT ILLNESS NEUROPATHY
                                       357.89  .....................  INFLAM/TOX NEUROPATHY
                                        357.9  .....................  UNSPEC INFLAM&TOXIC NEUROPATHY
                                       358.00  .....................  MYASTHENIA GRAVIS W/O ACUTE
                                       358.01  .....................  MYASTHENIA GRAVIS W/ACUTE
                                        358.1  M....................  MYASTHENIC SYNDROMES DZ CLASS ELSW
                                        358.2  .....................  TOXIC MYONEURAL DISORDERS
                                        358.9  .....................  UNSPECIFIED MYONEURAL DISORDERS
                                        359.0  .....................  CONGEN HEREDIT MUSCULAR DYSTROPHY
                                        359.1  .....................  HEREDITARY PROGRESSIVE MUSC DYSTROPH
                                        359.3  .....................  FAMILIAL PERIODIC PARALYSIS
                                        359.4  .....................  TOXIC MYOPATHY
                                        359.5  M....................  MYOPATHY ENDOCRINE DZ CLASS ELSW
                                        359.6  M....................  SX INFLAM MYOPATHY DZ CLASS ELSW
                                        359.8  .....................  OTHER MYOPATHIES
                                        359.9  .....................  UNSPECIFIED MYOPATHY
                                        386.0  .....................  MENIERE'S DISEASE
                                        386.2  .....................  VERTIGO OF CENTRAL ORIGIN
                                        386.3  .....................  LABYRINTHITIS
                                          392  .....................  RHEUMATIC CHOREA
                                          953  .....................  INJURY TO NERVE ROOTS&SPINAL PLEXUS
                                          954  .....................  INJR OTH NRV TRNK NO SHLDR&PLV GIRD
                                        955.8  .....................  INJR PERIPH NRV SHLDR GIRDL&UP LIMB
                                        956.0  .....................  INJR TO SCIATIC NERVE
                                        956.1  .....................  INJ TO FEMORAL NERVE
                                        956.8  .....................  INJR TO MULTIPLE PELVIC AND LE NERVES
Neuro 3--Stroke..................         342  .....................  HEMIPLEGIA AND HEMIPARESIS
                                        344.3  .....................  MONOPLEGIA OF LOWER LIMB
                                        344.4  .....................  MONOPLEGIA OF UPPER LIMB
                                        344.6  .....................  UNSPECIFIED MONOPLEGIA
                                          430  .....................  SUBARACHNOID HEMORRHAGE
                                          431  .....................  INTRACEREBRAL HEMORRHAGE
                                          432  .....................  OTH&UNSPEC INTRACRANIAL HEMORRHAGE
                                       433.01  .....................  OCCLUSION&STENOSIS BASILAR ART W INFARC
                                       433.11  .....................  OCCLUSION&STENOSIS CAROTID ART W INFARC
                                       433.21  .....................  OCCLUSION&STENOSIS VERTEBRAL ART W INFARC
                                       433.31  .....................  OCCLUSION&STENOSIS MULT BILAT ART W INFARC
                                       433.81  .....................  OCCLUSION&STENOSIS OTH PRECER ART W INFARC
                                       434.01  .....................  CEREBRAL THROMBOSIS W INFARCTION
                                       434.11  .....................  CEREBRAL EMBOLISM W INFARCTION
                                        781.8  .....................  NEURO NEGLECT SYNDROME
                                          436  .....................  ACUT BUT ILL-DEFINED CEREBRVASC DZ
                                          438  .....................  LATE EFF CEREBROVASCULAR DZ
                                          435  .....................  TRANSIENT CEREBRAL ISCHEMIA
Neuro 4--Multiple Sclerosis......         340  .....................  MULTIPLE SCLEROSIS
                                          341  M....................  OTH DEMYELINATING DZ CNTRL NERV SYS
Ortho 1--Leg Disorders...........      711.05  .....................  PYOGEN ARTHRITIS-PELVIS
                                       711.06  .....................  PYOGEN ARTHRITIS-L/LEG
                                       711.07  .....................  PYOGEN ARTHRITIS-ANKLE
                                       711.15  M....................  REITER ARTHRITIS-PELVIS
                                       711.16  M....................  REITER ARTHRITIS-L/LEG
                                       711.17  M....................  REITER ARTHRITIS-ANKLE
                                       711.25  M....................  BEHCET ARTHRITIS-PELVIS
                                       711.26  M....................  BEHCET ARTHRITIS-L/LEG
                                       711.27  M....................  BEHCET ARTHRITIS-ANKLE
                                       711.35  M....................  DYSENTER ARTHRIT-PELVIS
                                       711.36  M....................  DYSENTER ARTHRIT-L/LEG
                                       711.37  M....................  DYSENTER ARTHRIT-ANKLE
                                       711.45  M....................  BACT ARTHRITIS-PELVIS
                                       711.46  M....................  BACT ARTHRITIS-L/LEG

[[Page 25377]]

 
                                       711.47  M....................  BACT ARTHRITIS-ANKLE
                                       711.55  M....................  VIRAL ARTHRITIS-PELVIS
                                       711.56  M....................  VIRAL ARTHRITIS-L/LEG
                                       711.57  M....................  VIRAL ARTHRITIS-ANKLE
                                       711.65  M....................  MYCOTIC ARTHRITIS-PELVI
                                       711.66  M....................  MYCOTIC ARTHRITIS-L/LEG
                                       711.67  M....................  MYCOTIC ARTHRITIS-ANKLE
                                       711.75  M....................  HELMINTH ARTHRIT-PELVIS
                                       711.76  M....................  HELMINTH ARTHRIT-L/LEG
                                       711.77  M....................  HELMINTH ARTHRIT-ANKLE
                                       711.85  M....................  INF ARTHRITIS NEC-PELVI
                                       711.86  M....................  INF ARTHRITIS NEC-L/LEG
                                       711.87  M....................  INF ARTHRITIS NEC-ANKLE
                                       711.95  .....................  INF ARTHRIT NOS-PELVIS
                                       711.96  .....................  INF ARTHRIT NOS-L/LEG
                                       711.97  .....................  INF ARTHRIT NOS-ANKLE
                                       712.15  M....................  DICALC PHOS CRYST-PELVI
                                       712.16  M....................  DICALC PHOS CRYST-L/LEG
                                       712.17  M....................  DICALC PHOS CRYST-ANKLE
                                       712.25  M....................  PYROPHOSPH CRYST-PELVIS
                                       712.26  M....................  PYROPHOSPH CRYST-L/LEG
                                       712.27  M....................  PYROPHOSPH CRYST-ANKLE
                                       712.35  M....................  CHONDROCALCIN NOS-PELVI
                                       712.36  M....................  CHONDROCALCIN NOS-L/LEG
                                       712.37  M....................  CHONDROCALCIN NOS-ANKLE
                                       712.85  .....................  CRYST ARTHROP NEC-PELVI
                                       712.86  .....................  CRYST ARTHROP NEC-L/LEG
                                       712.87  .....................  CRYST ARTHROP NEC-ANKLE
                                       712.95  .....................  CRYST ARTHROP NOS-PELVI
                                       712.96  .....................  CRYST ARTHROP NOS-L/LEG
                                       712.97  .....................  CRYST ARTHROP NOS-ANKLE
                                       716.05  .....................  KASCHIN-BECK DIS-PELVIS
                                       716.06  .....................  KASCHIN-BECK DIS-L/LEG
                                       716.07  .....................  KASCHIN-BECK DIS-ANKLE
                                       716.15  .....................  TRAUM ARTHROPATHY-PELVIS
                                       716.16  .....................  TRAUM ARTHROPATHY-L/LEG
                                       716.17  .....................  TRAUM ARTHROPATHY-ANKLE
                                       716.25  .....................  ALLERG ARTHRITIS-PELVIS
                                       716.26  .....................  ALLERG ARTHRITIS-L/LEG
                                       716.27  .....................  ALLERG ARTHRITIS-ANKLE
                                       716.35  .....................  CLIMACT ARTHRITIS-PELVIS
                                       716.36  .....................  CLIMACT ARTHRITIS-L/LEG
                                       716.37  .....................  CLIMACT ARTHRITIS-ANKLE
                                       716.45  .....................  TRANS ARTHROPATHY-PELVIS
                                       716.46  .....................  TRANS ARTHROPATHY-L/LEG
                                       716.47  .....................  TRANS ARTHROPATHY-ANKLE
                                       716.55  .....................  POLYARTHRITIS NOS-PELVIS
                                       716.56  .....................  POLYARTHRITIS NOS-L/LEG
                                       716.57  .....................  POLYARTHRITIS NOS-ANKLE
                                       716.67  .....................  MONOARTHRITIS NOS-ANKLE
                                       716.85  .....................  ARTHROPATHY NEC-PELVIS
                                       716.86  .....................  ARTHROPATHY NEC-L/LEG
                                       716.87  .....................  ARTHROPATHY NEC-ANKLE
                                       716.95  .....................  ARTHROPATHY NOS-PELVIS
                                       716.96  .....................  ARTHROPATHY NOS-L/LEG
                                       716.97  .....................  ARTHROPATHY NOS-ANKLE
                                          717  .....................  INTERNAL DERANGEMENT OF KNEE
                                       718.05  .....................  ART CARTIL DISORDER PELVIS AND THIGH
                                       718.06  .....................  ART CARTIL DISORDER LOWER LEG
                                       718.07  .....................  ART CARTIL DIS ANKLE FOOT
                                       718.25  .....................  PATHOLOGIC DISLOCATION PELVIS AND THIGH
                                       718.26  .....................  PATHOLOGIC DISLOCATION LOWER LEG
                                       718.27  .....................  PATHOLOGIC DISLOCATION ANKLE FOOT
                                       718.35  .....................  RECURRENT DISLOCATION PELVIS AND THIGH
                                       718.36  .....................  RECURRENT DISLOCATION LOW LEG
                                       718.37  .....................  RECURRENT DISLOCATION ANKLE FOOT
                                       718.45  .....................  CONTRACTURE PELVIS AND THIGH
                                       718.46  .....................  CONTRACTURE LOWER LEG
                                       718.47  .....................  CONTRACTURE OF JOINT ANKLE FOOT
                                       718.55  .....................  ANKYLOSIS OF PELVIS AND THIGH

[[Page 25378]]

 
                                       718.56  .....................  ANKYLOSIS OF LOWER LEG
                                       718.57  .....................  ANKYLOSIS OF JOINT ANKLE FOOT
                                       718.85  .....................  OTHER DERANGEMENT OF PELVIS AND THIGH
                                       718.86  .....................  OTHER DERANGEMENT OF JOINT OF LOWER LEG
                                       718.87  .....................  OTH DERANGMENT JT NEC ANKLE FOOT
                                       719.15  .....................  HEMARTHROSIS PELVIS AND THIGH
                                       719.16  .....................  HEMARTHROSIS LOWER LEG
                                       719.17  .....................  HEMARTHROSIS ANKLE AND FOOT
                                       719.25  .....................  VILLONODULAR SYNOVITIS PELVIS AND THIGH
                                       719.26  .....................  VILLONODULAR SYNOVITIS LOWER LEG
                                       719.27  .....................  VILLONODULAR SYNOVITIS ANKLE AND FOOT
                                       719.35  .....................  PALANDROMIC RHEUMATISM PELVIS AND THIGH
                                       719.36  .....................  PALANDROMIC RHEUMATISM LOWER LEG
                                       719.37  .....................  PALANDROMIC RHEUMATISM ANKLE AND FOOT
                                       727.65  .....................  RUPTURE OF TENDON QUADRACEPS
                                       727.66  .....................  RUPTURE OF TENDON PATELLAR
                                       727.67  .....................  RUPTURE OF TENDON ACHILLES
                                       727.68  .....................  RUPTURE OTHER TENDONS FOOT AND ANKLE
                                       730.05  .....................  AC OSTEOMYELITIS-PELVIS
                                       730.06  .....................  AC OSTEOMYELITIS-L/LEG
                                       730.07  .....................  AC OSTEOMYELITIS-ANKLE
                                       730.15  .....................  CHR OSTEOMYELIT-PELVIS
                                       730.16  .....................  CHR OSTEOMYELIT-L/LEG
                                       730.17  .....................  CHR OSTEOMYELIT-ANKLE
                                       730.25  .....................  OSTEOMYELITIS NOS-PELVI
                                       730.26  .....................  OSTEOMYELITIS NOS-L/LEG
                                       730.27  .....................  OSTEOMYELITIS NOS-ANKLE
                                       730.35  .....................  PERIOSTITIS-PELVIS
                                       730.36  .....................  PERIOSTITIS-L/LEG
                                       730.37  .....................  PERIOSTITIS-ANKLE
                                       730.75  M....................  POLIO OSTEOPATHY-PELVIS
                                       730.76  M....................  POLIO OSTEOPATHY-L/LEG
                                       730.77  M....................  POLIO OSTEOPATHY-ANKLE
                                       730.85  M....................  BONE INFECT NEC-PELVIS
                                       730.86  M....................  BONE INFECT NEC-L/LEG
                                       730.87  M....................  BONE INFECT NEC-ANKLE
                                       730.95  .....................  BONE INFECT NOS-PELVIS
                                       730.96  .....................  BONE INFECT NOS-L/LEG
                                       730.97  .....................  BONE INFECT NOS-ANKLE
                                       733.14  .....................  PATHOLOGIC FRACTURE OF NECK OF FEMUR
                                       733.15  .....................  PATHOLOGIC FRACTURE OF FEMUR
                                       733.16  .....................  PATHOLOGIC FRACTURE OF TIBIA OR FIBULA
                                       733.42  .....................  ASEPTIC NECROSIS OF HEAD AND NECK OF FEMUR
                                       733.43  .....................  ASEPTIC NECROSIS OF MEDIAL FEMORAL CONDYLE
                                          808  .....................  FRACTURE OF PELVIS
                                          820  .....................  FRACTURE OF NECK OF FEMUR
                                          821  .....................  FRACTURE OTHER&UNSPEC PARTS FEMUR
                                          822  .....................  FRACTURE OF PATELLA
                                          823  .....................  FRACTURE OF TIBIA AND FIBULA
                                          824  .....................  FRACTURE OF ANKLE
                                          825  .....................  FRACTURE 1/MORE TARSAL&MT BNS
                                          827  .....................  OTH MX&ILL-DEFINED FX LOWER LIMB
                                          828  .....................  MX FX LEGS-LEG W/ARM-LEGS W/RIBS
                                          835  .....................  DISLOCATION OF HIP
                                          836  .....................  DISLOCATION OF KNEE
                                          897  .....................  TRAUMATIC AMPUTATION OF LEG
                                          928  .....................  CRUSHING INJURY OF LOWER LIMB
Ortho 2--Other Orthopedic              711.01  .....................  PYOGEN ARTHRITIS-SHLDER
 disorders.
                                       711.02  .....................  PYOGEN ARTHRITIS-UP/ARM
                                       711.03  .....................  PYOGEN ARTHRITIS-FOREAR
                                       711.04  .....................  PYOGEN ARTHRITIS-HAND
                                       711.08  .....................  PYOGEN ARTHRITIS NEC
                                       711.09  .....................  PYOGEN ARTHRITIS-MULT
                                       711.10  M....................  REITER ARTHRITIS-UNSPEC
                                       711.11  M....................  REITER ARTHRITIS-SHLDER
                                       711.12  M....................  REITER ARTHRITIS-UP/ARM
                                       711.13  M....................  REITER ARTHRITIS-FOREAR
                                       711.14  M....................  REITER ARTHRITIS-HAND
                                       711.18  M....................  REITER ARTHRITIS NEC
                                       711.19  M....................  REITER ARTHRITIS-MULT

[[Page 25379]]

 
                                       711.20  M....................  BEHCET ARTHRITIS-UNSPEC
                                       711.21  M....................  BEHCET ARTHRITIS-SHLDER
                                       711.22  M....................  BEHCET ARTHRITIS-UP/ARM
                                       711.23  M....................  BEHCET ARTHRITIS-FOREAR
                                       711.24  M....................  BEHCET ARTHRITIS-HAND
                                       711.28  M....................  BEHCET ARTHRITIS NEC
                                       711.29  M....................  BEHCET ARTHRITIS-MULT
                                       711.30  M....................  DYSENTER ARTHRIT-UNSPEC
                                       711.31  M....................  DYSENTER ARTHRIT-SHLDER
                                       711.32  M....................  DYSENTER ARTHRIT-UP/ARM
                                       711.33  M....................  DYSENTER ARTHRIT-FOREAR
                                       711.34  M....................  DYSENTER ARTHRIT-HAND
                                       711.38  M....................  DYSENTER ARTHRIT NEC
                                       711.39  M....................  DYSENTER ARTHRIT-MULT
                                       711.40  M....................  BACT ARTHRITIS-UNSPEC
                                       711.41  M....................  BACT ARTHRITIS-SHLDER
                                       711.42  M....................  BACT ARTHRITIS-UP/ARM
                                       711.43  M....................  BACT ARTHRITIS-FOREARM
                                       711.44  M....................  BACT ARTHRITIS-HAND
                                       711.48  M....................  BACT ARTHRITIS NEC
                                       711.49  M....................  BACT ARTHRITIS-MULT
                                       711.50  M....................  VIRAL ARTHRITIS-UNSPEC
                                       711.51  M....................  VIRAL ARTHRITIS-SHLDER
                                       711.52  M....................  VIRAL ARTHRITIS-UP/ARM
                                       711.53  M....................  VIRAL ARTHRITIS-FOREARM
                                       711.54  M....................  VIRAL ARTHRITIS-HAND
                                       711.58  M....................  VIRAL ARTHRITIS NEC
                                       711.59  M....................  VIRAL ARTHRITIS-MULT
                                       711.60  M....................  MYCOTIC ARTHRITIS-UNSPE
                                       711.61  M....................  MYCOTIC ARTHRITIS-SHLDE
                                       711.62  M....................  MYCOTIC ARTHRITIS-UP/AR
                                       711.63  M....................  MYCOTIC ARTHRIT-FOREARM
                                       711.64  M....................  MYCOTIC ARTHRITIS-HAND
                                       711.68  M....................  MYCOTIC ARTHRITIS NEC
                                       711.69  M....................  MYCOTIC ARTHRITIS-MULT
                                       711.70  M....................  HELMINTH ARTHRIT-UNSPEC
                                       711.71  M....................  HELMINTH ARTHRIT-SHLDER
                                       711.72  M....................  HELMINTH ARTHRIT-UP/ARM
                                       711.73  M....................  HELMINTH ARTHRIT-FOREAR
                                       711.74  M....................  HELMINTH ARTHRIT-HAND
                                       711.78  M....................  HELMINTH ARTHRIT NEC
                                       711.79  M....................  HELMINTH ARTHRIT-MULT
                                       711.80  M....................  INF ARTHRITIS NEC-UNSPE
                                       711.81  M....................  INF ARTHRITIS NEC-SHLDE
                                       711.82  M....................  INF ARTHRITIS NEC-UP/AR
                                       711.83  M....................  INF ARTHRIT NEC-FOREARM
                                       711.84  M....................  INF ARTHRITIS NEC-HAND
                                       711.88  M....................  INF ARTHRIT NEC-OTH SIT
                                       711.89  M....................  INF ARTHRITIS NEC-MULT
                                       711.90  .....................  INF ARTHRITIS NOS-UNSPE
                                       711.91  .....................  INF ARTHRITIS NOS-SHLDE
                                       711.92  .....................  INF ARTHRITIS NOS-UP/AR
                                       711.93  .....................  INF ARTHRIT NOS-FOREARM
                                       711.94  .....................  INF ARTHRIT NOS-HAND
                                       711.98  .....................  INF ARTHRIT NOS-OTH SIT
                                       711.99  .....................  INF ARTHRITIS NOS-MULT
                                       712.10  M....................  DICALC PHOS CRYST-UNSPE
                                       712.11  M....................  DICALC PHOS CRYST-SHLDE
                                       712.12  M....................  DICALC PHOS CRYST-UP/AR
                                       712.13  M....................  DICALC PHOS CRYS-FOREAR
                                       712.14  M....................  DICALC PHOS CRYST-HAND
                                       712.18  M....................  DICALC PHOS CRY-SITE NE
                                       712.19  M....................  DICALC PHOS CRYST-MULT
                                       712.20  M....................  PYROPHOSPH CRYST-UNSPEC
                                       712.21  M....................  PYROPHOSPH CRYST-SHLDER
                                       712.22  M....................  PYROPHOSPH CRYST-UP/ARM
                                       712.23  M....................  PYROPHOSPH CRYST-FOREAR
                                       712.24  M....................  PYROPHOSPH CRYST-HAND
                                       712.28  M....................  PYROPHOS CRYST-SITE NEC
                                       712.29  M....................  PYROPHOS CRYST-MULT

[[Page 25380]]

 
                                       712.30  M....................  CHONDROCALCIN NOS-UNSPE
                                       712.31  M....................  CHONDROCALCIN NOS-SHLDE
                                       712.32  M....................  CHONDROCALCIN NOS-UP/AR
                                       712.33  M....................  CHONDROCALC NOS-FOREARM
                                       712.34  M....................  CHONDROCALCIN NOS-HAND
                                       712.38  M....................  CHONDROCALC NOS-OTH SIT
                                       712.39  M....................  CHONDROCALCIN NOS-MULT
                                       712.80  .....................  CRYST ARTHROP NEC-UNSPE
                                       712.81  .....................  CRYST ARTHROP NEC-SHLDE
                                       712.82  .....................  CRYST ARTHROP NEC-UP/AR
                                       712.83  .....................  CRYS ARTHROP NEC-FOREAR
                                       712.84  .....................  CRYST ARTHROP NEC-HAND
                                       712.88  .....................  CRY ARTHROP NEC-OTH SIT
                                       712.89  .....................  CRYST ARTHROP NEC-MULT
                                       712.90  .....................  CRYST ARTHROP NOS-UNSPE
                                       712.91  .....................  CRYST ARTHROP NOS-SHLDR
                                       712.92  .....................  CRYST ARTHROP NOS-UP/AR
                                       712.93  .....................  CRYS ARTHROP NOS-FOREAR
                                       712.94  .....................  CRYST ARTHROP NOS-HAND
                                       712.98  .....................  CRY ARTHROP NOS-OTH SIT
                                       712.99  .....................  CRYST ARTHROP NOS-MULT
                                        713.0  M....................  ARTHROP W ENDOCR/MET DI
                                        713.1  M....................  ARTHROP W NONINF GI DIS
                                        713.2  M....................  ARTHROPATH W HEMATOL DI
                                        713.3  M....................  ARTHROPATHY W SKIN DIS
                                        713.4  M....................  ARTHROPATHY W RESP DIS
                                        713.5  M....................  ARTHROPATHY W NERVE DIS
                                        713.6  M....................  ARTHROP W HYPERSEN REAC
                                        713.7  M....................  ARTHROP W SYSTEM DIS NE
                                        713.8  M....................  ARTHROP W OTH DIS NEC
                                          714  .....................  RA&OTH INFLAM POLYARTHROPATHIES
                                       715.15  .....................  OSTEOARTHROSIS, LOCALIZED, PRIMARY, PELVIS
                                                                       AND THIGH
                                       715.16  .....................  OSTEOARTHROSIS, LOCALIZED, PRIMARY, LOWER
                                                                       LEG
                                       715.25  .....................  OSTEOARTHROSIS, LOCALIZED, SECONDARY,
                                                                       PELVIS AND THIGH
                                       715.26  .....................  OSTEOARTHROSIS, LOCALIZED, SECONDARY,
                                                                       LOWER LEG
                                       715.35  .....................  OSTEOARTHROSIS, LOCALIZED, NOT SPEC
                                                                       PRIMARY OR SECONDARY, PELVIS AND THIGH
                                       715.36  .....................  OSTEOARTHROSIS, LOCALIZED, NOT SPEC
                                                                       PRIMARY OR SECONDARY, LOWER LEG
                                       715.95  .....................  OSTEOARTHROSIS, UNSPECIFIED, PELVIS AND
                                                                       THIGH
                                       715.96  .....................  OSTEOARTHROSIS, UNSPECIFIED, LOWER LEG
                                       716.00  .....................  KASCHIN-BECK DIS-UNSPEC
                                       716.01  .....................  KASCHIN-BECK DIS-SHLDER
                                       716.02  .....................  KASCHIN-BECK DIS-UP/ARM
                                       716.03  .....................  KASCHIN-BECK DIS-FOREARM
                                       716.04  .....................  KASCHIN-BECK DIS-HAND
                                       716.08  .....................  KASCHIN-BECK DIS NEC
                                       716.09  .....................  KASCHIN-BECK DIS-MULT
                                       716.10  .....................  TRAUM ARTHROPATHY-UNSPEC
                                       716.11  .....................  TRAUM ARTHROPATHY-SHLDER
                                       716.12  .....................  TRAUM ARTHROPATHY-UP/ARM
                                       716.13  .....................  TRAUM ARTHROPATH-FOREARM
                                       716.14  .....................  TRAUM ARTHROPATHY-HAND
                                       716.18  .....................  TRAUM ARTHROPATHY NEC
                                       716.19  .....................  TRAUM ARTHROPATHY-MULT
                                       716.20  .....................  ALLERG ARTHRITIS-UNSPEC
                                       716.21  .....................  ALLERG ARTHRITIS-SHLDER
                                       716.22  .....................  ALLERG ARTHRITIS-UP/ARM
                                       716.23  .....................  ALLERG ARTHRITIS-FOREARM
                                       716.24  .....................  ALLERG ARTHRITIS-HAND
                                       716.28  .....................  ALLERG ARTHRITIS NEC
                                       716.29  .....................  ALLERG ARTHRITIS-MULT
                                       716.30  .....................  CLIMACT ARTHRITIS-UNSPEC
                                       716.31  .....................  CLIMACT ARTHRITIS-SHLDER
                                       716.32  .....................  CLIMACT ARTHRITIS-UP/ARM
                                       716.33  .....................  CLIMACT ARTHRIT-FOREARM
                                       716.34  .....................  CLIMACT ARTHRITIS-HAND

[[Page 25381]]

 
                                       716.38  .....................  CLIMACT ARTHRITIS NEC
                                       716.39  .....................  CLIMACT ARTHRITIS-MULT
                                       716.40  .....................  TRANS ARTHROPATHY-UNSPEC
                                       716.41  .....................  TRANS ARTHROPATHY-SHLDER
                                       716.42  .....................  TRANS ARTHROPATHY-UP/ARM
                                       716.43  .....................  TRANS ARTHROPATH-FOREARM
                                       716.44  .....................  TRANS ARTHROPATHY-HAND
                                       716.48  .....................  TRANS ARTHROPATHY NEC
                                       716.49  .....................  TRANS ARTHROPATHY-MULT
                                       716.50  .....................  POLYARTHRITIS NOS-UNSPEC
                                       716.51  .....................  POLYARTHRITIS NOS-SHLDER
                                       716.52  .....................  POLYARTHRITIS NOS-UP/ARM
                                       716.53  .....................  POLYARTHRIT NOS-FOREARM
                                       716.54  .....................  POLYARTHRITIS NOS-HAND
                                       716.58  .....................  POLYARTHRIT NOS-OTH SITE
                                       716.59  .....................  POLYARTHRITIS NOS-MULT
                                       716.60  .....................  MONOARTHRITIS NOS-UNSPEC
                                       716.61  .....................  MONOARTHRITIS NOS-SHLDER
                                       716.62  .....................  MONOARTHRITIS NOS-UP/ARM
                                       716.63  .....................  MONOARTHRIT NOS-FOREARM
                                       716.64  .....................  MONOARTHRITIS NOS-HAND
                                       716.65  .....................  UNSPECIFIED MONOARTHRITIS, PELVIS AND
                                                                       THIGH
                                       716.66  .....................  UNSPECIFIED MONOARTHRITIS, LOWER LEG
                                       716.68  .....................  MONOARTHRIT NOS-OTH SITE
                                       716.80  .....................  ARTHROPATHY NEC-UNSPEC
                                       716.81  .....................  ARTHROPATHY NEC-SHLDER
                                       716.82  .....................  ARTHROPATHY NEC-UP/ARM
                                       716.83  .....................  ARTHROPATHY NEC-FOREARM
                                       716.84  .....................  ARTHROPATHY NEC-HAND
                                       716.88  .....................  ARTHROPATHY NEC-OTH SITE
                                       716.89  .....................  ARTHROPATHY NEC-MULT
                                       716.90  .....................  ARTHROPATHY NOS-UNSPEC
                                       716.91  .....................  ARTHROPATHY NOS-SHLDER
                                       716.92  .....................  ARTHROPATHY NOS-UP/ARM
                                       716.93  .....................  ARTHROPATHY NOS-FOREARM
                                       716.94  .....................  ARTHROPATHY NOS-HAND
                                       716.98  .....................  ARTHROPATHY NOS-OTH SITE
                                       716.99  .....................  ARTHROPATHY NOS-MULT
                                       718.01  .....................  ART CARTIL DISORDER SHOULDER
                                       718.02  .....................  ART CARTIL DIS UPPER ARM
                                       718.03  .....................  ART CARTIL DIS FOREARM
                                       718.04  .....................  ART CARTIL DIS HAND
                                       718.08  .....................  ART CART DIS OTH SITES
                                       718.09  .....................  ART CART DIS MULT
                                        718.1  .....................  LOOSE BODY IN JT
                                       718.20  .....................  PATHOLOGIC DISLOCATION UNSPEC SITE
                                       718.21  .....................  PATHOLOGIC DISLOCATION SHOULDER
                                       718.22  .....................  PATHOLOGIC DISLOCATION UPPER ARM
                                       718.23  .....................  PATHOLOGIC DISLOCATION FOREARM
                                       718.24  .....................  PATHOLOGIC DISLOCATION HAND
                                       718.28  .....................  PATHOLOGIC DISLOCATION OTH LOC
                                       718.29  .....................  PATHOLOGIC DISLOCATION MULT LOC
                                       718.30  .....................  RECURRENT DISLOCATION UNSPEC SITE
                                       718.31  .....................  RECURRENT DISLOCATION SHOULDER
                                       718.32  .....................  RECURRENT DISLOCATION UPPER ARM
                                       718.33  .....................  RECURRENT DISLOCATION FOREARM
                                       718.34  .....................  RECURRENT DISLOCATION HAND
                                       718.38  .....................  RECURRENT DISLOCATION OTH LOC
                                       718.39  .....................  RECURRENT DISLOCATION MULT LOC
                                       718.40  .....................  CONTRACTURE OF JOINT UNSPEC SITE
                                       718.41  .....................  CONTRACTURE SHOULDER
                                       718.42  .....................  CONTRACTURE OF JOINT UPPER ARM
                                       718.43  .....................  CONTRACTURE OF JOINT FOREARM
                                       718.44  .....................  CONTRACTURE OF JOINT HAND
                                       718.48  .....................  CONTRACTURE OF JOINT OTH LOC
                                       718.49  .....................  CONTRACTURE OF JOINT MULT LOC
                                       718.50  .....................  ANKYLOSIS OF JOINT UNSPEC SITE
                                       718.51  .....................  ANKYLOSIS OF SHOULDER
                                       718.52  .....................  ANKYLOSIS OF JOINT UPPER ARM
                                       718.53  .....................  ANKYLOSIS OF JOINT FOREARM

[[Page 25382]]

 
                                       718.54  .....................  ANKYLOSIS OF JOINT HAND
                                       718.58  .....................  ANKYLOSIS OF JOINT OTH LOC
                                       718.59  .....................  ANKYLOSIS OF JOINT MULT LOC
                                       718.60  .....................  UNSPED 'INTRAPELVIC PROTRUSION ACETAB
                                        718.7  .....................  DEV DISLOC JOINT
                                       718.80  .....................  OTH DERANGMENT JT NEC UNSPEC SITE
                                       718.81  .....................  OTHER DERANGEMENT OF SHOULDER
                                       718.82  .....................  OTH DERANGMENT JT NEC UPPER ARM
                                       718.83  .....................  OTH DERANGMENT JT NEC FOREARM
                                       718.84  .....................  OTH DERANGMENT JT NEC HAND
                                       718.88  .....................  OTH DERANGMENT JT NEC OTH LOC
                                       718.89  .....................  OTH DERANGMENT JT NEC MULT LOC
                                        718.9  .....................  UNSPEC DERANGMENT JT
                                        719.1  .....................  HEMARTHROSIS UNSPECIFIED SITE
                                       719.11  .....................  HEMARTHROSIS SHOULDER
                                       719.12  .....................  HEMARTHROSIS UPPER ARM
                                       719.13  .....................  HEMARTHROSIS FOREARM
                                       719.14  .....................  HEMARTHROSIS HAND
                                       719.18  .....................  HEMARTHROSIS OTHER SPECIFIED
                                       719.19  .....................  HEMARTHROSIS MULTIPLE SITES
                                        719.2  .....................  VILLONODULAR SYNOVITIS UNSPECIFIED SITE
                                       719.21  .....................  VILLONODULAR SYNOVITIS SHOULDER
                                       719.22  .....................  VILLONODULAR SYNOVITIS UPPER ARM
                                       719.23  .....................  VILLONODULAR SYNOVITIS FOREARM
                                       719.24  .....................  VILLONODULAR SYNOVITIS HAND
                                       719.28  .....................  VILLONODULAR SYNOVITIS OTHER SITES
                                       719.29  .....................  VILLONODULAR SYNOVITIS MULTIPLE SITES
                                        719.3  .....................  PALANDROMIC RHEUMATISM UNSPECIFIED SITE
                                       719.31  .....................  PALANDROMIC RHEUMATISM SHOULDER
                                       719.32  .....................  PALANDROMIC RHEUMATISM UPPER ARM
                                       719.33  .....................  PALANDROMIC RHEUMATISM FOREARM
                                       719.34  .....................  PALANDROMIC RHEUMATISM HAND
                                       719.38  .....................  PALANDROMIC RHEUMATISM OTHER SITES
                                       719.39  .....................  PALANDROMIC RHEUMATISM MULTIPLE SITES
                                        720.0  .....................  ANKYLOSING SPONDYLITIS
                                        720.1  .....................  SPINAL ENTHESOPATHY
                                        720.2  .....................  SACROILIITIS NEC
                                        720.8  M....................  OTHER INFLAMMATORY SPONDYLOPATHIES
                                       720.81  M....................  SPONDYLOPATHY IN OTH DI
                                       720.89  .....................  OTHER INFLAMMATORY SPONDYLOPATHIES
                                        720.9  .....................  UNSPEC INFLAMMATORY SPONDYLOPATHY
                                          721  .....................  SPONDYLOSIS AND ALLIED DISORDERS
                                        722.0  .....................  DISPLACEMENT OF CERVICAL INTERVERTEBRAL
                                                                       DISC WITHOUT MYELOPATHY
                                        722.1  .....................  DISPLACEMENT OF THORACIC OR LUMBAR
                                                                       INTERVERTEBRAL DISC WITHOUT MYELOPATHY
                                        722.2  .....................  DISPLACEMENT OF INTERVERTEBRAL DISC, SITE
                                                                       UNSPECIFIED, WITHOUT MYELOPATHY
                                        722.4  .....................  DEGENERATION OF CERVICAL INTERVERTEBRAL
                                                                       DISC
                                        722.5  .....................  DEGENERATION OF THORACIC OR LUMBAR
                                                                       INTERVERTEBRAL DISC
                                        722.6  .....................  DEGENERATION OF INTERVERTEBRAL DISC, SITE
                                                                       UNSPECIFIED
                                        722.7  .....................  INTERVERTEBRAL DISC DISORDER WITH
                                                                       MYELOPATHY
                                        722.8  .....................  POSTLAMINECTOMY SYNDROME
                                        722.9  .....................  OTHER AND UNSPECIFIED DISC DISORDER
                                        723.0  .....................  SPINAL STENOSIS OF CERVICAL REGION
                                        723.1  .....................  CERVICALGIA
                                        723.2  .....................  CERVICOCRANIAL SYNDROME
                                        723.3  .....................  CERVICOBRACHIAL SYNDROME
                                        723.4  .....................  BRACHIA NEURITIS OR RADICULITIS
                                        723.5  .....................  TORTICOLLIS, UNSPECIFIED
                                        723.6  .....................  PANNICULITIS SPECIFIED AS AFFECTING NECK
                                        723.7  .....................  OSSIFICATION OF POSTERIOR LONGITUDINAL
                                                                       LIGAMENT IN CERVICAL REGION
                                        723.8  .....................  OTHER SYNDROMES AFFECTING CERVICAL REGION
                                        723.9  .....................  UNSPEC MUSCULOSKEL SX OF NECK
                                          724  .....................  OTHER&UNSPECIFIED DISORDERS OF BACK
                                          725  .....................  POLYMYALGIA RHEUMATICA
                                        726.0  .....................  ADHESIVE CAPSULITIS

[[Page 25383]]

