[Federal Register Volume 73, Number 154 (Friday, August 8, 2008)]
[Rules and Regulations]
[Pages 46370-46414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17797]



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Part II





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services



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42 CFR Part 412



 Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2009; Final Rule

  Federal Register / Vol. 73, No. 154 / Friday, August 8, 2008 / Rules 
and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1554-F]
RIN 0938-AP19


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2009

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

ACTION: Final rule.

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SUMMARY: This final rule updates the prospective payment rates for 
inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 
2009 (for discharges occurring on or after October 1, 2008 and on or 
before September 30, 2009) as required under section 1886(j)(3)(C) of 
the Social Security Act (the Act). Section 1886(j)(5) of the Act 
requires the Secretary to publish in the Federal Register on or before 
the August 1 that precedes the start of each fiscal year, the 
classification and weighting factors for the IRF prospective payment 
system's (PPS) case-mix groups and a description of the methodology and 
data used in computing the prospective payment rates for that fiscal 
year.
    We are revising existing policies regarding the PPS within the 
authority granted under section 1886(j) of the Act.

DATES: These regulations are effective October 1, 2008. The updated IRF 
prospective payment rates are applicable for discharges on or after 
October 1, 2008 and on or before September 30, 2009 (FY 2009).

FOR FURTHER INFORMATION CONTACT: Susanne Seagrave, (410) 786-0044, for 
information regarding the payment policies.
    Jeanette Kranacs, (410) 786-9385, for information regarding the 
wage index.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    A. Historical Overview of the Inpatient Rehabilitation Facility 
Prospective Payment System (IRF PPS)
    B. Operational Overview of the Current IRF PPS
II. Provisions of the Proposed Rule
III. Analysis of and Responses to Public Comments
IV. Update to the Case-Mix Group (CMG) Relative Weights and Average 
Length of Stay Values for FY 2009
V. FY 2009 IRF PPS Federal Prospective Payment Rates
    A. Increase Factor and Labor-Related Share for FY 2009
    B. Area Wage Adjustment
    C. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2009
    D. Example of the Methodology for Adjusting the Federal 
Prospective Payment Rates
VI. Update to Payments for High-Cost Outliers Under the IRF PPS
    A. Update to the Outlier Threshold Amount for FY 2009
    B. Update to the IRF Cost-to-Charge Ratio Ceilings
VII. Revisions to the Regulation Text in Response to the Medicare, 
Medicaid, and SCHIP Extension Act of 2007
VIII. Post Acute Care Payment Reform
IX. Miscellaneous Comments
X. Provisions of the Final Rule
XI. Collection of Information Requirements
XII. Regulatory Impact Statement
Regulation Text
Addendum

Acronyms

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

ASCA Administrative Simplification Compliance Act, Public Law 107-
105
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999, Public 
Law 106-113
BIPA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Benefits Improvement and Protection Act of 2000, 
Public Law 106-554
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CFR Code of Federal Regulations
CMG Case-Mix Group
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate Share Hospital
ECI Employment Cost Index
FI Fiscal Intermediary
FR Federal Register
FY Federal Fiscal Year
GDP Gross Domestic Product
HHH Hubert H. Humphrey Building
HIPAA Health Insurance Portability and Accountability Act, Public 
Law 104-191
IFMC Iowa Foundation for Medical Care
IPF Inpatient Psychiatric Facility
IPPS Inpatient Prospective Payment System
IRF Inpatient Rehabilitation Facility
IRF-PAI Inpatient Rehabilitation Facility-Patient Assessment 
Instrument
IRF PPS Inpatient Rehabilitation Facility Prospective Payment System
IRVEN Inpatient Rehabilitation Validation and Entry
LIP Low-Income Percentage
LTCH Long-Term Care Hospital
MAC Medicare Administrative Contractor
MEDPAR Medicare Provider Analysis and Review
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public 
Law 110-173
MSA Metropolitan Statistical Area
NAICS North American Industrial Classification System
OMB Office of Management and Budget
PAI Patient Assessment Instrument
PPS Prospective Payment System
RAND RAND Corporation
RFA Regulatory Flexibility Act, Public Law 96-354
RIA Regulatory Impact Analysis
RIC Rehabilitation Impairment Category
RPL Rehabilitation, Psychiatric, and Long-Term Care Hospital Market 
Basket
SCHIP State Children's Health Insurance Program
SIC Standard Industrial Code
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law 
97-248