 
                                       726.10  .....................  DISORDERS OF BURSAE AND TENDONS
                                       726.11  .....................  CALCIFYING TENDINITIS
                                       726.12  .....................  BICIPITAL TENOSYNOVITIS
                                       726.19  .....................  ROTATOR CUFF SYNDROME OTHER
                                       727.61  .....................  COMPLETE RUPTURE OF ROTATOR CUFF
                                        728.0  .....................  INFECTIVE MYOSITIS
                                       728.10  .....................  CALCIFICATION AND OSSIFICATION,
                                                                       UNSPECIFIED
                                       728.11  .....................  PROGRESSIVE MYOSITIS OSSIFICANS
                                       728.12  .....................  TRAUMATIC MYOSITIS OSSIFICATIONS
                                       728.13  .....................  POST OP HETEROTOPIC CALCIFICATION
                                       728.19  .....................  OTHER MUSCULAR CALCIFICATION AND
                                                                       OSSIFICATION
                                        728.2  .....................  MUSCULAR WASTING AND DISUSE ATROPHY
                                        728.3  .....................  OTHER SPECIFIC MUSCLE DISORDERS
                                        728.4  .....................  LAXITY OF LIGAMENT
                                        728.5  .....................  HYPERMOBILITY SYNDROME
                                        728.6  .....................  CONTRACTURE OF PALMAR FASCIA
                                       730.00  .....................  AC OSTEOMYELITIS-UNSPEC
                                       730.01  .....................  AC OSTEOMYELITIS-SHLDER
                                       730.02  .....................  AC OSTEOMYELITIS-UP/ARM
                                       730.03  .....................  AC OSTEOMYELITIS-FOREAR
                                       730.04  .....................  AC OSTEOMYELITIS-HAND
                                       730.08  .....................  AC OSTEOMYELITIS NEC
                                       730.09  .....................  AC OSTEOMYELITIS-MULT
                                       730.10  .....................  CHR OSTEOMYELITIS-UNSP
                                       730.11  .....................  CHR OSTEOMYELIT-SHLDER
                                       730.12  .....................  CHR OSTEOMYELIT-UP/ARM
                                       730.13  .....................  CHR OSTEOMYELIT-FOREARM
                                       730.14  .....................  CHR OSTEOMYELIT-HAND
                                       730.18  .....................  CHR OSTEOMYELIT NEC
                                       730.19  .....................  CHR OSTEOMYELIT-MULT
                                       730.20  .....................  OSTEOMYELITIS NOS-UNSPE
                                       730.21  .....................  OSTEOMYELITIS NOS-SHLDE
                                       730.22  .....................  OSTEOMYELITIS NOS-UP/AR
                                       730.23  .....................  OSTEOMYELIT NOS-FOREARM
                                       730.24  .....................  OSTEOMYELITIS NOS-HAND
                                       730.28  .....................  OSTEOMYELIT NOS-OTH SIT
                                       730.29  .....................  OSTEOMYELITIS NOS-MULT
                                       730.30  .....................  PERIOSTITIS-UNSPEC
                                       730.31  .....................  PERIOSTITIS-SHLDER
                                       730.32  .....................  PERIOSTITIS-UP/ARM
                                       730.33  .....................  PERIOSTITIS-FOREARM
                                       730.34  .....................  PERIOSTITIS-HAND
                                       730.38  .....................  PERIOSTITIS NEC
                                       730.39  .....................  PERIOSTITIS-MULT
                                       730.70  M....................  POLIO OSTEOPATHY-UNSPEC
                                       730.71  M....................  POLIO OSTEOPATHY-SHLDER
                                       730.72  M....................  POLIO OSTEOPATHY-UP/ARM
                                       730.73  M....................  POLIO OSTEOPATHY-FOREAR
                                       730.74  M....................  POLIO OSTEOPATHY-HAND
                                       730.78  M....................  POLIO OSTEOPATHY NEC
                                       730.79  M....................  POLIO OSTEOPATHY-MULT
                                       730.80  M....................  BONE INFECT NEC-UNSPEC
                                       730.81  M....................  BONE INFECT NEC-SHLDER
                                       730.82  M....................  BONE INFECT NEC-UP/ARM
                                       730.83  M....................  BONE INFECT NEC-FOREARM
                                       730.84  M....................  BONE INFECT NEC-HAND
                                       730.88  M....................  BONE INFECT NEC-OTH SIT
                                       730.89  M....................  BONE INFECT NEC-MULT
                                       730.90  .....................  BONE INFEC NOS-UNSP SIT
                                       730.91  .....................  BONE INFECT NOS-SHLDER
                                       730.92  .....................  BONE INFECT NOS-UP/ARM
                                       730.93  .....................  BONE INFECT NOS-FOREARM
                                       730.94  .....................  BONE INFECT NOS-HAND
                                       730.98  .....................  BONE INFECT NOS-OTH SIT
                                       730.99  .....................  BONE INFECT NOS-MULT
                                        731.0  .....................  OSTEITIS DEFORMANS W/O BN TUMR
                                        731.1  M....................  OSTEITIS DEFORMANS DZ CLASS ELSW
                                        731.2  .....................  HYPERTROPH PULM OSTEOARTHROPATHY
                                        731.8  M....................  OTH BONE INVOLVEMENT DZ CLASS EL
                                          732  .....................  OSTEOCHONDROPATHIES

[[Page 25384]]

 
                                       733.10  .....................  PATHOLOGIC FRACTURE UNSPEC
                                       733.11  .....................  PATHOLOGIC FRACTURE HUMERUS
                                       733.12  .....................  PATHOLOGIC FRACTURE DISTAL RADIUS ULNA
                                       733.13  .....................  PATHOLOGIC FRACTURE OF VERTEBRAE
                                       733.19  .....................  PATHOLOGIC FRACTURE OTH SPEC SITE
                                          800  .....................  FRACTURE OF VAULT OF SKULL
                                          801  .....................  FRACTURE OF BASE OF SKULL
                                          802  .....................  FRACTURE OF FACE BONES
                                          803  .....................  OTHER&UNQUALIFIED SKULL FRACTURES
                                          804  .....................  MX FX INVLV SKULL/FACE W/OTH BNS
                                          805  .....................  FX VERT COLUMN W/O SP CRD INJR
                                          807  .....................  FRACTURE RIB STERNUM LARYNX&TRACHEA
                                          809  .....................  ILL-DEFINED FRACTURES BONES TRUNK
                                          810  .....................  FRACTURE OF CLAVICLE
                                          811  .....................  FRACTURE OF SCAPULA
                                          812  .....................  FRACTURE OF HUMERUS
                                          813  .....................  FRACTURE OF RADIUS AND ULNA
                                          814  .....................  FRACTURE OF CARPAL BONE
                                          815  .....................  FRACTURE OF METACARPAL BONE
                                          816  .....................  FRACTURE ONE OR MORE PHALANGES HAND
                                          817  .....................  MULTIPLE FRACTURES OF HAND BONES
                                          818  .....................  ILL-DEFINED FRACTURES OF UPPER LIMB
                                          819  .....................  MX FX UP LIMBS&LIMBS W/RIB&STERNUM
                                          831  .....................  DISLOCATION OF SHOULDER
                                          832  .....................  DISLOCATION OF ELBOW
                                          833  .....................  DISLOCATION OF WRIST
                                          837  .....................  DISLOCATION OF ANKLE
                                          838  .....................  DISLOCATION OF FOOT
                                          846  .....................  SPRAINS&STRAINS SACROILIAC REGION
                                          847  .....................  SPRAINS&STRAINS OTH&UNS PART BACK
Psych 1--Affective and other              295  .....................  SCHIZOPHRENIA
 psychoses, depression.
                                          296  .....................  AFFECTIVE PSYCHOSES
                                          297  .....................  DELUSIONAL DIS
                                          298  .....................  OTH PSYCHOSES
                                          311  .....................  DEPRESSIVE DISORDER NEC
Psych 2--Degenerative and other         331.0  .....................  ALZHEIMER'S DISEASE
 organic psychiatric disorders.
                                       331.11  .....................  PICK'S DISEASE
                                       331.19  .....................  OTH FRONTO-TEMPORAL DEMENTIA
                                        331.2  .....................  SENILE DEGENERAT BRAIN
                                        331.3  .....................  COMMUNICAT HYDROCEPHALUS
                                        331.4  .....................  OBSTRUCTIV HYDROCEPHALUS
                                        331.7  M....................  CEREB DEGEN IN OTH DIS
                                       331.81  .....................  REYE'S SYNDROME
                                       331.82  .....................  DEMENTIA WITH LEWY BODIES
                                       331.89  .....................  CEREB DEGENERATION NEC
                                        331.9  .....................  CEREB DEGENERATION NOS
                                        290.0  M....................  SENILE DEMENTIA, UNCOMPLICATED
                                       290.10  M....................  PRESENILE DEMENTIA UNCOMP
                                       290.11  M....................  PRESENILE DEMENTIA WITH DELIRIUM
                                       290.12  M....................  PRESENILE DEMENTIA WITH DELUSIONAL
                                                                       FEATURES
                                       290.13  M....................  PRESENILE DEMENTIA WITH DEPRESSIVE
                                                                       FEATURES
                                       290.20  M....................  SENILE DEMENTIA WITH DELUSIONAL FEATURES
                                       290.21  M....................  SENILE DEMENTIA WITH DEPRESSIVE FEATURES
                                        290.3  M....................  SENILE DEMENTIA WITH DELIRIUM
                                       290.40  M....................  VASCULAR DEMENTIA, UNCOMPLICATED
                                       290.41  M....................  VASCULAR DEMENTIA, WITH DELIRIUM
                                       290.42  M....................  VASCULAR DEMENTIA, WITH DELUSIONS
                                       290.43  M....................  VASCULAR DEMENTIA, WITH DEPRESSED MOOD
                                        291.1  .....................  ALCOHOL PSYCHOSIS
                                        291.2  .....................  ALCOHOL DEMENTIA
                                        292.8  .....................  DRUG PSYCHOSES
                                        294.0  M....................  AMNESTIC DISORD OTH DIS
                                        294.1  M....................  DEMENTIA
                                        294.8  .....................  MENTAL DISOR NEC OTH DIS
                                        294.9  .....................  MENTAL DISOR NOS OTH DIS
Pulmonary disorders..............         491  .....................  CHRONIC BRONCHIT
                                          492  .....................  EMPHYSEMA
                                        493.2  .....................  ASTHMA

[[Page 25385]]

 
                                          496  .....................  CHRONIC AIRWAY OBSTRUCTION NEC
Skin 1--Traumatic wounds, burns           870  .....................  OPEN WOUND OF OCULAR ADNEXA
 and post-operative complications.
                                          872  .....................  OPEN WOUND OF EAR
                                          873  .....................  OTHER OPEN WOUND OF HEAD
                                          874  .....................  OPEN WOUND OF NECK
                                          875  .....................  OPEN WOUND OF CHEST
                                          876  .....................  OPEN WOUND OF BACK
                                          877  .....................  OPEN WOUND OF BUTTOCK
                                          878  .....................  OPEN WND GNT ORGN INCL TRAUMAT AMP
                                          879  .....................  OPEN WOUND OTH&UNSPEC SITE NO LIMBS
                                          880  .....................  OPEN WOUND OF SHOULDER&UPPER ARM
                                          881  .....................  OPEN WOUND OF ELBOW FOREARM&WRIST
                                          882  .....................  OPEN WOUND HAND EXCEPT FINGER ALONE
                                          883  .....................  OPEN WOUND OF FINGER
                                          884  .....................  MX&UNSPEC OPEN WOUND UPPER LIMB
                                          885  .....................  TRAUMATIC AMPUTATION OF THUMB
                                          886  .....................  TRAUMATIC AMPUTATION OTHER FINGER
                                          887  .....................  TRAUMATIC AMPUTATION OF ARM&HAND
                                          890  .....................  OPEN WOUND OF HIP AND THIGH
                                          891  .....................  OPEN WOUND OF KNEE, LEG , AND ANKLE
                                          892  .....................  OPEN WOUND OF FOOT EXCEPT TOE ALONE
                                          893  .....................  OPEN WOUND OF TOE
                                          894  .....................  MX&UNSPEC OPEN WOUND LOWER LIMB
                                          895  .....................  TRAUMATIC AMPUTATION OF TOE
                                          896  .....................  TRAUMATIC AMPUTATION OF FOOT
                                          941  .....................  BURN OF FACE, HEAD, AND NECK
                                          942  .....................  BURN OF TRUNK
                                          943  .....................  BURN UPPER LIMB EXCEPT WRIST&HAND
                                          944  .....................  BURN OF WRIST AND HAND
                                          945  .....................  BURN OF LOWER LIMB
                                          946  .....................  BURNS OF MULTIPLE SPECIFIED SITES
                                          948  .....................  BURN CLASS ACCORD-BODY SURF INVOLVD
                                          949  .....................  BURN, UNSPECIFIED SITE
                                          927  .....................  CRUSHING INJURY OF UPPER LIMB
                                          951  .....................  INJURY TO OTHER CRANIAL NERVE
                                        955.0  .....................  INJURY TO AXILLARY NERVE
                                        955.1  .....................  INJURY TO MEDIAN NERVE
                                        955.2  .....................  INJURY TO ULNAR NERVE
                                        955.3  .....................  INJURY TO RADIAL NERVE
                                        955.4  .....................  INJURY TO MUSCULOCUTANEOUS NERVE
                                        955.5  .....................  INJURY TO CUTANEOUS SENSORY NERVE, UPPER
                                                                       LIMB
                                        955.6  .....................  INJURY TO DIGITAL NERVE
                                        955.7  .....................  INJURY TO OTHER SPECIFIED NERVE(S)
                                                                       SHOULDER GIRDLE AND UPPER LIMB
                                        955.9  .....................  INJURY TO UNSPEC NERVE(S) SHOULDER GIRDLE
                                                                       AND UPPER LIMB
                                        956.2  .....................  INJURY TO POSTERIOR TIBIAL NERVE
                                        956.3  .....................  INJURY TO PERONEAL NERVE
                                        956.4  .....................  INJURY TO CUTANEOUS SENSORY NERVE, LOWER
                                                                       LIMB
                                        956.5  .....................  INJURY TO OTHER SPECIFIED NERVE(S) OF
                                                                       PELVIC GIRDLE AND LOWER LIMB
                                        956.9  .....................  INJURY TO UNSPECIFIED NERVE OF PELVIC
                                                                       GIRDLE AND LOWER LIMB
                                        998.1  .....................  HEMORR/HEMAT/SEROMA COMP PROC NEC
                                        998.2  .....................  ACC PUNCT/LACRATION DURING PROC NEC
                                        998.3  .....................  DISRUPTION OF OPERATION WOUND NEC
                                        998.4  .....................  FB ACC LEFT DURING PROC NEC
                                        998.5  .....................  POSTOPERATIVE INFECTION NEC
                                        998.6  .....................  PERSISTENT POSTOPERATIVE FIST NEC
                                       998.83  .....................  NON-HEALING SURGICAL WOUND NEC
Skin 2--Ulcers and other skin          440.23  .....................  ATHEROSCLER-ART EXTREM W/ULCERATION
 conditions.
                                        707.1  .....................  ULCER LOWER LIMBS EXCEPT DECUBITUS
                                        707.8  .....................  CHRONIC ULCER OTHER SPECIFIED SITE
                                        707.9  .....................  CHRONIC ULCER OF UNSPECIFIED SITE
                                          681  .....................  CELLULITIS&ABSCESS OF FINGER&TOE
                                          683  .....................  ACUTE LYMPHADENITIS
                                          684  .....................  IMPETIGO
                                          685  .....................  PILONIDAL CYST
                                          686  .....................  OTH LOCAL INF SKIN&SUBCUT TISSUE

[[Page 25386]]

 
                                       440.24  .....................  ATHERSCLER-ART EXTREM W/GANGRENE
                                        785.4  M....................  GANGRENE
                                          565  .....................  ANAL FISSURE AND FISTULA
                                          566  .....................  ABSCESS OF ANAL AND RECTAL REGIONS
                                          682  .....................  OTHER CELLULITIS AND ABSCESS
                                          680  .....................  CARBUNCLE AND FURUNCLE
----------------------------------------------------------------------------------------------------------------
*We are aware that some of these codes or code categories involve manifestation codes. The ICD-9-CM Official
  Guidelines for Coding and Reporting requires that the underlying disease or condition code be sequenced first
  followed by the manifestation code. The underlying disease codes associated with the manifestation codes are
  not listed in Table 2b, and these underlying codes were not specified in the analysis process. However, when
  reporting certain conditions that have both an underlying etiology and body system manifestations due to the
  underlying etiology, the appropriate sequencing must be followed according to the ICD-9-CM Coding Guidelines.
  Equally important, the reported etiology must be valid for the manifestation specified.
**Note: ``ICD-9-CM Official Guidelines for Coding and Reporting'' dictate that a three-digit code is to be used
  only if it is not further subdivided. Where fourth-digit subcategories and/or fifth-digit subclassifications
  are provided, they must be assigned. A code is invalid if it has not been coded to the full number of digits
  required for that code. Codes with three digits are included in ICD-9-CM as the heading of a category of codes
  that may be further subdivided by the use of fourth and/or fifth digits, which provide greater detail. The
  category codes listed in Table 2b include all the related 4- and 5-digit codes.

d. Determining the Case-Mix Weights
    In the case-mix model adopted in July 2000, we examined the sum of 
scores for the clinical dimension of the system, and the sum of scores 
for the functional dimension, and determined ranges of scores to assign 
a severity level. For example, in the original case-mix model adopted 
in July 2000, severity levels ranged from minimum to high for the 
clinical dimension. Severity levels were used to derive regression 
coefficients for calculating case-mix relative weights. The calculated 
coefficients from this regression, which we call the payment 
regression, were displayed in the July 3, 2000 Federal Register (65 FR 
41201) (``Regression Coefficients for Calculating Case-Mix Relative 
Weights'').
    Now using the proposed four-equation case-mix model, we again 
derived severity levels for the clinical, functional, and services 
utilization dimensions. We classified activities of daily living 
variables as functional variables, diagnostic, interaction, and other 
OASIS variables as clinical variables, and therapy-related variables 
(threshold variables and visit count variables) as services utilization 
variables. For each episode in the sample, we summed the variables' 
scores by dimension. Then, we examined the range of summed scores 
within each equation and threshold group of the sample, in order to 
determine severity level intervals. We determined how many severity 
levels to define for each of the equation/threshold groups based on the 
relative number of episodes in a potential severity level, and on the 
clustering of summed scores. In addition, for the services utilization 
dimension, which is based only on therapy visit utilization, we defined 
severity intervals based on relatively small aggregates (ones, twos, 
and threes) of therapy visits above the six-visit threshold up to 13 
visits (equations 1 and 3) and above the 14-visit therapy threshold, up 
to 19 therapy visits (equations 2 and 4). Our goal was to ensure 
payment graduation due to added numbers of therapy visits between 
thresholds, without creating too many severity levels.
BILLING CODE 4120-01-P

[[Page 25387]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.006

BILLING CODE 4120-01-C
    We derived the relative payment weights for the proposed four-
equation model using the same kind of payment regression we employed in 
July 2000. The sample episodes were classified into severity levels as 
just described. We defined indicator variables for the payment 
regression based on these severity classifications. The major 
difference between the July 2000 payment regression and the one in this

[[Page 25388]]

proposal is that additional indicator variables were defined to 
identify the episodes classified into each equation of the four-
equation model, as well as certain thresholds and therapy visit 
intervals. Including the indicator variables allows us to combine 
information derived from the four-equation model into a single payment 
regression equation. For example, an indicator variable was created for 
the group of later episodes below 14 therapy visits and, within this 
group, indicator variables were created for the six-visit therapy 
threshold and successive therapy-visit aggregates. See the table of 
regression coefficients (Table 4) for the remaining indicator 
variables; the indicator variables for the underlying four equations 
are denoted by the terms ``constant'' and ``intercept.'' An additional 
indicator variable denoted by a constant was used for all episodes with 
at least 20 therapy visits; it is explained further below.
    As with the original HH PSS rule, regression coefficients in Table 
4 represent the average addition to resource cost due to each severity 
level. (To show the coefficients in actual, as opposed to resource 
cost, dollars, the coefficients were scaled by a multiplier 
representing the ratio of the HH PPS average payment level to the Abt 
Associates average resource cost level.) However, the severity level 
coefficients in Table 4 are specific to the classification of the 
episode in the four-equation model; for example, only for early 
episodes below 14 therapy visits are the severity level coefficients 
$861.74 for the third clinical severity level, and $219.44 for the 
second functional severity level.
    The lowest-severity case-mix group is the base group for the 
payment regression, whose predicted cost is the regression intercept 
value of $1,265.18. This group consists of the lowest clinical, 
functional, and services utilization severity levels for episodes 
classified as early episodes below the 14-visit therapy threshold 
(Equation 1 of the four-equation model). The service severity level for 
this group is severity level 1 (S1), which comprises episodes of 0 to 5 
therapy visits.
    To use the results of the payment regression for determining 
payments, find the severity level coefficients for the applicable 
equation and add those amounts to the regression intercept and to the 
constant for the applicable equation. There is no constant for the 
first equation/group, the early episodes below the 14-visit therapy 
threshold; for this group, the constant is the regression intercept. 
For example, later episodes below the 14-visit therapy threshold with 
clinical severity level 2, functional severity level 1, and service 
severity level 2 have the following scaled coefficients summed to 
represent the resource cost: $1,265.18 for the regression intercept; 
$139.26 for the second clinical severity level; $645.90 for the second 
service severity level (6 therapy visits); and $210.94, a constant 
amount for all later episodes below 14 therapy visits. The constant 
incorporates the predicted average resource cost for the lowest 
functional severity group. The predicted average resource cost, 
$2,261.28, is the sum of these four coefficients from the regression. 
Table 5 shows the results of the computational procedure for all 
combinations of severity levels within each equation/threshold group.

   Table 4.--Regression Coefficients for Calculating Case-Mix Relative
                                 Weights
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Intercept (constant for all case mix groups)...............    $1,265.18
------------------------------------------------------------------------
                      1st and 2nd Episodes, 0 to 13
                             Therapy Visits
------------------------------------------------------------------------
C2.........................................................       380.66
C3.........................................................       861.74
F2.........................................................       219.44
F3.........................................................       379.06
S2 (6 therapy visits)......................................       499.96
S3 (7-9 therapy visits)....................................       935.02
S4 (10 therapy visits).....................................     1,375.38
S5 (11-13 therapy visits)..................................     1,755.92
------------------------------------------------------------------------
                     1st and 2nd Episodes, 14 to 19
------------------------------------------------------------------------
                             Therapy Visits
------------------------------------------------------------------------
Constant...................................................     2,171.56
C2.........................................................       534.70
C3.........................................................     1,246.47
F2.........................................................       268.36
F3.........................................................       425.68
S2 (16-17 therapy visits)..................................       425.49
S3 (18-19 therapy visits)..................................       698.92
------------------------------------------------------------------------
                  3rd+ Episodes, 0 to 13 Therapy Visits
------------------------------------------------------------------------
Constant...................................................       210.94
C2.........................................................       139.26
C3.........................................................       613.76
F2.........................................................       414.74
F3.........................................................       818.25
S2 (6 therapy visits)......................................       645.90
S3 (7-9 therapy visits)....................................     1,083.30
S4 (10 therapy visits).....................................     1,507.60
S5 (11-13 therapy visits)..................................     1,890.78
------------------------------------------------------------------------
                 3rd+ Episodes, 14 to 19 Therapy Visits
------------------------------------------------------------------------
Constant...................................................     2,178.93
C2.........................................................       672.65
C3.........................................................     1,392.59
F2.........................................................       390.72
F3.........................................................       687.07
S2 (16-17 therapy visits)..................................       292.06
S3 (18-19 therapy visits)..................................       712.62
------------------------------------------------------------------------
                    All Episodes, 20+ Therapy Visits
------------------------------------------------------------------------
Constant...................................................     3,996.82
C2.........................................................       578.49
C3.........................................................     1,383.67
F2.........................................................       485.73
F3.........................................................    1,043.13
------------------------------------------------------------------------
Note: Regression coefficients were scaled by multiplier representing the
  ratio of the HH PS average payment level to the Abt Associates average
  resource cost level.

    The payment regression in Table 4 reflects a decision to group 
together early and later episodes for purposes of deriving the payment 
regression coefficients for episodes at or above the 20-visit therapy 
threshold. This has the advantage of producing a lower number of case-
mix groups than we would have had without grouping. Earlier analysis 
had revealed that the coefficients, predicted average resource cost, 
and relative weights of the case-mix groups for episodes of 20 or more 
therapy visits in Equations 2 (early episodes) and 4 (later episodes) 
had very similar values. Specifically, of the 9 case groups defined for 
these noted episodes in each equation (a total of 18 groups), the 
relative weights did not differ by more than 3.5 percent for 7 pairs of 
groups; in the remaining two pairs of groups, the difference was 
slightly more than 7 percent. Because of the virtually identical 
values, we specified our payment regression procedure to produce a 
single set of case-mix groups for all episodes in the 20-visit 
threshold group, with the result that the relative case-mix weights do 
not differ according to whether the episode is early or later. This 
final step produced a total of 153 case-mix groups.
    The predicted average resource cost for each case-mix group is 
shown in Table 5. As with the coefficients in Table 4, these values are 
scaled up from the resource cost values used to model the case-mix, 
using a single multiplier. The multiplier allows us to report the 
coefficients and the predicted average resource cost using dollars of 
the same magnitude as the payments we would make. It does not change 
the relationships among the predicted average resource costs, which are 
the values that determine the relative case mix weights.
    We used the predicted average resource costs for the 153 case-mix 
groups to calculate the relative case-mix weights. The relative case-
mix weight for a case-mix group is simply the predicted average 
resource cost for the group divided by the sample's overall

[[Page 25389]]

average resource cost. Table 5 shows the final relative case-mix 
weights, after we applied two further adjustments, the budget 
neutrality adjustment and the adjustment for nominal changes in case-
mix coding, which are explained further in this section II.A.2.c.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C

    *Note: Case-mix weight is after applying budget neutrality 
adjustment factor (see text for description of adjustment of the 
weights). Predicted average cost is calculated from the regression 
coefficients in Table 4.

    The budget neutrality adjustment to the relative case-mix weights 
is required to achieve no change in outlays when moving from the 
original case-mix system to the proposed new case-mix system. The 
process of revising the case-mix system results in relative weights 
with an average value of 1.0 over all 1,656,551 sample episodes we used 
to represent the totality of reimbursable episodes in the first year of 
the new case-mix system. The budget neutrality adjustment restores the 
average case-mix weight that results from the revision process to the 
average level observed before implementing the proposed new case-mix 
system. To implement the budget neutrality adjustment, we used the 
constant budget neutrality factor to increase the weights for all 153 
case-mix groups to the prior average level. The resulting adjusted 
case-mix weights prevent total payments under the proposed revised HH 
PPS system from dropping below a budget-neutral level. The budget 
neutrality adjustment factor is 1.194227193.
    Based upon our review of trends in the national average case-mix 
index (CMI), we are proposing an additional adjustment to the HH PPS 
national standardized rate to account for case-mix upcoding that is not 
due to change in the underlying health status of home health users. 
Section 1895(b)(3)(B)(iv) of the Act specifically provides the 
Secretary with the authority to adjust the standard payment amount (or 
amounts) if the Secretary determines that the case-mix adjustments 
resulted (or would likely result in) a change in aggregate payments 
that are the result of changes in the coding or classification of 
different units of services that do not reflect real changes in case-
mix. The Secretary may then adjust the payment amount to eliminate the 
effect of the coding or classification changes that do not reflect real 
changes in case-mix. To identify whether such an adjustment factor was 
needed, we first determined the current average case-mix weight per 
paid episode.
    The most recent available data from which to compute an average 
case-mix weight, or case mix index, under the HH PPS is from 2003. 
Using the most current available data from 2003, the average case-mix 
weight per episode for initial episodes is 1.233. To proceed with this 
analysis, next we determined the baseline year needed to evaluate the 
trend in the average case-mix per episode.
    There are two different baseline years that could be used to 
measure the increase in case-mix:
1. A Cohort Admitted to Home Care From October 1997 to April 1998 (the 
Abt Case-Mix Study Sample Which Was Used To Develop the Current Case-
Mix Model)
    There are several advantages to using data from this period of time 
as the baseline from which we measure the increase in case-mix. This 
time period is free from any anticipatory response to the HH PPS, and 
data from this time period were used to develop the original

[[Page 25393]]

HH PPS model. Also, this is the only nationally representative dataset 
from the 1997-1998 time period that measures patient characteristics 
using an OASIS assessment form comparable to the one adopted for the HH 
PPS. Because the Abt case-mix dataset was used to determine the current 
set of case-mix weights, the average case-mix weight in the sample 
equals 1.0. The sample's value of 1.0 provides a starting point from 
which to measure the increase in case-mix. The increase in the average 
case-mix using this time period as the baseline results in a 23.3 
percent increase (from 1.0 to 1.233).
    However, agencies included in the sample were volunteers for the 
study and cannot be considered a perfectly representative, unbiased 
sample. Furthermore, the response to Balanced Budget Act of 1997 
provisions such as the home health interim payment system (HH IPS) 
during this period might produce data from this sample that reflect a 
case-mix in flux; for example, venipuncture patients were suddenly no 
longer eligible, and long-term-care patients were less likely to be 
admitted. Therefore, we are not confident the trend in the CMI between 
the time of the Abt Associates study and 2003 reflects only changes in 
nominal coding practices, as will be explained in more detail further 
below in this section. Therefore, we are not proposing to use this 
baseline year to determine the baseline.
2. 12 Months Ending September 30, 2000 (HH IPS Baseline)
    Analysis of a 1 percent sample of initial episodes from the 1999-
2000 data under the HH IPS revealed an average case-mix weight of 
1.125. Standardized to the distribution of agency type (freestanding 
proprietary, freestanding not-for-profit, hospital-based, government, 
and SNF-based) that existed in 2003 under the HH PPS, the average 
weight was 1.134. We note this time period is likely not free from 
anticipatory response to the HH PPS, because we published our initial 
HH PPS proposal on October 28, 1999. The increase in the average case-
mix using this time period as the baseline results in an 8.7 percent 
increase (from 1.134 to 1.233; 1.233-1.134=0.099; 0.099/1.134=0.087; 
0.087*100=8.7%).
    Since the HH IPS, reported severity has increased as episodes have 
shifted from low severity groups to high severity groups. Concurrently, 
there has been a reduction in resource utilization. For example, the 
number of visits per episode has significantly declined under the HH 
PPS since 1999. This decline is illustrated in Table 6.

       Table 6.--Average Number of Home Health Visits per Episode
------------------------------------------------------------------------
                                                              Total home
                                                                health
                            Year                                hisits
                                                              (excluding
                                                                LUPAs)
------------------------------------------------------------------------
1997.......................................................        36.04
1998.......................................................        31.56
IPS........................................................        25.51
2001.......................................................        21.78
2002.......................................................        21.44
2003.......................................................        20.98
------------------------------------------------------------------------

    We believe that change in case-mix between the time of the Abt 
Associates case-mix study and the end of the HH IPS period reflected 
substantial change in real case-mix. First, throughout most of this 
period, HHAs had no incentive to bring about nominal changes in case-
mix because case-mix was not a part of the payment system at that time.
    Dramatic changes in the home health benefit also became evident 
under the HH IPS as a result of provisions of the Balanced Budget Act 
of 1997. Venipuncture patients were suddenly no longer eligible; 
members of this group often had multiple comorbidities and commonly 
used substantial amounts of personal care. In addition, according to a 
study in the literature, beneficiaries age 85 and older, as well as 
beneficiaries dually eligible for Medicare and Medicaid, were slightly 
less likely to be admitted to home care (McCall et al., 2003). Both of 
these groups are associated with high needs for personal care services, 
suggesting that long-term care patients were less likely to be admitted 
under the HH IPS. The agency closure rates in States associated with 
high utilization (for example, Louisiana, Oklahoma, and Texas) also 
suggests that admissions among long-term care patients experienced 
decline. The OASIS data comparing the case-mix sample and the HH IPS 
period exhibit some consistency with these ideas, in that they indicate 
substantial decline in admission of the kinds of patients likely to be 
long-term homebound beneficiaries with chronic medical care needs--
patients with diabetes, impaired vision, parenteral nutrition, bowel 
and urinary incontinence, behavioral problems, toileting dependency, 
and more-severe transferring dependency.
    Various studies are consistent with the incentives created by the 
HH IPS per-beneficiary cost cap--particularly an incentive to admit 
many different patients with low care needs and/or for short periods to 
keep per-beneficiary costs low (MedPac, 1999; GAO, 1998; GAO, 1999; 
Smith et al., 1999).
    An important implication of these studies and our comparative OASIS 
data is that patients with intensive or lengthy needs for nursing and 
personal care services as opposed to short-term or rehabilitative needs 
were less likely to be found in the national home care caseload as a 
result of the HH IPS. This would mean that a larger share of patients 
in the caseload would have acute, post-acute, and rehabilitative needs. 
Practice patterns began to change concomitantly with the share of 
visits shifting towards rehabilitation services and, to a lesser extent 
skilled nursing. In 1997 through 1998, the average number of therapy 
visits per 60-day period was about 3, whereas by the last year of the 
HH IPS, it rose to 4.4, with growth moderating thereafter. Skilled 
nursing visits declined from more than 12 at the beginning of the HH 
IPS, and stabilized at slightly more than 9 under the HH PPS. Aide 
visits declined by 44 percent from 1997 to 2000, the last year of the 
HH IPS, and continued to decline at a slower rate under the HH PPS. An 
issue in interpreting these trends in the utilization data is the 
uncertainty about how much of the startling change in therapy provision 
was driven by patient case-mix, and how much was driven by an 
anticipatory response of the practice pattern itself to our proposals 
for the original HH PPS case-mix system. By using a 10-visit therapy 
threshold, the proposal installed a substantial payment increase for 
high-therapy episodes. If providers started responding to the 
incentives in the anticipated HH PPS even before it became effective, 
then our measure of case-mix change between the time of the Abt 
Associates case-mix study sample and the HH IPS baseline is affected by 
provider behavioral change that is not strictly reflective of the case-
mix of the treated population.
    In contrast to the 13.4 percent increase that we consider a real 
case-mix change, we believe that the 8.7 percent increase in the 
national case-mix index between the HH IPS baseline and CY 2003 cannot 
be considered a real increase in case-mix. The trend data on visits 
(Table 6), resource data (presented below), and our analysis of changes 
in rates of health characteristics on OASIS assessments and changes in 
reporting practices (presented in section II.A.3.c of this proposed 
rule) all lead to the conclusion that the underlying case-mix of the 
population of home health users actually was essentially stable between 
the IPS baseline and CY 2003. Our research shows that HHAs have reduced 
services (see Tables 6 and 7) while the CMI continued to rise (see 
Table 7). We would normally expect

[[Page 25394]]

growth in the CMI to be accompanied by more consumption of services; 
but, to the contrary, we measure slightly lower resource consumption. 
This is indicated by the data in Table 7 that illustrates, by quarter, 
the average resource cost per episode as well as the average CMI for 
initial (admissions) episodes and all episodes. (Note: In Table 7, the 
CMI data for the HH IPS quarters are not adjusted for distribution of 
agency types; that is, they do not reflect the adjustment to the HH IPS 
baseline that we cited earlier, which caused the HH IPS baseline to 
increase to 1.134 from 1.125). In addition, in Table 7, the average 
resource cost is not adjusted for wage inflation. If the average 
resource cost had been adjusted for wage inflation, there would be an 
even larger reduction in resource cost between the HH IPS and HH PPS.)

                                     Table 7.--Average Resource Cost and CMI
----------------------------------------------------------------------------------------------------------------
                                                                      Average
                             Period                                  resources    CMI admissions      CMI all
----------------------------------------------------------------------------------------------------------------
HH IPS:
    1999Q4......................................................         $477.06          1.1278          1.0823
    2000Q1......................................................          467.70          1.1074          1.0815
    2000Q2......................................................          466.59          1.1223          1.0982
    2000Q3......................................................          469.52          1.1453          1.1138
HH PPS:
    2000Q4......................................................             N/A             N/A             N/A
    2001Q1......................................................          432.84          1.1841          1.1622
    2001Q2......................................................          440.73          1.1910          1.1774
    2001Q3......................................................          445.59          1.1965          1.1724
    2001Q4......................................................          446.93          1.2003          1.1818
    2002Q1......................................................          452.48          1.2052          1.1800
    2002Q2......................................................          453.89          1.1999          1.1835
    2002Q3......................................................          456.69          1.2099          1.1832
    2002Q4......................................................          460.10          1.2213          1.1957
    2003Q1......................................................          453.74          1.2152          1.1889
    2003Q2......................................................          459.97          1.2295          1.2018
    2003Q3......................................................          458.86          1.2302          1.2002
    2003Q4......................................................          462.59          1.2465          1.2159
----------------------------------------------------------------------------------------------------------------

    According to the data in Table 7, in Year 2 (2002) of HH PPS, home 
health resources per episode for new admissions were approximately 2 
percent lower than they were in the year immediately before 
implementation of HH PPS. At the same time, the national case-mix index 
for new admissions rose by approximately 0.02 per year. (The national 
case-mix index for all episodes, new and continuing, rose by 
approximately 0.01 per year.) By Year 3 (2003) of the HH PPS, home 
health resources per admission episode rose slightly above the Year 2 
level, and then stabilized at levels similar to the HH IPS. The 
national CMI for new admissions continued to rise by about 0.02 per 
year (with the CMI for all episodes rising by about 0.01 per year).
    Therefore, based upon our trend analysis described above, we 
believe the change in the case-mix index between the Abt case-mix 
sample (a cohort admitted between October 1997 and April 1998) and the 
HH IPS period (the 12 months ending September 30, 2000) is due to real 
case-mix change. We take this view, even though we understand that 
there may be some issue as to whether this period was affected by 
nominal case-mix change due to providers' anticipating, in the last 
year of HH IPS, the forthcoming case-mix system, with its incentives to 
intensify rehabilitation services. This change from these two periods 
is from 1.00 to 1.134, an increase of 13.4 percent. However, we are not 
proposing to adjust for case-mix change based on this change in values. 
However, we are proposing that the 8.7 percent of case-mix change that 
occurred between the 12 months ending September 30, 2000 (HH IPS 
baseline, CMI=1.134), and the most recent available data from 2003 
(CMI=1.233), be considered a nominal change in the CMI that does not 
reflect a ``real'' change in case-mix.
    In addition to the trend analysis above, we conducted several 
additional kinds of analyses of data and documentary materials related 
to home health case mix coding change. These analyses are described in 
detail in section II.A.3.e. The results support our view that the 
change in the CMI since the HH IPS baseline mostly reflects provider 
responses to the changes that accompanied the HH PPS, including 
particulars of the payment system itself and changes to OASIS reporting 
requirements. Our analyses indicated generally modest changes in 
overall OASIS health characteristics between the two periods noted 
above, a specific pattern of changes in scaled OASIS responses that is 
not indicative of material worsening of presenting health status, 
various changes in the OASIS reporting instructions that help account 
for numerous coding changes we observe, and a large increase in post-
surgical patients with their traditionally lower case-mix index.
    Our past experience establishing other prospective payment systems 
also led us to believe a proposal to make this adjustment for nominal 
change in case-mix is warranted. In other systems, Medicare payments 
were almost invariably found to be affected by nominal case-mix change. 
We are considering several options for implementing this case-mix 
adjustment. These options include incorporating the entire -8.7 percent 
adjustment in CY 2008, incorporating an adjustment of -5.0 percent in 
CY 2008 and an adjustment of -2.7 percent in CY 2009, and incorporating 
an adjustment of -4.35 percent in CY 2008 and an adjustment of -4.35 
percent in CY 2009. However, because of the potential impact our 
proposed adjustment may have on providers, we are proposing and 
requesting comment on whether to adjust for the nominal increase in 
national average CMI by gradually reducing the national standardized 
60-day episode payment rate over 3 years. During that period we would 
continue to update our estimate of nominal case-mix change and adjust 
the national standardized 60-day episode payment

[[Page 25395]]

rate accordingly for any nominal change in case-mix that might occur. 
We propose to implement a 3-year phase-in of the total downward 
adjustment for nominal changes in case-mix by reducing the national 
standardized 60-day episode payment rate by 2.75 percent each year up 
to and including CY 2010. This annual reduction percent is based on our 
current estimate of the nominal change in case-mix that has occurred 
between the HH IPS baseline (+0.099) and 2003. However, if, at the time 
of publication of the final CY 2008 HH PPS rule, updates of the 
national claims data to 2005 indicate that the nominal change in case-
mix between the HH IPS baseline and 2005 is not +0.099, we would revise 
the percentage reduction in the next year's update. The revision would 
be determined by the ratio of the updated 3-year annual reduction 
factor to the previous year's annual reduction factor. For example, the 
scheduled annual reduction factor is now estimated to be 0.9725 
(equivalent to a 2.75 percent reduction); for CY 2008 we would multiply 
this reduction factor by the ratio of the updated reduction factor to 
0.9725. For the CY 2010 rule, which governs the third and final year of 
the case-mix adjustment transition period, we would obtain the CY 2007 
national average CMI to compute the updated value for nominal case-mix 
adjustment. Again, we would form the ratio of the updated adjustment 
factor to the previous year's effective adjustment factor. The annual 
updating procedure avoids a large reduction for the final year of the 
phase-in, in the event that the CY 2007 national average case-mix index 
reflects continued growth since CY 2005. The calculation of the 
adjusted national prospective 60-day episode payment rate for case-mix 
and area wage levels is set forth in Sec.  484.220. We are proposing to 
revise Sec.  484.220 to address changes to case-mix that are not a real 
change in case-mix.
    CMS proposes to adjust the national prospective 60-day episode 
payment rate to account for the following:
     HHA case-mix using a case-mix index to explain the 
relative resource utilization of different patients. To address changes 
to the case-mix that were a result of changes in the coding or 
classification of different units of service that did not reflect real 
changes in case-mix, the national prospective 60-day episode payment 
rate will be adjusted downward as follows:

--For CY 2008 the adjustment is 2.75 percent.
--For CY 2009 and CY 2010, the adjustment is 2.75 percent in each year.