I. Background

A. Historical Overview of the Inpatient Rehabilitation Facility 
Prospective Payment System (IRF PPS)

    Section 4421 of the Balanced Budget Act of 1997 (BBA), Public Law 
105-33, as amended by section 125 of the Medicare, Medicaid, and SCHIP 
(State Children's Health Insurance Program) Balanced Budget Refinement 
Act of 1999 (BBRA), Public Law 106-113, and by section 305 of the 
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act 
of 2000 (BIPA), Public Law 106-554, provides for the implementation of 
a per discharge prospective payment system (PPS) under section 1886(j) 
of the Social Security Act (the Act) for inpatient rehabilitation 
hospitals and inpatient rehabilitation units of a hospital (hereinafter 
referred to as IRFs).
    Payments under the IRF PPS encompass inpatient operating and 
capital costs of furnishing covered rehabilitation services (that is, 
routine, ancillary, and capital costs) but not direct graduate medical 
education costs, costs of approved nursing and allied health education 
activities, bad debts, and other services or items outside the scope of 
the IRF PPS. Although a complete discussion of the IRF PPS provisions 
appears in the original FY 2002 IRF PPS final rule (66 FR 41316) and 
the FY 2006 IRF PPS final rule (70 FR 47880), we are providing below a 
general description of the IRF PPS for fiscal years (FYs) 2002 through 
2008.
    Under the IRF PPS from FY 2002 through FY 2005, as described in the 
FY 2002 IRF PPS final rule (66 FR 41316), the Federal prospective 
payment rates were computed across 100 distinct case-mix groups (CMGs). 
We constructed 95 CMGs using rehabilitation impairment