     Geographic differences in wage levels using an appropriate 
wage index based on the site of service of the beneficiary.
    We plan to continue to monitor changes in the national average CMI 
to determine if any adjustment for nominal change in case-mix is 
warranted in the future.
    Accordingly, based upon our analysis and conclusions, we are 
proposing a new set of case-mix weights that reflect the four-equation 
model and a payment adjustment for the nominal change in the case-mix 
index described above. We arrived at these weights, listed in Table 5, 
by first determining relative weights for each of the 153 groups using 
the four-equation model and the payment regression. The definition for 
each of these groups based on clinical, functional, and service 
severity levels is described in Table 5. Each of these relative weights 
was adjusted by multiplying it by an adjustment factor to make the 
proposed payments budget-neutral to current estimated payments for CY 
2008. This budget neutrality factor raised the proposed average case-
mix weight to the case-mix index reflected by the most recent data 
available from 2003. The proposed budget-neutrality factor for 2008 is 
1.194227193. Each budget neutral, adjusted, weight in Table 5 was 
calculated in the following manner: Relative Weight x 1.194227193. 
References to literature cited in this section:

N. McCall et al., ``Utilization of Home Health Services before and 
after the Balanced Budget Act of 1997: What Were the Initial 
Effects?'' Health Services Research, Feb. 2003: 85-106.
MedPac, Report to the Congress: Selected Medicare Issues, June 1999: 
105-115.
General Accounting Office (GAO), ``Medicare Home Health Benefit: 
Impact of Interim Payment System and Agency Closures on Access to 
Services,'' GAO/HEHS-98-238, Sept. 1998.
General Accounting Office (GAO), ``Medicare Home Health Agencies: 
Closures Continue, with Little Evidence Beneficiary Access Is 
Impaired,'' GAO/HEHS-99-120, May 1999.
B.M. Smith et al., ``An Examination of Medicare Home Health 
Services: A Descriptive Study of the Effects of the Balanced Budget 
Act Interim Payment System on Access to and Quality of Care,'' 
Center for Health Services Research and Policy, George Washington 
University, Sept. 1999.
3. Description and Analysis of Case-Mix Coding Change under the HH PPS
    As stated in section II.A.2.c of this proposed rule, under section 
1895(b)(3)(B)(iv) of the Act, we are proposing a reduction in HH PPS 
national standardized 60-Day episode payment rate to offset a change in 
coding practice that has resulted in significant growth in the national 
case-mix index (CMI) since the inception of the HH PPS that is not 
related to ``real'' change in case mix. The factor was determined by 
calculating the change in the national CMI between the HH IPS and the 
HH PPS.
    In this section II.A.3, for purposes of illuminating the sources of 
CMI increase in terms of the case-mix system itself, we identify the 
severity levels with the largest growth between the two periods. We 
will provide, in Table 8, the percentage change in volume for each of 
the 80 case-mix groups, and summary statistics of the changes. Table 9 
shows the rates of all OASIS assessment items in the two time periods. 
We will explain below our inferences from Table 9 about the comparative 
health status of the populations treated in the two time periods. 
Subsequent to that, we will explain our analysis of the changes to 
OASIS reporting instructions that were likely to have affected reported 
case mix. We also describe analyses we performed to quantify the effect 
on the CMI of increases in post-surgical episodes in the national 
caseload, and our interpretation of the analyses. We conclude with a 
summary and interpretation of our key findings from the descriptive 
analysis of OASIS assessment data, analysis of OASIS reporting 
instructions, and analysis of changes in post-surgical volume.
    In making these analyses, we reviewed data from two samples. The 
first, the HH IPS sample, is the same sample used in section II.A.2.c 
of this proposed rule for determining the IPS baseline that we used to 
determine the proposed adjustment for nominal change in case-mix. The 
HH IPS sample is a 1 percent random sample of claims (total number of 
18,480) with its matched start of care OASIS assessments from the 12 
months immediately preceding HH PPS. We matched the assessments to 
determine what the patient's case-mix group would have been had HH PPS 
been in effect. To simulate 60-day episodes from actual claims we used 
the same method that was used to create the initial development sample 
for the HH PPS case-mix system. In performing the simulation, we took 
into account the timing of the start of care in relation to previous 
service periods, and used only 60-day periods that would have 
corresponded to initial episodes in a sequence of adjacent episodes 
that consisted of one or more simulated episodes. We considered initial 
episodes as the first episodes that follow

[[Page 25396]]

periods of at least 60 days without receiving home health service.
    The second sample is a 20 percent sample of FY 2003 claims for 
initial episodes again matched to start of care OASIS assessments. In 
both samples, we corrected any initial errors in determining the 
beneficiary's pre-admission location that affected the HHRG before 
determining the HHRG. We made the correction by consulting the sample 
member's claims history for information about previous inpatient stays.
a. Change in Case-Mix Group Frequencies
    Table 8 presents the share of the population assigned to each 
severity level of the case-mix system's three dimensions (clinical, 
functional, and service). The table indicates there was a strong shift 
away from the lowest-severity case-mix groups towards higher severity 
level between the two sample periods. Growth of the two highest 
severity levels of the clinical domain was approximately 23 percent; 
for every 100 beneficiaries, 8 additional beneficiaries were classified 
to the highest two clinical dimensions in 2003 compared to the HH IPS 
period.
    Growth of the functional severity levels F2 and F3 totaled 12 
percent. The 12 percent growth in share was concentrated in F2. Share 
growth for F2 and F3 was offset by a decline for the two lowest 
functional severity levels and, potentially, a tiny decline in share 
for the severest functional level, F4. Notwithstanding the small 
decrease in the share assigned to F4, for every hundred beneficiaries, 
about 7 additional beneficiaries were classified to the higher severity 
levels F2 and F3.
    The data also indicate that the proportion of patients with a prior 
SNF or rehabilitation facility discharge in the 14 days before 
admission, but no hospital discharge in that period, grew by 25 percent 
for episodes below the 10-visit therapy threshold, and 64 percent for 
episodes above the 10-visit therapy threshold. These patients receive a 
higher case-mix score than patients from all other pre-admission 
locations on the OASIS (including inpatient discharge).
    In addition, the table indicates growth in the high-therapy groups 
(levels S2 and S3) of 30 percent. This means that for every hundred 
beneficiaries, 8 additional beneficiaries were assigned to receive at 
least 10 therapy visits in 2003 compared to the HH IPS period. Under 
the HH PPS, approximately 35 percent of patients in their initial 
episode received at least 10 therapy visits.

             Table 8.--Comparison of Severity Level Prevalence, HH IPS Sample and 2003 HH PPS Sample
----------------------------------------------------------------------------------------------------------------
                                                                      HH IPS        HH PPS 2003
                                                                     (percent)       (percent)      Difference
----------------------------------------------------------------------------------------------------------------
All C0................................  Min.....................           29.69           22.07           -7.62
All C1................................  Low.....................           36.49           36.19           -0.31
All C2................................  Mod.....................           28.91           35.50            6.58
All C3................................  High....................            4.91            6.25            1.34
All F0................................  Min.....................            9.27            6.15           -3.12
All F1................................  Low.....................           28.57           25.40           -3.17
All F2................................  Mod.....................           45.18           51.30            6.12
All F3................................  High....................           10.39           10.83            0.44
All F4................................  Max.....................            6.60            6.33           -0.27
All S0................................  Min.....................           65.74           55.87           -9.87
All S1................................  Low.....................            7.40            9.22            1.83
All S2................................  Mod.....................           19.94           23.59            3.64
All S3................................  High....................            6.92           11.32            4.40
----------------------------------------------------------------------------------------------------------------

    Table 9 shows the shares of total episodes for the complete set of 
80 original case-mix groups, during both the HH IPS and the HH PPS FY 
2003. Table 9 also displays each group's case-mix weight. Ten groups 
had no change in their share of episodes between the HH IPS period and 
the HH PPS period in the table. Of the remaining 70 groups, 38 groups, 
slightly more than half, had a larger share of total episodes under HH 
PPS than the HH IPS. However, decline in share of total episodes was 
associated with minimal or low clinical severity (C0 and C1). Only 8 of 
40 groups with moderate (C2) or high (C3) clinical severity had 
decrease in their share of episodes under HH PPS, with most of the 
remaining moderate or high clinical severity groups having a share 
increase. As noted above, growth in functional severity level F2 almost 
entirely offset the loss of population from groups F0 and F1. Only 
three of 16 groups in the functional severity level F2 experienced a 
decline in episode shares, and this was concentrated entirely in the 
two lowest clinical severity groups.
    We summarized the association between case-mix group severity and 
change in episode share by calculating the rate ratio for growth in 
episode shares. We sorted the groups by case-mix weight and divided the 
groups into the top 40 weights of the 80-group case-mix system and the 
remaining 40 weights. The rate ratio was determined by dividing the 
growth in total share of the top 40 weights by the growth in total 
share for the remaining 40 weights. The groups with the 40 smallest 
weights have mostly reductions in episode shares (24 of 40 have 
reductions), and the groups with the largest 40 weights have mostly 
increases in episode shares (24 of 40 groups). The rate ratio for 
positive changes was 1.71, which means that as a group the top 40 case-
mix weights were about 70 percent more likely than the bottom 40 to 
have an increase in share of total episodes.
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b. Health Characteristics Reported on the OASIS
    To further our understanding of the relative roles of case-mix 
change and coding changes that might be responsible for the .0991 
increase of the national HHRG CMI, we analyzed the HH IPS and HH PPS 
samples' health characteristics, based on the start-of-care OASIS 
assessment. We compared the proportion of start-of-care assessments 
that had each OASIS characteristic, using data from our HH IPS and HH 
PPS 2003 samples. We used the wound-related OASIS data to compute 
statistics on changes in numbers of wounds. The results are shown in 
Table 10 and discussed below. (Items scored in the HH PPS 80 group 
case-mix system are shown in bold.) Table 10: Comparison of rates of 
response categories on OASIS Start of Care Assessments, HH IPS Sample 
and 2003 HH PPS Sample
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    In general, the results showed that health characteristics as 
measured by the OASIS items were stable or changed little. Exceptions 
to the general findings were indications that the HH PPS population 
included:
     More post-acute and more post-surgical patients;
     More patients that had a recent history of post-acute 
institutional care;
     More patients with a recent change in medical or treatment 
regimen;
     More patients in the orthopedic diagnosis group defined 
under the PPS system's clinical dimension; and
     More patients assessed with dependencies in Activities of 
Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs) 
as of 14 days before the assessment. The proportion of patients using 
at least 10 therapy visits also rose noticeably.
    Otherwise, the rate comparisons of OASIS items are generally 
unremarkable. Several measures usually reflective of a more compromised 
health status, including ADL limitations, incontinence, pain, short 
life expectancy, and diagnosis severity had a somewhat higher rate in 
the HH PPS sample than the HH IPS sample.

[[Page 25419]]

However, various physiologic measures and risk factors showed little or 
no change, including urinary tract infection, visual and aural 
functioning, dyspnea, bowel ostomy, bowel incontinence, obesity, 
alcoholism, drug dependence, depressive symptoms, behavioral problem 
frequency, use of home oxygen, infusion therapy, and nutritional 
therapies. In addition, the probability that a patient used psychiatric 
nursing was reduced, from 2 percent to 1 percent.
    The current HH PPS case-mix system recognizes four types of 
diagnoses for purposes of assigning patients to case-mix groups: 
diabetes, orthopedic conditions, neurological conditions, and burns and 
trauma. These diagnoses were found to be associated with higher-than-
average resource costs in the original case-mix research. The data in 
Table 10 indicate that the share of patients assigned to the four case-
mix diagnosis groups grew by 23 percent. This change was due to an 
additional 7 per hundred patients assigned to the orthopedic diagnosis 
group, and an additional 2 per hundred assigned to the diabetes 
diagnosis group. The share of patients assigned to the neurological 
diagnosis group remained unchanged (at 8 per hundred), and the share of 
patients assigned to the burns/trauma diagnosis group declined by 2 per 
hundred.
    There are two important reasons why we believe these changes 
reflect mostly nominal, as opposed to real, underlying case-mix change. 
First, the notable increase in the proportion of orthopedic diagnoses 
is due at least in part to the listing of the diagnosis code for 
abnormality of gait in this diagnosis group. The diagnosis code for 
abnormality of gait (781.2) is commonly used to indicate that the 
primary reason for the home health treatment is rehabilitation services 
(for example, physical therapy). Detailed analysis shows that this use 
of this code grew by 50 percent between the HH IPS period and the early 
years of the HH PPS. We believe agencies had an incentive to use this 
code on Medicare claims to support treatment plans that included large 
amounts of rehabilitation services. This code could be used even if the 
underlying condition was not orthopedic. Second, the decline in burns/
trauma assignment may be due in part to agencies' early confusion about 
how to use the ICD-9-CM coding system when a patient has an open wound 
not due to an injury. We believe traumatic open wounds were thus 
overreported early in HH PPS. However, with educational efforts 
initiated by CMS and the home health industry after HH PPS began, 
understanding and application of the coding instructions for traumatic 
wound diagnoses improved, resulting in a lower, and more accurate, rate 
of reported burns/trauma cases, which we believe is now more 
representative and not an actual change in case-mix.
    Other wound-related items varied in the types of change they 
experienced. The basic wound-related item measuring the presence of a 
skin disturbance or lesion (M0440) increased by 15 percentage points; 
however, this measure is general and covers a broad range of both 
clinically significant and insignificant problems. We note the three 
detailed series of OASIS items following M0440, that is, surgical 
wounds, pressure ulcers, and stasis ulcers, had varying results. The 
proportion of patients with pressure ulcers increased from 5.4 percent 
to 6.6 percent with more than half of the pressure ulcers at Stage 2. 
(Pressure ulcers are staged using four levels, 1 to 4, in order of 
increasing severity.) The average number of pressure ulcers per hundred 
patients increased from 9.2 to 11.1. Pressure ulcers per 100 persons 
with any pressure ulcers were 1.70 in the HH IPS sample and 1.68 in HH 
PPS sample. Excluding the approximately 5 percent of pressure ulcers 
that were unobservable, the average number of stage 1 and stage 2 
pressure ulcers per patient with pressure ulcers did not change; the 
number of stage 3 and stage 4 pressure ulcers per patient with pressure 
ulcers declined by 13 percent and 27 percent, respectively. In terms of 
the overall population, stage 1 and stage 2 pressure ulcers per 
beneficiary increased by about 23 percent between the HH IPS and HH 
PPS; stage 3 pressure ulcers per beneficiary increased 7 percent; and 
stage 4 pressure ulcers decreased by 11 percent. There was no change in 
the item measuring the healing status of the most problematic pressure 
ulcer.
    Review of these data suggest to us that the population of home 
health beneficiaries was more likely to include pressure ulcer patients 
under HH PPS, that such patients had about the same number of pressure 
ulcers per person in both periods, and that the pressure ulcer stage 
tended to be of lower severity, on average, under HH PPS compared to 
the HH IPS. We note that under OASIS coding policy, there is ``no 
reverse staging'' of pressure ulcers, which means that a healed 
pressure ulcer could be recorded and contribute to the statistics. 
Therefore, because of such policy, from these statistics it is 
difficult to draw conclusions about change in the burden of care 
related to pressure ulcers under the HH PPS.
    We also found little change in numbers of stasis ulcers reported or 
their overall seriousness. The proportion of patients with any stasis 
ulcers was 3 percent under the HH IPS and 2 percent under HH PPS. 
Furthermore, while some patients have more than one stasis ulcer, the 
number of stasis ulcers per 100 patients decreased from approximately 
5.0 to 4.5. The status of the most problematic stasis ulcer (if any) 
did not change. The stasis ulcer decline may be attributable in part to 
improved knowledge among agency clinical staff in distinguishing among 
different types of ulcers.
    Based on the HH IPS and the HH PPS samples, the case-mix of the 
population of home health beneficiaries clearly shifted towards more 
post-surgical patients, with a possible indication that the average 
patient's healing status worsened. The proportion of patients with any 
surgical wounds increased from 22.7 percent to 30.0 percent. The number 
of surgical wounds per hundred patients increased from 37.4 to 49.2, 
due entirely to the increased numbers of post-surgical patients; there 
was no change in the estimated average number of surgical wounds per 
person with any surgical wound (our estimate assumed patients recorded 
as having at least one unobservable surgical wound had only one such 
wound). There was a 6 percentage point increase in the probability that 
the most problematic surgical wound's healing status would be in an 
early stage of healing (indicated on the OASIS by the response category 
``early/partial granulation,'' which refers to the type of newly 
forming tissue which may be visible in a healing wound), and a 1 
percentage point increase in the probability that the wound's healing 
status would be ``not healing''. This amounts to a 13 percent increase 
in the share of most-problematic surgical wounds assigned to the two 
less-favorable healing categories, early and partial granulation or not 
healing.
    Our review of current functional measures also showed mixed 
results, with some (grooming, upper body dressing, meal preparation, 
laundry, telephone use, independence with inhalant, and injective 
medications) exhibiting minor or little change. Other measures 
experienced negative and sometimes substantial change (transferring, 
ambulation, feeding, and housekeeping). In both the HH IPS and the HH 
PPS sample periods, prior functional measures were almost invariably 
reflective of a better average prior status (as of the 14 days before 
the assessment) compared to the current status. However, in the HH PPS 
sample,

[[Page 25420]]

the overall difference between prior and current status is less than in 
the HH IPS sample. In other words, average current status is reported 
as generally more functionally impaired under HH PPS than under the HH 
IPS, and accordingly, average prior status reflects a different 
relationship to current status in the two sample periods. We believe 
this pattern may reflect better understanding of the definition and 
interpretation of the prior status items as agencies became more 
familiar with the assessment.
    We also found that quite a few items with scaled responses 
indicated a decline in the numbers of patients at the best end of the 
scale (for example, independent in bathing), as well as a decline or 
stability in the numbers (usually very small numbers) at the worst end 
of the scale (for example, totally dependent in bathing). Often, the 
decline in numbers of patients at the best end was offset by increased 
numbers rated just below the best end of the scale. This pattern was 
evident with measures of primary and secondary diagnosis symptom 
severity, cognitive functioning, confusion, hearing, speech, current 
upper and lower body dressing, current bathing, current toileting, 
current transferring, current ambulation, and several of the prior 
function-related items.
    Table 10 results indicated a pattern of change in functional 
severity away from the two lowest severity groups and towards the 
middle severity group. The shift towards the middle severity group 
could be explainable by seemingly minimal changes in a person's ADL 
ratings. The examples below show how an incremental change in reported 
dependency on a single functional item in the HHRG system could change 
the case-mix group functional severity to F2 from F1. For a 
hypothetical individual in the second-lowest functional severity group 
(F1), a single added limitation (that is, going from independence to a 
minimal limitation) could result in the individual moving from severity 
category F1 into severity category F2. Similarly, in the case of 
transferring or locomotion, a score change that is due only to going 
from one level of limitation to the next worst level could possibly 
result in the individual moving from severity category F1 into severity 
category F2.
    The three prognosis-related items also showed mixed results, with 
the overall and rehabilitative prognosis items changing minimally and 
the life expectancy item indicating a more than two-fold increase in 
the proportion of the population of home health beneficiaries with a 
life expectancy below 6 months. We believe that as agencies 
increasingly recognized that the life expectancy item was used in 
measuring adverse events under the Outcome-based Quality Improvement 
(OBQM) system, which commenced in the early years of HH PPS, agencies 
became more careful to record the prognosis accurately.
    We discuss below some of the influences on the reporting of the 
OASIS health characteristics since the HH PPS began. Our conclusion 
from review of the changes in rates of OASIS characteristics, however, 
is that it is far from certain that the essential health status and 
service needs of the population of home health beneficiaries changed 
dramatically under the HH PPS. A very substantial majority of the OASIS 
characteristics rates noted for 2003 in Table 10 were within 2 
percentage points of their initial value at the HH IPS baseline. Also, 
few OASIS items experienced more than moderate adverse change. Included 
within our analysis of adverse changes were several items unrelated to 
the HHRG system, including diagnosis symptom severity, recent regimen 
or treatment change, feeding, housekeeping, laundry, life expectancy, 
and various prior functional status items. Items with adverse change 
that are related to the HHRG system include use of post-acute 
institutional care, orthopedic cases, incontinence, pain, surgical 
wound healing status, and transferring.
c. Impact of the Context of OASIS Reporting
    As noted above, some items with adverse changes are related to the 
HHRG system. We believe that some of these changes are a likely result 
of more care being taken in conducting the assessment. Agencies were 
exposed to OASIS training and educational initiatives in the early HH 
PPS period and, beginning with the HH PPS, agencies had an incentive to 
ensure they did not overlook items that could affect the HHRG. The new 
emphasis on proper application of OASIS guidelines was later reinforced 
when CMS began to implement outcome-based quality reporting (OBQI) in 
early 2002.
    We further believe that, to some extent, incentives brought by the 
payment and quality program changes interacted with the subjective 
aspects of the assessment process to cause nominal coding change. The 
process of coding, especially diagnosis coding and determining certain 
rating scales, entails some discretion by the agency. With diagnosis 
coding, patients may have more than one diagnosis that can reasonably 
be called the primary diagnosis. The significant growth in orthopedic 
diagnosis codes partly reflects the ambiguity in the diagnosis 
assignment process itself, particularly in the context of a system 
where financial incentives to choose one diagnosis over another may be 
operating. Furthermore, scales of ADL functioning can be difficult to 
apply with some patients because of daily variability in their status 
and the multiple dimensions of the functional item. This difficulty may 
also result in a bias towards selecting a more-severe rating in the 
context of the financial incentives of the HH PPS. We believe that such 
bias was likely reinforced by the financial incentive created by the 
10-visit therapy threshold. As a result of that incentive, high-therapy 
treatment plans became more common under HH PPS. OASIS coding practices 
regarding ``functional status'' could have changed in ways to make 
coding more harmonious with the new emphasis on therapy in treatment 
plans.
    Not only is the process of coding likely subject to discretion, 
several issuances providing official guidance on specific OASIS items 
released early in the HH PPS could have caused some clinicians to 
downgrade patients in their assessment of the specific item. 
Instructions regarding the dressing, bathing, toileting, transferring, 
and locomotion items, assessment items all used in the HH PPS case-mix 
system, were amended in August 2000 in such a way that the concept of 
performing the function safely was highlighted prominently in the item-
by-item instructions. (See M0650 to M0700 in Chapter 8 at http://www.cms.hhs.gov/apps/hha/usermanu.asp).
    This change alone arguably emphasized the concept that ``safety'' 
is a consideration in assessing the patient's ability to perform the 
activity and in determining the functional item on the OASIS. Thus, it 
seems a likely contributing factor in explaining why the OASIS data in 
Table 10 show a strong tendency for several ADL statistics to shift 
away from the completely independent level. In terms of impact on the 
patient's case-mix group, it should be noted that the case-mix score 
for most of these items becomes a positive value if the assessing 
clinician selects any response category other than the one indicating 
that the patient is able to function independently. (Note: Selecting 
``unknown'' does not add to the case-mix score.)
    Another change in OASIS instructions affected the pain item, M0420, 
in August 2000. The section on Assessment Strategies offered additional 
strategies for assessing pain in a

[[Page 25421]]

nonverbal patient, such as facial expression and physiological 
indicators (for example, perspiration, pallor). If many clinicians were 
not using these strategies during the HH IPS period, it is likely that 
fewer patients would have been assessed to have pain. The strategies 
section also introduced the term ``well controlled'' in referring to 
pain assessment, by adding the following sentence: ``Pain that is well 
controlled with treatment may not interfere with activity or movement 
at all.'' If, as a result of this guidance, clinicians began taking 
into account patient adherence to pain medication, one result could 
have been more patients were assessed with pain. Adherence to pain 
medication is an important issue in medicine, because many patients 
experience side effects that may cause them to trade off pain control 
for diminution of side effects.
    The assessment instructions for incontinence were also amended in 
August 2000. The Assessment Strategies section for M0520 included a new 
statement: ``Urinary incontinence may result from multiple causes, 
including physiologic reasons, cognitive impairments, or mobility 
problems.'' This clarification could have potentially sensitized 
clinicians to the idea that the definition of incontinence is not 
simply about physiologic status (that is, bladder control), but instead 
involves considerations such as mobility and cognition that can 
intervene to produce wetting on clothing. Because more patients were 
assessed as incontinent in the HH PPS period according to M0520 (which 
is not used in the case-mix system), the OASIS skip pattern drew more 
responses for M0530, the case-mix item used to assess the type of 
incontinence. A similar change in the Assessment Strategies section was 
made for M0540, bowel incontinence, with the potentially similar impact 
of increasing the reported rate.
    Finally, two changes to the OASIS manual in August 2000 could have 
expanded the number of patients reported to have surgical wounds. The 
first change affecting surgical wounds was to expand the definition to 
read: ``Medi-port sites and other implanted infusion devices or venous 
access devices are considered surgical wounds.'' The possible impact on 
the national case-mix index of broadening this instruction is that more 
openings in the skin would be considered surgical wounds, requiring 
more assessments to respond to OASIS item M0488, a case-mix variable, 
provided that the site is the most problematic surgical wound under the 
expanded definition. It is possible for the healing status of these 
types of openings to be ``fully granulating'' (with no case-mix score 
available), at a stage of ``early or partial granulation'' (a score of 
7), or even ``not healing'' (a score of 15). For example, a central 
line site being held open by the line itself may not reach a fully 
granulating state, or a site that has become infected may be assessable 
as ``not healing.'' Before these clarifications, it may not have 
occurred to many assessing clinicians to classify these device-related 
sites as surgical wounds, so it seems reasonable to assume that more 
surgical wounds would be reported after the manual change, and to 
assume that some of these would add to the higher rates of wounds 
reported to be not healing or in early healing stages.
    The second manual change was a new bulleted item in the OASIS 
response-specific instructions: ``A muscle flap performed to surgically 
replace a pressure ulcer is a surgical wound and is no longer a 
pressure ulcer.'' We note it is not uncommon for home health patients 
to be admitted after hospitalization for pressure ulcer procedures, 
such as debridements or grafts. While the OASIS manual change noted 
that debridements do not change the classification of the pressure 
ulcer to a surgical wound, the muscle flap does change the 
classification. Again, we would expect this technical clarification to 
have added to the reported number of surgical wounds.
    Another OASIS manual change added the statement that ``A PICC line 
is not a surgical wound, as it is peripherally inserted, although it is 
considered a skin lesion (see M0440).'' The PICC line is a common 
method of delivering antibiotic treatment intravenously at home. 
However, using the same reasoning about the perception of device-
related openings before the issuance of the August 2000 manual, we 
believe it is unlikely that the peripherally inserted central catheters 
(PICC) line clarification caused reduction in reported surgical wounds 
as it would not have originally occurred to many assessing clinicians 
to have classified it as such in the first place.
    The changes to the OASIS manual instructions noted in this section 
present concrete potential causes of increased OASIS reporting rates 
for case-mix items measuring ADL dependencies, pain, incontinence, and 
surgical wounds. While it is difficult to know with data available how 
much of the reported increase is traceable to these clarifications, we 
believe that in the environment at the time the HH PPS was initiated, 
which included strong efforts in the public and private sectors to 
educate home health agencies on the proper application of OASIS, the 
changes must have had some impact. To the extent that the result was a 
new approach to classifying patients for purposes of the OASIS items 
involved, we note the increased item reporting rates may not represent 
an actual material change in the health status of the population under 
treatment in home care. Given the potential impact of OASIS reporting 
instructions on case-mix, we will continue to monitor appropriate 
requirements in an effort to promote effectiveness in the HH PPS 
payment methodology. Clarifications to the ``OASIS Implementation 
Manual'' are issued administratively through normal operating 
procedures.
     Impact of more post-surgical patients
    We also reviewed the increase in rates of post-surgical patients 
that occurred under the HH PPS to improve our understanding of how this 
increase contributed to the growth in the case-mix index between the 
IPS baseline and the 2003 HH PPS period. Being a patient with a 
surgical wound does not in and of itself increase the case-mix score. 
However, if the surgical wound is not assigned to the best healing 
status on the OASIS assessment, the score will increase. Therefore, an 
increase in the proportion of post-surgical patients makes more 
episodes eligible for an addition to the score based on the healing 
status. Furthermore, data shown in Table 10 indicate that under the HH 
PPS, post-surgical patients were more likely to be assessed with a 
healing status that impacts upon a case-mix score. Because surgical 
patients have historically had other characteristics associated with 
relatively low resource use, we hypothesized that a higher occurrence 
of surgical wound patients would not necessarily lead to a rise in the 
overall CMI.
    We analyzed the extent to which the severity of HHRG-related OASIS 
items is due to the increased presence of post-surgical patients, of 
whom many would have mobility restrictions, pain, and an evolving 
surgical wound status in the early post-acute phase. First, we analyzed 
the relationship between having a surgical wound and having a 
characteristic indicative of increased severity. Second, we 
recalculated the average case-mix change under two alternative 
assumptions: (1) The higher share of post-surgical cases is entirely 
responsible for the changed CMI; (2) growth in the CMI for post-
surgical patients was the same as growth in the CMI for non-surgical 
patients. The second assumption would reveal the potential effect of a 
faster worsening of

[[Page 25422]]

presenting health status through time among post-surgical patients 
compared to non-surgical patients.
    As expected, post-surgical patients exhibited certain 
characteristics at different rates. Specifically, compared to non-
surgical patients, they were slightly less likely to have no home 
therapies (M0250), about 40 percent more likely to have frequent pain 
(M0420), nearly three times as likely to have a bowel ostomy, nearly 
twice as likely to have come from an inpatient rehabilitation facility 
and to have intractable pain, and 15 percent less likely to be 
independent in lower body dressing. Many other characteristics were 
less prevalent among post-surgical patients, such as having any 
pressure or stasis ulcers; dyspnea; urinary and bowel incontinence; 
behavioral problems (M0610); upper body dressing, toileting, and 
ambulation functional limitations.
    If we make the first assumption, that the only cause of change in 
the national CMI under the HH PPS was the increased share of post-
surgical patients in the population of home health users, then the 
national case-mix under the HH PPS sample should have been slightly 
below the CMI of the HH IPS sample. This is because the CMI for post-
surgical patients is smaller than the CMI for non-surgical patients, 
and because even under the HH PPS the share of post-surgical patients 
is a minority of all patients. However, in actuality, as stated in 
section II.A.2.b of this proposed rule, the national CMI increased by 
0.099 between the HH IPS sample and the 2003 HH PPS sample.
    Post-surgical patients' CMI grew slightly faster than non-surgical 
patients' CMI over this period. This may represent a change in the mix 
of post-surgical patients, or it may represent stronger effects of 
changed coding practices on post-surgical patients than on non-surgical 
patients. If we make the second assumption--that the growth rate of 
post-surgical patients' case mix was the same as the growth rate of 
non-surgical patients' case mix--then the increase in the national CMI 
should have been marginally smaller than 0.099 (smaller by about one-
half of 1 percent). Because our second assumption caused a very small 
reduction in the CMI increase, we conclude that only a very small 
portion of the substantial growth in CMI might be attributable to 
having more severe surgical patients under HH PPS compared to HH IPS.
    We believe one possible contributing factor in the slightly faster 
growth in the CMI for surgical patients was uncertainty about how to 
assess the healing status of a surgical wound. As noted above, twice as 
many surgical wounds judged ``most problematic'' were assigned a status 
of ``not healing'' under the HH PPS than under the HH IPS. Fifty 
percent more surgical wounds were assigned a status of ``early and 
partial granulation,'' under the HH PPS. A recent clarification in the 
guidance for assessing healing status is significant, we believe, in 
understanding this change. In July 2006 the Wound Ostomy and Continence 
Nurses Society (WOCN), a national source of expertise in wound 
assessment, and one that CMS encouraged agencies to consult, issued a 
change in guidance on surgical wound assessment. Before that time, 
criteria for a status of ``non-healing'' in a wound closed by primary 
intention were the following: ``incisional separation OR incisional 
necrosis OR signs or symptoms of infection OR no palpable healing 
ridge'' (WOCN Society OASIS Guidance Document--Spring 2001). Criteria 
for a status of ``fully granulating/healing'' were: ``incision well-
approximated with complete epithelialization of incision; no signs or 
symptoms of infection; healing ridge well-defined.'' The July 2006 
revision removed all references to a ``healing ridge'' due to the lack 
of scientific evidence supporting its use as a sign of wound healing. 
Many surgical wounds will not exhibit a healing ridge, though the wound 
is actually healing. To the extent that assessing clinicians paid 
heightened attention to the now-outdated WOCN guidance in adapting to 
the HH PPS, it is likely that they applied the pre-2006 criteria, with 
the result that the national OASIS rate for the healing status of 
surgical wounds indicated more wounds ``not healing'' or at a stage of 
``early and partial granulation.''
    In summary, based upon our above discussion of review of the data 
on OASIS items and our discussion of reasons for coding change, we 
conclude that growth in the national average CMI reflects, to a very 
large extent, coding practice changes against a background of new 
financial incentives. The impact of these forces is evidenced by mostly 
incremental changes in home health population rates of case-mix 
relevant items and not to actual changes in health status. Other than 
the increase in reported numbers of surgical wound patients, changes in 
numbers and characteristics of wound care patients documented on the 
OASIS were modest. While there was substantially more use of aggressive 
treatment plans involving at least 10 therapy visits, the pattern of 
decline in many ADL, IADL and other scale ratings is suggestive of 
added numbers of marginally limited patients, not severely limited 
patients. Moreover, scale ratings for ADL measures, an important part 
of the case-mix system, were likely affected by the manual changes 
noted above emphasizing that safety is a consideration in determining 
the rating. Lastly, we found that the higher rate of reported post-
surgical patients does not contribute to CMI change. Accordingly, as 
noted previously, we are proposing to adjust the national standardized 
60-day episode payment amount to reflect the nominal change in the CMI.
4. Partial Episode Payment Adjustment (PEP Adjustment) Review
    In our July 3, 2000 final rule (65 FR 41128), we described a PEP 
adjustment under the PPS. The PEP adjustment provides a simplified 
approach to the episode definition and accounts for key intervening 
events in a patient's care defined as a beneficiary elected transfer, 
or a discharge and return to the same HHA that warrants a new start of 
care for payment purposes, OASIS, and physician certification of the 
new plan of care. When a new 60-day episode begins, the original 
national standardized 60-day episode payment rate is proportionally 
adjusted to reflect the length of time the beneficiary remained under 
the agency's care before the intervening event. The proportional 
payment is the PEP adjustment.
    The PEP-adjusted episode is paid based on the span of days 
including start of care date or first billable service date through and 
including the last billable service date under the original plan of 
care before the intervening event. The PEP-adjusted payment is 
calculated by using the span of days (first billable service date 
through the last billable service date) under the original plan of care 
as a proportion of 60. The proportion is then multiplied by the 
original case-mix and wage-adjusted national standardized 60-day 
episode payment rate. This method of proration in relation to the span 
of days between the first and last billable service date assumes that 
the rate of visits through time is constant during the episode period.
    Since the July 2000 final rule, we have received comments and 
correspondence pertaining to the PEP adjustment. These have guided our 
research efforts since the HH PPS has been in place. Through a contract 
with Abt Associates, descriptive analysis has been conducted on a large 
sample of claims linked to OASIS assessments from the first 3 years of 
the HH PPS in an effort to better understand the patient 
characteristics associated with PEP-adjusted episodes and the 
circumstances under which PEP-

[[Page 25423]]

adjusted episodes occur. Analysis of patient characteristics revealed 
no appreciable differences between patients in normal episodes and 
patients in PEP episodes with regard to conditions or clinical 
characteristics. (Normal episodes are defined as home health episodes 
of care that are not subject to any of the payment systems adjustments 
(for instance, LUPAs, PEPs, SCICs).) The mix of visits for PEP episodes 
is similar to that of normal episodes.
    Additionally, analysis of a 20 percent sample of 2003 episodes 
showed that approximately 3 percent of all episodes were PEP-adjusted. 
Of those, three types of PEP-adjusted episodes were identified: 
approximately 55 percent of PEP-adjusted episodes involved a discharge 
and return to the same HHA; about 42 percent involved transfers to 
other agencies; and approximately 3 percent involved a move to managed 
care. Regarding the circumstances under which PEP-adjusted episodes 
occur, analysis showed the incidence of inpatient utilization during 
the 60 days following the first day of a PEP-adjusted episode was 14.5 
percent which is lower than the incidence during normal episodes (21.4 
percent). The lower incidence of hospitalizations for patients with 
PEP-adjusted episodes may indicate that these patients are in better 
health than the average home health patient. Along with the patient 
characteristics we examined, this seems to suggest that patients 
experiencing PEP episodes are not necessarily very different from the 
overall population of home health beneficiaries.
    As part of our research efforts, we also examined the different 
components that make up PEP episodes. Our analysis showed that PEP-
adjusted episodes have significantly shorter service periods on average 
(approximately 23.4 days) than all episodes other than LUPAs and SCIC 
episodes (42.0 days). The average of 23.4 days was calculated by 
dividing PEP episodes into their four components. The number of days 
between the start of the episode and the first billable visit averaged 
0.2 days, or 0.4 percent of a full 60-day episode. The paid days, or 
the days between the first billable and last billable visit days, 
averaged 23.4 days or 38.9 percent of a full 60-day episode. The number 
of days between last billable visit to the new episode from-date 
averaged 17.9 days, or 29.9 percent of a full 60-day episode. Finally, 
the number of days between the from-date of the new episode from-date 
to the first episode's original day 60 averaged 18.5 days or 30.8 
percent of a full 60-day episode. Under the current system, payment for 
a PEP episode is adjusted to reflect the paid days only (23.4 days on 
average).
    We further examined the number of visits that occurred during PEP 
episodes. We found that an average of 13.8 visits occur during PEP 
episodes. We recognize that this average represents 75 percent of the 
average number of visits for normal episodes, while the number of paid 
days represents less than 40 percent of the normal 60-day episode. 
Thus, the average proration fraction is about 40 percent of the normal 
episode payment while the number of visits is approximately 75 percent 
of the number delivered during the average normal episode. 
Additionally, the average number of minutes per visit during a PEP 
episode is slightly longer than that of a normal episode for most types 
of visits. Both results provide evidence that there is some front-
loading of visits compared to normal episodes, causing PEP episodes to 
have a faster average rate of visits during the span of days used to 
prorate the episode payment. Because the PEP adjustment proration 
methodology does not take visit occurrence into account, commenters 
have argued that, PEP episodes appear to be systematically 
``underpaid''.
    As we described in the July 3, 2000 final rule, the decision to use 
the span of billable visit dates was made because of the HHA's 
involvement in decisions influencing the intervening events for a 
beneficiary who elected transfer or discharge and returned to the same 
HHA during the same 60-day episode period. Agencies have some 
flexibility in discharge decisions that affect the likelihood of 
incurring a partial episode, whether or not a hospital stay intervenes. 
They also have indirect influence on a beneficiary's decision to 
transfer to another home care provider through the quality of care they 
provide. Current data suggest that PEP episodes are rare and, 
therefore, the current PEP policy may be serving as a deterrent to 
premature discharge. We believe that the PEP adjustment is provided in 
a manner that maintains the opportunity for Medicare patients to choose 
the provider with which they feel most comfortable. Therefore, we are 
proposing that the current system of proportional payments based on 
billable visit dates continue to be the payment methodology for PEP 
episodes. It should also be noted that in many cases, an HHA receives 
payment for an additional full episode which it might not have received 
had the first episode not been subject to a PEP adjustment. We will 
continue to research the nature of HHA resource use during and 
following PEP episodes, as well as explore alternative methodologies 
for payment adjustment.
    At this time, our analysis of PEP episodes does not suggest a more 
appropriate alternative payment policy. We believe that many 
alternative proration rules that we could devise would likely introduce 
adverse incentives into the HH PPS. For example, a proposal to pay PEP 
episodes amounts proportional to the average visit accrual rate we 
observe for PEP episodes would provide agencies with a financial 
incentive to reduce visits in the first few weeks of the episode and/or 
to time the date discharge in relation to the new, prorated schedule of 
payments. For many types of patients, such a delivery pattern would 
likely worsen patient outcomes. We would like to solicit suggestions 
and comments from the public on this matter to guide our continued 
efforts to improve the PEP adjustment policy.
5. Low-Utilization Payment Adjustment (LUPA) Review
    In our July 3, 2000 final rule (65 FR 4117), we described a low-
utilization payment to be implemented under the HH PPS. The LUPA was 
established to reduce the national standardized 60-day episode payment 
rate regardless if the episode is adjusted as a PEP adjustment or SCIC 
adjustment when minimal services are provided during a 60-day episode. 
LUPAs are episodes with four or fewer visits. Payments under a LUPA 
episode are made on a per-visit basis by discipline. For the July 2000 
final rule, the per-visit rates were determined from the audited cost 
report sample we used to design the HH PPS. (The same rates were used 
in calculating the standard episode amount.)
    The per-visit amounts include payment for (1) Non-routine medical 
supplies (NRS) paid under a home health plan of care, (2) NRS possibly 
unbundled to Part B, and (3) a per-visit ongoing OASIS reporting 
adjustment as discussed in the July 3, 2000 final rule (65 FR 41180). 
The LUPA payment rates are not case-mix adjusted. As discussed in the 
July 3, 2000 HH PPS final rule, a standardization factor used to adjust 
the LUPAs was calculated using national claims data for episodes 
containing four or fewer visits. This standardization factor includes 
adjustments only for the wage index.
    The per-visit rates originally listed in the July 2000 rule have 
been updated in the same manner as the standard episode amount. 
Additionally, the payments are adjusted by the wage index in the same 
manner as the standard episode amount.