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categories (RICs), functional status (both motor and cognitive), and 
age (in some cases, cognitive status and age may not be a factor in 
defining a CMG). In addition, we constructed five special CMGs to 
account for very short stays and for patients who expire in the IRF.
    For each of the CMGs, we developed relative weighting factors to 
account for a patient's clinical characteristics and expected resource 
needs. Thus, the weighting factors accounted for the relative 
difference in resource use across all CMGs. Within each CMG, we created 
tiers based on the estimated effects that certain comorbidities would 
have on resource use.
    We established the Federal PPS rates using a standardized payment 
conversion factor (formerly referred to as the budget neutral 
conversion factor). For a detailed discussion of the budget neutral 
conversion factor, please refer to our FY 2004 IRF PPS final rule (68 
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 
47880), we discussed in detail the methodology for determining the 
standard payment conversion factor.
    We applied the relative weighting factors to the standard payment 
conversion factor to compute the unadjusted Federal prospective payment 
rates under the IRF PPS from FYs 2002 through 2005. Within the 
structure of the payment system, we then made adjustments to account 
for interrupted stays, transfers, short stays, and deaths. Finally, we 
applied the applicable adjustments to account for geographic variations 
in wages (wage index), the percentage of low-income patients, location 
in a rural area (if applicable), and outlier payments (if applicable) 
to the IRF's unadjusted Federal prospective payment rates.
    For cost reporting periods that began on or after January 1, 2002 
and before October 1, 2002, we determined the final prospective payment 
amounts using the transition methodology prescribed in section 
1886(j)(1) of the Act. Under this provision, IRFs transitioning into 
the PPS were paid a blend of the Federal IRF PPS rate and the payment 
that the IRF would have received had the IRF PPS not been implemented. 
This provision also allowed IRFs to elect to bypass this blended 
payment and immediately be paid 100 percent of the Federal IRF PPS 
rate. The transition methodology expired as of cost reporting periods 
beginning on or after October 1, 2002 (FY 2003), and payments for all 
IRFs now consist of 100 percent of the Federal IRF PPS rate.
    We established a CMS Web site as a primary information resource for 
the IRF PPS. The Web site URL is http://www.cms.hhs.gov/InpatientRehabFacPPS/ and may be accessed to download or view 
publications, software, data specifications, educational materials, and 
other information pertinent to the IRF PPS.
    Section 1886(j) of the Act confers broad statutory authority upon 
the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF 
PPS final rule (70 FR 47880) and in correcting amendments to the FY 
2006 IRF PPS final rule (70 FR 57166) that we published on September 
30, 2005, we finalized a number of refinements to the IRF PPS case-mix 
classification system (the CMGs and the corresponding relative weights) 
and the case-level and facility-level adjustments. These refinements 
included the adoption of OMB's Core-Based Statistical Area (CBSA) 
market definitions, modifications to the CMGs, tier comorbidities, and 
CMG relative weights, implementation of a new teaching status 
adjustment for IRFs, revision and rebasing of the IRF market basket, 
and updates to the rural, low-income percentage (LIP), and high-cost 
outlier adjustments. Any reference to the FY 2006 IRF PPS final rule in 
this final rule also includes the provisions effective in the 
correcting amendments. For a detailed discussion of the final key 
policy changes for FY 2006, please refer to the FY 2006 IRF PPS final 
rule (70 FR 47880 and 70 FR 57166).
    In the FY 2007 IRF PPS final rule (71 FR 48354), we further refined 
the IRF PPS case-mix classification system (the CMG relative weights) 
and the case-level adjustments, to ensure that IRF PPS payments 
continue to reflect as accurately as possible the costs of care. For a 
detailed discussion of the FY 2007 policy revisions, please refer to 
the FY 2007 IRF PPS final rule (71 FR 48354).
    In the FY 2008 IRF PPS final rule (72 FR 44284), we updated the 
Federal prospective payment rates and the outlier threshold, revised 
the IRF wage index policy, and clarified how we determine high-cost 
outlier payments for transfer cases. For more information on the policy 
changes implemented for FY 2008, please refer to the FY 2008 IRF PPS 
final rule (72 FR 44284), in which we published the final FY 2008 IRF 
Federal prospective payment rates.
    After publication of the FY 2008 IRF PPS final rule (72 FR 44284), 
section 115 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, 
Public Law 110-173 (MMSEA), amended section 1886(j)(3)(C) of the Act to 
apply a zero percent increase factor for FYs 2008 and 2009, effective 
for IRF discharges occurring on or after April 1, 2008. Section 
1886(j)(3)(C) of the Act requires the Secretary to develop an increase 
factor to update the IRF Federal prospective payment rates for each FY. 
Based on the legislative change to the increase factor, we revised the 
FY 2008 Federal prospective payment rates for IRF discharges occurring 
on or after April 1, 2008. Thus, the final FY 2008 IRF Federal 
prospective payment rates that were published in the FY 2008 IRF PPS 
final rule (72 FR 44284) were effective for discharges occurring on or 
after October 1, 2007 and on or before March 31, 2008; and the revised 
FY 2008 IRF Federal prospective payment rates are effective for 
discharges occurring on or after April 1, 2008 and on or before 
September 30, 2008. The revised FY 2008 Federal prospective payment 
rates are available on the CMS Web site at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles.asp#TopOfPage.

B. Operational Overview of the Current IRF PPS

    As described in the FY 2002 IRF PPS final rule, upon the admission 
and discharge of a Medicare Part A fee-for-service patient, the IRF is 
required to complete the appropriate sections of a patient assessment 
instrument, the Inpatient Rehabilitation Facility-Patient Assessment 
Instrument (IRF-PAI). All required data must be electronically encoded 
into the IRF-PAI software product. Generally, the software product 
includes patient classification programming called the GROUPER 
software. The GROUPER software uses specific IRF-PAI data elements to 
classify (or group) patients into distinct CMGs and account for the 
existence of any relevant comorbidities.
    The GROUPER software produces a five-digit CMG number. The first 
digit is an alpha-character that indicates the comorbidity tier. The 
last four digits represent the distinct CMG number. Free downloads of 
the Inpatient Rehabilitation Validation and Entry (IRVEN) software 
product, including the GROUPER software, are available on the CMS Web 
site at http://www.cms.hhs.gov/InpatientRehabFacPPS/06_Software.asp.
    Once a patient is discharged, the IRF submits a Medicare claim as a 
Health Insurance Portability and Accountability Act (HIPAA), Public Law 
104-191, compliant electronic claim or, if the Administrative 
Compliance Act (ASCA), Public Law 107-105, permits, a paper claim, a 
UB-04 or a CMS-1450, (as appropriate) using the five-digit CMG number 
and sends it to the

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appropriate Medicare fiscal intermediary (FI) or Medicare 
Administrative Contractor (MAC). Claims submitted to Medicare must 
comply with both ASCA and HIPAA. Section 3 of the ASCA amends section 
1862(a) of the Act by adding paragraph (22) which requires the Medicare 
program, subject to section 1862(h) of the Act, to deny payment under 
Part A or Part B for any expenses for items or services ``for which a 
claim is submitted other than in an electronic form specified by the 
Secretary.'' Section 1862(h) of the Act, in turn, provides that the 
Secretary shall waive such denial in situations in which there is no 
method available for the submission of claims in an electronic form or 
the entity submitting the claim is a small provider.
    In addition, the Secretary also has the authority to waive such 
denial ``in such unusual cases as the Secretary finds appropriate.'' We 
refer the reader to the final rule, ``Medicare Program; Electronic 
Submission of Medicare Claims'' (70 FR 71008, November 25, 2005). 
Section 3 of the ASCA operates in the context of the administrative 
simplification provisions of HIPAA, which include, among others, the 
requirements for transaction standards and code sets codified in 45 
CFR, parts 160 and 162, subparts A and I through R (generally known as 
the Transactions Rule). The Transactions Rule requires covered 
entities, including covered healthcare providers, to conduct covered 
electronic transactions according to the applicable transaction 
standards. (See the program claim memoranda issued and published by CMS 
at: http://www.cms.hhs.gov/ElectronicBillingEDITrans/ and listed in the 
addenda to the Medicare Intermediary Manual, Part 3, section 3600. CMS 
instructions for the limited number of Medicare claims submitted on 
paper are available at: http://www.cms.hhs.gov/manuals/downloads/clm104c25.pdf.)
    The Medicare FI or MAC processes the claim through its software 
system. This software system includes pricing programming called the 
``PRICER'' software. The PRICER software uses the CMG number, along 
with other specific claim data elements and provider-specific data, to 
adjust the IRF's prospective payment for interrupted stays, transfers, 
short stays, and deaths, and then applies the applicable adjustments to 
account for the IRF's wage index, percentage of low-income patients, 
rural location, and outlier payments. For discharges occurring on or 
after October 1, 2005, the IRF PPS payment also reflects the new 
teaching status adjustment that became effective as of FY 2006, as 
discussed in the FY 2006 IRF PPS final rule (70 FR 47880).

II. Provisions of the Proposed Rule

    As discussed in the FY 2009 IRF PPS proposed rule (73 FR 22674), we 
proposed to make revisions to the regulation text in response to 
section 115 of the MMSEA. Specifically, we proposed to revise 42 CFR 
part 412. We discuss these proposed revisions and others in detail 
below.

A. Section 412.23 Excluded Hospitals: Classifications

    We proposed to revise the regulation text in paragraph (b)(2)(i) 
and remove paragraph (b)(2)(ii) in response to section 115 of the 
MMSEA. To summarize, for cost reporting periods--
    (1) Beginning on or after July 1, 2005, the hospital has served an 
inpatient population of whom at least 60 percent require intensive 
rehabilitation services for treatment of one or more of the conditions 
specified at paragraph (b)(2)(ii) of this section (as amended by 
removing former (b)(2)(ii) and redesignating former (b)(2)(iii) as the 
new (b)(2)(ii)).
    (2) A comorbidity that meets the criteria as specified in Sec.  
412.23(b)(2)(i) may continue to be used to determine the compliance 
threshold.

B. Additional Proposed Changes

     Update the FY 2009 IRF PPS relative weights and average 
length of stay values using the most current and complete Medicare 
claims and cost report data, as discussed in section II of the FY 2009 
IRF PPS proposed rule (73 FR 22674, 22676 through 22680).
     Update the FY 2009 IRF PPS payment rates by the proposed 
wage index and labor related share in a budget neutral manner, as 
discussed in sections III.A and B of the FY 2009 IRF PPS proposed rule 
(73 FR 22674, 22680 through 22686).
     Update the outlier threshold amount for FY 2009, as 
discussed in section IV.A of the FY 2009 IRF PPS proposed rule (73 FR 
22674, 22686 through 22687).
     Update the cost-to-charge ratio ceiling and the national 
average urban and rural cost-to-charge ratios for purposes of 
determining outlier payments under the IRF PPS, as discussed in section 
IV.B of the FY 2009 IRF PPS proposed rule (73 FR 22674 at 22687).