[[Page 25424]]

    As part of our ongoing research of the HH PPS and to analyze the 
general appropriateness of an adjustment for low-utilization episodes, 
Abt Associates analyzed a 20 percent sample of home health episodes 
covering more than three years of experience under the HH PPS. The 
analysis file was the Fu Associates analytical file linking OASIS with 
home health claims. This allowed the grouping of LUPAs into categories 
for analysis of patient characteristics. There were approximately 
179,845 LUPA episodes in this file, accounting for approximately 13 
percent of episodes.
    The analysis revealed minor differences between patients in LUPA 
episodes and patients in normal episodes. Although, overall, patients 
in LUPA episodes on average had somewhat lower clinical and functional 
severity, a substantial number of patients were in high severity 
groups. LUPA episodes were also just as likely as normal episodes to 
include a hospital stay during the 60-day episode. We believe that some 
LUPAs result from the hospitalization of the patient before a 
significant number of visits have been delivered.
    One indication from these data is that LUPAs are serving as a low-
end outlier payment for certain episodes that incur unexpectedly low 
costs. Other LUPAs result from expected care patterns for patients with 
conditions such as neurogenic bladder and pernicious anemia. The 
incidence of LUPAs has changed little since the HH PPS began, which 
suggests that LUPA episodes are not excessively vulnerable to 
incentives to manipulate care plans for payment purposes. However, we 
continue to believe that the distinction between LUPAs and full 
episodes requires sustained monitoring through medical review and other 
activities. Further, we are aware of the potential for inappropriate 
admissions into LUPA episodes among patients with questionable medical 
necessity for home health care.
    Since the HH PPS went into effect, we have received comments and 
correspondence pertaining to the LUPA policy. In particular, these have 
focused on the suggestion that LUPA payment rates do not adequately 
account for the front-loading of costs in an episode. Further, 
commenters suggested that because of the small number of visits in a 
LUPA episode, HHAs have little opportunity to spread the costs of 
lengthy initial visits over a full episode. CMS has also received 
comments regarding the appropriateness of the 4-visit threshold for 
LUPAs. CMS is not proposing to modify the 4-visit threshold for LUPA 
episodes in this proposed rule. We did look at, and consider, the 4-
visit threshold and possible alternatives to that threshold in our 
analysis of LUPA episodes. Increasing the 4-visit threshold to some 
number greater than 4 would result in a HH PPS in which we have an even 
greater percentage of LUPA, which are per-visit reimbursed episodes and 
could be interpreted as a move closer toward a per-visit payment 
system. This is not the direction we want to go with a bundled 
prospective payment system as is the HH PPS. Conversely, decreasing the 
4-visit threshold to some number less than 4 would result in an 
overpayment of episodes, in that episodes with 4 visits would then 
receive a full episode payment. As a result, we have concentrated our 
efforts to address the payment of certain types of LUPA episodes, in 
particular, LUPA episodes occurring as the only episode and 
circumstances where a LUPA episode is the initial episode in a sequence 
of adjacent episodes.
    To examine this assertion, Abt Associates conducted a descriptive 
analysis of LUPA episodes. Of particular interest are the findings 
pertaining to the average visit length of LUPAs occurring in the 
initial episode of a sequence of adjacent episodes or occurring as the 
only episode (constituting approximately 59 percent of all LUPA 
episodes). An examination of visit log data predating the HH PPS, used 
for the original Abt case-mix study (July 2000 Final Rule), revealed 
that the average visit length for nursing for an initial assessment is, 
on average, twice as long as the length for other nursing visits. 
Likewise, an initial assessment visit made by a physical therapist 
averaged 25 percent more than other physical therapy visits. These 
estimates paralleled findings from a 2001 Government Accountability 
Office (GAO) study that reported that the OASIS added an average of 40 
minutes to a typical start of care visit. We found that the average 
visit lengths in initial and only episode LUPAs are 16 to 18 percent 
higher than the average visit length in initial non-LUPA episodes. In 
comparison, the average visit length for LUPA episodes that occurred 
between initial and ending episodes in a sequence of adjacent episodes 
(approximately 24 percent of all LUPAs) or at the end of a sequence of 
adjacent episodes (approximately 17 percent of all LUPAs) is less than 
or about equal to average visit lengths for corresponding non-LUPA 
episodes.
    The results of this data analysis suggest that initial and only 
episode LUPAs require longer visits, on average, than non-LUPA 
episodes, and that the longer average visit length is due to the start 
of care visit, when the case is opened and the initial assessment takes 
place. We agree with commenters to the extent that these analyses of 
initial and only episode LUPA episodes indicate that payments for such 
episodes may not offset the full cost of initial visits. This is likely 
due to the fact that the LUPA per-visit payment rates were originally 
set based on the costs of an average visit, not the costs of the subset 
of visits incurred by patients receiving four or fewer visits during an 
initial or only episode LUPA; for these patients, a large share of 
total visits comprises initial visits. However, the comparisons of 
average minutes per visit for LUPA episodes occurring within or at the 
end of a sequence of episodes do not support a proposal for payment 
increases for those types of LUPAs.
    Based upon our initial review that initial or only episode LUPAs 
may not reflect the full costs incurred for the visits delivered, we 
then conducted further analysis to determine an appropriate payment 
increase for initial or only episode LUPAs. Analyzing a 10 percent 
sample of 2003 episodes, we found that 75 percent of LUPA episodes 
involved nursing without physical therapy while 15 percent of LUPAs 
involved physical therapy without skilled nursing. Almost all of the 
remaining 10 percent of episodes involved a mix of physical therapy and 
skilled nursing. Although the discipline that delivered the initial 
visit may not be identified in the sample file, for deriving payment 
rates based upon our analysis noted above, we have assumed the share of 
initial assessment visits from skilled nursing is 80 percent and the 
share of initial assessment visits from physical therapy is 20 percent. 
We then used these percentages to calculate the estimated value of 40 
minutes added to the initial visit for start of care episodes. We 
relied upon the GAO report noted above, as the basis for the estimate 
of 40 minutes. For this calculation, we multiplied the current per-
visit rate by the percentage increase in the average visit length. The 
average visit length was calculated from all non-LUPA episodes in the 
Abt sample file. Specifically, we multiplied, for the value of extra 
skilled nursing visits, the LUPA base rate of $105.07 for skilled 
nursing (trended forward from the original rate of $98.85) by the 
percentage over average skilled nursing visit length (0.860215) and by 
the share of initial assessment visits from skilled nursing (0.80). The 
product was $72.31. Next, we multiplied, for the value of

[[Page 25425]]

extra physical therapy minutes, the LUPA base rate of $114.89 for 
physical therapy (trended forward to CY 2008 from the original rate of 
$108.08) by the percentage over average physical therapy visit length 
(0.858369) and by the share of initial assessment visits from physical 
therapy (0.20). The product was $19.72. Finally, we summed these 
weighted values to calculate a total average value of $92.03 ($72.31 + 
$19.72 = $92.03).
    In the July 3, 2000, HH PPS final rule (65 FR 41187), we adjusted 
the per-visit rate by 1.05 to account for outlier payments. Therefore, 
we are proposing to multiply the $92.03 by 1.05 and then reduce this 
amount to account for the estimated percentage of outlier payments as a 
result of the current FDL ratio of 0.67 (see section II.A.8. of this 
proposed regulation), resulting in an amount of $92.63.
    Given the findings from the descriptive analysis of LUPA episodes 
and total average value of excess visit length for initial visits in 
certain LUPA episodes, we propose an increase of $92.63 for LUPA 
episodes that occur as the only episode or the initial episode during a 
sequence of adjacent episodes. Again, as defined in section II.A.2 of 
this proposed rule, a sequence of adjacent episodes is defined as a 
series of claims with no more than 60 days between the end of one 
episode and the beginning of the next episode (except for episodes that 
have been PEP-adjusted). In Sec.  484.230, we are proposing to add a 
third, fourth, and fifth sentence after the second sentence to define 
the term ``sequence of adjacent episodes'' for the purpose of 
identifying situations where the LUPA is the beneficiary's only episode 
or the initial episode in a sequence of adjacent episodes. We propose 
to pay an additional low-utilization payment adjustment LUPA episodes 
which are either the only episode or the initial episode in a sequence 
of adjacent episodes, and note the additional payment for such LUPA 
episodes will be updated annually by the home health market basket 
percentage increase. As with the other components of the LUPA 
methodology, this increase for situations where a LUPA is the only 
episode or the initial episode in a sequence of adjacent episodes will 
be wage-adjusted. We believe this increase allows HHAs fair 
compensation for the cost of lengthier start of care visits in LUPA 
episodes. To maintain budget neutrality, we further propose that the 
national standardized 60-day episode payment rate be reduced. We 
determined the budget neutral national standardized 60-day episode 
payment rate that compensates for the extra payment of $92.63, as well 
as for other proposed changes in this proposed rule, from simulating 
the new payment system on our 2003 claims sample. The results are shown 
in the section II. D.
    We are soliciting comments on our methodology for arriving at an 
adjustment to achieve fair compensation for the cost of lengthier start 
of care visits in LUPA episodes. An alternative methodology is basing 
the estimated additional time on claims-based reports of lengths of the 
first visit in initial and only episode LUPAs. We expect to test the 
adequacy of such an alternative methodology using a large, 
representative CY 2005 claims sample that would be available before the 
final rule. We are specifically soliciting comments on alternative 
methodologies.
6. Significant Change in Condition (SCIC) Review
    The SCIC adjustment occurs when a beneficiary experiences a SCIC 
during the 60-day episode that was not envisioned in the original plan 
of care. In our final rule published July 3, 2000 in the Federal 
Register (65 FR 41128), we established the SCIC adjustment to be the 
proportional payment adjustment reflecting the time both before and 
after the patient experienced a SCIC during the 60-day episode. In 
order to receive a new case-mix assignment for purposes of SCIC payment 
during the 60-day episode, the HHA must complete an OASIS and obtain 
the necessary physician orders reflecting the significant change in 
treatment in the patient's plan of care.
    Currently, the SCIC adjustment is calculated in two parts. The 
first part of the SCIC adjustment reflects the adjustment to the level 
of payment before the significant change in the patient's condition 
during the 60-day episode. The second part of the SCIC adjustment 
reflects the adjustment to the level of payment after the significant 
change in the patient's condition occurs during the 60-day episode.
    The first part of the SCIC adjustment is determined by taking the 
span of days (first billable service date through the last billable 
service date) before the patient's SCIC as a proportion of 60 
multiplied by the original episode payment amount. The original episode 
payment level is proportionally adjusted using the span of time the 
patient was under the care of the HHA before the SCIC that required an 
OASIS, physician orders indicating the need for a change in the 
treatment plan, and the new case-mix assignment for the remainder of 
the 60-day episode.
    The second part of the SCIC adjustment reflects the time the 
patient is under the care of the HHA after the patient experienced a 
SCIC during the 60-day episode that required the new case-mix 
assignment. The second part of the SCIC adjustment is a proportional 
payment adjustment reflecting the time the patient will be under the 
care of the HHA after the SCIC and continuing until another significant 
change or until the end of the 60-day episode. Once the HHA completes 
the OASIS, determines the new case-mix assignment, and obtains the 
necessary physician change orders reflecting the need for a new course 
of treatment, the second part of the SCIC adjustment begins. The second 
part of the SCIC adjustment is determined by taking the span of days 
(first billable service date through the last billable service date) 
after the patient experiences the SCIC through the balance of the 60-
day episode (or until the next significant change, if any) as a 
proportion of 60 multiplied by the new episode payment level resulting 
from the significant change.
    Since we proposed the SCIC adjustment in October 1999 (64 FR 
58134), we have received comments and correspondence regarding the 
appropriateness and the complexity of the SCIC adjustment methodology. 
These suggestions expressed concerns that SCIC adjustments may be 
difficult to apply appropriately. Additionally, analysis of HHA margins 
using a sample of approximately 2,500 cost reports suggested that SCIC 
episodes did not necessarily account for the cost associated with a 
patient in a SCIC episode. These concerns guided our descriptive 
analysis of SCIC episodes and our investigation of possible 
alternatives to SCIC adjustment.
    The SCIC policy was designed and implemented primarily to protect 
HHAs from receiving a lower, inadequate payment for a patient that 
unexpectedly got worse and became more expensive to the agency during 
the course of a 60-day episode. While it is also possible that a 
patient could become unexpectedly better, resulting in a patient 
needing far fewer resources and costing the agency less, such instances 
were expected to be few. For patients who experienced an unexpected 
adverse significant change in condition, but the agency would actually 
receive lower payments when applying the computation for deriving a 
SCIC payment, agencies were instructed that they did not have to report 
a SCIC.
    Abt Associates, under contract to CMS to conduct analysis and 
simulation of refinements to HH PPS, first conducted several 
descriptive analyses

[[Page 25426]]

examining the payment accuracy for SCIC-adjusted episodes. As with the 
LUPA, they used the Fu Associates' large analytic file consisting of 
home health claims linked to OASIS. Analyses included examination of 
trends in rates and other utilization statistics relating to SCIC 
episodes, OASIS characteristics for SCIC episodes, and estimation of 
margins for SCIC episodes.
    Results of the analyses indicated that SCIC episodes have been 
declining since HH PPS began. Approximately 3.7 percent of episodes 
were reported as SCIC episodes in the first quarter of the HH PPS 
(October 1, 2000, to December 31, 2000); they decreased to 2.1 percent 
of episodes by the first quarter of CY 2004. SCIC episodes tended to be 
longer than the average episode (excluding LUPAs), and were more likely 
to occur in facility-based agencies and rural agencies. There was some 
evidence that the percentage of episodes in the highest category of the 
services utilization dimension of the case-mix system increased for 
SCIC episodes over time. SCIC episodes had a higher likelihood of using 
at least 10 therapy visits, and this excess grew over time. Overall, 
patients experiencing SCIC episodes differed little in terms of case-
mix characteristics from the average home health patient, except for a 
higher incidence of dyspnea, ADL limitations, and those recently 
discharged from acute care.
    The margin analysis suggested that, on average, SCIC episodes had 
negative margins, even though the SCIC payment policy allows agencies 
to avoid declaring a SCIC if an episode that experiences an adverse 
significant change in condition would be paid less than the original 
case-mix adjusted payment. One reason for the negative margin estimate 
appears to be that in some cases agencies inappropriately applied the 
SCIC adjustment for patients experiencing a significant adverse change, 
when in doing so the agency actually received lower payments for those 
patients. Also, the proportional payment policy, which reduces payment 
in proportion to the number of days between the last visit before the 
significant change in condition and the first visit following the 
significant change, results in increasingly lower payments as the 
number of days between the last and next visit increases. In contrast, 
a normal episode payment is not affected by periods when visits do not 
occur.
    As noted above, we believe that HHAs have had difficulty in 
interpreting when to apply the SCIC adjustment policy. Agencies also 
reported additional administrative burdens from adhering to the policy. 
Furthermore, there has been a 2 percent decline in use of the SCIC 
adjustments since the implementation of the HH PPS. We have received 
comments that stated eliminating the SCIC policy altogether might be 
better than having a SCIC policy that is difficult to understand and 
adhere to. Given these concerns, we decided to focus our analysis on 
simulating the impact of eliminating the SCIC adjustment policy. We 
performed this simulation by repricing SCIC claims to use the first 
HHRG during the episode for determining the payment, and eliminating 
any proration. We then compared the total expenditures before and after 
making this change.
    The results of eliminating the SCIC policy suggested little impact 
on outlays--an increase of 0.5 percent of total payments. The 
difference in total payments was less than one-half of one percent for 
all categories of agencies (urban versus rural, by size, and 
ownership).
    Based on these findings, we are proposing to eliminate the SCIC 
adjustment from the HH PPS. Specifically, we are proposing in Sec.  
484.205 to remove paragraph (e) concerning the SCIC adjustment policy 
from the HHA PPS. We are also proposing to redesignate paragraph (f) as 
paragraph (e). In addition, we are proposing to amend our regulations 
at Sec.  484.205 by removing paragraph (a)(3) and redesignating 
paragraph (a)(4) as paragraph (a)(3). Furthermore, we proposing to 
revise paragraph (b) introductory text to read as follows: ``(b) 
Episode payment. The national prospective 60-day episode payment 
represents payment in full for all costs associated with furnishing 
home health services previously paid on a reasonable cost basis (except 
the osteoporosis drug listed in section 1861(m) of the Act as defined 
in section 1861(kk) of the Act) as of August 5, 1997 unless the 
national 60-day episode payment is subject to a low-utilization payment 
adjustment set forth in Sec.  484.230, a partial episode payment 
adjustment set forth at Sec.  484.235, or an additional outlier payment 
set forth in Sec.  484.240. All payments under this system may be 
subject to a medical review adjustment reflecting beneficiary 
eligibility, medical necessity determinations, and HHRG assignment. DME 
provided as a home health service as defined in section 1861(m) of the 
Act continues to be paid the fee schedule amount.'' We are also 
proposing to remove Sec.  484.237 relating to the methodology used for 
the calculation of the significant change in condition payment 
adjustment.
    Episodes that are currently SCIC adjusted would be treated as 
normal episodes and will receive payment for the entire 60-day period 
based on the initial, and only, HHRG code. The national standardized 
60-day episode payment rate in section II.A.2.c of the proposed rule 
takes into account this proposed change in SCIC policy and is, 
therefore, slightly lower than it would have been without proposing 
this change. We believe the elimination of the SCIC adjustment policy 
would have a minor impact on home health agency operations and 
revenues, because SCIC episodes are very infrequent. Our estimate of 
the cost of eliminating the SCIC policy, implemented in a budget 
neutral manner as a reduction to the national standardized 60-day 
payment rate, is presented in section II.D and reported in the 
accompanying table (Table 23b). The estimated reduction is $15.71. We 
discussed this proposal at a meeting with the contractor's TEP in March 
2006. We received favorable feedback noting that our proposal would be 
an appropriate simplification of the HH PPS.
7. Non-Routine Medical Supply (NRS) Amounts Review
    As described in the HH PPS final rule published in the Federal 
Register (65 FR 41180) and modified in the June 1, 2001, correction 
notice (66 FR 32777), the NRS amounts included in the per-episode 
payment and initially paid on a reasonable cost basis under a home 
health plan of care, were calculated by summing the NRS costs using 
audited cost reports from 1997. The NRS costs for all the providers in 
that audited cost report sample were then weighted to represent the 
national population and updated to FY 2001. That weighted total was 
divided by the number of episodes for the providers in the audited cost 
report sample, to obtain the average cost per episode of NRS reported 
as costs on the cost report. This amount was $43.54.
    The possible unbundled NRS, billed under Medicare Part B and not 
reflected in on the home health cost report, were also included in the 
HH PPS national standardized 60-day episode payment rate by summing the 
allowed charges for 176 Healthcare Common Procedure Coding System 
(HCPCS) codes, reflecting NRS codes, in CY 1998 for beneficiaries under 
a home health plan of care. That total was divided by the total number 
of episodes in CY 1998 from the episode database, to obtain the average 
cost of unbundled NRS per episode. This amount was $6.08.
    The total of the two amounts $43.54 and $6.08, or $49.62, was added 
to the national total prospective payment

[[Page 25427]]

amount per 60-day episode for CY 2001 (before standardization). The 
standardized amount has been subsequently updated annually.
    Since the proposal and adoption of this methodology for payment of 
NRS, we have received comments expressing concern about the cost of 
supplies for certain patients with ``high'' supply costs. In 
particular, commenters were concerned about the adequacy of payment for 
some patients with pressure ulcers, stasis ulcers, other ulcers, 
wounds, burns or trauma, cellulitis, and skin cancers.
    In general, NRS use is unevenly distributed across episodes of care 
in home health. While most patients do not use NRS, many use a small 
amount, and a small number of patients use a large amount of NRS. The 
payment for NRS included in the HH PPS standardized payment rate does 
not reflect this distributional variation. Furthermore, the current 
case-mix adjustment of the standardized amount, which effectively 
adjusts the NRS payment we originally included, may not be the most 
appropriate way to account for NRS costs.
    In order to investigate the performance of the payment methodology 
for NRS and to explore an approach to case-mix adjustment of the NRS 
component of the payment, our contractor, Abt Associates, performed 
several analyses of the current system. The analysis file was 
constructed by Abt Associates from a sample of 2001 cost reports, which 
were needed to determine cost-to-charge ratios. The cost reports were 
then linked to claims. The claims came from an analytic file 
constructed by Fu Associates that links home health claims and OASIS.
    The cost report sample was analyzed to detect or correct extremely 
implausible cost data (that is, if cost report erroneously inverted 
ratio of costs to charges, this was corrected). Many cost reports were 
dropped after this initial analysis because the cost-to-charge ratio 
for nonroutine medical supplies was zero. Then, we retrieved Medicare 
claims for patients admitted to the agencies with remaining cost 
reports, in order to ensure that the cost report totals for non-routine 
supplies were consistent with total charges for non-routine supplies 
that we obtained from the provider's claims. Additional cost reports 
were dropped from the sample at this step. At the end of this process, 
from an initial sample of 2,864 cost reports, 1,207 cost reports were 
considered usable.
    The cost report data were then merged with a random sample of data 
from 496,237 ``normal'' home health episodes from the same set of 
agencies used in the sample data. Normal episodes were defined as 
episodes that did not include additional adjustments such as LUPAs or 
PEP adjustments. ``Cost-to-charge'' ratios generated from the cost 
reports were used to estimate NRS costs for the episodes in the sample.
    The exploration of case-mix adjustment for NRS costs was conducted 
in a manner similar to the way Abt Associates developed the initial 
case-mix model. We created regression equations that used OASIS 
measures to predict episode-level NRS costs. One equation used the 
current case-mix variables. This equation explained approximately 10 
percent of the variation in NRS costs in this data sample. This 
provided a baseline against which to judge the performance of set 
variables that differ from the set used in the current HH PPS case-mix 
system.
    Models were developed after creating additional variables from 
OASIS items and targeting certain conditions expected to be predictors 
of NRS use based on clinical considerations. Many of these conditions 
were skin-related.
    The end result of the model exploration process was two versions of 
the ``best-fitting'' variable set. This best fitting variable set 
consisted of more than two dozen indicators for diagnoses, wound 
conditions, and certain prosthetics captured on the OASIS. The 
variables could be used as the basis for improved prediction of NRS 
costs. These variables represent measurable conditions that have been 
the subject of extensive education by CMS in its administration of the 
OASIS system, and by others such as the ICD-9-CM coding committee with 
its interest in coding accuracy. Therefore, we believe this variable 
set would be the basis for a methodology to account for NRS costs that 
is feasible to administer and does not create significant new payment 
concerns.
    The first alternative model using the best-fitting variables 
divided episodes into two episode groups, with one group containing 
first and second episodes (early), and the second containing third and 
later episodes (later). The second alternative model does not 
distinguish between early and later episodes. These ``best fit'' models 
were then used to construct a scoring system. Each condition in the 
best-fit models was assigned one point for each $5 increment in NRS 
cost as determined from the model results. For example, if a variable 
representing a clinical condition predicted a $50 increase in cost, an 
episode with that variable would be given 10 points. We summed the 
condition-specific scores for each episode. We then placed those sums 
into five severity groups. For the model that separated early from 
later episodes we defined 10 severity groups, five for early episodes 
and 5 for later episodes. This system explained about 13.7 percent of 
NRS cost variation in the sample. The model that pooled all episodes 
had 5 severity groups and explained 13.0 percent of the variation in 
NRS costs.
    We note, because there is a limited performance advantage of the 
two-episode group model over the single model, we are proposing to use 
the simpler model that pays all episodes, whether early or later 
episodes, using the same set of severity groups. Table 11 shows the 
relative weights and payment weights for the five severity levels in 
the proposed NRS model, and Table 12a sets forth the NRS scores for the 
five-group model. We will continue to evaluate the ICD-9-CM codes 
listed for each group (Table 12b) to ensure as much as possible that 
condition-related scores are based on ICD-9-CM codes that are specific, 
unambiguous, and use diagnostic criteria widely accepted within the 
medical community. In addition to refining the list of conditions 
contained within each diagnostic group (Table 12b), we intend to 
continue to study ways of improving the statistical performance of all 
the variables represented in Table 12a. We solicit public comment to 
help inform our efforts. We also intend to update the data base upon 
which our payment proposal for NRS is based. Our ability to update the 
data files will depend on the quality of data available in claims and 
cost reports for succeeding years. If the data are not found to be 
sufficiently complete and accurate, we would use the existing data for 
any final revisions that result from further analysis and public 
comments.
    In addition to computing the R-square statistic as a summary of the 
system's performance, we examined the improvements in payment accuracy 
for NRS costs per episode, according to selected characteristics of the 
episode. The magnitude of change is difficult to report with a high 
degree of certainty because of the limited data resources available for 
these analyses.
    We found that under our proposal NRS payments for episodes 
reporting no NRS charges on the episode claim would better reflect the 
absence of NRS costs incurred in such an episode, by having their 
payment for NRS reduced. For the remaining claims--those reporting any 
amount of NRS costs--on average we estimate that NRS payments would 
come significantly closer to their estimated NRS costs under the 
proposed

[[Page 25428]]

new system of accounting for NRS. For the subgroups of episodes with 
the OASIS conditions listed in Table 11, under our proposal, the 
difference between the estimate of average NRS costs incurred and the 
proposed amount to account for those NRS costs would decrease in a 
similar manner, with some differences becoming even smaller.
    However, our ability to predict NRS costs remains limited. We have 
not yet developed a statistical model that has performed with a high 
degree of predictive accuracy. Some of the reasons for this result 
include the limited data available to model NRS costs, and the 
likelihood that OASIS does not have any measures available for some 
kinds of NRS. Nevertheless, we are proposing to change the payment 
system because the majority of episodes do not incur any NRS costs, and 
the current payment system overcompensates these episodes. Further, we 
believe the proposed approach is appropriate to the extent that we have 
developed a way to account for NRS costs that is based on measurable 
conditions, is feasible to administer, and offers HHAs some protection 
against episodes with extremely high NRS costs. As we noted earlier in 
this section, we will continue to look into ways to improve the 
predictive model we are proposing to account for NRS costs. We solicit 
suggestions and comments from the public on this matter.
    In the course of conducting the NRS analysis, we discovered a 
possible source of error in reporting on claims. Data analysis 
suggested that enteral nutrition patients were incurring higher NRS 
costs than average and, in our model, could be assigned a moderate 
score for NRS cost. However, we did not find evidence from our analyses 
that any category of NRS other than enteral supplies would 
systematically account for the NRS finding in the model for enteral 
nutrition patients. These patients often have a very compromised health 
status, including skin and other conditions that are already accounted 
for in our model. Further, we explored other possibilities to determine 
if information was missing from the model. If available, such 
information could be added to the model to explain the scores we found 
for the enteral nutrition variable. However, we did not gather any 
information that produced any additional hypotheses. An important 
remaining hypothesis is that some providers are reporting enteral 
supplies charges for these patients in error; in fact, at least one 
large provider has indicated this was the case. We are proposing to 
exclude the enteral nutrition variable from the model to ensure 
compliance with the statute and regulations governing enteral 
nutrition, as noted below; but, we welcome comments on this issue.
    As we stated in the final HH PPS rule dated July 3, 2000 (65 FR 
41139), ``Part B services such as parenteral or enteral nutrition are 
neither currently covered as home health services nor defined as non-
routine medical supplies. Parenteral or enteral nutrition would 
therefore not be subject to the requirements governing home health 
consolidated billing.''
    If the patient requires medical supplies that are currently covered 
and paid for under the Medicare home health benefit during a certified 
episode under HH PPS, the billing for those medical supplies falls 
under the auspices of the HHA due to the consolidated billing 
requirements. As parenteral and enteral nutrition are not covered or 
paid for under the Medicare home health benefit, they should be billed 
separately by the supplier or provider. Because we assumed that some 
providers are reporting these supplies in error, we believe it is 
important to again note the Medicare coverage requirements for 
parenteral and enteral nutrition to prevent any potential future 
reporting errors.
    Medicare's coverage guidelines for enteral nutrition state: 
``Coverage of nutritional therapy as a Part B benefit is provided under 
the prosthetic device benefit provision which requires that the patient 
must have a permanently inoperative internal body organ or function 
thereof. Therefore, enteral and parenteral nutritional therapy is not 
covered under Part B in situations involving temporary impairments.'' 
The National Coverage Decision (NCD) provides guidance in applying the 
definition of temporary impairment: ``Coverage of such therapy, 
however, does not require a medical judgment that the impairment giving 
rise to the therapy will persist throughout the patient's remaining 
years. If the medical record, including the judgment of the attending 
physician, indicates that the impairment will be of long and indefinite 
duration, the test of permanence is considered met.'' (See Medicare 
National Coverage Determinations [NCD] Manual, Pub. 100-03, Section 
180.2, Chapter 1 (Part 3). Section 1842(s) of the Act implements the 
fee schedule for parenteral and enteral nutrition (PEN) nutrients, 
equipment and supplies. The general payment rules for PEN effective on 
or after January 1, 2002, are stipulated in Sec.  414.102 and Sec.  
414.104.
    The following is the list of HCPCS codes which may be used to claim 
reimbursement for enteral nutrition. Providers may claim reimbursement 
for it on the UB-92 claim form if they report the appropriate HCPCS 
code and revenue center code. Payment is made by the RHHI under the 
Medicare Fee Schedule.
BILLING CODE 4120-01-P

[[Page 25429]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.034

    Notwithstanding our proposal to exclude enteral nutrition from the 
list of conditions included as NRS, we now describe our proposed 
revision to the payment methodology to account for NRS costs. We 
propose to account for

[[Page 25430]]

NRS costs based on five severity groups and a national conversion 
factor. Table 12a shows the condition-specific scores derived from the 
NRS model. Table 12b shows the ICD-9-CM diagnosis codes used to define 
conditions that are based on diagnosis codes. The sum of scores for 
each episode is then used to group episodes into one of five severity 
groups, as follows: Group 0 if the sum is zero; group 1 for 1 to 16; 
group 2 for 17 to 34; group 3 for 35 to 59; and group 4 for 60 or more. 
We defined these five scoring levels from examining the distribution of 
scores in our analysis sample. Most of the episodes (64 percent, see 
Table 11) fell into the group with a score of zero (that is, no 
conditions listed in Table 12b were reported on the OASIS assessment). 
For purposes of payment, relative weights were calculated for each 
severity group based on the estimated average NRS cost, divided by the 
overall average in the sample. The relative weights are listed below in 
Table 11.
    To derive payment, each relative weight is multiplied by the 
conversion factor. We calculated the conversion factor by inflating the 
original allowance included in the episode base rate ($49.62) by the 
total percentage increase since October 2000 using the statutory market 
basket updates. We take the inflated conversion factor of $53.91 and 
multiply it by 1.05 to account for the initial outlier payment noted in 
the July 3, 2000 final rule (65 FR 41187). We then take that product 
and multiply it by 0.958614805 to account for the estimated percentage 
of outlier payments as a result of the current FDL ratio of 0.67. To 
further adjust for the nominal change in case-mix, we multiply the 
$54.26 by 0.9725 for a proposed NRS conversion factor of $52.77. 
Because the market for most NRS is national, we do not propose to have 
a geographic adjustment to the conversion factor. We plan to continue 
to monitor NRS costs to determine if any adjustment for the NRS weights 
is warranted in the future.
    We determined the budget-neutral national standardized 60-day 
episode payment rate that compensates for the payments for NRS under 
the proposed new case-mix-adjusted HH PPS as part of the simulation of 
all proposed changes on our 2003 claims sample. The results are shown 
in section II.D.
    For an example of calculating an HH PPS payment using the NRS 
proposed payment methodology see section II.D.
    We do not propose to apply the five-level NRS payment approach to 
LUPA episodes. In the original design of the HH PPS, $1.94 was built 
into the per-visit rates used to pay for visits in a LUPA episode. This 
amount was the sum of $1.71, the average cost per visit for NRS 
reported as costs on the cost report, and $.23, the average cost per 
visit for NRS possibly unbundled and billed separately to Part B and 
reimbursed on the fee schedule. Recent analysis shows that NRS charges 
for non-LUPA episodes are almost 3 times higher than that for LUPA 
episodes. In general, approximately 1 in 5 LUPAs report NRS while 1 in 
3 non-LUPA episodes report NRS. Our proposal is to redistribute the 
$53.96 currently paid to all non-LUPA episodes. Given that LUPA 
episodes, by nature, are of extremely low visit volume, we do not 
propose to redistribute that $1.94 now paid to LUPA episodes. We 
believe an attempt to develop a model for redistributing the small 
amount of NRS payments ($1.94) paid to LUPA episodes would be 
unproductive.
    Furthermore, we are also concerned that additional payment for 
LUPAs to account for NRS costs could promote increases in medically 
unnecessary home health episodes. In proposing refinements for LUPA 
payments, as discussed in section II.A.5 of this proposed rule, we are 
aware of the potential for increases in medically unnecessary LUPA 
episodes that could result from our proposal for increased LUPA payment 
for only or initial LUPA episodes. Providing for additional NRS 
payments for such LUPAs could only adversely add to this potential. 
Consequently, we are not proposing any additional payments for NRS 
costs for LUPA episodes. However, we are specifically soliciting 
comment on alternative approaches for NRS payment in LUPAs.
    We also considered proposing an outlier policy for NRS costs, but 
we believe one is not administratively feasible at this time. An 
outlier policy for NRS costs would depend on having an infrastructure, 
including a reporting system for the extensive range of nonroutine 
supplies used in home health care, and a basis for assigning allowable 
costs for those supply items. At this time, this kind of infrastructure 
is not sufficiently developed. Many types of NRS cannot be coded under 
the existing reporting system, the HCPCS system, and reliable cost data 
are limited. Therefore, at this time, we also believe an outlier policy 
for NRS cost would be premature. We also recognize the additional 
administrative burdens on agencies that would exist under such an 
outlier policy.
    While we are not proposing an outlier policy for NRS costs, we 
nonetheless urge agencies to provide cost data on cost reports and 
charge data on all claims (including LUPA claims) with the utmost 
precision for possible future use in developing payment proposals for 
NRS under the HH PPS.