III. Analysis of and Responses to Public Comments

    We received approximately 17 timely items of correspondence 
containing multiple comments on the FY 2009 IRF PPS proposed rule (73 
FR 22674) from the public. We received comments from various trade 
associations, inpatient rehabilitation facilities, health care industry 
organizations, and health care consulting firms. The following 
discussion, arranged by subject area, includes a summary of the public 
comments that we received, and our responses to the comments appear 
under the appropriate subject heading.

IV. Update to the CMG Relative Weights and Average Length of Stay 
Values for FY 2009

    As specified in 42 CFR 412.620(b)(1), we calculate a relative 
weight for each CMG that is proportional to the resources needed by an 
average inpatient rehabilitation case in that CMG. For example, cases 
in a CMG with a relative weight of 2, on average, will cost twice as 
much as cases in a CMG with a relative weight of 1. Relative weights 
account for the variance in cost per discharge due to the variance in 
resource utilization among the payment groups, and their use helps to 
ensure that IRF PPS payments support beneficiary access to care as well 
as provider efficiency.
    In the FY 2009 IRF PPS proposed rule (73 FR 22674, 22676 through 
22680), we proposed updates to the CMG relative weights and average 
length of stay values using the most recent available data (FY 2006 IRF 
claims, FY 2006 IRF-PAI, and FY 2006 IRF cost report data) to ensure 
that IRF PPS payments continue to reflect as accurately as possible the 
costs of care in IRFs. We proposed to do this using the same 
methodology, with one change, that was described in the original, FY 
2002 IRF PPS final rule (66 FR 41316) and the FY 2006 IRF PPS final 
rule (70 FR 47880, 47887 through 47888). The proposed change to the 
methodology involves using new, more detailed cost-to-charge ratio 
(CCR) data from the cost reports of IRF subprovider units of primary 
acute care hospitals, instead of CCR data from the associated primary 
acute care hospitals, to calculate IRFs' average costs per case. In 
general, we proposed to make this change in the methodology because the 
more detailed CCR data from the IRF subprovider cost reports are now 
available in sufficient detail, and the relationship between costs and 
charge in the primary acute care hospital could differ from the 
relationship between costs and charges in the IRF subprovider units, 
making the data from the IRF subprovider units potentially more 
accurate for estimating the average costs per case in these units. For 
freestanding IRFs, we proposed to continue using CCR data from the