                      Table 11.--Proposed Relative Weights for Non-Routine Medical Supplies
----------------------------------------------------------------------------------------------------------------
                                                   Percentage of      Points         Relative
                 Severity level                      episodes        (scoring)        weight      Payment amount
----------------------------------------------------------------------------------------------------------------
0...............................................              63               0          0.2456          $12.96
1...............................................              17            1-16          1.0356           54.65
2...............................................              12           17-34          2.0746          109.48
3...............................................               5           35-59          4.0776          215.17
4...............................................               3             60+          6.9612          367.34
----------------------------------------------------------------------------------------------------------------
Note: Proposed conversion factor = $52.77.


        Table 12a.--NRS Case-Mix Adjustment Variables and Scores
------------------------------------------------------------------------
                                    Description                  Score
------------------------------------------------------------------------
                      SELECTED SKIN CONDITIONS:
1...................  Primary diagnosis = Anal fissure,               19
                       fistula and abscess.
2...................  Primary diagnosis = Cellulitis and              13
                       abscess.
3...................  Primary diagnosis = Gangrene...........         11
4...................  Primary diagnosis = Malignant neoplasms         16
                       of skin.

[[Page 25431]]

 
5...................  Primary diagnosis = Non-pressure and             9
                       non-stasis ulcers.
6...................  Primary diagnosis = Other infections of         19
                       skin and subcutaneous tissue.
7...................  Primary diagnosis = Post-operative              32
                       Complications 1.
8...................  Primary diagnosis = Post-operative              22
                       Complications 2.
9...................  Primary diagnosis = Traumatic Wounds            16
                       and Burns.
10..................  Other diagnosis = Anal fissure, fistula          9
                       and abscess.
11..................  Other diagnosis = Cellulitis and                 6
                       abscess.
12..................  Other diagnosis = Gangrene.............         11
13..................  Other diagnosis = Non-pressure and non-          8
                       stasis ulcers.
14..................  Other diagnosis = Other infections of            7
                       skin and subcutaneous tissue.
15..................  Other diagnosis = Post-operative                15
                       Complications 1.
16..................  Other diagnosis = Post-operative                15
                       Complications 2.
17..................  Other diagnosis = Traumatic Wounds and           7
                       Burns.
18..................  M0450 = 1 pressure ulcer, stage 1 or 2.         12
19..................  M0450 = 2 or 3 pressure ulcers, stage 1         20
                       or 2.
20..................  M0450 = 4+ pressure ulcers, stage 1 or          31
                       2.
21..................  M0450 = 1 or 2 pressure ulcers, stage 3         41
                       or 4.
22..................  M0450 = 3 pressure ulcers, stage 3 or 4         75
23..................  M0450 = 4+ pressure ulcers, stage 3 or          80
                       4.
24..................  M0450 = 5+ pressure ulcers, stage 3 or         143
                       4.
25..................  M0450e = 1(unobserved pressure                  18
                       ulcer(s)).
26..................  M0476 = 2 (status of most problematic           18
                       stasis ulcer: early/partial
                       granulation).
27..................  M0476 = 3 (status of most problematic           28
                       stasis ulcer: not healing).
28..................  M0488 = 3 (status of most problematic           18
                       surgical wound: not healing).
29..................  M0488 = 2 (status of most problematic            5
                       surgical wound: early/partial
                       granulation).
                      OTHER CLINICAL FACTORS:
30..................  M0550 = 1 (ostomy not related to inpt           21
                       stay/no regimen change).
31..................  M0550 = 2 (ostomy related to inpt stay/         35
                       regimen change).
32..................  Any ``Selected Skin Conditions'' (see           24
                       rows 1 to 29 above) AND M0550=1(ostomy
                       not related to inpt stay/no regimen
                       change).
33..................  Any ``Selected Skin Conditions'' (see            8
                       rows 1 to 29 above) AND M0550=2
                       (ostomy related to inpt stay/regimen
                       change).
34..................  M0250 (Therapy at home) =1 (IV/                 11
                       Infusion).
35..................  M0470 = 2 or 3 (2 or 3 stasis ulcers)..         17
36..................  M0470 = 4 (4 stasis ulcers)............         34
37..................  M0520 = 2 (patient requires urinary             17
                       catheter).
------------------------------------------------------------------------

BILLING CODE 4120-01-P

[[Page 25432]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.035


[[Page 25433]]


[GRAPHIC] [TIFF OMITTED] TP04MY07.036


[[Page 25434]]


[GRAPHIC] [TIFF OMITTED] TP04MY07.037


    *Note: ``ICD-9-CM Official Guidelines for Coding and Reporting'' 
dictate that a three-digit code is to be used only if it is not 
further subdivided. Where fourth-digit subcategories and/or fifth-
digit subclassifications are provided, they must be assigned. A code 
is invalid if it has not been coded to the full number of digits 
required for that code. Codes with three digits are included in ICD-
9-CM as the heading of a category of codes that may be further 
subdivided by the use of fourth and/or fifth digits, which provide 
greater detail. The category codes listed in Table 12b include all 
the related 4- and 5-digit codes.

8. Outlier Payment Review
    Section 1895(b)(5) of the Act allows for the provision of an 
addition or adjustment to the regular 60-day case-mix and wage-adjusted 
episode payment amount in the case of episodes that incur unusually 
large costs due to patient home health care needs. This section further 
stipulates that total outlier payments in a given CY may not exceed 5 
percent of total projected estimated HH PPS payments.
    In the July 2000 final rule, we described a method for determining 
outlier payments. Under this system, outlier payments are made for 
episodes whose estimated cost exceeds a threshold amount. The episode's 
estimated cost is the sum of the national wage-adjusted per-visit 
payment amounts for all visits delivered during the episode. The 
outlier threshold for each case-mix group, PEP adjustment, or total 
SCIC adjustment is defined as the national standardized 60-day episode 
payment rate, PEP adjustment, or total SCIC adjustment for that group 
plus a fixed dollar loss (FDL) amount. Both components of the outlier 
threshold are wage-adjusted.
    The wage-adjusted FDL amount represents the amount of loss that an 
agency must experience before an episode becomes eligible for outlier 
payments. The FDL is computed by multiplying the wage-adjusted national 
standardized 60-day episode payment amount by the FDL ratio, which is a 
proportion expressed in terms of the national standardized episode 
payment amount. The outlier payment is defined to be a proportion of 
the wage-adjusted estimated costs beyond the wage-adjusted threshold. 
The proportion of additional costs paid as outlier payments is referred 
to as the loss-sharing ratio. The FDL ratio and the loss-sharing ratio 
were selected so that the estimated total outlier payments would not 
exceed the 5 percent level.
    For a given level of outlier payments, there is a trade-off between 
the values selected for the FDL ratio and the loss-sharing ratio. A 
high FDL ratio reduces the number of episodes that may receive outlier 
payments, but makes it possible to select a higher loss-sharing ratio 
and, therefore, increase outlier payments for outlier episodes. 
Alternatively, a lower FDL ratio means that more episodes may qualify 
for outlier payments, but outlier payments per episode must be lower. 
As a result of public comments on the October 28, 1999 proposed rule, 
and in our July 2000 final rule, we made the decision to attempt to 
cover a relatively high proportion of the costs of outlier cases for 
the most expensive episodes that would qualify for outlier payments 
within the 5 percent constraint.
    We chose a value of 0.80 for the loss-sharing ratio, which is 
relatively high, but preserves incentives for agencies to attempt to 
provide care efficiently for outlier cases. It was also consistent with 
the loss-sharing ratios used in other Medicare PPS outlier policies. 
Having made this decision, we estimated the value of the FDL ratio that 
would yield estimated total outlier payments that were projected to be 
no more than 5 percent of total HH PPS payments. The resulting value 
for the FDL ratio was 1.13.
    When the data became available, we performed an analysis of CY 2001 
home health claims data. This analysis revealed that outlier episodes 
represented approximately 3 percent of total episodes and 3 percent of 
total HH PPS payments. Additionally, we performed the same analysis on 
CY 2002 and CY 2003 home health claims data and found the number of 
outlier episodes and payments held at approximately 3 percent of total 
episodes and total HH PPS payments, respectively. Based on these 
analyses and comments we received, we decided that an update to the FDL 
ratio would be appropriate.
    To that end, for the October 2004 final rule, we performed data 
analysis on CY 2003 HH PPS analytic data. The results of this analysis 
indicated that a FDL ratio of 0.70 is consistent with the existing 
loss-sharing ratio of 0.80 and a projected target percentage of 
estimated outlier payments of no more than 5 percent. Consequently, we 
updated the FDL ratio from the initial ratio of 1.13 to the FDL ratio 
of 0.70. Our analysis showed that reducing the FDL ratio from 1.13 to 
0.70 would increase the percentage of episodes that qualified for 
outlier episodes from 3.0 percent to approximately 5.9 percent. A FDL 
ratio of 0.70 also better met the estimated 5 percent target of outlier 
payments to total HH PPS payments. We believed that this updated FDL 
ratio of 0.70 preserved a reasonable degree of cost sharing, while 
allowing a greater number of episodes to qualify for outlier payments.
    Our CY 2006 update to the HH PPS rates (70 FR 68132) changed the 
FDL ratio from 0.70 to 0.65 to allow even more home health episodes to 
qualify for outlier payments and to better meet the estimated 5 percent 
target of outlier payments to total HH PPS payments. For the CY 2006 
update, we used CY 2004 home health claims data.
    In our CY 2007 update to the HH PPS rates (71 FR 65884) we again 
changed the FDL ratio from 0.65 to 0.67 to better meet the estimated 5 
percent target of outlier payments to total HH PPS payments. For the CY 
2007 update, we used CY 2005 home health claims data.
    Under the HH PPS, outlier payments have thus far not exceeded 5 
percent of total HH PPS payments. However, preliminary analysis shows 
that outlier payments, as a percentage of total HH PPS payments, have 
increased on a yearly basis. With outlier payments having increased in 
recent years, and given the unknown effects that the proposed 
refinements of this rule may have on outliers, we are proposing to 
maintain the FDL ratio of 0.67. By maintaining the FDL ratio of 0.67, 
we believe we will continue to meet the statutory requirement of having 
an outlier payment outlay that does not exceed 5 percent of total HH 
PPS payments, while still providing for an adequate number of episodes 
to qualify for outlier payments. Some preliminary analysis shows the 
FDL ratio could be as low as 0.42 in a refined HH PPS. We believe that 
analysis of more recent data could indicate that a change in the FDL 
ratio is appropriate. Consequently for the final rule, we will rely on 
the latest

[[Page 25435]]

data and best analysis available at the time to estimate outlier 
payments and update the FDL ratio if appropriate.
    Because payment for NRS was included in the base rate of the 
national standardized 60-day episode payment rate, under the refined 
system proposed in this proposed rule, both the proposed national 
standardized 60-day episode payment rate and the proposed computed NRS 
amount contribute towards reaching the outlier threshold in the outlier 
payment calculation.

B. Rebasing and Revising of the Home Health Market Basket

1. Background
    Section 1895(b)(3)(B) of the Act, as amended by section 701(b)(3) 
of the MMA, requires the standard prospective payment amounts to be 
adjusted by a factor equal to the applicable home health market basket 
increase for CY 2008.
    Effective for cost reporting periods beginning on or after July 1, 
1980, we developed and adopted an HHA input price index (that is, the 
home health ``market basket''). Although ``market basket'' technically 
describes the mix of goods and services used to produce home health 
care, this term is also commonly used to denote the input price index 
derived from that market basket. Accordingly, the term ``home health 
market basket'' used in this document refers to the HHA input price 
index.
    The percentage change in the home health market basket reflects the 
average change in the price of goods and services purchased by HHAs in 
providing an efficient level of home health care services. We first 
used the home health market basket to adjust HHA cost limits by an 
amount that reflected the average increase in the prices of the goods 
and services used to furnish reasonable cost home health care. This 
approach linked the increase in the cost limits to the efficient 
utilization of resources. For a greater discussion on the home health 
market basket, see the notice with comment period published in the 
Federal Register on February 15, 1980 (45 FR 10450, 10451), the notice 
with comment period published in the Federal Register on February 14, 
1995 (60 FR 8389, 8392), and the notice with comment period published 
in Federal Register on July 1, 1996 (61 FR 34344, 34347). Beginning 
with the FY 2002 HH PPS payments, we used the home health market basket 
to update payments under the HH PPS. We last rebased the home health 
market basket effective with the CY 2005 update. For more information 
on the HH PPS home health market basket, see our proposed rule 
published in the Federal Register on June 2, 2004 (69 FR 31251, 31255).
    The home health market basket is a fixed-weight Laspeyres-type 
price index; its weights reflect the cost distribution for the base 
year while current period price changes are measured. The home health 
market basket is constructed in three steps. First, a base period is 
selected and total base period expenditures are estimated for mutually 
exclusive and exhaustive spending categories based upon the type of 
expenditure. Then the proportion of total costs that each spending 
category represents is determined. These proportions are called cost or 
expenditure weights.
    The second step essential for developing an input price index is to 
match each expenditure category to an appropriate price/wage variable, 
called a price proxy. These proxy variables are drawn from publicly 
available statistical series published on a consistent schedule, 
preferably at least quarterly.
    In the third and final step, the price level for each spending 
category is multiplied by the expenditure weight for that category. The 
sum of these products for all cost categories yields the composite 
index level in the market basket in a given year. Repeating the third 
step for other years will produce a time series of market basket index 
levels. Dividing one index level by an earlier index level will produce 
rates of growth in the input price index.
    We described the market basket as a fixed-weight index because it 
answers the question of how much more or less it would cost, at a later 
time, to purchase the same mix of goods and services that was purchased 
in the base period. As such, it measures ``pure'' price changes only. 
The effects on total expenditures resulting from changes in the 
quantity or mix of goods and services purchased subsequent to the base 
period are, by design, not considered.
2. Rebasing and Revising the Home Health Market Basket
    We believe that it is desirable to rebase the home health market 
basket periodically so the cost category weights reflect changes in the 
mix of goods and services that HHAs purchase in furnishing home health 
care. We based the cost category weights in the current home health 
market basket on FY 2000 data. We are proposing to rebase and revise 
the home health market basket to reflect FY 2003 Medicare cost report 
data, the latest available and most complete data on the structure of 
HHA costs.
    The terms ``rebasing'' and ``revising,'' while often used 
interchangeably, actually denote different activities. The term 
``rebasing'' means moving the base year for the structure of costs of 
an input price index (that is, in this exercise, we are proposing to 
move the base year cost structure from FY 2000 to FY 2003). The term 
``revising'' means changing data sources, cost categories, and/or price 
proxies used in the input price index.
    For this proposed revising and rebasing, we modified the wages and 
salaries and benefits cost categories in order to reflect a new data 
source on the occupational mix of HHAs. We mainly relied on this 
alternative proposed data source to construct the cost weights for the 
blended wage and benefit index. We are not proposing any changes to the 
price proxies used in the HH market basket or the HH blended wage and 
benefit proxies.
    The weights for this proposed revised and rebased home health 
market basket are based off of the cost report data for freestanding 
HHAs, whose cost reporting period began on or after October 1, 2002 and 
before October 1, 2003. Using this methodology allowed our sample to 
include HHA facilities with varying cost report years including, but 
not limited to, the federal fiscal or calendar year. We refer to the 
market basket as a fiscal year market basket because the base period 
for all price proxies and weights are set to FY 2003. For this proposed 
rebased and revised market basket, we reviewed HHA expenditure data for 
the market basket cost categories.
    We proposed to maintain our policy of using data from freestanding 
HHAs because they better reflect HHAs actual cost structure. Expense 
data for a hospital-based HHA are affected by the allocation of 
overhead costs over the entire institution (including but not limited 
to hospital, hospital-based skilled nursing facility, and hospital-
based HHA). Due to the method of allocation, total expenses will be 
correct, but the individual components' expenses may be skewed. 
Therefore, if data from hospital-based HHAs were included, the 
resultant cost structure could be unrepresentative of the average HHA 
costs.
    Data on HHA expenditures for nine major expense categories (wages 
and salaries, employee benefits, transportation, operation and 
maintenance, administrative and general, insurance, fixed capital, 
movable capital, and a residual ``all other'') were tabulated from the 
FY 2003 Medicare HHA cost reports. As

[[Page 25436]]

prescription drugs and DME are not payable under the HH PPS, we 
excluded those items from the home health market basket and from the 
expenditures. Expenditures for contract services were also tabulated 
from these FY 2003 Medicare HHA cost reports and allocated to wages and 
salaries, employee benefits, administrative and general, and other 
expenses. After totals for these cost categories were edited to remove 
reports where the data were deemed unreasonable (for example, when 
total costs were not greater than zero), we then determined the 
proportion of total costs that each category represents. The 
proportions represent the major rebased home health market basket 
weights.
    We determined the weights for subcategories (telephone, postage, 
professional fees, other products, and other services) within the 
combined administrative and general and other expenses using the latest 
available (1997 Benchmark) U.S. Department of Commerce, Bureau of 
Economic Analysis (BEA) Input-Output (I-O) Table, from which we 
extracted data for HHAs. The BEA I-O data, which are updated at 5-year 
intervals, were most recently described in the Survey of Current 
Business article, ``Benchmark Input-Output Accounts of the U.S., 1997'' 
(December 2002). These data were aged from 1997 to 2003 using relevant 
price changes.
    The methodology we used to age the data applied the annual price 
changes from the price proxies to the appropriate cost categories. We 
repeated this practice for each year.
    This work resulted in the identification of 12 separate cost 
categories, the same number found in the FY 2000-based home health 
market basket. The differences between the major categories for the 
proposed FY 2003-based index and those used for the current FY 2000-
based index are summarized in Table 13. We have allocated the 
contracted services weight to the wages and salaries, employee 
benefits, and administrative and general and other expenses cost 
categories in the proposed FY 2003-based index as we did in the FY 
2000-based index.

 Table 13.--Comparison Of 2000-Based and Proposed 2003-Based Home Health
            Market Baskets Major Cost Categories and Weights
------------------------------------------------------------------------
                                                          Proposed 2003-
                                            2000-Based      based home
             Cost categories                home health    health market
                                           market basket      basket
------------------------------------------------------------------------
Wages and Salaries, including allocated           65.766          64.484
 contract services' labor...............
Employee Benefits, including allocated            11.009          12.598
 contract services' labor...............
All Other Expenses including allocated            23.225          22.918
 contract services' labor...............
                                         -------------------------------
    Total...............................         100.000         100.000
------------------------------------------------------------------------

    The complete proposed 2003-based cost categories and weights are 
listed in Table 14.

Table 14.--Cost Categories, Weights, and Price Proxies in Proposed 2003-
                     Based Home Health Market Basket
------------------------------------------------------------------------
          Cost categories               Weight          Price proxy
------------------------------------------------------------------------
Compensation, including allocated         77.082  ......................
 contract services' labor.
Wages and Salaries, including             64.484  Proposed Home Health
 allocated contract services' labor.               Occupational Wage
                                                   Index.
Employee Benefits, including              12.598  Proposed Home Health
 allocated contract services' labor.               Occupational Benefits
                                                   Index.
Operations & Maintenance...........        0.694  CPI-U Fuel & Other
                                                   Utilities.
Administrative & General & Other          16.712  ......................
 Expenses including allocated
 contract services' labor.
Telephone..........................        0.785  CPI-U Telephone
                                                   Services.
Postage............................        0.605  CPI-U Postage.
Professional Fees..................        1.471  ECI for Compensation
                                                   for Professional and
                                                   Technical Workers.
Other Products.....................        7.228  CPI-U All Items Less
                                                   Food and Energy.
Other Services.....................        6.622  ECI for Compensation
                                                   for Service Workers.
Transportation.....................        2.494  CPI-U Private
                                                   Transportation.
Capital-Related....................        3.018  ......................
Insurance..........................        0.510  CPI-U Household
                                                   Insurance.
Fixed Capital......................        1.618  CPI-U Owner's
                                                   Equivalent Rent.
Movable Capital....................        0.890  PPI Machinery &
                                                   Equipment.
                                    ------------------------------------
    Total..........................      100.000  **
------------------------------------------------------------------------
** Figures may not sum to total due to rounding.

    After we computed the FY 2003 cost category weights for the 
proposed rebased home health market basket, we selected the most 
appropriate wage and price indexes to proxy the rate of change for each 
expenditure category. These price proxies are based on Bureau of Labor 
Statistics (BLS) data and are grouped into one of the following BLS 
categories:
     Employment Cost Indexes--Employment Cost Indexes (ECIs) 
measure the rate of change in employee wage rates and employer costs 
for employee benefits per hour worked.

[[Page 25437]]

These indexes are fixed-weight indexes and strictly measure the change 
in wage rates and employee benefits per hour. They are not affected by 
shifts in skill mix. ECIs are superior to average hourly earnings as 
price proxies for input price indexes for two reasons: (a) They measure 
pure price change; and (b) they are available by occupational groups, 
not just by industry.
     Consumer Price Indexes--Consumer Price Indexes (CPIs) 
measure change in the prices of final goods and services bought by the 
typical consumer. Consumer price indexes are used when the expenditure 
is more similar to that of a purchase at the retail level rather than 
at the wholesale level, or if no appropriate Producer Price Indexes 
(PPIs) were available.
     Producer Price Indexes--PPIs are used to measure price 
changes for goods sold in other than retail markets. For example, a PPI 
for movable equipment is used rather than a CPI for equipment. PPIs in 
some cases are preferable price proxies for goods that HHAs purchase at 
wholesale levels. These fixed-weight indexes are a measure of price 
change at the producer or at the intermediate stage of production.
    We evaluated the price proxies using the criteria of reliability, 
timeliness, availability, and relevance. Reliability indicates that the 
index is based on valid statistical methods and has low sampling 
variability. Widely accepted statistical methods ensure that the data 
were collected and aggregated in way that can be replicated. Low 
sampling variability is desirable because it indicates that sample 
reflects the typical members of the population. (Sampling variability 
is variation that occurs by chance because a sample was surveyed rather 
than the entire population.) Timeliness implies that the proxy is 
published regularly, preferably at least once a quarter. The market 
baskets are updated quarterly and therefore it is important the 
underlying price proxies be up-to-date, reflecting the most recent data 
available. We believe that using proxies that are published regularly 
(at least quarterly, whenever possible) helps ensure that we are using 
the most recent data available to update the market basket. We strive 
to use publications that are disseminated frequently because we believe 
that this is an optimal way to stay abreast of the most current data 
available. Availability means that the proxy is publicly available. We 
prefer that our proxies are publicly available because this will help 
ensure that our market basket updates are as transparent to the public 
as possible. In addition, this enables the public to be able to obtain 
the price proxy data on a regular basis. Finally, relevance means that 
the proxy is applicable and representative of the cost category weight 
to which it is applied. The CPIs, PPIs, and ECIs selected by us to be 
proposed in this regulation meet these criteria. Therefore, we believe 
that they continue to be the best measure of price changes for the cost 
categories to which they would be applied.
    As part of the revising and rebasing of the home health market 
basket, we are proposing to revise and rebase the home health blended 
wage and salary index and the home health blended benefits index.
    We would use these blended indexes as price proxies for the wages 
and salaries and the employee benefits portions of the proposed FY 
2003-based home health market basket, as we did in the FY 2000-based 
home health market basket. The price proxies for these two cost 
categories are the same as those used in the FY 2000-based home health 
market basket but with occupational weights reflecting the FY 2003 
occupational mix in HHAs. These proxies are a combination of health 
industry specific and economy-wide proxies.
3. Price Proxies Used To Measure Cost Category Growth
     Wages and salaries, including an allocation for contract 
services' labor: For measuring price growth in the FY 2003-based home 
health market basket, as we did in the FY 2000-based index, five price 
proxies would be applied to the four occupational subcategories within 
the wages and salaries component, and would be weighted to reflect the 
HHA occupational mix. This approach was used because there is not a 
wage proxy for home health care workers that reflects only wage changes 
and not both wage and skill mix changes. The professional and technical 
occupational subcategory is represented by a 50-50 blend of hospital 
industry and economy-wide price proxies. Therefore, there are five 
price proxies used for the four occupational subcategories. The 
percentage change in the blended wages and salaries price is applied to 
the wages and salaries component of the home health market basket, 
which is described in Table 15.

  Table 15.--Proposed Home Health Occupational Wages and Salaries Index
 [Wages and salaries component of the proposed FY 2003-based home health
                             market basket]
------------------------------------------------------------------------
                                   2000       2003
         Cost category            weight     weight       Price proxy
------------------------------------------------------------------------
Skilled Nursing & Therapists &     53.816     50.812   50
 Other Professional/Technical,                         percent ECI for
 including an allocation for                           Wages & Salaries
 contract services' labor.                             in Private
                                                       Industry for
                                                       Professional,
                                                       Specialty &
                                                       Technical
                                                       Workers.
                                                       50
                                                       percent ECI for
                                                       Wages & Salaries
                                                       for Civilian
                                                       Hospital Workers.
Managerial/Supervisory,             7.431      9.007  ECI for Wages &
 including an allocation for                           Salaries in
 contract services' labor.                             Private Industry
                                                       for Executive,
                                                       Administrative &
                                                       Managerial
                                                       Workers.
Clerical, including an              6.822      7.596  ECI for Wages &
 allocation for contract                               Salaries in
 services' labor.                                      Private Industry
                                                       for
                                                       Administrative
                                                       Support,
                                                       Including
                                                       Clerical Workers.
Service, including an              31.931     32.584  ECI for Wages &
 allocation for contract                               Salaries in
 services' labor.                                      Private Industry
                                                       Service
                                                       Occupations.
                               -----------------------------------------
    Total.....................    100.000    100.000
------------------------------------------------------------------------

    Beginning with the FY 2001 Medicare cost report, the occupational 
specific wage and benefit expenditure data was no longer collected in 
the cost report. Previously, we used these data to estimate weights for 
the home health blended wage and salary index and the home health 
blended benefits index. We believed the options to obtain these data 
were:
     To obtain the home health occupational specific 
expenditure data from an alternative source, or
     To propose a change to the home health wages and salaries 
and the home

[[Page 25438]]

health benefits proxy used in the market basket.
    However, there is no publicly available data source that tracks 
wage and salary price growth for the home health industry while holding 
skill mix constant. There is also no publicly available data source 
that tracks benefit price growth for the home health industry while 
holding skill mix constant. Therefore, option 2 was not an viable 
solution. Next, we investigated if there was home health occupational 
specific expenditure data from an alternative source other than the 
Medicare cost reports. We believe an alternative source exists in the 
form of data from the November 2003 National industry-specific 
occupational employment and wage estimates published by the BLS Office 
of Occupational Employment Statistics (OES). Accordingly, we propose to 
use that data to determine weights for the home health specific blended 
wage and benefits proxy. Detailed information on the methodology for 
the national industry-specific occupational employment and wage 
estimates survey can be found at http://www.bls.gov/oes/current/oes_tec.htm.
    Therefore, the needed data on HHA expenditures for the four 
occupational subcategories (managerial, professional and technical, 
service, and clerical) for the wages and salaries component were 
tabulated from the November 2003 OES data for North American Industrial 
Classification System (NAICS) 621600, Home Health Care Services. We 
assigned the occupations to the groups in a manner consistent with the 
occupational groupings used in the Medicare cost report. Table 16 shows 
the specific occupational assignments to the four CMS designated 
subcategories.
BILLING CODE 4120-01-P

[[Page 25439]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.038

    Total expenditures by occupation were calculated by taking the OES 
number of employees multiplied by the OES annual average salary. The 
wage and salary expenditures were aggregated based on the groupings in 
table 14. Next, contract labor expenditures were obtained from the 1997 
I-O for the home health industry, NAICS 621600 and aged forward to FY 
2003 using the PPI for employment services. We then proportionally 
allocated the contract labor to each of the four subcategories. We 
determined the proportion of total wage costs (contract wages plus

[[Page 25440]]

industry wages) that each subcategory represents. These proportions 
represent the major rebased and revised home health blended wage and 
salary index weights.
    We did not propose a change from our current blended measure 
because we believe it reflects the competition between HHAs and 
hospitals for registered nurses, while still capturing the overall wage 
trends for professional and technical workers.
     Employee benefits, including an allocation for contract 
services' labor: For measuring employee benefits price growth in the FY 
2003-based home health market basket, price proxies are applied to the 
four occupational subcategories within the employee benefits component, 
weighted to reflect the home health occupational mix. The professional 
and technical occupational subcategory is represented by a blend of 
hospital industry and economy-wide price proxies. Therefore, there are 
five price proxies for four occupational subcategories. The percentage 
change in the blended price of home health employee benefits is applied 
to this component, which is described in Table 17.

       Table 17.--Proposed Home Health Occupational Benefits Index
   [Employee benefits component of the proposed 2003-based home health
                             market basket]
------------------------------------------------------------------------
                                   2000       2003
         Cost category            weight     weight       Price proxy
------------------------------------------------------------------------
Skilled Nursing & Therapists &     53.492     50.506   50
 Other Professional/Technical,                         percent ECI for
 including an allocation for                           Benefits in
 contract services' labor.                             Private Industry
                                                       for Professional,
                                                       Specialty
                                                       &Technical
                                                       Workers.
                                .........  .........   50
                                                       percent ECI for
                                                       Benefits for
                                                       Civilian Hospital
                                                       Workers.
Managerial/Supervisory,             7.232      8.766  ECI for Benefits
 including an allocation for                           in Private
 contract services' labor.                             Industry for
                                                       Executive,
                                                       Administrative &
                                                       Managerial
                                                       Workers.
Clerical, including an              6.941      7.698  ECI for Benefits
 allocation for contract                               in Private
 services' labor.                                      Industry for
                                                       Administrative
                                                       Support,
                                                       Including
                                                       Clerical Workers.
Service, including an              32.362     33.024  ECI for Benefits
 allocation for contract                               in Private
 services' labor.                                      Industry Service
                                                       Occupations.
                               -----------------------------------------
    Total.....................    100.000    100.000
------------------------------------------------------------------------

    After conducting research we could find no data source that exists 
for benefit expenditures by occupation for the home health industry. 
Thus, to construct weights for the home health occupational benefits 
index we calculated the ratio of benefits to wages and salaries from 
the 2000 Home health occupational wages and occupational benefits 
indices for the four occupational subcategories. We then applied the 
benefit-to-wage ratios to each of the four occupational subcategories 
from the 2003 OES wage and salary weights. For example, the ratio of 
benefits to wages from the 2000 home health occupational wage and 
benefit indexes for home health managers is 0.973. We apply this ratio 
to the 2003 OES weight for wages and salaries for home health managers, 
9.007, to obtain a benefit weight in the home health occupational 
benefit index for home health managers of 8.766 percent.
    We are proposing to continue to use the same 50-50 split for 
benefits for professional and technical workers (50 percent hospital 
workers and 50 percent professional and technical workers) as we did in 
the FY 2000-based market basket.
     Operations and Maintenance: The percentage change in the 
price of fuel and other utilities as measured by the Consumer Price 
Index is applied to this component. The same proxy was used for the FY 
2000-based market basket.
     Telephone: The percentage change in the price of telephone 
service as measured by the Consumer Price Index is applied to this 
component. The same proxy was used for the FY 2000-based market basket.
     Postage: The percentage change in the price of postage as 
measured by the Consumer Price Index is applied to this component. The 
same proxy was used for the FY 2000-based market basket.
     Professional Fees: The percentage change in the price of 
professional fees as measured by the ECI for compensation for 
professional and technical workers is applied to this component. The 
same proxy was used for the 2000-based market basket.
     Other Products: The percentage change in the price for all 
items less food and energy as measured by the Consumer Price Index is 
applied to this component. The same proxy was used for the FY 2000-
based market basket.
     Other Services: The percentage change in the employment 
cost index for compensation for service workers is applied to this 
component. The same proxy was used for the FY 2000-based market basket.
     Transportation: The percentage change in the price of 
private transportation as measured by the Consumer Price Index is 
applied to this component. The same proxy was used for the FY 2000-
based market basket.
     Insurance: The percentage change in the price of household 
insurance as measured by the Consumer Price Index is applied to this 
component. The same proxy was used for the FY 2000-based market basket.
     Fixed capital: The percentage change in the price of an 
owner's equivalent rent as measured by the Consumer Price Index is 
applied to this component. The same proxy was used for the FY 2000-
based market basket.
     Movable Capital: The percentage change in the price of 
machinery and equipment as measured by the Producer Price Index is 
applied to this component. The same proxy was used for the FY 2000-
based market basket.
    As we did in the FY 2000-based home health market basket, we 
allocated the Contract Services' share of home health agency 
expenditures among wages and salaries, employee benefits, 
administrative and general and other expenses.
    Table 18 summarizes the proposed FY 2003-based proxies and compares 
them to the FY 2000-based proxies.

[[Page 25441]]



  Table 18.--Comparison of Price Proxies Used in the 2000-Based and the
             Proposed 2003-Based Home Health Market Baskets
------------------------------------------------------------------------
                                                           2003-Based
         Cost category             2000-Based price      proposed price
                                        proxy                proxy
------------------------------------------------------------------------
Compensation, including
 allocated contract services'
 labor
Wages and Salaries, including   Same.................  Home Health
 allocated contract services'                           Agency
 labor                                                  Occupational
                                                        Wage Index.
Employee Benefits, including    Same.................  Home Health
 allocated contract services'                           Agency
 labor                                                  Occupational
                                                        Benefits Index.
Operations and Maintenance....  Same.................  CPI-Fuel and
                                                        Other Utilities.
Administrative & General &
 Other Expenses, including
 allocated contract services'
 labor
Telephone.....................  Same.................  CPI-U Telephone.
Postage.......................  Same.................  CPI-U Postage.
Professional Fees.............  Same.................  ECI for
                                                        Compensation for
                                                        Professional and
                                                        Technical
                                                        Workers.
Other Products................  Same.................  CPI-U for All
                                                        Items Less Food
                                                        and Energy.
Other Services................  Same.................  ECI for
                                                        Compensation for
                                                        Service Workers.
Transportation................  Same.................  CPI-U Private
                                                        Transportation.
Capital-Related
Insurance.....................  Same.................  CPI-U Household
                                                        Insurance.
Fixed Capital.................  Same.................  CPI-U Owner's
                                                        Equivalent Rent.
Movable Capital...............  Same.................  PPI Machinery and
                                                        Equipment.
Contract Services.............  Same.................  Contained within
                                                        Wages &
                                                        Salaries,
                                                        Employee
                                                        Benefits,
                                                        Administrative &
                                                        General & Other
                                                        Expenses; see
                                                        those price
                                                        proxies.
------------------------------------------------------------------------

4. Rebasing Results
    A comparison of the yearly changes from CY 2005 to CY 2008 for the 
FY 2000-based home health market basket and the proposed FY 2003-based 
home health market basket is shown in Table 19. The average annual 
increase in the two market baskets is similar, and in no year is the 
difference greater than 0.1 percentage point.

Table 19.--Comparison of The 2000-Based Home Health Market Basket and the Proposed 2003-Based Home Health Market
                                        Basket, Percent Change, 2005-2008
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed home    Difference
                                                                    Home health    health market  (proposed 2003-
                Fiscal years beginning October 1                  market basket,   basket, 2003-    based less
                                                                    2000-based         based        2000-based)
----------------------------------------------------------------------------------------------------------------
Historical:
CY 2005.........................................................             3.1             3.1             0.0
CY 2006.........................................................             3.2             3.1            -0.1
CY 2007.........................................................             3.1             3.1             0.0
CY 2008.........................................................             2.9             2.9             0.0
Average Change: 2005-2008.......................................             3.1             3.1             0.0
----------------------------------------------------------------------------------------------------------------
 Source: Global Insights, Inc, 4th Qtr, 2006.

    Table 20 shows that the forecasted rate of growth for CY 2008, 
beginning January 1, 2008, for the proposed rebased and revised home 
health market basket is 2.9 percent, while the forecasted rate of 
growth for the current 2000-based home health market basket is also 2.9 
percent. As previously mentioned, we rebase the home health market 
basket periodically so the cost category weights continue to reflect 
changes in the mix of goods and services that HHAs purchase in 
furnishing home health care.

 Table 20.--Forecasted Annual Percent Change in the Current and Proposed Revised and Rebased Home Health Market
                                                     Baskets
----------------------------------------------------------------------------------------------------------------
                                                                                 Proposed home      Difference
                                                                 Home health     health market   (proposed 2003-
              Calendar year beginning January 1                 market basket,   basket, 2003-   based Less 2000-
                                                                  2000-based         based            based)
----------------------------------------------------------------------------------------------------------------
January 2008, CY 2008........................................             2.9              2.9              0.0
----------------------------------------------------------------------------------------------------------------
 Source: Global Insights, Inc, 4th Qtr, 2006.


[[Page 25442]]

    Table 21 shows the percent changes for CY 2008 for each cost 
category in the home health market basket.

   Table 21.--CY 2008 Forecasted Annual Percent Change for All Cost Categories in the Proposed 2003-Based Home
                                              Health Market Basket
----------------------------------------------------------------------------------------------------------------
                                                                                                    Forecasted
                                                                                                  annual percent
                Cost categories                     Weight                 Price proxy             change for CY
                                                                                                       2008
----------------------------------------------------------------------------------------------------------------
Total.........................................          100.00  ................................             2.9
Compensation..................................          77.082  ................................             3.1
Wages and Salaries............................          64.484  Proposed Home Health                         2.9
                                                                 Occupational Wage Index.
Employee Benefits.............................          12.598  Proposed Home Health                         3.8
                                                                 Occupational Benefits Index.
Operations & Maintenance......................           0.694  CPI-U Fuel & Other Utilities....             3.2
Administrative & General & Other Expenses.....          16.712  ................................             2.6
Telephone.....................................           0.785  CPI-U Telephone Services........             0.8
Postage.......................................           0.605  CPI-U Postage...................             4.8
Professional Fees.............................           1.471  ECI for Compensation for                     3.0
                                                                 Professional and Technical
                                                                 Workers.
Other Products................................           6.622  CPI-U All Items Less Food and                2.0
                                                                 Energy.
Other Services................................           7.228  ECI for Compensation for Service             3.1
                                                                 Workers.
Transportation................................           2.494  CPI-U Private Transportation....             0.5
Capital-Related...............................           3.018  ................................             1.8
Insurance.....................................           0.510  CPI-U Household Insurance.......             2.6
Fixed Capital.................................           1.618  CPI-U Owner's Equivalent Rent...             2.6
Movable Capital...............................           0.890  PPI Machinery & Equipment.......            -0.3
----------------------------------------------------------------------------------------------------------------
 Source: Global Insights, Inc, 4th Qtr, 2006.