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freestanding IRF's cost report. We also noted that in future years we 
would continue to estimate the CMG relative weights using both the 
primary acute care hospital CCRs and the IRF subprovider unit CCRs to 
ensure that we continue to use the most appropriate data in updating 
the CMG relative weights.
    In addition, we proposed to make changes to the CMG relative 
weights for FY 2009 in such a way that total estimated aggregate 
payments to IRFs for FY 2009 would be the same with or without the 
proposed changes (that is, in a budget neutral manner) by applying a 
budget neutrality factor to the standard payment amount, as described 
in section II of the FY 2009 IRF PPS proposed rule (73 FR 22674 at 
22677). To compute the budget neutrality factor used to update the CMG 
relative weights, we proposed to use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2009 (with no proposed changes to the CMG relative weights).
    Step 2. Apply the proposed changes to the CMG relative weights (as 
discussed above) to calculate the estimated total amount of IRF PPS 
payments for FY 2009.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor that 
would maintain the same total estimated aggregate payments in FY 2009 
with and without the proposed changes to the CMG relative weights.
    Step 4. Apply the proposed budget neutrality factor to the FY 2008 
IRF PPS standard payment amount after the application of the budget-
neutral wage adjustment factor.
    Note that the budget neutrality factor that we use to update the 
CMG relative weights for FY 2009 changed from 0.9969 in the proposed 
rule to 0.9939 in this final rule due to the use of updated FY 2007 IRF 
claims data in this final rule.
    We received five comments on the proposed updates to the CMG 
relative weights and average length of stay values, which are 
summarized below.
    Comment: Several commenters supported the proposed update to the 
CMG relative weights for FY 2009, with one commenter referring to the 
proposed update as a ``step in the right direction.'' However, several 
commenters specifically suggested that we analyze the FY 2007 IRF 
claims and cost report data in computing the CMG relative weights for 
FY 2009, as these data would reflect more of the impact of recent 
changes in the 75 percent rule and the IRF medical necessity reviews 
than the FY 2006 IRF claims and cost report data. Further, one 
commenter recommended that we seek additional cost information to use 
to compute the CMG relative weights, including nursing staff time data, 
ancillary cost data, and other alternatives to the IRF claims and cost 
report data that we currently use to compute the CMG relative weights. 
Finally, a couple of commenters recommended that we recalibrate the CMG 
relative weights more frequently, with one commenter specifically 
asking that we recalibrate the CMG relative weights again next year 
(for FY 2010) using the most recent available data.
    Response: We agree with the commenters that we should analyze the 
most recent available IRF data to compute the CMG relative weights for 
FY 2009 in order to ensure that IRF PPS payments continue to reflect as 
accurately as possible the costs of care in IRFs. For the proposed 
rule, we used data from FY 2006 IRF claims, FY 2006 IRF-PAI, and FY 
2006 IRF cost reports because that was the best available data at the 
time. For this final rule, we have updated the IRF claims data used in 
our analysis of the CMG relative weights and average length of stay 
values from FY 2006 to FY 2007.
    We note that we used FY 2006 IRF-PAI data for analyzing the CMG 
relative weights in the proposed rule because we implemented some minor 
adjustments to the classification system for FY 2007 in the FY 2007 IRF 
PPS final rule (71 FR 48354, 48360 through 48370). Accordingly, some of 
the CMGs that appeared on the FY 2006 IRF claims data would not be the 
same CMGs that would be assigned under the current, post-FY 2007 IRF 
classification system. We therefore used the FY 2006 IRF-PAI data for 
the proposed rule to ensure that the appropriate current CMG was 
assigned for all of the FY 2006 claims. However, use of the IRF-PAI 
data was no longer necessary when we used the FY 2007 IRF claims data 
for this final rule because the CMG information on the FY 2007 IRF 
claims data incorporated all of the changes to the IRF classification 
system that were implemented in the FY 2007 IRF PPS final rule (71 FR 
48354, 48360 through 48370). We did not implement any changes to the 
IRF classification system in the FY 2008 IRF PPS final rule (72 FR 
44284). The results of our analysis of the FY 2007 IRF claims data are 
reflected in the CMG relative weights and average length of stay values 
presented in Table 1 in this final rule.
    We further note that we have not updated the IRF cost report data 
used in this final rule. Although we agree with the commenter that it 
is important to analyze the most recent available cost report data to 
reflect as fully as possible the changes in IRF patient populations 
that may have occurred as a result of changes in the 75 percent rule 
and the IRF medical necessity reviews, only a small portion of the FY 
2007 IRF cost reports are available for analysis at this time. 
Accordingly, we have continued to use the FY 2006 cost report data for 
analyzing IRFs' costs per case in this final rule because these are the 
most complete IRF cost report data available at this time. However, we 
will continue to evaluate the need for further updates and refinements 
to the CMG relative weights and average length of stay values in future 
years and would update the cost report data, as appropriate, when the 
data become available.
    We appreciate the commenter's suggestions regarding alternative 
data to use in analyzing the costs of caring for IRF patients, and we 
will carefully consider the commenter's suggestions for future 
refinements to the methodology for computing the CMG relative weights.
    Finally, we agree with the commenters that we may need to update 
the CMG relative weight and average length of stay analysis frequently 
to ensure that IRF payments continue to reflect the costs of caring for 
IRF patients, especially in light of recent changes resulting from 
changes to the 75 percent rule and the IRF medical necessity reviews. 
We intend to continue analyzing the most recent available data, and 
will propose future refinements to the IRF classification and weighting 
system based on that analysis, as appropriate.
    Comment: One commenter stated a concern that the methodology used 
to revise the IRF classification system in the FY 2006 IRF PPS final 
rule (70 FR 47880) may have reduced the overall IRF case mix weights. 
This commenter asked CMS to re-examine this issue.
    Response: As discussed in the FY 2006 IRF PPS final rule (70 FR 
47880, 47886 through 47904), the FY 2007 IRF PPS final rule (71 FR 
48354, 48373 through 48374), and the FY 2008 IRF PPS final rule (72 FR 
44284 at 44293), we have analyzed the data and it continues to show 
that the FY 2006 refinements to the IRF classification system did not 
cause a reduction in the overall IRF case mix weights or in aggregate 
IRF payments. We have met with industry representatives several times 
in order to understand their concerns. We have also discussed the 
results of our analysis with them, which continues to show that we 
implemented the FY 2006 refinements to the IRF

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classification system in a budget neutral manner, so that estimated 
aggregate payments to providers would not increase or decrease as a 
result of these refinements.
    Comment: One commenter questioned why only 141 (40 percent) of the 
proposed FY 2009 CMG relative weight values increased compared with the 
FY 2008 CMG relative weight values, while 212 (60 percent) of the 
proposed FY 2009 CMG relative weight values decreased compared with the 
FY 2008 CMG relative weight values. This commenter generally expressed 
surprise at the proposed FY 2009 CMG relative weights values, but 
indicated that certain changes appeared to be correct, particularly the 
increases in the CMG relative weights for some of the orthopedic 
conditions. However, the commenter questioned why the CMG relative 
weight values for other types of cases decreased.
    Response: As we discussed in the proposed rule (73 FR 22674 at 
22680), updates to the CMG relative weights will result in some 
increases and some decreases to the CMG relative weight values. This is 
due to the distributional nature of CMG relative weight changes. 
However, our updated analysis of the CMG relative weight values 
presented in Table 1 of this final rule (which is based on more recent 
data than that used in the proposed rule, as explained previously in 
this section) now shows that more than half of the CMG relative weights 
will increase and, further, that more than half of beneficiaries are in 
payment groups for which the CMG relative weight will increase between 
FY 2008 and FY 2009. Specifically, our analysis shows that 57 percent 
of patients are classified into one of the 177 payment groups (that is, 
the combination of CMG and tier) that will experience an increase in 
the CMG relative weight value between FYs 2008 and 2009, and 43 percent 
of patients are classified into one of the 176 classification groups 
that will experience a decrease in the CMG relative weight value 
between FYs 2008 and 2009.
    Final Decision: We received only positive comments in support of 
the proposal to change the methodology for determining IRFs' average 
costs per case by using more detailed cost-to-charge ratio (CCR) data 
from the cost reports of IRF subprovider units of primary acute care 
hospitals to calculate the IRF subprovider units' average costs per 
case. Thus, after carefully considering all of the comments that we 
received on the proposed updates to the CMG relative weights and 
average length of stay values, we are finalizing this change to the 
methodology for the reasons explained previously and as described in 
more detail in the proposed rule (73 FR 22674, 22676 through 22677). 
For freestanding IRFs, we will continue to use the CCR data from the 
freestanding IRFs' cost reports. Consistent with the methodology that 
we used to compute the CMG relative weights for FYs 2002 through 2008, 
with the one change described above, we are implementing the updates to 
the CMG relative weights and average length of stay values presented in 
Table 1 below. As recommended by the commenters, we have updated the 
CMG relative weights and average length of stay values in Table 1 using 
FY 2007 IRF claims data for this final rule. Further, as noted 
previously, we have continued to use FY 2006 IRF cost report data for 
this final rule because it is the best available cost report data at 
this time.