5. Labor-Related Share
    In the 2000-based home health market basket the labor-related share 
was 76.775 percent while the remaining non-labor-related share was 
23.225 percent. In the proposed revised and rebased home health market 
basket, the labor-related share would be 77.082 percent. The labor-
related share includes wages and salaries and employee benefits. The 
proposed non-labor-related share would be 22.918 percent. The increase 
in the labor-related share using the FY 2003-based HH market basket is 
primarily due to the increase in the benefit cost weight. Our 
preliminary analysis of Medicare cost report data for skilled nursing 
facilities and acute care hospitals also shows a similar upward trend 
for the SNF and hospital benefit cost weights from FY 2000 to FY 2003.
    Table 22 details the components of the labor-related share for the 
FY 2000-based and proposed FY 2003-based home health market baskets.

   Table 22.--Labor-Related Share of Current and Proposed Home Health
                             Market Baskets
------------------------------------------------------------------------
                                            2000-based    Proposed 2003-
              Cost category                market basket   based market
                                              weight       basket weight
------------------------------------------------------------------------
Wages and Salaries......................          65.766          64.484
Employee Benefits.......................          11.009          12.598
                                         -------------------------------
    Total Labor Related.................          76.775          77.082
                                         -------------------------------
    Total Non-Labor Related.............          23.225          22.918
------------------------------------------------------------------------

C. National Standardized 60-Day Episode Payment Rate

    The Medicare HH PPS has been effective since October 1, 2000. As 
set forth in the final rule published July 3, 2000 in the Federal 
Register (65 FR 41128), the unit of payment under the Medicare HH PPS 
is a national standardized 60-day episode payment rate. As set forth in 
Sec.  484.220, we adjust the national standardized 60-day episode 
payment rate by a case-mix grouping and a wage index value based on the 
site of service for the beneficiary. The proposed CY 2008 HH PPS rates 
use the case-mix methodology proposed in section II.A.2 of this 
proposed rule and application of the wage index adjustment to the labor 
portion of the HH PPS rates as set forth in the July 3, 2000 final 
rule. As stated above, we are proposing to rebase and revise the home 
health market basket, resulting in a revised and rebased labor related 
share of 77.082 percent and a non-labor portion of 22.918 percent. We 
multiply the national standardized 60-day episode payment rate by the 
patient's applicable case-mix weight. We divide the case-mix adjusted 
amount into a labor and non-labor portion. We multiply the labor 
portion by the applicable wage index based on the site of service of 
the beneficiary.
    For CY 2008, we are proposing to base the wage index adjustment to 
the labor portion of the HH PPS rates on the most recent pre-floor and 
pre-reclassified hospital wage index as discussed in section II.B of 
this proposed rule (not including any reclassifications under section 
1886(d)(8)(B)) of the Act.
    As discussed in the July 3, 2000 HH PPS final rule, for episodes 
with four or

[[Page 25443]]

fewer visits, Medicare pays the national per-visit amount by 
discipline, referred to as a LUPA. We update the national per-visit 
amounts by discipline annually by the applicable home health market 
basket percentage. We adjust the national per-visit amount by the 
appropriate wage index based on the site of service for the beneficiary 
as set forth in Sec.  484.230. We propose to adjust the labor portion 
of the updated national per-visit amounts by discipline used to 
calculate the LUPA by the most recent pre-floor and pre-reclassified 
hospital wage index, as discussed in section II.D of this proposed 
rule.
    Medicare pays the 60-day case-mix and wage-adjusted episode payment 
on a split percentage payment approach. The split percentage payment 
approach includes an initial percentage payment and a final percentage 
payment as set forth in Sec.  484.205(b)(1) and (b)(2). We may base the 
initial percentage payment on the submission of a request for 
anticipated payment and the final percentage payment on the submission 
of the claim for the episode, as discussed in Sec.  409.43. The claim 
for the episode that the HHA submits for the final percentage payment 
determines the total payment amount for the episode and whether we make 
an applicable adjustment to the 60-day case-mix and wage-adjusted 
episode payment. The end date of the 60-day episode as reported on the 
claim determines which CY rates Medicare will use to pay the claim.
    We may also adjust the 60-day case-mix and wage-adjusted episode 
payment based on the information submitted on the claim to reflect the 
following:
     A LUPA provided on a per-visit basis as set forth in Sec.  
484.205(c) and Sec.  484.230.
     A PEP adjustment as set forth in Sec.  484.205(d) and 
Sec.  484.235.
     An outlier payment as set forth in Sec.  484.205(f) and 
Sec.  484.240.
    Currently, we may also adjust the episode payment by a SCIC 
adjustment as set forth in Sec.  484.202, but as noted in section 
II.A.6 of this proposed rule, we are now proposing to remove the SCIC 
adjustment from HH PPS.
    This proposed rule reflects the proposed updated CY 2008 rates that 
would be effective January 1, 2008.

D. Proposed CY 2008 Rate Update by the Home Health Market Basket Index 
(With Examples of Standard 60-Day and LUPA Episode Payment 
Calculations)

    Section 1895(b)(3)(B) of the Act, as amended by section 5201 of the 
DRA, requires for CY 2008 that the standard prospective payment amounts 
be increased by a factor equal to the applicable home health market 
basket update for those HHAs that submit quality data as required by 
the Secretary. The applicable home health market basket update will be 
reduced by 2 percentage points for those HHAs that fail to submit the 
required quality data.
     Proposed CY 2008 Adjustments
    In calculating the annual update for the CY 2008 national 
standardized 60-day episode payment rates, we are proposing to first 
look at the CY 2007 rates as a starting point. The CY 2007 national 
standardized 60-day episode payment rate is $2,339.00.
    In order to calculate the CY 2008 national standardized 60-day 
episode payment rate, we are proposing to first increase the CY 2007 
national standardized 60-day episode payment rate ($2,339.00) by the 
proposed estimated rebased and revised home health market basket update 
of 2.9 percent for CY 2008.
    Given this updated rate, we would then take a reduction of 2.75 
percent to account for nominal change in case-mix. We would multiply 
the resulting value by 1.05 and 0.958614805 to account for the 
estimated percentage of outlier payments as a result of the current FDL 
ratio of 0.67 (that is, $2,339.00 * 1.029 * .9725 * 1.05 * 
0.958614805), to yield an updated CY 2008 national standardized 60-day 
episode payment rate of $2,355.96 for episodes that begin in CY 2007 
and end in CY 2008 (see Table 23a). For episodes that begin in CY 2007 
and end in CY 2008, the new proposed 153 HHRG case-mix model (and 
associated Grouper) would not yet be in effect. For that reason, we 
propose that episodes that begin in CY 2007 and end in CY 2008 be paid 
at the rate of $2,355.96, and be further adjusted for wage differences 
and for case-mix, based on the current 80 HHRG case-mix model. We 
recognize that the annual update for CY 2008 is for all episodes that 
end on or after January 1, 2008 and before January 1, 2009. By paying 
this rate ($2,355.96) for episodes that begin in CY 2007 and end in CY 
2008, we will have appropriately recognized that these episodes are 
entitled to receive the CY 2008 home health market, even though the new 
case-mix model will not yet be in effect.

 Table 23a.--Proposed National 60-Day Episode Amounts Updated by the Estimated Home Health Market Basket Update
 for CY 2008, Before Case-Mix Adjustment, Wage Index Adjustment Based on the Site of Service for the Beneficiary
            or Applicable Payment Adjustment for Episodes Beginning in CY 2007 and Ending in CY 2008
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                                                     national
                                                    Multiply by                                    standardized
                                                   the proposed   Reduce by 2.75    Adjusted to   60-day episode
   Total CY 2007 national standardized 60-day     estimated home    percent for     account for    payment rate
              episode payment rate                 health market  nominal change   the 5 percent   for episodes
                                                   basket update    in case-mix   outlier policy   beginning in
                                                   (2.9 percent)                                    CY 2007 and
                                                        \1\                                        ending in CY
                                                                                                       2008
----------------------------------------------------------------------------------------------------------------
$2,339.00.......................................         x 1.029        x 0.9725          x 1.05      $2,355.96
                                                                                   x 0.958614805
----------------------------------------------------------------------------------------------------------------
\1\ The estimated home health market basket update of 2.9 percent for CY 2008 is based on Global Insight, Inc,
  4th Qtr, 2006 forecast with historical data through 3rd Qtr, 2006.

    Next, in order to establish new rates based on a proposed new case-
mix system, we again start with the CY 2007 national standardized 60-
day episode payment rate and increase that rate by the proposed 
estimated rebased and revised home health market basket update (2.9 
percent) ($2,339.00 * 1.029 = $2,406.83). We next have to put dollars 
associated with the outlier targeted estimates back into the base rate. 
In the 2000 HH PPS final rule (65 FR 41184), we divided the base rate 
by 1.05 to account for the outlier target policy. Therefore, we are 
proposing to

[[Page 25444]]

multiply the $2,406.83 by 1.05, resulting in $2,527.17. Next we need to 
reduce this amount to pay for each of our proposed policies. As noted 
previously, based upon our proposed change to the LUPA payment, the NRS 
redistribution, the elimination of the SCIC policy, the amounts needed 
to account for outlier payments, and the reduction accounting for 
nominal change in case-mix, we would reduce the national standardized 
60-day episode payment rate by $6.46, $40.88, $15.71, $94.02, and 
$69.50, respectively. This results in a proposed CY 2008 updated 
national standardized 60-day episode payment rate, for episodes 
beginning and ending in CY 2008, of $2,300.60 (see Table 23b). These 
episodes would be further adjusted for case-mix based on the proposed 
153 HHRG case-mix model for episodes beginning and ending in CY 2008. 
As we noted in section II.A.2.d., we increased the case-mix weights by 
a budget neutrality factor of 1.194227193.

 Table 23b.--Proposed National 60-Day Episode Amounts Updated by the Estimated Home Health Market Basket Update for CY 2008, Before Case-Mix Adjustment,
  Wage Index Adjustment Based on the Site of Service for the Beneficiary or Applicable Payment Adjustment for Episodes Beginning and Ending in CY 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Changes to account
                                                                                                                       for LUPA
                                                                                                                      adjustment
                                                                                                                     ($6.46), NRS
                                                                                                                   payment ($40.88),
                                                                                                                    elimination of     Proposed CY 2008
                                                                          Adjusted to return      Updated and         SCIC policy          national
                                                        Multiply by the    the outlier funds   outlier adjusted        ($15.71),       standardized 60-
 Total CY 2007 national standardized 60-day episode   proposed estimated    to the national        national       maintaining a 0.67      day episode
                    payment rate                      home health market   standardized 60-    standardized 60-        FDL ratio       payment rate for
                                                         basket update        day episode         day episode     ($94.02), and 2.75  episodes beginning
                                                       (2.9 percent) \1\     payment rate           payment        percent reduction   and ending in CY
                                                                                                                  for nominal change         2008
                                                                                                                      in case-mix
                                                                                                                     ($69.50) for
                                                                                                                  episodes beginning
                                                                                                                   and ending in CY
                                                                                                                         2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,339.00...........................................            x 1.029              x 1.05           $2,527.17            -$226.57          $2,300.60
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The estimated home health market basket update of 2.9 percent for CY 2008 is based on Global Insight, Inc, 4th Qtr, 2006 forecast with historical
  data through 3rd Qtr, 2006.

    Under the HH PPS, NRS payment, which was $49.62 at the onset of the 
HH PPS, has been updated yearly as part of the national standardized 
60-day episode payment rate. As discussed previously in section 
II.A.7., we propose to remove the current NRS payment amount portion 
from the national standardized 60-day episode payment rate and add a 
severity adjusted NRS payment amount subject to case-mix and wage 
adjustment to the national standardized 60-day episode payment rate. 
Therefore, to calculate an episode's prospective payment amount, the 
NRS adjusted payment amount must first be calculated by multiplying the 
episode's NRS weight (taken from Table 11 of this proposed rule) by the 
NRS conversion factor. This NRS adjusted payment amount is then added 
to, and, becomes a part of, the non-adjusted HH PPS standardized 
prospective payment rate for CY 2008. Then, for any HHRG group, to 
compute a case-mix adjusted payment, the sum of the non-adjusted 
national standardized 60-day episode payment rate and the NRS adjusted 
payment amount are multiplied by the appropriate case-mix weight taken 
from Table 5. Finally, to compute a wage adjusted national standardized 
60-day episode payment rate, that labor-related portion of the national 
standardized 60-day episode payment rate for CY 2008 is multiplied by 
the appropriate wage index factor listed in Addendum A. The product of 
that calculation is added to the corresponding non-labor-related 
amount. The resulting amount is the national case-mix and wage adjusted 
national standardized 60-day episode payment rate for that particular 
episode. The following example illustrates the computation described 
above:

    Example 1. An HHA is providing services to a Medicare 
beneficiary in Grand Forks, ND. The national standardized payment 
rate is $2,300.60 (see Table 23). The HHA determines that the 
beneficiary is in his or her 3rd episode and thus falls under the 
C1F3S3 HHRG for 3rd+ episodes with 0 to 13 therapy visits (Case Mix 
Weight = 1.4815). It is also determined that the beneficiary falls 
under NRS severity level 4. The NRS Severity Level 
4 weight = 6.9612 and the NRS Conversion Factor = $52.77 
(see Table 11).

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[[Page 25445]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.039


[[Page 25446]]


     National Per-visit Amounts Used to Pay LUPAs and Compute 
Imputed Costs Used in Outlier Calculations
    As discussed previously in this proposed rule, the policies 
governing LUPAs and the outlier calculations set forth in the July 3, 
2000 HH PPS final rule will continue (65 FR 41128) with an increase of 
$92.63 for initial and only episode LUPAs during CY 2008. In 
calculating the proposed CY 2008 national per-visit amounts used to 
calculate payments for LUPA episodes and to compute the imputed costs 
in outlier calculations, we are proposing to start with the CY 2007 
per-visit amounts. We propose to increase the CY 2007 per-visit amounts 
for each home health discipline for CY 2008 by the proposed estimated 
rebased and revised home health market basket update (2.9 percent), 
then multiply by 1.05 and 0.958614805 to account for the estimated 
percentage of outlier payments as a result of the current FDL ratio of 
0.67 (see Table 24).

      Table 24.--Proposed National Per-Visit Amounts for LUPAs (Not Including the Increase in Payment for a
 Beneficiary's Only Episode or the Initial Episode in a Sequence of Adjacent Episodes) and Outlier Calculations
Updated by the Estimated Home Health Market Basket Update for CY 2008, Before Wage Index Adjustment Based on the
                                       Site of Service for the Beneficiary
----------------------------------------------------------------------------------------------------------------
                                                               Multiply by the
                                               Final CY 2007       proposed       Adjusted to      Proposed CY
                                                 per-visit      estimated home  account for the   2008 per-visit
         Home health discipline type          amounts per 60-   health market      5 percent      payment amount
                                              day episode for    basket  (2.9    outlier policy  per  discipline
                                                   LUPAs         percent) \1\
----------------------------------------------------------------------------------------------------------------
Home Health Aide............................           $46.24          x 1.029           x 1.05          $47.91.
                                                                                  x 0.958614805
Medical Social Services.....................           163.68          x 1.029           x 1.05          169.53.
                                                                                  x 0.958614805
Occupational Therapy........................           112.40          x 1.029           x 1.05          116.42.
                                                                                  x 0.958614805
Physical Therapy............................           111.65          x 1.029           x 1.05          115.63.
                                                                                  x 0.958614805
Skilled Nursing.............................           102.11          x 1.029           x 1.05          105.76.
                                                                                  x 0.958614805
Speech-Language Pathology...................           121.22          x 1.029           x 1.05         125.55.
                                                                                  x 0.958614805
----------------------------------------------------------------------------------------------------------------
\1\ The estimated home health market basket update of 2.9 percent for CY 2008 is based on Global Insight, Inc,
  4th Qtr, 2006 forecast with historical data through 3rd Qtr, 2006.

    Payment for LUPA episodes is changed in that for LUPAs that occur 
as initial episodes in a sequence of adjacent episodes or as the only 
episode, we are proposing an increased payment amount (see section 
II.A.5. of this proposed regulation) to the LUPA payment. Table 24 
rates are before that adjustment and are the rates paid to all other 
LUPA episodes. LUPA episodes that occur as the only episode or initial 
episode in a sequence of adjacent episodes are adjusted by including 
the proposed amount of $92.63 to the LUPA payment before adjusting for 
wage index.

    Example 2. An HHA is providing services to a Medicare 
beneficiary in rural New Hampshire. During the 60-day episode the 
beneficiary receives only 3 visits. It is the initial episode during 
a sequence of adjacent episodes for this beneficiary.

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[[Page 25447]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.040

    Outlier payments are determined and calculated using the same 
methodology that has been used since the implementation of the HH PPS.

E. Hospital Wage Index

    Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the 
Secretary to

[[Page 25448]]

establish area wage adjustment factors that reflect the relative level 
of wages and wage-related costs applicable to the furnishing of home 
health services and to provide appropriate adjustments to the episode 
payment amounts under the HH PPS to account for area wage differences. 
We apply the appropriate wage index value to the proposed labor portion 
(77.082 percent; see Table 22) of the HH PPS rates based on the 
geographic area where the beneficiary received the home health 
services. As implemented under the HH PPS in the July 3, 2000 HH PPS 
final rule, each HHA's labor market area is based on definitions of 
Metropolitan Statistical Areas (MSAs) issued by the OMB.
    In the August 11, 2004 IPPS final rule [69 FR 49206], revised labor 
market area definitions were adopted at Sec.  412.64(b), which were 
effective October 1, 2004 for acute care hospitals. The new standards, 
Core Based Statistical Areas (CBSAs), were announced by OMB in late 
2000 and were also discussed in greater detail in the July 14, 2005 HH 
PPS proposed rule. For the purposes of the HH PPS, the term ``MSA-
based'' refers to wage index values and designations based on the 
previous MSA designations. Conversely, the term ``CBSA-based'' refers 
to wage index values and designations based on the new OMB revised MSA 
designations which now include CBSAs. In the November 9, 2005 HH PPS 
final rule (70 FR 68132), we implemented a 1-year transition policy 
using a 50/50 blend of the CBSA-based wage index values and the MSA-
based wage index values for CY 2006. The one-year transition policy 
ended in CY 2006. For CY 2008, we propose to use a wage index based 
solely on the CBSA designations.
1. Background
    As implemented under the HH PPS in the July 3, 2000 HH PPS final 
rule, each HHA's labor market is determined based on definitions of 
MSAs issued by OMB. In general, an urban area is defined as an MSA or 
New England County Metropolitan Area (NECMA) as defined by OMB. Under 
Sec.  412.64(b)(1)(ii)(C), a rural area is defined as any area outside 
of the urban area. The urban and rural area geographic classifications 
are defined in Sec.  412.64(b)(1)(ii)(A) and Sec.  412.64.(b)(1)(II)(C) 
respectively, and have been used under the HH PPS since implementation.
    Under the HH PPS, the wage index value used is based upon the 
location of the beneficiary's home. As has been our longstanding 
practice, any area not included in an MSA (urban area) is considered to 
be non-urban Sec.  412.64(b)(1)(ii)(C) and receives the statewide rural 
wage index value (see, for example, 65 FR 41173).
    As discussed previously and set forth in the July 3, 2000 final 
rule, the statute provides that the wage adjustment factors may be the 
factors used by the Secretary for purposes of section 1886(d)(3)(E) of 
the Act for hospital wage adjustment factors. As discussed in the July 
3, 2000 final rule, we are proposing again to use the pre-floor and 
pre-reclassified hospital wage index data to adjust the labor portion 
of the HH PPS rates based on the geographic area where the beneficiary 
receives home health services. We believe the use of the pre-floor and 
pre-reclassified hospital wage index data results in the appropriate 
adjustment to the labor portion of the costs as required by statute. 
For the CY 2008 update to home health payment rates, we would continue 
to use the most recent pre-floor and pre-reclassified hospital wage 
index available at the time of publication.
    In adopting the CBSA designations, we identified some geographic 
areas where there are no hospitals, and thus no hospital wage data on 
which to base the calculation of the home health wage index. Beginning 
in CY 2006, we adopted a policy that, for urban labor markets without 
an urban hospital from which a hospital wage index can be derived, all 
of the urban CBSA wage index values within the State would be used to 
calculate a statewide urban average wage index to use as a reasonable 
proxy for these areas. Currently, the only CBSA that would be affected 
by this policy is CBSA 25980, Hinesville, Georgia. We propose to 
continue this policy for CY 2008.
2. Update
    Currently, the only rural areas where there are no hospitals from 
which to calculate a hospital wage index are Massachusetts and Puerto 
Rico. For CY 2006, we adopted a policy in the HH PPS November 9, 2005 
final rule (70 FR 68138) of using the CY 2005 pre-floor, pre-
reclassified hospital wage index value. In the August 3, 2006 proposed 
rule, we again proposed to apply the CY 2005 pre-floor/pre-reclassified 
hospital wage index to rural areas where no hospital wage data is 
available. In response to commenters' concerns and in recognition that, 
in the future, there may be additional rural areas impacted by a lack 
of hospital wage data from which to derive a wage index, we adopted, in 
the November 9, 2006 final rule (71 FR 65905), the following 
methodology for imputing a rural wage index for areas where no hospital 
wage data are available as an acceptable proxy. The methodology that we 
implemented for CY 2007 imputed an average wage index value by 
averaging the wage index values from contiguous CBSAs as a reasonable 
proxy for rural areas with no hospital wage data from which to 
calculate a wage index. We believe this methodology best meets our 
criteria for imputing a rural wage index as well as representing an 
appropriate wage index proxy for rural areas without hospital wage 
data. Specifically, such a methodology uses pre-floor, pre-reclassified 
hospital wage data, is easy to evaluate, is updateable from year to 
year, and uses the most local data available. In determining an imputed 
rural wage index, we define ``contiguous'' as sharing a border. For 
Massachusetts, rural Massachusetts currently consists of Dukes and 
Nantucket Counties. We determined that the borders of Dukes and 
Nantucket counties are ``contiguous'' with Barnstable and Bristol 
counties. We are again proposing to apply this methodology for imputing 
a rural wage index for those rural areas without rural hospital wage 
data. While we continue to believe that this policy could be readily 
applied to other rural areas that lack hospital wage data (possibly due 
to hospitals converting to a different provider type (such as a CAH) 
that does not submit the appropriate wage data), we specifically 
solicit comments on this issue.
    However, as we noted in the HH PPS final rule for CY 2007, we did 
not believe that this policy was appropriate for Puerto Rico. As noted 
in the August 3, 2006 proposed rule, there are sufficient economic 
differences between the hospitals in the United States and those in 
Puerto Rico, including the fact that hospitals in Puerto Rico are paid 
on blended Federal/Commonwealth-specific rates, that a separate 
distinct policy for Puerto Rico is necessary. Consequently, any 
alternative methodology for imputing a wage index for rural Puerto Rico 
would need to take into account those differences. Our policy of 
imputing a rural wage index by using an averaged wage index of CBSAs 
contiguous to that rural area does not recognize the unique 
circumstances of Puerto Rico. For CY 2008, we again propose to continue 
to use the most recent wage index previously available for Puerto Rico 
which is 0.4047.
    The rural and urban hospital wage indexes can be found in Addenda A 
and B of this proposed rule. For HH PPS rates addressed in this 
proposed rule, we are using the 2007 pre-floor and pre-reclassified 
hospital wage index data, as 2008 pre-floor and pre-reclassified 
hospital wage index data are not yet

[[Page 25449]]

available. We propose to use the 2008 pre-floor and pre-reclassified 
hospital wage index (not including any reclassification under section 
1886(d)(8)(B) of the Act) to adjust rates for CY 2008 and will publish 
those wage index values in the final rule.

F. Home Health Care Quality Improvement

    Section 5201(c)(2) of the DRA added section 1895(b)(3)(B)(v)(II) to 
the Act, requiring that ``each home health agency shall submit to the 
Secretary such data that the Secretary determines are appropriate for 
the measurement of health care quality. Such data shall be submitted in 
a form and manner, and at a time, specified by the Secretary for 
purposes of this clause.'' In addition, section 1895(b)(3)(B)(v)(I) of 
the Act, as also added by section 5201(c)(2) of the DRA, dictates that 
``for 2007 and each subsequent year, in the case of a home health 
agency that does not submit data to the Secretary in accordance with 
subclause (II) with respect to such a year, the home health market 
basket percentage increase applicable under such clause for such year 
shall be reduced by 2 percentage points.''
    The OASIS data currently provide consumers and HHAs with 10 
publicly-reported home health quality measures which have been endorsed 
by the National Quality Forum (NQF). Reporting these quality data have 
also required the development of several supporting mechanisms such as 
the HAVEN software used to encode and transmit data using a CMS 
standard electronic record layout, edit specifications, and data 
dictionary. The HAVEN software includes the required OASIS data set 
that has become a standard part of HHA operations. These early 
investments in data infrastructure and supporting software that CMS and 
HHAs have made over the past several years in order to create this 
quality reporting structure have been successful in making quality 
reporting and measurement an integral component of the HHA industry. 
The 10 measures are--
     Improvement in ambulation/locomotion;
     Improvement in bathing;
     Improvement in transferring;
     Improvement in management of oral medications;
     Improvement in pain interfering with activity;
     Acute care hospitalization;
     Emergent care;
     Improvement in dyspnea;
     Improvement in urinary incontinence; and
     Discharge to community.
    We are proposing to continue to use OASIS data and the current 10 
quality measures, and to add two additional quality measures based on 
those data for the CY 2008 HH PPS quality data reporting requirement. 
Continuing to use the OASIS instrument ensures that providers will not 
have an additional burden of reporting through a separate mechanism and 
that the costs associated with the development and testing of a new 
reporting mechanism can be avoided. Accordingly, for CY 2008, we 
propose to continue to use submission of OASIS data to meet the 
requirement that the HHA submit data appropriate for the measurement of 
health care quality.
    We specifically propose to add the following two additional quality 
measures as data appropriate for measuring health care quality. Adding 
new measures to the currently available outcome measures could broaden 
the patient population we can assess, expand the types of quality care 
we can measure, and capture an aspect of care directly under providers' 
control. These two wound measures focus on a prevalent condition among 
home health beneficiaries. We believe that by adding these two 
measures, we can address agencies' ability to maintain patients in 
their homes. These additional NQF endorsed measures that will provide a 
more complete picture of the level of quality care delivered by HHAs 
are the following:
     Emergent Care for Wound Infections, Deteriorating Wound 
Status; and
     Improvement in Status of Surgical Wound.
    The data elements used to calculate these measures are already 
captured by the OASIS instrument and do not require additional 
reporting or burden to HHAs.
    Additionally, section 1895(b)(3)(B)(v)(II) of the Act provides the 
Secretary with the discretion to submit the required data in a form, 
manner, and time specified by him. We are proposing for CY 2008 to 
consider OASIS data submitted by HHAs to CMS for episodes beginning on 
or after July 1, 2006 and before July 1, 2007 as meeting the reporting 
requirement for CY 2008. This reporting time period would allow 12 full 
months of data and would provide us the time necessary to analyze and 
make any necessary payment adjustments to the CY 2008 payment rates. 
HHAs that meet the reporting requirement would be eligible for the full 
home health market basket percentage increase.
    We recognize, however, that the home health conditions of 
participations (CoPs) in (42 CFR part 484) that require OASIS 
submission also provide for exclusions from the CoP submission 
requirement. Generally, agencies excluded from the CoP OASIS submission 
requirement do not receive Medicare payments as they either do not 
provide services to Medicare beneficiaries or the patients are not 
receiving Medicare-covered home health services. Under the CoP, 
agencies are excluded from the OASIS reporting requirement on 
individual patients if--
     Those patients are receiving only non-skilled services;
     Neither Medicare nor Medicaid is paying for home health 
care (patients receiving care under a Medicare or Medicaid Managed Care 
Plan are not excluded from the OASIS reporting requirement);
     Those patients are receiving pre- or post-partum services; 
and
     Those patients are under the age of 18 years.
    We believe that the rationale behind the exclusion of these 
agencies from submission of OASIS on patients which are excluded from 
OASIS CoP submission is equally applicable to HHAs for quality 
purposes. If an agency is not submitting OASIS for patients excluded 
from OASIS submission for purposes of a CoP, we believe that the 
submission of OASIS for quality measures for Medicare purposes is 
likewise not necessary. Therefore, we propose that those agencies do 
not need to submit quality measures for reporting purposes for those 
patients who are excluded from the OASIS CoP submission.
    Additionally, we propose that agencies newly certified (on or after 
May 31, 2007 for payments to be made in CY 2008) be excluded from the 
quality reporting requirement as data submission and analysis would not 
be possible for an agency certified this late in the reporting time 
period. We again propose that in future years, agencies that certify on 
or after May 31 of the preceding year involved be excluded from any 
payment penalty for quality reporting purposes for the following CY. We 
note these exclusions only affect quality reporting requirements and do 
not affect the agency's OASIS reporting responsibilities under the CoP.
    We propose to require that all HHAs, unless covered by these 
specific exclusions, meet the reporting requirement, or be subject to a 
2 percent reduction in the home health market basket percentage 
increase in accordance with section 895(b)(3)(B)(v)(I) of the Act. The 
2 percent reduction would apply to all episode payments beginning on or 
after

[[Page 25450]]

January 1, 2008. We provide the proposed reduced payment rates in 
tables 25 and 26. We would reconcile the OASIS submissions with claims 
data in order to verify full compliance with the quality reporting 
requirements.
    For episodes that begin in CY 2007 and end in CY 2008, the new 
proposed 153 HHRG case-mix model (and associated Grouper) would not yet 
be in effect. For that reason, we propose, for HHAs that do not submit 
required quality data (for episodes that begin in CY 2007 and end in CY 
2008), the following: First, we update the CY 2007 rate of $2,339.00 by 
the home health market basket percentage update (2.9 percent) minus 2 
percent, reduced by 2.75 percent to account for nominal change in case-
mix, and multiplied by 1.05 and 0.958614805 to account for the 
estimated percentage of outlier payments as a result of the current FDL 
ratio of 0.67 ($2,339.00 * 1.009 * .9725 * 1.05 * 0.958614805), to 
yield an updated CY 2008 national standardized 60-day episode payment 
rate of $2,310.17 for episodes that begin in CY 2007 and end in CY 2008 
for HHAs that do not submit required quality data (see Table 25a).
    These episodes would be further adjusted for case-mix based on the 
80 HHRG case-mix model for episodes beginning in CY 2007 and ending in 
CY 2008.

   Table 25a.--For HHAs That Do Not Submit The Required Quality Data-Proposed National 60-Day Episode Amounts
 Updated by the Estimated Home Health Market Basket Update for CY 2008, Minus 2 Percentage Points, For Episodes
 that Begin in CY 2007 and End in CY 2008 Before Case-Mix Adjustment, Wage Index Adjustment Based on the Site of
                          Service for the Beneficiary or Applicable Payment Adjustment
----------------------------------------------------------------------------------------------------------------
                                                                                                     Proposed
                                                                                                     national
                                                                                                   standardized
                                                    Multiply by                                   60-day episode
                                                   the proposed                                    payment rate
                                                  estimated home  Reduce by 2.75    Adjusted to    for episodes
   Total CY 2007 national standardized 60-Day      health market    percent for     account for    beginning in
              episode payment rate                 basket update  nominal change   the 5 percent    CY 2007 and
                                                       (2.9         in case-mix   outlier policy   ending in CY
                                                    percent)\1\                                    2008 for HHAs
                                                      Minus 2                                       that do not
                                                      percent                                         submit
                                                                                                     required
                                                                                                   quality data
----------------------------------------------------------------------------------------------------------------
$2,339.00.......................................         x 1.009        x 0.9725          x 1.05      $2,310.17
                                                                                   x 0.958614805
----------------------------------------------------------------------------------------------------------------
\1\ The estimated home health market basket update of 2.9 percent for CY 2008 is based on Global Insight, Inc,
  4th Qtr, 2006 forecast with historical data through 3rd Qtr, 2006.

    Next, in order to establish new rates based on a proposed new case-
mix system, we again start with the CY 2007 national standardized 60-
day episode payment rate and increase that rate by the proposed 
estimated rebased and revised home health market basket update (2.9 
percent) minus 2 percent ($2,339.00 * 1.009 = $2,360.05). We next have 
to put dollars associated with the outlier target estimate back into 
the base rate. In the 2000 HH PPS final rule (65 FR 41184), we divided 
the base rate by 1.05 to account for outlier payments. Therefore, we 
are proposing to multiply the $2,360.05 by 1.05, resulting in 
$2,478.05. Next we need to reduce this amount to pay for each of our 
proposed policies. To do this, we take the payment adjustment amount to 
pay for our proposed policies of this rule, determined in Table 23a of 
$226.57, multiply it by (1/1.029) to take away the 2.9 percent 
increase, and multiply that number by 1.009 to impose the 0.9 percent 
update for episodes where HHAs have not submitted the required quality 
data. This results in a payment adjustment amount of $222.17. Finally, 
subtract the payment adjustment amount of $222.17 from $2,478.05, for a 
final rate of $2,255.88 for HHAs that do not submit quality data, for 
episodes that begin and end in CY 2008.
    These episodes would be further adjusted for case-mix based on the 
153 HHRG case-mix model for episodes beginning and ending in CY 2008. 
As we noted in section II.A.2.d., we increased the case-mix weights by 
a budget neutrality factor of 1.194227193.

[[Page 25451]]



 Table 25b.--for HHAs That Do Not Submit The Requried Quality Data-Proposed National 60-day Episode Amounts Updated by the Estimated Home Health Market
   Basket Update for CY 2008, Minus 2 Percentage Points, For Episodes that Begin and End in CY 2008, Before Case-Mix Adjustment, Wage Index Adjustment
                                    Based on the Site of Service for the Beneficiary or Applicable Payment Adjustment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Changes to
                                                                                                                          account for
                                                                                                                        LUPA adjustment
                                                                                                                          ($6.46), NRS
                                                                                                                            payment
                                                                                                                           ($40.88),
                                                                                                                         elimination of
                                                                                                                          SCIC policy
                                                                                                                           ($15.71),
                                                                                                                         outlier target    Proposed CY
                                                                                        Adjusted to      Updated and     ($94.02), and    2008 national
                                                                     Multiply by the     return the        outlier        2.75 percent   standardized 60-
                                                                         proposed      outlier funds       adjusted      reduction for     day episode
  Total CY 2007 national standardized 60-day episode payment rate     estimated home  to the national      national      nominal change    payment rate
                                                                      health market   standardized 60- standardized 60-   in case-mix      for episodes
                                                                      basket update     day episode      day episode       ($69.50) =     beginning and
                                                                     (2.9 percent) 1    payment rate       payment       $226.57; minus    ending in CY
                                                                                                                          2 percentage         2008
                                                                                                                         points off of
                                                                                                                        the home health
                                                                                                                         market basket
                                                                                                                          update (2.9
                                                                                                                         Percent) 1 for
                                                                                                                            episodes
                                                                                                                         beginning and
                                                                                                                          ending in CY
                                                                                                                              2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,339.00..........................................................         x 1.009           x 1.05        $2,478.05         -$222.17       $2,255.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 The estimated home health market basket update of 2.9 percent for CY 2008 is based on Global Insight, Inc, 4th Qtr, 2006 forecast with historical data
  through 3rd Qtr, 2006.

    In calculating the proposed CY 2008 national per-visit amounts used 
to calculate payments for LUPA episodes for HHAs that do not submit 
required quality data and to compute the imputed costs in outlier 
calculations for those episodes, we are proposing to start with the CY 
2007 per-visit rates. We propose to multiply those amounts by the 
proposed estimated home health market basket update (2.9 percent) minus 
2 percentage points, then multiply by 1.05 and 0.958614805 to account 
for the estimated percentage of outlier payments as a result of the 
current FDL ratio of 0.67, to yield the updated per-visit amounts for 
each home health discipline for CY 2008 for HHAs that do not submit 
required quality data.

 Table 26.--For HHAs That Do Not Submit the Required Quality Data-Proposed National Per-Visit Amounts for LUPAs
 (Not Including the Increase in Payment for a Beneficiary's Only Episode or the Initial Episode in a Sequence of
  Adjacent Episodes) and Outlier Calculations Updated by the Estimated Home Health Market Basket Update for CY
 2008, Minus 2 Percentage Points, Before Wage Index Adjustment Based on the Site of Service for the Beneficiary
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                                                  2008 per-visit
                                                                                                  payment amount
                                                               Multiply by the                   per  discipline
                                               Final CY 2007       proposed       Adjusted to         for a
                                                 per-visit      estimated home  account for the  beneficiary who
         Home health discipline type          amounts per 60-   health market      5 percent       resides in a
                                              day episode for    basket  (2.9    outlier policy    non-MSA for
                                                   LUPAs          percent) 1                       HHAs that do
                                                                                                    not submit
                                                                                                     required
                                                                                                   quality data
----------------------------------------------------------------------------------------------------------------
Home Health Aide............................           $46.24           x1.009            x1.05           $46.96
                                                                                   x0.958614805                .
Medical Social Services.....................           163.68           x1.009            x1.05           166.23
                                                                                  x 0.958614805  ...............
Occupational Therapy........................           112.40           x1.009            x10.5           114.15
                                                                                   x0.958614805  ...............
Physical Therapy............................           111.65           x1.009           x 1.05           113.39
                                                                                   x0.958614805  ...............
Skilled Nursing.............................           102.11           x1.009            x1.05           103.70
                                              ...............  ...............     x0.958614805  ...............

[[Page 25452]]

 
Speech-Language Pathology...................           121.22           x1.009            x1.05           123.11
                                                                                   x0.958614805  ...............
----------------------------------------------------------------------------------------------------------------
 The estimated home health market basket update of 2.9 percent for CY 2008 is based on Global Insight, Inc, 4th
  Qtr, 2006 forecast with historical data through 3rd Qtr, 2006.

    Section 1895(b)(3)(B)(v)(III) of the Act further requires that the 
``Secretary shall establish procedures for making data submitted under 
subclause (II) available to the public.'' Additionally, the statute 
requires that ``such procedures shall ensure that a home health agency 
has the opportunity to review the data that is to be made public with 
respect to the agency before such data being made public.'' To meet the 
requirement for making such data public, we are proposing to continue 
to use the Home Health Compare Web site whereby HHAs are listed 
geographically.
    Currently, the 10 existing quality measures are posted on the Home 
Health Compare Web site. The Home Health Compare Web site will also 
include the two proposed additional measures discussed earlier. 
Consumers can search for all Medicare-approved home health providers 
that serve their city or zip code and then find the agencies offering 
the types of services they need as well as the proposed quality 
measures. See http://www.medicare.gov/HHCompare/Home.asp. HHAs 
currently have access (through the Home Health Compare contractor) to 
their own agency's quality data (updated periodically) and we propose 
to continue this process thus enabling each agency to know how it is 
performing before public posting of data on the Home Health Compare Web 
site.
    Over the next year, we will be testing patient level process 
measures for HHAs, as well as continuing to refine the current OASIS 
tool in response to recommendations from a TEP conducted to review the 
data elements that make up the OASIS tool. We expect to introduce these 
complementary additional measures during CY 2008 to determine if they 
should be incorporated into the statutory quality measure reporting 
requirements. We hope to apply these measures to the CY 2010 reporting 
period. Before usage in the HH PPS, we will test and refine these 
measures to determine if they can more accurately reflect the level of 
quality care being provided at HHAs without being overly burdensome 
with the data collection instrument. To the extent that evidence-based 
data are available on which to determine the appropriate measure 
specifications, and adequate risk-adjustments are made, we anticipate 
collecting and reporting these measures as part of each agency's home 
health quality plan. We believe that future modifications to the 
current OASIS tool, refinements to the possible responses as well as 
adding new process measures will be made. In all cases, we anticipate 
that any future quality measures should be evidence-based, clearly 
linked to improved outcomes, and able to be reliably captured with the 
least burden to the provider. We are also working on developing 
measures of patient experience in the home health setting through the 
development of the Home Health Consumer Assessment of Healthcare 
Providers and Systems (CAHPS) Survey. We will be working with the 
Agency for Healthcare Research and Quality (AHRQ) to field test this 
instrument in summer/fall 2007. We anticipate implementing the Home 
Health CAHPS Survey in late 2008 for potential application to the CY 
2010 pay for reporting requirements.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act (PRA) of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that 
we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Therefore, we are soliciting public comments on each of these 
issues for the information collection requirements discussed below.
    To implement the OASIS changes discussed in sections II.A.(2)(a), 
II.A.(2)(b), and II.A.(2)(c) of this proposed rule, which are currently 
approved in Sec.  484.55, Sec.  484.205, and Sec.  484.250, a few items 
in the OASIS will need to be modified, deleted, or added. The 
requirements and burden associated with the OASIS are currently 
approved under OMB control number 0938-0760 with an expiration date of 
August 31, 2007. We are soliciting public comment on each of the 
proposed changes for the information collection requirements (ICRs) as 
summarized and discussed below. For the purposes of soliciting public 
review and comment, we have placed a current draft of the proposed 
changes to the OASIS on the CMS Web site at: http://www.cms.hhs.gov/

[[Page 25453]]

PaperworkReductionActof1995/PRAL/list.aspTopOfPage.
    As discussed in section II.A.(2)(a) of this proposed rule, in order 
for the OASIS to have the information necessary to allow the grouper to 
price-out the claim, we propose to make the following changes to the 
OASIS to capture whether an episode is an early or later episode:
    The creation of a new OASIS item to capture whether a particular 
assessment, is for an episode considered to be an early episode or a 
later episode in the patient's current sequence of adjacent Medicare 
home health payment episodes. As defined in section II.A.1. of this 
proposed rule, we defined a sequence of adjacent episodes for a 
beneficiary as a series of claims with no more than 60-days without 
home care between the end of one episode, which is the 60th day (except 
for episode that have been PEP-adjusted), and the beginning of the next 
episode. This definition holds true regardless of whether or not the 
same HHA provided care for the entire sequence of adjacent episodes. 
The HHA will chose from the options: ``Early'' for single episodes or 
the first or second episode in a sequence of adjacent episodes, 
``Later'' for third or later episodes, ``UK'' for unknown if the HHA is 
uncertain as to whether the episode is an early or later episode (the 
payment grouper software will default to the definition of an ``early'' 
episode), and ``NA'' for not applicable (no Medicare case-mix group to 
be defined by this assessment).
    As discussed in section II.A.(2)(b) of this proposed rule, we 
propose to make changes to the OASIS in order to enable agencies to 
report secondary case-mix diagnosis codes. The proposed changes clarify 
how to appropriately fill out OASIS items M0230 and M0240, using ICD-9-
CM sequencing requirements if multiple coding is indicated for any 
diagnosis. Additionally, if a V-code is reported in place of a case-mix 
diagnosis for OASIS item M0230 or M0240, then the new optional OASIS 
item (which is replacing existing OASIS item M0245) may then be 
completed. A case-mix diagnosis is a diagnosis that determines the HH 
PPS case-mix group.
    As discussed in section II.A.(2)(c) of this proposed rule, we 
propose to make changes to the OASIS to capture the projected total 
number of therapy visits for a given episode. With the projected total 
number of therapy visits, the payment grouper would be able to group 
that episode into the appropriate case-mix group for payment. The 
existing OASIS item M0825 asks an HHA if the projected number of 
therapy visits would meet the therapy threshold or not. As noted 
previously, we propose to delete OASIS item M0825 and replace it with a 
new OASIS item. The OASIS item would ask the following: ``In the plan 
of care for the Medicare payment episode for which this assessment will 
define a case-mix group, what is the indicated need for therapy visits 
(total of reasonable and necessary physical, occupational, and speech-
pathology visits combined)?'' The HHA would provide the total number of 
projected therapy visits for that Medicare payment episode, unless not 
applicable (that is, no case-mix group defined by this assessment). The 
HHA would enter ``000'' if no therapy visits were projected for that 
particular episode.
    The burden associated with the proposed changes discussed in 
sections II.A.(2)(a), II.A.(2)(b), and II.A.(2)(c) of this rule 
includes possible training of staff, the time and effort associated 
with downloading a new form and replacing previously pre-printed 
versions of the OASIS, and utilizing updated vendor software. However, 
as stated above, CMS would be removing or modifying existing questions 
in the OASIS data set to accommodate the proposed requirements 
referenced above. In addition, as a result of the proposed changes of 
this rule, we expect that the claims processing system is expected to 
automatically adjust the therapy visits, upward and downward on the 
final claim, according to the information on the final claim.
    Consequently, the HHA would no longer have to withdraw and resubmit 
a revised claim when the number of therapy visits delivered to the 
patient is higher than the level report on the RAP. Therefore, CMS 
believes the burden increase associated with these changes is negated 
by the removal or modification of several current data items.
    We have submitted a copy of this proposed rule to OMB for its 
review of the information collection requirements described above. 
These requirements are not effective until OMB has approved them.
    If you comment on any of these information collection and record 
keeping requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Regulations Development Group, 
Attn.: Melissa Musotto, CMS-1541-P, Room C4-26-05, 7500 Security 
Boulevard, Baltimore, MD 21244-1850; and Office of Information and 
Regulatory Affairs, Office of Management and Budget, Room 10235, New 
Executive Office Building, Washington, DC 20503, Attn: Carolyn Lovett, 
CMS Desk Officer, (CMS-1541-P), [email protected]. Fax (202) 
395-6974.

IV. Response to Comments

    Because of the large number of public comments normally receive on 
Federal Register documents, we are not able to acknowledge or respond 
to them individually. We will consider all comments we receive by the 
date and time specified in the DATES section of this proposed rule, 
and, when we proceed with subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Analysis

    [If you choose to comment on issues in this section, please include 
the caption ``REGULATORY IMPACT ANALYSIS'' at the beginning of your 
comments.]

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This proposed rule would be a major rule, as defined in Title 5, United 
States Code, section 804(2), because we estimate the impact to the 
Medicare program, and the annual effects to the overall economy, would 
be more than $100 million. The update set forth in this proposed rule 
would apply to Medicare payments under the HH PPS in CY 2008.
    Accordingly, the following analysis describes the impact in CY 2008 
only. We estimate that the net impact of the proposals in this rule, 
including a 2.75 percent reduction to the case-mix weights to account 
for nominal increase in case-mix, is estimated to be

[[Page 25454]]

approximately $140 million in CY 2008 expenditures. That estimate 
incorporates the 2.9 percent home health market basket increase (an 
estimated additional $410 million in CY 2008 expenditures attributable 
only to the CY 2008 proposed estimated home health market basket 
update), an estimated additional $130 million due to the increase in 
the HH PPS rates as a result of maintaining a FDL ratio of 0.67, and 
the 2.75 percent decrease (-$400 million for the first year of a 3-year 
phase-in) to the HH PPS national standardized 60-day episode rate to 
account for the nominal increase in case-mix under the HH PPS. Given 
that we allowed for a FDL ratio of 0.67, all HH PPS rates were adjusted 
slightly upward by a factor of 0.008614805. Column 6 of Table 27 
displays a 0.95 percent increase in expenditures when comparing the CY 
2007 current system to the proposed revised CY 2008 system. This 
equates to approximately $140 million and is driven primarily by the 
adjustment made to maintain the FDL ratio at 0.67 and partially by the 
difference between the 2.9 percent update and the 2.75 percent 
reduction to the HH PPS rates.
    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 small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. For purposes of the RFA, 
approximately 75 percent of HHAs are considered small businesses 
according to the Small Business Administration's size standards with 
total revenues of $11.5 million or less in any 1 year. Individuals and 
States are not included in the definition of a small entity. As stated 
above, this proposed rule would have an estimated positive effect upon 
small entities that are HHAs.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We have determined that 
this proposed rule would not have a significant economic impact on the 
operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. We believe this proposed rule would not 
mandate expenditures in that amount.
    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 determined that this proposed rule would not have 
substantial direct effects on the rights, roles, and responsibilities 
of States.

B. Anticipated Effects

    This proposed rule would update the HH PPS rates contained in the 
CY 2007 final rule (71 FR 65884, November 9, 2006). The impact analysis 
of this proposed rule presents the refinement related policy changes 
proposed in this rule. We use the best data available, but we do not 
attempt to predict behavioral responses to these changes, and we do not 
make adjustments for future changes in such variables as days or case-
mix.
    This analysis incorporates the latest estimates of growth in 
service use and payments under the Medicare home health benefit, based 
on the latest available Medicare claims from 2003. We note that certain 
events may combine to limit the scope or accuracy of our impact 
analysis, because such an analysis is future-oriented and, thus, 
susceptible to forecasting errors due to other changes in the 
forecasted impact time period. Some examples of such possible events 
are newly-legislated general Medicare program funding changes made by 
the Congress, or changes specifically related to HHAs. In addition, 
changes to the Medicare program may continue to be made as a result of 
the BBA, the BBRA, the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000, the MMA, the DRA, or new 
statutory provisions. Although these changes may not be specific to the 
HH PPS, the nature of the Medicare program is such that the changes may 
interact, and the complexity of the interaction of these changes could 
make it difficult to predict accurately the full scope of the impact 
upon HHAs.
    Table 27 represents how home health agencies are likely to be 
affected by the policy changes described in this rule. For each agency 
type listed below, Table 27 displays the average case-mix index, both 
under the current HH PPS case-mix system and the proposed CY 2008 HH 
PPS case-mix system. For this analysis, we used the most recent data 
available that linked home health claims and OASIS assessments, a 10 
percent sample of episodes occurring in FY 2003. In Table 27, the 
average case-mix is the same, in the aggregate, between the current HH 
PPS system and the proposed revised HH PPS system, due to our 
application of a budget neutrality factor for the case-mix weights. 
Column one of this table classifies HHAs according to a number of 
characteristics including provider type, geographic region, and urban 
versus rural location. Column two displays the average case-mix weight 
for each type of agency under the current payment system. Column three 
displays the average case-mix weight for each type of agency 
incorporating all of the changes/refinements discussed above. The 
average case-mix weight for proprietary (for profit) agencies is 
estimated to decrease from 1.2601 to 1.2227. Comparatively, the average 
case-mix weight for voluntary non-profit agencies is estimated to 
increase from 1.1404 to 1.1716. Rural agencies are estimated to 
experience a decrease in their average case-mix from 1.1583 to 1.1417. 
It is estimated that urban agencies would see a slight increase in 
their average case-mix weight from 1.2032 to 1.2074. In particular, the 
New England, Mid-Atlantic, East North Central, Mountain, and West North 
Central areas of the country are estimated to see their average case-
mix increase under the proposed refinements of this rule. Conversely, 
the West South Central, East South Central, Pacific, and South Atlantic 
areas of the country are estimated to see their average case-mix 
decrease as a result of proposed refinements of this rule. Both small 
and large agencies are estimated to see decreases in their average 
case-mix under the new proposed case-mix system, the only exception 
being much larger agencies (200+ first episodes), which are estimated 
to see an increase of their average case-mix from 1.1769 to 1.1920.
    For the purposes of analyzing impacts on payments, we performed 
three simulations and compared them to each other. The first simulation 
estimated 2007 payments under the current system. The second simulation 
estimated 2008 payments as though there would be no changes to the 
payment system other than the rebased and revised home health market 
basket increase of 2.9 percent. The second

[[Page 25455]]

simulation produces an estimate of what total payments using the sample 
data would be in 2008 without making any of the proposed changes 
described in this proposed rule.
    The third simulation estimates what total payments would be in 
2008, using the proposed case-mix model, the proposed additional 
payment for initial and only episode LUPA episodes, the proposed 
removal of SCIC adjustments, and the proposed revised approach to 
making NRS payments. The third simulation also assumed payments would 
incorporate the rebased and revised home health market basket increase 
of 2.9 percent, the current outlier threshold determined by a FDL ratio 
of 0.67, and the 2.75 percent reduction in the national standardized 
60-day episode payment rate to account for the proposed nominal change 
in case-mix. All three simulations used the same CBSA wage index (we 
used a crosswalk from the MSA reported on the 2003 claims to the CBSA 
to determine the appropriate wage index). The results of comparing 
these simulations are displayed in columns four, five, and six of Table 
27.
    Column four shows the percentage change in estimated total payments 
in moving from CY 2007 to a CY 2008 system incorporating none of the 
proposed refinements to the HH PPS except for the rebased and revised 
home health market basket increase of 2.9 percent. Column five shows 
the percentage change in estimated total payments in moving from a CY 
2008 system that incorporates none of the proposed changes to the HH 
PPS except for the rebased and revised home health market basket 
increase of 2.9 percent to the proposed revised CY 2008 system of this 
rule. Finally, column six shows the percentage change in estimated 
total payments in moving from CY 2007 to the proposed revised CY 2008 
system of this rule.
    In general terms, the percentage change in estimated total payments 
from CY 2007 to a CY 2008 system that incorporates none of the proposed 
refinements to the HH PPS except for the rebased and revised home 
health market basket update of 2.9 percent is approximately the home 
health market basket increase of 2.9 percent. Some of the 
classifications of HHAs show a slightly less than 2.9 percent increase 
in this comparison, which is due to the CY 2007 system incorporating 
the current labor share, which is slightly less than the labor share 
being proposed for the CY 2008 system.
    When comparing a CY 2008 system that incorporates none of the 
refinements to the HH PPS except for the rebased and revised home 
health market basket increase of 2.9 percent with the proposed revised 
CY 2008 system of this rule, it is estimated that under the proposed 
revised CY 2008 system of this rule, total estimated payments would 
decrease by approximately 1.88 percent. Comparatively, the percentage 
change in estimated total payments from CY 2007 to the proposed revised 
CY 2008 system of this rule is an increase of just under 1 percent 
(0.95 percent). All three simulations incorporate a FDL ratio of 0.67. 
By maintaining the FDL ratio of 0.67, we believe we will continue to 
meet the statutory requirement of having an outlier payment outlay that 
does not exceed 5 percent of total HH PPS payments. In maintaining a 
0.67 FDL ratio for CY 2008, in order to maintain budget neutrality 
(other than the 2.75 percent reduction to the HH PPS rates to account 
for nominal case-mix change), HH PPS rates are increased slightly, as 
stated earlier in this section.
    In general, voluntary non-profit HHAs (3.56 percent), facility-
based HHAs (3.50 percent), government owned HHAs (3.04 percent) and 
free-standing HHAs (0.10 percent) are estimated to see an increase in 
the percentage change in estimated total payments from CY 2007 to the 
proposed revised CY 2008 system. Proprietary HHAs, on the other hand 
are estimated to see a decrease of 1.90 percent in estimated total 
payments from CY 2007 to the proposed revised CY 2008 system. The major 
contributor to this decrease of 1.90 percent is the free-standing 
proprietary HHAs, which are estimated to see a decrease of slightly 
more than 2 percent in the percentage change in estimated total payment 
from CY 2007 to the proposed revised CY 2008 system.
    We note that some of these impacts are partly explained by practice 
patterns associated with certain types of agencies. For example, LUPA 
episodes are relatively common among nonprofit agencies and 
freestanding government-owned agencies. Our proposal for an additional 
payment for certain LUPA episodes would tend to increase payments for 
such classes of agencies with higher-than-average LUPA rates, while 
tending to decrease payments for agencies with comparatively low LUPA 
rates. Similarly, the proposed elimination of the SCIC policy would 
tend to favorably affect total payments for agencies with relatively 
high rates of SCIC episodes, such as facility-based proprietary 
agencies and facility-based government agencies. The percentage change 
in estimated total payments from CY 2007 to a CY 2008 system that 
incorporates all of the refinements to the HH PPS for rural HHAs is a 
slight decrease of 0.50 percent, while for urban HHAs an increase of 
1.26 percent is expected. Urban agencies have somewhat higher LUPA 
rates than rural agencies, so urban agencies would be expected to 
benefit, relative to rural agencies, from the proposal to make an 
additional payment for certain LUPA episodes. Urban agencies are also 
more likely to benefit from elimination of the SCIC policy. Urban 
agencies are less likely to bill a SCIC episode than rural agencies. 
However, when urban agencies do bill a SCIC episode the payment is 
reduced more, on average, than when rural agencies bill a SCIC. The net 
effect of these two components (relative frequency and payment impact 
per SCIC episode) is a larger expected reduction for urban agencies 
under the SCIC adjustment policy. Therefore, while both urban and rural 
agencies benefit from eliminating the SCIC policy, urban agencies 
benefit more.
    HHAs in the North are expected to experience a percentage change 
increase of 4.33 percent in estimated total payments from CY 2007 to 
the proposed revised CY 2008 system. The only region estimated to 
experience a decrease in the percentage change in estimated total 
payments from CY 2007 to the proposed revised CY 2008 system is the 
South. That percentage change is an estimated decrease of 1.84 percent. 
It is estimated that New England and Mid Atlantic area HHAs will 
experience percentage change increases of slightly more than 4 percent 
(New England, 4.10 percent and the Mid-Atlantic, 4.45 percent) in 
estimated total payments from CY 2007 to the proposed revised CY 2008 
system. Conversely, West South Central HHAs are expected to experience 
a decrease (-3.80 percent) in the percentage change in estimated total 
payments from CY 2007 to the proposed CY 2008 system. In general, 
smaller HHAs are expected to experience a decrease (ranging from -0.63 
percent to -2.76 percent) for their percentage change in estimated 
total payments from CY 2007 to the proposed revised CY 2008 system. 
Conversely, larger HHAs are estimated to experience an increase 
(ranging from 0.59 percent to 2.16 percent) in the percent change in 
estimated total payments from CY 2007 to the proposed CY 2008 system.
BILLING CODE 4120-01-P

[[Page 25456]]

[GRAPHIC] [TIFF OMITTED] TP04MY07.041


[[Page 25457]]


[GRAPHIC] [TIFF OMITTED] TP04MY07.042

C. Accounting Statement

    As Required by OMB Circular A-4 (available at http:// 
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 28 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of this proposed rule. This 
table provides our best estimate of the increase in Medicare payments 
under the HH PPS as a result of the changes presented in this proposed 
rule based on the data for 8,164 HHAs in our database. All expenditures 
are classified as transfers to Medicare providers (that is, HHAs).

      Table 28.--Accounting Statement: Classification of Estimated
                  Expenditures, From CY 2007 to CY 2008
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $140.
From Whom to Whom?........................  Federal Government to HHAs.
------------------------------------------------------------------------

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

List of Subjects in 42 CFR Part 484

    Health facilities, Health professions, Medicare, and Reporting and 
recordkeeping requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services would amend 42 CFR chapter IV as set forth below:

PART 484--HOME HEALTH SERVICES

    1. The authority citation for part 484 continues to read as 
follows:

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

Subpart E--Prospective Payment System for Home Health Agencies


Sec.  484.205  [Amended]

    2. Amend Sec.  484.205 by--
    A. Removing paragraph (a)(3).
    B. Redesignating paragraph (a)(4) as paragraph (a)(3).
    C. Revising paragraph (b) introductory text.
    D. Removing paragraph (e).
    E. Redesignating paragraph (f) as paragraph (e).
    The revisions read as follows:


Sec.  484.205  Basis of payment.

* * * * *
    (b) Episode payment. The national prospective 60-day episode 
payment represents payment in full for all costs associated with 
furnishing home health services previously paid on a reasonable cost 
basis (except the osteoporosis drug listed in section 1861(m) of the 
Act as defined in section 1861(kk) of the Act) as of August 5, 1997 
unless the national 60-day episode payment is subject to a low-
utilization payment adjustment set forth in Sec.  484.230, a partial 
episode payment adjustment set forth at Sec.  484.235, or an additional 
outlier payment set forth in Sec.  484.240. All payments under this 
system may be

[[Page 25458]]

subject to a medical review adjustment reflecting beneficiary 
eligibility, medical necessity determinations, and HHRG assignment. DME 
provided as a home health service as defined in section 1861(m) of the 
Act continues to be paid the fee schedule amount.
* * * * *
    3. Revise Sec.  484.220 to read as follows:


Sec.  484.220  Calculation of the adjusted national prospective 60-day 
episode payment rate for case-mix and area wage levels.

    CMS adjusts the national prospective 60-day episode payment rate to 
account for the following:
    (a) HHA case-mix using a case-mix index to explain the relative 
resource utilization of different patients. To address changes to the 
case-mix that are a result of changes in the coding or classification 
of different units of service that do not reflect real changes in case-
mix, the national prospective 60-day episode payment rate will be 
adjusted downward as follows:
    (1) For CY 2008 the adjustment is 2.75 percent.
    (2) For CY 2009 and CY 2010, the adjustment is 2.75 percent in each 
year.
    (b) Geographic differences in wage levels using an appropriate wage 
index based on the site of service of the beneficiary.
    4. Amend Sec.  484.230 by adding a third, fourth, and fifth 
sentence after the second sentence to read as follows:


Sec.  484.230  Methodology used for the calculation of the low-
utilization payment adjustment.

    * * * For 2008 and subsequent calendar years, an amount will be 
added to low-utilization payment adjustments for low-utilization 
episodes that occur as the beneficiary's only episode or initial 
episode in a sequence of adjacent episodes. For purposes of the home 
health PPS, a sequence of adjacent episodes for a beneficiary is a 
series of claims with no more than 60 days without home care between 
the end of one episode, which is the 60th day (except for episodes that 
have been PEP-adjusted), and the beginning of the next episode. This 
additional amount will be updated annually after 2008 by a factor equal 
to the applicable home health market basket percentage.


Sec.  484.237  [Removed]

    5. Remove Sec.  484.237.

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

    Dated: February 15, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 2, 2007.
Michael O. Leavitt,
Secretary.


[[Page 25459]]


    Note: The following addenda will not be published in the Code of 
Federal Regulations.


Addendum A.--CY 2007 Wage Index for Rural Areas by CBSA; Applicable Pre-
             Floor and Pre-Reclassified Hospital Wage Index
------------------------------------------------------------------------
                                                                  Wage
          CBSA code                     Nonurban area            index
------------------------------------------------------------------------
01...........................  Alabama.......................     0.7592
02...........................  Alaska........................     1.0661
03...........................  Arizona.......................     0.8909
04...........................  Arkansas......................     0.7307
05...........................  California....................     1.1454
06...........................  Colorado......................     0.9325
07...........................  Connecticut...................     1.1709
08...........................  Delaware......................     0.9706
10...........................  Florida.......................     0.8594
11...........................  Georgia.......................     0.7593
12...........................  Hawaii........................     1.0449
13...........................  Idaho.........................     0.8120
14...........................  Illinois......................     0.8320
15...........................  Indiana.......................     0.8539
16...........................  Iowa..........................     0.8682
17...........................  Kansas........................     0.7999
18...........................  Kentucky......................     0.7769
19...........................  Louisiana.....................     0.7438
20...........................  Maine.........................     0.8443
21...........................  Maryland......................     0.8927
22...........................  Massachusetts \1\.............     1.0661
23...........................  Michigan......................     0.9063
24...........................  Minnesota.....................     0.9153
25...........................  Mississippi...................     0.7738
26...........................  Missouri......................     0.7927
27...........................  Montana.......................     0.8590
28...........................  Nebraska......................     0.8678
29...........................  Nevada........................     0.8944
30...........................  New Hampshire.................     1.0853
31...........................  New Jersey \1,2\..............  .........
32...........................  New Mexico....................     0.8333
33...........................  New York......................     0.8232
34...........................  North Carolina................     0.8589
35...........................  North Dakota..................     0.7216
36...........................  Ohio..........................     0.8659
37...........................  Oklahoma......................     0.7629
38...........................  Oregon........................     0.9753
39...........................  Pennsylvania..................     0.8321
40...........................  Puerto Rico \3\...............     0.4047
41...........................  Rhode Island \2\..............  .........
42...........................  South Carolina................     0.8566
43...........................  South Dakota..................     0.8480
44...........................  Tennessee.....................     0.7827
45...........................  Texas.........................     0.7965
46...........................  Utah..........................     0.8141
47...........................  Vermont.......................     0.9744
48...........................  Virgin Islands................     0.8467
49...........................  Virginia......................     0.7941
50...........................  Washington....................     1.0263
51...........................  West Virginia.................     0.7607
52...........................  Wisconsin.....................     0.9553
53...........................  Wyoming.......................     0.9295
65...........................  Guam..........................    0.9611
------------------------------------------------------------------------
\1\ All counties within the State are classified as rural. No short-
  term, acute care hospitals are located in the area(s). The rural wage
  index for Massachusetts is imputed using the methodology discussed in
  section II.E.2 of this rule.
\2\ All counties within the State are classified as urban.
\3\ All counties within the State are classified as rural. No short-
  term, acute care hospitals are located in the area(s). We will
  continue to use the wage index from CY 2005, which was the last year
  in which we had ``rural'' hospital wage data for Puerto Rico.


Addendum B.--CY 2007 Wage Index for Urban Areas by CBSA; Applicable Pre-
             Floor and Pre-Reclassified Hospital Wage Index
------------------------------------------------------------------------
                                                                  Wage
         CBSA code          Urban area (constituent counties)    index
------------------------------------------------------------------------
10180.....................  Abilene, TX......................     0.8001
                             Callahan County, TX.............
                             Jones County, TX................
                             Taylor County, TX...............
10380.....................  Aguadilla-Isabela-San                 0.3915
                             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........................     0.8654
                             Portage County, OH..............
                             Summit County, OH...............
10500.....................  Albany, GA.......................     0.8991
                             Baker County, GA................
                             Dougherty County, GA............
                             Lee County, GA..................
                             Terrell County, GA..............
                             Worth County, GA................
10580.....................  Albany-Schenectady-Troy, NY......     0.8720
                             Albany County, NY...............
                             Rensselaer County, NY...........
                             Saratoga County, NY.............
                             Schenectady County, NY..........
                             Schoharie County, NY............
10740.....................  Albuquerque, NM..................     0.9458
                             Bernalillo County, NM...........
                             Sandoval County, NM.............
                             Torrance County, NM.............
                             Valencia County, NM.............
10780.....................  Alexandria, LA...................     0.8006
                             Grant Parish, LA................
                             Rapides Parish, LA..............

[[Page 25460]]

 
10900.....................  Allentown-Bethlehem-Easton, PA-NJ     0.9947
                             Warren County, NJ...............
                             Carbon County, PA...............
                             Lehigh County, PA...............
                             Northampton County, PA..........
11020.....................  Altoona, PA......................     0.8812
                             Blair County, PA................
11100.....................  Amarillo, TX.....................     0.9161
                             Armstrong County, TX............
                             Carson County, TX...............
                             Potter County, TX...............
                             Randall County, TX..............
11180.....................  Ames, IA.........................     0.9760
                             Story County, IA................
11260.....................  Anchorage, AK....................     1.2024
                             Anchorage Municipality, AK......
                             Matanuska-Susitna Borough, AK...
11300.....................  Anderson, IN.....................     0.8681
                             Madison County, IN..............
11340.....................  Anderson, SC.....................     0.9017
                             Anderson County, SC.............
11460.....................  Ann Arbor, MI....................     1.0826
                             Washtenaw County, MI............
11500.....................  Anniston-Oxford, AL..............     0.7770
                             Calhoun County, AL..............
11540.....................  Appleton, WI.....................     0.9455
                             Calumet County, WI..............
                             Outagamie County, WI............
11700.....................  Asheville, NC....................     0.9077
                             Buncombe County, NC.............
                             Haywood County, NC..............
                             Henderson County, NC............
                             Madison County, NC..............
12020.....................  Athens-Clarke County, GA.........     0.9856
                             Clarke County, GA...............
                             Madison County, GA..............
                             Oconee County, GA...............
                             Oglethorpe County, GA...........
12060.....................  Atlanta-Sandy Springs-Marietta,       0.9762
                             GA.
                             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................     1.1831
                             Atlantic County, NJ.............
12220.....................  Auburn-Opelika, AL...............     0.8096

[[Page 25461]]

 
                             Lee County, AL..................
12260.....................  Augusta-Richmond County, GA-SC...     0.9667
                             Burke County, GA................
                             Columbia County, GA.............
                             McDuffie County, GA.............
                             Richmond County, GA.............
                             Aiken County, SC................
                             Edgefield County, SC............
12420.....................  Austin-Round Rock, TX............     0.9344
                             Bastrop County, TX..............
                             Caldwell County, TX.............
                             Hays County, TX.................
                             Travis County, TX...............
                             Williamson County, TX...........
12540.....................  Bakersfield, CA..................     1.0726
                             Kern County, CA.................
12580.....................  Baltimore-Towson, MD.............     1.0088
                             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.......................     0.9712
                             Penobscot County, ME............
12700.....................  Barnstable Town, MA..............     1.2540
                             Barnstable County, MA...........
12940.....................  Baton Rouge, LA..................     0.8085
                             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.................     0.9763
                             Calhoun County, MI..............
13020.....................  Bay City, MI.....................     0.9252
                             Bay County, MI..................
13140.....................  Beaumont-Port Arthur, TX.........     0.8595
                             Hardin County, TX...............
                             Jefferson County, TX............
                             Orange County, TX...............
13380.....................  Bellingham, WA...................     1.1105
                             Whatcom County, WA..............
13460.....................  Bend, OR.........................     1.0743
                             Deschutes County, OR............
13644.....................  Bethesda-Frederick-Gaithersburg,      1.0904
                             MD.
                             Frederick County, MD............
                             Montgomery County, MD...........
13740.....................  Billings, MT.....................     0.8713
                             Carbon County, MT...............
                             Yellowstone County, MT..........
13780.....................  Binghamton, NY...................     0.8786
                             Broome County, NY...............
                             Tioga County, NY................
13820.....................  Birmingham-Hoover, AL............     0.8994
                             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.....................     0.7240
                             Burleigh County, ND.............
                             Morton County, ND...............

[[Page 25462]]

 
13980.....................  Blacksburg-Christiansburg-            0.8213
                             Radford, VA.
                             Giles County, VA................
                             Montgomery County, VA...........
                             Pulaski County, VA..............
                             Radford City, VA................
14020.....................  Bloomington, IN..................     0.8533
                             Greene County, IN...............
                             Monroe County, IN...............
                             Owen County, IN.................
14060.....................  Bloomington-Normal, IL...........     0.8945
                             McLean County, IL...............
14260.....................  Boise City-Nampa, ID.............     0.9401
                             Ada County, ID..................
                             Boise County, ID................
                             Canyon County, ID...............
                             Gem County, ID..................
                             Owyhee County, ID...............
14484.....................  Boston-Quincy, MA................     1.1679
                             Norfolk County, MA..............
                             Plymouth County, MA.............
                             Suffolk County, MA..............
14500.....................  Boulder, CO......................     1.0350
                             Boulder County, CO..............
14540.....................  Bowling Green, KY................     0.8148
                             Edmonson County, KY.............
                             Warren County, KY...............
14740.....................  Bremerton-Silverdale, WA.........     1.0914
                             Kitsap County, WA...............
14860.....................  Bridgeport-Stamford-Norwalk, CT..     1.2659
                             Fairfield County, CT............
15180.....................  Brownsville-Harlingen, TX........     0.9430
                             Cameron County, TX..............
15260.....................  Brunswick, GA....................     1.0165
                             Brantley County, GA.............
                             Glynn County, GA................
                             McIntosh County, GA.............
15380.....................  Buffalo-Niagara Falls, NY........     0.9424
                             Erie County, NY.................
                             Niagara County, NY..............
15500.....................  Burlington, NC...................     0.8674
                             Alamance County, NC.............
15540.....................  Burlington-South Burlington, VT..     0.9475
                             Chittenden County, VT...........
                             Franklin County, VT.............
                             Grand Isle County, VT...........
15764.....................  Cambridge-Newton-Framingham, MA..     1.0970
                             Middlesex County, MA............
15804.....................  Camden, NJ.......................     1.0393
                             Burlington County, NJ...........
                             Camden County, NJ...............
                             Gloucester County, NJ...........
15940.....................  Canton-Massillon, OH.............     0.9032
                             Carroll County, OH..............
                             Stark County, OH................
15980.....................  Cape Coral-Fort Myers, FL........     0.9343
                             Lee County, FL..................
16180.....................  Carson City, NV..................     1.0026
                             Carson City, NV.................
16220.....................  Casper, WY.......................     0.9145
                             Natrona County, WY..............
16300.....................  Cedar Rapids, IA.................     0.8888
                             Benton County, IA...............
                             Jones County, IA................
                             Linn County, IA.................
16580.....................  Champaign-Urbana, IL.............     0.9645
                             Champaign County, IL............
                             Ford County, IL.................
                             Piatt County, IL................
16620.....................  Charleston, WV...................     0.8543
                             Boone County, WV................

[[Page 25463]]

 
                             Clay County, WV.................
                             Kanawha County, WV..............
                             Lincoln County, WV..............
                             Putnam County, WV...............
16700.....................  Charleston-North Charleston, SC..     0.9145
                             Berkeley County, SC.............
                             Charleston County, SC...........
                             Dorchester County, SC...........
16740.....................  Charlotte-Gastonia-Concord, NC-SC     0.9555
                             Anson County, NC................
                             Cabarrus County, NC.............
                             Gaston County, NC...............
                             Mecklenburg County, NC..........
                             Union County, NC................
                             York County, SC.................
16820.....................  Charlottesville, VA..............     1.0125
                             Albemarle County, VA............
                             Fluvanna County, VA.............
                             Greene County, VA...............
                             Nelson County, VA...............
                             Charlottesville City, VA........
16860.....................  Chattanooga, TN-GA...............     0.8948
                             Catoosa County, GA..............
                             Dade County, GA.................
                             Walker County, GA...............
                             Hamilton County, TN.............
                             Marion County, TN...............
                             Sequatchie County, TN...........
16940.....................  Cheyenne, WY.....................     0.9060
                             Laramie County, WY..............
16974.....................  Chicago-Naperville-Joliet, IL....     1.0752
                             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........................     1.1054
                             Butte County, CA................
17140.....................  Cincinnati-Middletown, OH-KY-IN..     0.9601
                             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...............     0.8436
                             Christian County, KY............
                             Trigg County, KY................
                             Montgomery County, TN...........
                             Stewart County, TN..............
17420.....................  Cleveland, TN....................     0.8110
                             Bradley County, TN..............
                             Polk County, TN.................
17460.....................  Cleveland-Elyria-Mentor, OH......     0.9400
                             Cuyahoga County, OH.............
                             Geauga County, OH...............
                             Lake County, OH.................
                             Lorain County, OH...............

[[Page 25464]]

 
                             Medina County, OH...............
17660.....................  Coeur d'Alene, ID................     0.9344
                             Kootenai County, ID.............
17780.....................  College Station-Bryan, TX........     0.9046
                             Brazos County, TX...............
                             Burleson County, TX.............
                             Robertson County, TX............
17820.....................  Colorado Springs, CO.............     0.9701
                             El Paso County, CO..............
                             Teller County, CO...............
17860.....................  Columbia, MO.....................     0.8543
                             Boone County, MO................
                             Howard County, MO...............
17900.....................  Columbia, SC.....................     0.8934
                             Calhoun County, SC..............
                             Fairfield County, SC............
                             Kershaw County, SC..............
                             Lexington County, SC............
                             Richland County, SC.............
                             Saluda County, SC...............
17980.....................  Columbus, GA-AL..................     0.8239
                             Russell County, AL..............
                             Chattahoochee County, GA........
                             Harris County, GA...............
                             Marion County, GA...............
                             Muscogee County, GA.............
18020.....................  Columbus, IN.....................     0.9318
                             Bartholomew County, IN..........
18140.....................  Columbus, OH.....................     1.0107
                             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...............     0.8564
                             Aransas County, TX..............
                             Nueces County, TX...............
                             San Patricio County, TX.........
18700.....................  Corvallis, OR....................     1.1546
                             Benton County, OR...............
19060.....................  Cumberland, MD-WV................     0.8447
                             Allegany County, MD.............
                             Mineral County, WV..............
19124.....................  Dallas-Plano-Irving, TX..........     1.0076
                             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.......................     0.9093
                             Murray County, GA...............
                             Whitfield County, GA............
19180.....................  Danville, IL.....................     0.9267
                             Vermilion County, IL............
19260.....................  Danville, VA.....................     0.8451
                             Pittsylvania County, VA.........
                             Danville City, VA...............
19340.....................  Davenport-Moline-Rock Island, IA-     0.8847
                             IL.
                             Henry County, IL................
                             Mercer County, IL...............
                             Rock Island County, IL..........
                             Scott County, IA................
19380.....................  Dayton, OH.......................     0.9037
                             Greene County, OH...............

[[Page 25465]]

 
                             Miami County, OH................
                             Montgomery County, OH...........
                             Preble County, OH...............
19460.....................  Decatur, AL......................     0.8160
                             Lawrence County, AL.............
                             Morgan County, AL...............
19500.....................  Decatur, IL......................     0.8173
                             Macon County, IL................
19660.....................  Deltona-Daytona Beach-Ormond          0.9264
                             Beach, FL.
                             Volusia County, FL..............
19740.....................  Denver-Aurora, CO................     1.0931
                             Adams County, CO................
                             Arapahoe County, CO.............
                             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...................     0.9214
                             Dallas County, IA...............
                             Guthrie County, IA..............
                             Madison County, IA..............
                             Polk County, IA.................
                             Warren County, IA...............
19804.....................  Detroit-Livonia-Dearborn, MI.....     1.0282
                             Wayne County, MI................
20020.....................  Dothan, AL.......................     0.7381
                             Geneva County, AL...............
                             Henry County, AL................
                             Houston County, AL..............
20100.....................  Dover, DE........................     0.9848
                             Kent County, DE.................
20220.....................  Dubuque, IA......................     0.9134
                             Dubuque County, IA..............
20260.....................  Duluth, MN-WI....................     1.0042
                             Carlton County, MN..............
                             St. Louis County, MN............
                             Douglas County, WI..............
20500.....................  Durham, NC.......................     0.9826
                             Chatham County, NC..............
                             Durham County, NC...............
                             Orange County, NC...............
                             Person County, NC...............
20740.....................  Eau Claire, WI...................     0.9630
                             Chippewa County, WI.............
                             Eau Claire County, WI...........
20764.....................  Edison, NJ.......................     1.1190
                             Middlesex County, NJ............
                             Monmouth County, NJ.............
                             Ocean County, NJ................
                             Somerset County, NJ.............
20940.....................  El Centro, CA....................     0.9076
                             Imperial County, CA.............
21060.....................  Elizabethtown, KY................     0.8698
                             Hardin County, KY...............
                             Larue County, KY................
21140.....................  Elkhart-Goshen, IN...............     0.9426
                             Elkhart County, IN..............
21300.....................  Elmira, NY.......................     0.8240
                             Chemung County, NY..............
21340.....................  El Paso, TX......................     0.9053
                             El Paso County, TX..............
21500.....................  Erie, PA.........................     0.8828
                             Erie County, PA.................
21604.....................  Essex County, MA.................     1.0419
                             Essex County, MA................
21660.....................  Eugene-Springfield, OR...........     1.0877

[[Page 25466]]

 
                             Lane County, OR.................
21780.....................  Evansville, IN-KY................     0.9071
                             Gibson County, IN...............
                             Posey County, IN................
                             Vanderburgh County, IN..........
                             Warrick County, IN..............
                             Henderson County, KY............
                             Webster County, KY..............
21820.....................  Fairbanks, AK....................     1.1060
                             Fairbanks North Star Borough, AK
21940.....................  Fajardo, PR......................     0.4037
                             Ceiba Municipio, PR.............
                             Fajardo Municipio, PR...........
                             Luquillo Municipio, PR..........
22020.....................  Fargo, ND-MN.....................     0.8251
                             Cass County, ND.................
                             Clay County, MN.................
22140.....................  Farmington, NM...................     0.8589
                             San Juan County, NM.............
22180.....................  Fayetteville, NC.................     0.8946
                             Cumberland County, NC...........
                             Hoke County, NC.................
22220.....................  Fayetteville-Springdale-Rogers,       0.8865
                             AR-MO.
                             Benton County, AR...............
                             Madison County, AR..............
                             Washington County, AR...........
                             McDonald County, MO.............
22380.....................  Flagstaff, AZ....................     1.1601
                             Coconino County, AZ.............
22420.....................  Flint, MI........................     1.0969
                             Genesee County, MI..............
22500.....................  Florence, SC.....................     0.8388
                             Darlington County, SC...........
                             Florence County, SC.............
22520.....................  Florence-Muscle Shoals, AL.......     0.7844
                             Colbert County, AL..............
                             Lauderdale County, AL...........
22540.....................  Fond du Lac, WI..................     1.0064
                             Fond du Lac County, WI..........
22660.....................  Fort Collins-Loveland, CO........     0.9545
                             Larimer County, CO..............
22744.....................  Fort Lauderdale-Pompano Beach-        1.0134
                             Deerfield Beach, FL.
                             Broward County, FL..............
22900.....................  Fort Smith, AR-OK................     0.7732
                             Crawford County, AR.............
                             Franklin County, AR.............
                             Sebastian County, AR............
                             Le Flore County, OK.............
                             Sequoyah County, OK.............
23020.....................  Fort Walton Beach-Crestview-          0.8643
                             Destin, FL.
                             Okaloosa County, FL.............
23060.....................  Fort Wayne, IN...................     0.9517
                             Allen County, IN................
                             Wells County, IN................
                             Whitley County, IN..............
23104.....................  Fort Worth-Arlington, TX.........     0.9570
                             Johnson County, TX..............
                             Parker County, TX...............
                             Tarrant County, TX..............
                             Wise County, TX.................
23420.....................  Fresno, CA.......................     1.0943
                             Fresno County, CA...............
23460.....................  Gadsden, AL......................     0.8066
                             Etowah County, AL...............
23540.....................  Gainesville, FL..................     0.9277
                             Alachua County, FL..............
                             Gilchrist County, FL............
23580.....................  Gainesville, GA..................     0.8959
                             Hall County, GA.................
23844.....................  Gary, IN.........................     0.9334

[[Page 25467]]

 
                             Jasper County, IN...............
                             Lake County, IN.................
                             Newton County, IN...............
                             Porter County, IN...............
24020.....................  Glens Falls, NY..................     0.8325
                             Warren County, NY...............
                             Washington County, NY...........
24140.....................  Goldsboro, NC....................     0.9171
                             Wayne County, NC................
24220.....................  Grand Forks, ND-MN...............     0.7949
                             Polk County, MN.................
                             Grand Forks County, ND..........
24300.....................  Grand Junction, CO...............     0.9669
                             Mesa County, CO.................
24340.....................  Grand Rapids-Wyoming, MI.........     0.9455
                             Barry County, MI................
                             Ionia County, MI................
                             Kent County, MI.................
                             Newaygo County, MI..............
24500.....................  Great Falls, MT..................     0.8598
                             Cascade County, MT..............
24540.....................  Greeley, CO......................     0.9602
                             Weld County, CO.................
24580.....................  Green Bay, WI....................     0.9787
                             Brown County, WI................
                             Kewaunee County, WI.............
                             Oconto County, WI...............
24660.....................  Greensboro-High Point, NC........     0.8866
                             Guilford County, NC.............
                             Randolph County, NC.............
                             Rockingham County, NC...........
24780.....................  Greenville, NC...................     0.9432
                             Greene County, NC...............
                             Pitt County, NC.................
24860.....................  Greenville, SC...................     0.9804
                             Greenville County, SC...........
                             Laurens County, SC..............
                             Pickens County, SC..............
25020.....................  Guayama, PR......................     0.3235
                             Arroyo Municipio, PR............
                             Guayama Municipio, PR...........
                             Patillas Municipio, PR..........
25060.....................  Gulfport-Biloxi, MS..............     0.8915
                             Hancock County, MS..............
                             Harrison County, MS.............
                             Stone County, MS................
25180.....................  Hagerstown-Martinsburg, MD-WV....     0.9039
                             Washington County, MD...........
                             Berkeley County, WV.............
                             Morgan County, WV...............
25260.....................  Hanford-Corcoran, CA.............     1.0282
                             Kings County, CA................
25420.....................  Harrisburg-Carlisle, PA..........     0.9402
                             Cumberland County, PA...........
                             Dauphin County, PA..............
                             Perry County, PA................
25500.....................  Harrisonburg, VA.................     0.9074
                             Rockingham County, VA...........
                             Harrisonburg City, VA...........
25540.....................  Hartford-West Hartford-East           1.0894
                             Hartford, CT.
                             Hartford County, CT.............
                             Litchfield County, CT...........
                             Middlesex County, CT............
                             Tolland County, CT..............
25620.....................  Hattiesburg, MS..................     0.7430
                             Forrest County, MS..............
                             Lamar County, MS................
                             Perry County, MS................
25860.....................  Hickory-Lenoir-Morganton, NC.....     0.9010
                             Alexander County, NC............

[[Page 25468]]

 
                             Burke County, NC................
                             Caldwell County, NC.............
                             Catawba County, NC..............
259801....................  Hinesville-Fort Stewart, GA......     0.9178
                             Liberty County, GA..............
                             Long County, GA.................
26100.....................  Holland-Grand Haven, MI..........     0.9163
                             Ottawa County, MI...............
26180.....................  Honolulu, HI.....................     1.1096
                             Honolulu County, HI.............
26300.....................  Hot Springs, AR..................     0.8782
                             Garland County, AR..............
26380.....................  Houma-Bayou Cane-Thibodaux, LA...     0.8082
                             Lafourche Parish, LA............
                             Terrebonne Parish, LA...........
26420.....................  Houston-Baytown-Sugar Land, TX...     1.0009
                             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.....     0.8998
                             Boyd County, KY.................
                             Greenup County, KY..............
                             Lawrence County, OH.............
                             Cabell County, WV...............
                             Wayne County, WV................
26620.....................  Huntsville, AL...................     0.9007
                             Limestone County, AL............
                             Madison County, AL..............
26820.....................  Idaho Falls, ID..................     0.9088
                             Bonneville County, ID...........
                             Jefferson County, ID............
26900.....................  Indianapolis, IN.................     0.9896
                             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....................     0.9714
                             Johnson County, IA..............
                             Washington County, IA...........
27060.....................  Ithaca, NY.......................     0.9928
                             Tompkins County, NY.............
27100.....................  Jackson, MI......................     0.9560
                             Jackson County, MI..............
27140.....................  Jackson, MS......................     0.8271
                             Copiah County, MS...............
                             Hinds County, MS................
                             Madison County, MS..............
                             Rankin County, MS...............
                             Simpson County, MS..............
27180.....................  Jackson, TN......................     0.8853
                             Chester County, TN..............
                             Madison County, TN..............
27260.....................  Jacksonville, FL.................     0.9166
                             Baker County, FL................
                             Clay County, FL.................
                             Duval County, FL................
                             Nassau County, FL...............

[[Page 25469]]

 
                             St. Johns County, FL............
27340.....................  Jacksonville, NC.................     0.8231
                             Onslow County, NC...............
27500.....................  Janesville, WI...................     0.9655
                             Rock County, WI.................
27620.....................  Jefferson City, MO...............     0.8333
                             Callaway County, MO.............
                             Cole County, MO.................
                             Moniteau County, MO.............
                             Osage County, MO................
27740.....................  Johnson City, TN.................     0.8043
                             Carter County, TN...............
                             Unicoi County, TN...............
                             Washington County, TN...........
27780.....................  Johnstown, PA....................     0.8620
                             Cambria County, PA..............
27860.....................  Jonesboro, AR....................     0.7662
                             Craighead County, AR............
                             Poinsett County, AR.............
27900.....................  Joplin, MO.......................     0.8606
                             Jasper County, MO...............
                             Newton County, MO...............
28020.....................  Kalamazoo-Portage, MI............     1.0705
                             Kalamazoo County, MI............
                             Van Buren County, MI............
28100.....................  Kankakee-Bradley, IL.............     1.0083
                             Kankakee County, IL.............
28140.....................  Kansas City, MO-KS...............     0.9495
                             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.....     1.0343
                             Benton County, WA...............
                             Franklin County, WA.............
28660.....................  Killeen-Temple-Fort Hood, TX.....     0.8902
                             Bell County, TX.................
                             Coryell County, TX..............
                             Lampasas County, TX.............
28700.....................  Kingsport-Bristol-Bristol, TN-VA.     0.7985
                             Hawkins County, TN..............
                             Sullivan County, TN.............
                             Bristol City, VA................
                             Scott County, VA................
                             Washington County, VA...........
28740.....................  Kingston, NY.....................     0.9367
                             Ulster County, NY...............
28940.....................  Knoxville, TN....................     0.8249
                             Anderson County, TN.............
                             Blount County, TN...............
                             Knox County, TN.................
                             Loudon County, TN...............
                             Union County, TN................
29020.....................  Kokomo, IN.......................     0.9669
                             Howard County, IN...............
                             Tipton County, IN...............
29100.....................  La Crosse, WI-MN.................     0.9426
                             Houston County, MN..............
                             La Crosse County, WI............

[[Page 25470]]

 
29140.....................  Lafayette, IN....................     0.8932
                             Benton County, IN...............
                             Carroll County, IN..............
                             Tippecanoe County, IN...........
29180.....................  Lafayette, LA....................     0.8289
                             Lafayette Parish, LA............
                             St. Martin Parish, LA...........
29340.....................  Lake Charles, LA.................     0.7914
                             Calcasieu Parish, LA............
                             Cameron Parish, LA..............
29404.....................  Lake County-Kenosha County, IL-WI     1.0571
                             Lake County, IL.................
                             Kenosha County, WI..............
29460.....................  Lakeland, FL.....................     0.8879
                             Polk County, FL.................
29540.....................  Lancaster, PA....................     0.9589
                             Lancaster County, PA............
29620.....................  Lansing-East Lansing, MI.........     1.0088
                             Clinton County, MI..............
                             Eaton County, MI................
                             Ingham County, MI...............
29700.....................  Laredo, TX.......................     0.7812
                             Webb County, TX.................
29740.....................  Las Cruces, NM...................     0.9273
                             Dona Ana County, NM.............
29820.....................  Las Vegas-Paradise, NV...........     1.1430
                             Clark County, NV................
29940.....................  Lawrence, KS.....................     0.8366
                             Douglas County, KS..............
30020.....................  Lawton, OK.......................     0.8066
                             Comanche County, OK.............
30140.....................  Lebanon, PA......................     0.8680
                             Lebanon County, PA..............
30300.....................  Lewiston, ID-WA..................     0.9854
                             Nez Perce County, ID............
                             Asotin County, WA...............
30340.....................  Lewiston-Auburn, ME..............     0.9126
                             Androscoggin County, ME.........
30460.....................  Lexington-Fayette, KY............     0.9181
                             Bourbon County, KY..............
                             Clark County, KY................
                             Fayette County, KY..............
                             Jessamine County, KY............
                             Scott County, KY................
                             Woodford County, KY.............
30620.....................  Lima, OH.........................     0.9042
                             Allen County, OH................
30700.....................  Lincoln, NE......................     1.0092
                             Lancaster County, NE............
                             Seward County, NE...............
30780.....................  Little Rock-North Little Rock, AR     0.8890
                             Faulkner County, AR.............
                             Grant County, AR................
                             Lonoke County, AR...............
                             Perry County, AR................
                             Pulaski County, AR..............
                             Saline County, AR...............
30860.....................  Logan, UT-ID.....................     0.9022
                             Franklin County, ID.............
                             Cache County, UT................
30980.....................  Longview, TX.....................     0.8788
                             Gregg County, TX................
                             Rusk County, TX.................
                             Upshur County, TX...............
31020.....................  Longview, WA.....................     1.0011
                             Cowlitz County, WA..............
31084.....................  Los Angeles-Long Beach-Glendale,      1.1760
                             CA.
                             Los Angeles County, CA..........
31140.....................  Louisville, KY-IN................     0.9119
                             Clark County, IN................

[[Page 25471]]

 
                             Floyd County, IN................
                             Harrison County, IN.............
                             Washington County, IN...........
                             Bullitt County, KY..............
                             Henry County, KY................
                             Jefferson County, KY............
                             Meade County, KY................
                             Nelson County, KY...............
                             Oldham County, KY...............
                             Shelby County, KY...............
                             Spencer County, KY..............
                             Trimble County, KY..............
31180.....................  Lubbock, TX......................     0.8613
                             Crosby County, TX...............
                             Lubbock County, TX..............
31340.....................  Lynchburg, VA....................     0.8694
                             Amherst County, VA..............
                             Appomattox County, VA...........
                             Bedford County, VA..............
                             Campbell County, VA.............
                             Bedford City, VA................
                             Lynchburg City, VA..............
31420.....................  Macon, GA........................     0.9520
                             Bibb County, GA.................
                             Crawford County, GA.............
                             Jones County, GA................
                             Monroe County, GA...............
                             Twiggs County, GA...............
31460.....................  Madera, CA.......................     0.8155
                             Madera County, CA...............
31540.....................  Madison, WI......................     1.0840
                             Columbia County, WI.............
                             Dane County, WI.................
                             Iowa County, WI.................
31700.....................  Manchester-Nashua, NH............     1.0243
                             Hillsborough County, NH.........
                             Merrimack County, NH............
31900.....................  Mansfield, OH....................     0.9271
                             Richland County, OH.............
32420.....................  Mayag[uuml]ez, PR................     0.3848
                             Hormigueros Municipio, PR.......
                             Mayag[uuml]ez Municipio, PR.....
32580.....................  McAllen-Edinburg-Pharr, TX.......     0.8773
                             Hidalgo County, TX..............
32780.....................  Medford, OR......................     1.0818
                             Jackson County, OR..............
32820.....................  Memphis, TN-MS-AR................     0.9373
                             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.......................     1.1471
                             Merced County, CA...............
33124.....................  Miami-Miami Beach-Kendall, FL....     0.9813
                             Miami-Dade County, FL...........
33140.....................  Michigan City-La Porte, IN.......     0.9118
                             LaPorte County, IN..............
33260.....................  Midland, TX......................     0.9786
                             Midland County, TX..............
33340.....................  Milwaukee-Waukesha-West Allis, WI     1.0218
                             Milwaukee County, WI............
                             Ozaukee County, WI..............
                             Washington County, WI...........
                             Waukesha County, WI.............
33460.....................  Minneapolis-St. Paul-Bloomington,     1.0946
                             MN-WI.
                             Anoka County, MN................

[[Page 25472]]

 
                             Carver County, MN...............
                             Chisago County, MN..............
                             Dakota County, MN...............
                             Hennepin County, MN.............
                             Isanti County, MN...............
                             Ramsey County, MN...............
                             Scott County, MN................
                             Sherburne County, MN............
                             Washington County, MN...........
                             Wright County, MN...............
                             Pierce County, WI...............
                             St. Croix County, WI............
33540.....................  Missoula, MT.....................     0.8929
                             Missoula County, MT.............
33660.....................  Mobile, AL.......................     0.7914
                             Mobile County, AL...............
33700.....................  Modesto, CA......................     1.1730
                             Stanislaus County, CA...........
33740.....................  Monroe, LA.......................     0.7997
                             Ouachita Parish, LA.............
                             Union Parish, LA................
33780.....................  Monroe, MI.......................     0.9708
                             Monroe County, MI...............
33860.....................  Montgomery, AL...................     0.8009
                             Autauga County, AL..............
                             Elmore County, AL...............
                             Lowndes County, AL..............
                             Montgomery County, AL...........
34060.....................  Morgantown, WV...................     0.8423
                             Monongalia County, WV...........
                             Preston County, WV..............
34100.....................  Morristown, TN...................     0.7933
                             Grainger County, TN.............
                             Hamblen County, TN..............
                             Jefferson County, TN............
34580.....................  Mount Vernon-Anacortes, WA.......     1.0518
                             Skagit County, WA...............
34620.....................  Muncie, IN.......................     0.8562
                             Delaware County, IN.............
34740.....................  Muskegon-Norton Shores, MI.......     0.9941
                             Muskegon County, MI.............
34820.....................  Myrtle Beach-Conway-North Myrtle      0.8811
                             Beach, SC.
                             Horry County, SC................
34900.....................  Napa, CA.........................     1.3375
                             Napa County, CA.................
34940.....................  Naples-Marco Island, FL..........     0.9941
                             Collier County, FL..............
34980.....................  Nashville-Davidson-Murfreesboro,      0.9847
                             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...............     1.2663
                             Nassau County, NY...............
                             Suffolk County, NY..............
35084.....................  Newark-Union, NJ-PA..............     1.1892
                             Essex County, NJ................
                             Hunterdon County, NJ............
                             Morris County, NJ...............
                             Sussex County, NJ...............
                             Union County, NJ................

[[Page 25473]]

 
                             Pike County, PA.................
35300.....................  New Haven-Milford, CT............     1.1953
                             New Haven County, CT............
35380.....................  New Orleans-Metairie-Kenner, LA..     0.8832
                             Jefferson Parish, LA............
                             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-      1.3177
                             NJ.
                             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..........     0.8915
                             Berrien County, MI..............
35980.....................  Norwich-New London, CT...........     1.1932
                             New London County, CT...........
36084.....................  Oakland-Fremont-Hayward, CA......     1.5819
                             Alameda County, CA..............
                             Contra Costa County, CA.........
36100.....................  Ocala, FL........................     0.8867
                             Marion County, FL...............
36140.....................  Ocean City, NJ...................     1.0472
                             Cape May County, NJ.............
36220.....................  Odessa, TX.......................     1.0102
                             Ector County, TX................
36260.....................  Ogden-Clearfield, UT.............     0.8995
                             Davis County, UT................
                             Morgan County, UT...............
                             Weber County, UT................
36420.....................  Oklahoma City, OK................     0.8843
                             Canadian County, OK.............
                             Cleveland County, OK............
                             Grady County, OK................
                             Lincoln County, OK..............
                             Logan County, OK................
                             McClain County, OK..............
                             Oklahoma County, OK.............
36500.....................  Olympia, WA......................     1.1081
                             Thurston County, WA.............
36540.....................  Omaha-Council Bluffs, NE-IA......     0.9450
                             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......................     0.9452
                             Lake County, FL.................
                             Orange County, FL...............
                             Osceola County, FL..............
                             Seminole County, FL.............
36780.....................  Oshkosh-Neenah, WI...............     0.9315
                             Winnebago County, WI............
36980.....................  Owensboro, KY....................     0.8748
                             Daviess County, KY..............
                             Hancock County, KY..............
                             McLean County, KY...............

[[Page 25474]]

 
37100.....................  Oxnard-Thousand Oaks-Ventura, CA.     1.1546
                             Ventura County, CA..............
37340.....................  Palm Bay-Melbourne-Titusville, FL     0.9443
                             Brevard County, FL..............
37460.....................  Panama City-Lynn Haven, FL.......     0.8027
                             Bay County, FL..................
37620.....................  Parkersburg-Marietta, WV-OH......     0.7978
                             Washington County, OH...........
                             Pleasants County, WV............
                             Wirt County, WV.................
                             Wood County, WV.................
37700.....................  Pascagoula, MS...................     0.8215
                             George County, MS...............
                             Jackson County, MS..............
37860.....................  Pensacola-Ferry Pass-Brent, FL...     0.8000
                             Escambia County, FL.............
                             Santa Rosa County, FL...........
37900.....................  Peoria, IL.......................     0.8982
                             Marshall County, IL.............
                             Peoria County, IL...............
                             Stark County, IL................
                             Tazewell County, IL.............
                             Woodford County, IL.............
37964.....................  Philadelphia, PA.................     1.0997
                             Bucks County, PA................
                             Chester County, PA..............
                             Delaware County, PA.............
                             Montgomery County, PA...........
                             Philadelphia County, PA.........
38060.....................  Phoenix-Mesa-Scottsdale, AZ......     1.0288
                             Maricopa County, AZ.............
                             Pinal County, AZ................
38220.....................  Pine Bluff, AR...................     0.8383
                             Cleveland County, AR............
                             Jefferson County, AR............
                             Lincoln County, AR..............
38300.....................  Pittsburgh, PA...................     0.8674
                             Allegheny County, PA............
                             Armstrong County, PA............
                             Beaver County, PA...............
                             Butler County, PA...............
                             Fayette County, PA..............
                             Washington County, PA...........
                             Westmoreland County, PA.........
38340.....................  Pittsfield, MA...................     1.0266
                             Berkshire County, MA............
38540.....................  Pocatello, ID....................     0.9401
                             Bannock County, ID..............
                             Power County, ID................
38660.....................  Ponce, PR........................     0.4843
                             Juana D[iacute]az Municipio, PR.
                             Ponce Municipio, PR.............
                             Villalba Municipio, PR..........
38860.....................  Portland-South Portland-              0.9909
                             Biddeford, ME.
                             Cumberland County, ME...........
                             Sagadahoc County, ME............
                             York County, ME.................
38900.....................  Portland-Vancouver-Beaverton, OR-     1.1416
                             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...     0.9834
                             Martin County, FL...............
                             St. Lucie County, FL............
39100.....................  Poughkeepsie-Newburgh-Middletown,     1.0911
                             NY.
                             Dutchess County, NY.............

[[Page 25475]]

 
                             Orange County, NY...............
39140.....................  Prescott, AZ.....................     0.9836
                             Yavapai County, AZ..............
39300.....................  Providence-New Bedford-Fall           1.0783
                             River, RI-MA.
                             Bristol County, MA..............
                             Bristol County, RI..............
                             Kent County, RI.................
                             Newport County, RI..............
                             Providence County, RI...........
                             Washington County, RI...........
39340.....................  Provo-Orem, UT...................     0.9538
                             Juab County, UT.................
                             Utah County, UT.................
39380.....................  Pueblo, CO.......................     0.8754
                             Pueblo County, CO...............
39460.....................  Punta Gorda, FL..................     0.9405
                             Charlotte County, FL............
39540.....................  Racine, WI.......................     0.9356
                             Racine County, WI...............
39580.....................  Raleigh-Cary, NC.................     0.9864
                             Franklin County, NC.............
                             Johnston County, NC.............
                             Wake County, NC.................
39660.....................  Rapid City, SD...................     0.8833
                             Meade County, SD................
                             Pennington County, SD...........
39740.....................  Reading, PA......................     0.9623
                             Berks County, PA................
39820.....................  Redding, CA......................     1.3198
                             Shasta County, CA...............
39900.....................  Reno-Sparks, NV..................     1.1964
                             Storey County, NV...............
                             Washoe County, NV...............
40060.....................  Richmond, VA.....................     0.9177
                             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,     1.0904
                             CA.
                             Riverside County, CA............
                             San Bernardino County, CA.......
40220.....................  Roanoke, VA......................     0.8647
                             Botetourt County, VA............
                             Craig County, VA................
                             Franklin County, VA.............
                             Roanoke County, VA..............
                             Roanoke City, VA................
                             Salem City, VA..................
40340.....................  Rochester, MN....................     1.1408
                             Dodge County, MN................
                             Olmsted County, MN..............
                             Wabasha County, MN..............
40380.....................  Rochester, NY....................     0.8994
                             Livingston County, NY...........

[[Page 25476]]

 
                             Monroe County, NY...............
                             Ontario County, NY..............
                             Orleans County, NY..............
                             Wayne County, NY................
40420.....................  Rockford, IL.....................     0.9990
                             Boone County, IL................
                             Winnebago County, IL............
40484.....................  Rockingham County-Strafford           1.0159
                             County, NH.
                             Rockingham County, NH...........
                             Strafford County, NH............
40580.....................  Rocky Mount, NC..................     0.8854
                             Edgecombe County, NC............
                             Nash County, NC.................
40660.....................  Rome, GA.........................     0.9194
                             Floyd County, GA................
40900.....................  SacramentoArden-ArcadeRoseville,      1.3373
                             CA.
                             El Dorado County, CA............
                             Placer County, CA...............
                             Sacramento County, CA...........
                             Yolo County, CA.................
40980.....................  Saginaw-Saginaw Township North,       0.8874
                             MI.
                             Saginaw County, MI..............
41060.....................  St. Cloud, MN....................     1.0362
                             Benton County, MN...............
                             Stearns County, MN..............
41100.....................  St. George, UT...................     0.9265
                             Washington County, UT...........
41140.....................  St. Joseph, MO-KS................     1.0118
                             Doniphan County, KS.............
                             Andrew County, MO...............
                             Buchanan County, MO.............
                             DeKalb County, MO...............
41180.....................  St. Louis, MO-IL.................     0.9006
                             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........................     1.0439
                             Marion County, OR...............
                             Polk County, OR.................
41500.....................  Salinas, CA......................     1.4338
                             Monterey County, CA.............
41540.....................  Salisbury, MD....................     0.8953
                             Somerset County, MD.............
                             Wicomico County, MD.............
41620.....................  Salt Lake City, UT...............     0.9402
                             Salt Lake County, UT............
                             Summit County, UT...............
                             Tooele County, UT...............
41660.....................  San Angelo, TX...................     0.8362
                             Irion County, TX................
                             Tom Green County, TX............
41700.....................  San Antonio, TX..................     0.8845
                             Atascosa County, TX.............
                             Bandera County, TX..............
                             Bexar County, TX................
                             Comal County, TX................

[[Page 25477]]

 
                             Guadalupe County, TX............
                             Kendall County, TX..............
                             Medina County, TX...............
                             Wilson County, TX...............
41740.....................  San Diego-Carlsbad-San Marcos, CA     1.1354
                             San Diego County, CA............
41780.....................  Sandusky, OH.....................     0.9302
                             Erie County, OH.................
41884.....................  San Francisco-San Mateo-Redwood       1.5166
                             City, CA.
                             Marin County, CA................
                             San Francisco County, CA........
                             San Mateo County, CA............
41900.....................  San Germ[aacute]n-Cabo Rojo, PR..     0.4885
                             Cabo Rojo Municipio, PR.........
                             Lajas Municipio, PR.............
                             Sabana Grande Municipio, PR.....
                             San Germ[aacute]n Municipio, PR.
41940.....................  San Jose-Sunnyvale-Santa Clara,       1.5543
                             CA.
                             San Benito County, CA...........
                             Santa Clara County, CA..........
41980.....................  San Juan-Caguas-Guaynabo, PR.....     0.4452
                             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..     1.1599
                             San Luis Obispo County, CA......
42044.....................  Santa Ana-Anaheim-Irvine, CA.....     1.1473
                             Orange County, CA...............
42060.....................  Santa Barbara-Santa Maria-Goleta,     1.1092
                             CA.
                             Santa Barbara County, CA........
42100.....................  Santa Cruz-Watsonville, CA.......     1.5458

[[Page 25478]]

 
                             Santa Cruz County, CA...........
42140.....................  Santa Fe, NM.....................     1.0825
                             Santa Fe County, NM.............
42220.....................  Santa Rosa-Petaluma, CA..........     1.4464
                             Sonoma County, CA...............
42260.....................  Sarasota-Bradenton-Venice, FL....     0.9868
                             Manatee County, FL..............
                             Sarasota County, FL.............
42340.....................  Savannah, GA.....................     0.9351
                             Bryan County, GA................
                             Chatham County, GA..............
                             Effingham County, GA............
42540.....................  ScrantonWilkes-Barre, PA.........     0.8348
                             Lackawanna County, PA...........
                             Luzerne County, PA..............
                             Wyoming County, PA..............
42644.....................  Seattle-Bellevue-Everett, WA.....     1.1434
                             King County, WA.................
                             Snohomish County, WA............
42680.....................  Sebastian-Vero Beach, FL.........     0.9573
43100.....................  Sheboygan, WI....................     0.9027
                             Sheboygan County, WI............
43300.....................  Sherman-Denison, TX..............     0.8503
                             Grayson County, TX..............
43340.....................  Shreveport-Bossier City, LA......     0.8865
                             Bossier Parish, LA..............
                             Caddo Parish, LA................
                             De Soto Parish, LA..............
43580.....................  Sioux City, IA-NE-SD.............     0.9201
                             Woodbury County, IA.............
                             Dakota County, NE...............
                             Dixon County, NE................
                             Union County, SD................
43620.....................  Sioux Falls, SD..................     0.9559
                             Lincoln County, SD..............
                             McCook County, SD...............
                             Minnehaha County, SD............
                             Turner County, SD...............
43780.....................  South Bend-Mishawaka, IN-MI......     0.9842
                             St. Joseph County, IN...........
                             Cass County, MI.................
43900.....................  Spartanburg, SC..................     0.9174
                             Spartanburg County, SC..........
44060.....................  Spokane, WA......................     1.0447
                             Spokane County, WA..............
44100.....................  Springfield, IL..................     0.8890
                             Menard County, IL...............
                             Sangamon County, IL.............
44140.....................  Springfield, MA..................     1.0079
                             Franklin County, MA.............
                             Hampden County, MA..............
                             Hampshire County, MA............
44180.....................  Springfield, MO..................     0.8469
                             Christian County, MO............
                             Dallas County, MO...............
                             Greene County, MO...............
                             Polk County, MO.................
                             Webster County, MO..............
44220.....................  Springfield, OH..................     0.8593
                             Clark County, OH................
44300.....................  State College, PA................     0.8784
                             Centre County, PA...............
44700.....................  Stockton, CA.....................     1.1443
                             San Joaquin County, CA..........
44940.....................  Sumter, SC.......................     0.8084
                             Sumter County, SC...............
45060.....................  Syracuse, NY.....................     0.9692
                             Madison County, NY..............
                             Onondaga County, NY.............
                             Oswego County, NY...............

[[Page 25479]]

 
45104.....................  Tacoma, WA.......................     1.0789
                             Pierce County, WA...............
45220.....................  Tallahassee, FL..................     0.8942
                             Gadsden County, FL..............
                             Jefferson County, FL............
                             Leon County, FL.................
                             Wakulla County, FL..............
45300.....................  Tampa-St. Petersburg-Clearwater,      0.9144
                             FL.
                             Hernando County, FL.............
                             Hillsborough County, FL.........
                             Pasco County, FL................
                             Pinellas County, FL.............
45460.....................  Terre Haute, IN..................     0.8765
                             Clay County, IN.................
                             Sullivan County, IN.............
                             Vermillion County, IN...........
                             Vigo County, IN.................
45500.....................  Texarkana, TX-Texarkana, AR......     0.8104
                             Miller County, AR...............
                             Bowie County, TX................
45780.....................  Toledo, OH.......................     0.9586
                             Fulton County, OH...............
                             Lucas County, OH................
                             Ottawa County, OH...............
                             Wood County, OH.................
45820.....................  Topeka, KS.......................     0.8730
                             Jackson County, KS..............
                             Jefferson County, KS............
                             Osage County, KS................
                             Shawnee County, KS..............
                             Wabaunsee County, KS............
45940.....................  Trenton-Ewing, NJ................     1.0836
                             Mercer County, NJ...............
46060.....................  Tucson, AZ.......................     0.9203
                             Pima County, AZ.................
46140.....................  Tulsa, OK........................     0.8103
                             Creek County, OK................
                             Okmulgee County, OK.............
                             Osage County, OK................
                             Pawnee County, OK...............
                             Rogers County, OK...............
                             Tulsa County, OK................
                             Wagoner County, OK..............
46220.....................  Tuscaloosa, AL...................     0.8542
                             Greene County, AL...............
                             Hale County, AL.................
                             Tuscaloosa County, AL...........
46340.....................  Tyler, TX........................     0.8812
                             Smith County, TX................
46540.....................  Utica-Rome, NY...................     0.8397
                             Herkimer County, NY.............
                             Oneida County, NY...............
46660.....................  Valdosta, GA.....................     0.8369
                             Brooks County, GA...............
                             Echols County, GA...............
                             Lanier County, GA...............
                             Lowndes County, GA..............
46700.....................  Vallejo-Fairfield, CA............     1.5138
                             Solano County, CA...............
47020.....................  Victoria, TX.....................     0.8560
                             Calhoun County, TX..............
                             Goliad County, TX...............
                             Victoria County, TX.............
47220.....................  Vineland-Millville-Bridgeton, NJ.     0.9832
                             Cumberland County, NJ...........
47260.....................  Virginia Beach-Norfolk-Newport        0.8790
                             News, VA-NC.
                             Currituck County, NC............
                             Gloucester County, VA...........
                             Isle of Wight County, VA........
                             James City County, VA...........

[[Page 25480]]

 
                             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..........     0.9968
                             Tulare County, CA...............
47380.....................  Waco, TX.........................     0.8633
                             McLennan County, TX.............
47580.....................  Warner Robins, GA................     0.8380
                             Houston County, GA..............
47644.....................  Warren-Farmington Hills-Troy, MI.     1.0054
                             Lapeer County, MI...............
                             Livingston County, MI...........
                             Macomb County, MI...............
                             Oakland County, MI..............
                             St. Clair County, MI............
47894.....................  Washington-Arlington-Alexandria,      1.1054
                             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.........     0.8408
                             Black Hawk County, IA...........
                             Bremer County, IA...............
                             Grundy County, IA...............
48140.....................  Wausau, WI.......................     0.9723
                             Marathon County, WI.............
48260.....................  Weirton-Steubenville, WV-OH......     0.8064
                             Jefferson County, OH............
                             Brooke County, WV...............
                             Hancock County, WV..............
48300.....................  Wenatchee, WA....................     1.0347
                             Chelan County, WA...............
                             Douglas County, WA..............
48424.....................  West Palm Beach-Boca Raton-           0.9649
                             Boynton Beach, FL.
                             Palm Beach County, FL...........
48540.....................  Wheeling, WV-OH..................     0.7010
                             Belmont County, OH..............
                             Marshall County, WV.............
                             Ohio County, WV.................
48620.....................  Wichita, KS......................     0.9063
                             Butler County, KS...............
                             Harvey County, KS...............
                             Sedgwick County, KS.............
                             Sumner County, KS...............

[[Page 25481]]

 
48660.....................  Wichita Falls, TX................     0.8311
                             Archer County, TX...............
                             Clay County, TX.................
                             Wichita County, TX..............
48700.....................  Williamsport, PA.................     0.8139
                             Lycoming County, PA.............
48864.....................  Wilmington, DE-MD-NJ.............     1.0684
                             New Castle County, DE...........
                             Cecil County, MD................
                             Salem County, NJ................
48900.....................  Wilmington, NC...................     0.9836
                             Brunswick County, NC............
                             New Hanover County, NC..........
                             Pender County, NC...............
49020.....................  Winchester, VA-WV................     1.0091
                             Frederick County, VA............
                             Winchester City, VA.............
                             Hampshire County, WV............
49180.....................  Winston-Salem, NC................     0.9276
                             Davie County, NC................
                             Forsyth County, NC..............
                             Stokes County, NC...............
                             Yadkin County, NC...............
49340.....................  Worcester, MA....................     1.0690
                             Worcester County, MA............
49420.....................  Yakima, WA.......................     0.9848
                             Yakima County, WA...............
49500.....................  Yauco, PR........................     0.3854
                             Gu[aacute]nica Municipio, PR....
                             Guayanilla Municipio, PR........
                             Pe[ntilde]uelas Municipio, PR...
                             Yauco Municipio, PR.............
49620.....................  York-Hanover, PA.................     0.9398
                             York County, PA.................
49660.....................  Youngstown-Warren-Boardman, OH-PA     0.8802
                             Mahoning County, OH.............
                             Trumbull County, OH.............
                             Mercer County, PA...............
49700.....................  Yuba City, CA....................     1.0731
                             Sutter County, CA...............
                             Yuba County, CA.................
49740.....................  Yuma, AZ.........................     0.9109
                             Yuma County, AZ ................
------------------------------------------------------------------------
\1\ At this time, there are no hospitals in these urban areas on which
  to base a wage index. Therefore, the urban wage index value is based
  on the average wage index of all urban areas within the State.

[FR Doc. 07-2167 Filed 4-27-07; 4:45 am]
BILLING CODE 4120-01-P