                                        Table 1--Relative Weights and Average Lengths of Stay for Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             CMG description                    Relative weight                         Average length of stay
                  CMG                    (M=motor, C=cognitive,  ---------------------------------------------------------------------------------------
                                                 A=age)             Tier 1     Tier 2     Tier 3      None      Tier 1     Tier 2     Tier 3      None
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101..................................  Stroke: M>51.05.........     0.7712     0.7108     0.6381     0.6059          9         10          9          8
0102..................................  Stroke: M>44.45 and          0.9694     0.8936     0.8021     0.7617         11         11         11         10
                                         M<51.05 and C>18.5.
0103..................................  Stroke: M>44.45 and          1.1478     1.0580     0.9496     0.9018         14         14         12         12
                                         M<51.05 and C<18.5.
0104..................................  Stroke: M>38.85 and          1.2192     1.1238     1.0087     0.9579         13         14         13         13
                                         M<44.45.
0105..................................  Stroke: M>34.25 and          1.4320     1.3199     1.1848     1.1251         16         18         15         15
                                         M<38.85.
0106..................................  Stroke: M>30.05 and          1.6632     1.5330     1.3761     1.3067         19         19         17         17
                                         M<34.25.
0107..................................  Stroke: M>26.15 and          1.8970     1.7485     1.5695     1.4904         20         21         19         19
                                         M<30.05.
0108..................................  Stroke: M<26.15 and          2.2795     2.1011     1.8860     1.7910         27         26         23         22
                                         A>84.5.
0109..................................  Stroke: M>22.35 and          2.1786     2.0081     1.8025     1.7117         22         23         21         22
                                         M<26.15 and A<84.5.
0110..................................  Stroke: M<22.35 and          2.7217     2.5087     2.2518     2.1384         30         30         27         26
                                         A<84.5.
0201..................................  Traumatic brain injury:      0.7556     0.6464     0.5818     0.5295         10         10          8          8
                                         M>53.35 and C>23.5.
0202..................................  Traumatic brain injury:      1.0305     0.8817     0.7935     0.7222         13         11         10         10
                                         M>44.25 and M<53.35 and
                                         C>23.5.
0203..................................  Traumatic brain injury:      1.1487     0.9828     0.8846     0.8051         12         13         12         11
                                         M>44.25 and C<23.5.
0204..................................  Traumatic brain injury:      1.2934     1.1066     0.9959     0.9064         15         14         13         12
                                         M>40.65 and M<44.25.
0205..................................  Traumatic brain injury:      1.5739     1.3466     1.2119     1.1030         17         17         16         14
                                         M>28.75 and M<40.65.
0206..................................  Traumatic brain injury:      1.9530     1.6709     1.5039     1.3687         21         21         18         18
                                         M>22.05 and M<28.75.
0207..................................  Traumatic brain injury:      2.6307     2.2508     2.0257     1.8437         36         28         24         22
                                         M<22.05.

[[Page 46375]]

 
0301..................................  Non-traumatic brain          1.1084     0.9308     0.8358     0.7650         12         12         11         10
                                         injury: M>41.05.
0302..................................  Non-traumatic brain          1.4120     1.1857     1.0647     0.9746         14         15         13         13
                                         injury: M>35.05 and
                                         M<41.05.
0303..................................  Non-traumatic brain          1.6938     1.4224     1.2772     1.1691         17         17         16         15
                                         injury: M>26.15 and
                                         M<35.05.
0304..................................  Non-traumatic brain          2.3130     1.9424     1.7441     1.5966         27         23         21         20
                                         injury: M<26.15.
0401..................................  Traumatic spinal cord        0.9255     0.7883     0.7732     0.6566         12         12         11          9
                                         injury: M>48.45.
0402..................................  Traumatic spinal cord        1.3933     1.1868     1.1640     0.9886         17         15         16         13
                                         injury: M>30.35 and
                                         M<48.45.
0403..................................  Traumatic spinal cord        2.2823     1.9440     1.9067     1.6194         28         23         23         21
                                         injury: M>16.05 and
                                         M<30.35.
0404..................................  Traumatic spinal cord        3.9766     3.3872     3.3222     2.8215         53         40         37         34
                                         injury: M<16.05 and
                                         A>63.5.
0405..................................  Traumatic spinal cord         .0347     2.5850     2.5354     2.1532         42         30         29         27
                                         injury: M<16.05 and
                                         A<63.5.
0501..................................  Non-traumatic spinal         0.8107     0.6397     0.5945     0.5245          9          9          8          8
                                         cord injury: M>51.35.
0502..................................  Non-traumatic spinal         1.0994     0.8675     0.8062     0.7113         13         11         11         10
                                         cord injury: M>40.15
                                         and M<51.35.
0503..................................  Non-traumatic spinal         1.4315     1.1296     1.0497     0.9261         16         14         13         13
                                         cord injury: M>31.25
                                         and M<40.15.
0504..................................  Non-traumatic spinal         1.7229     1.3596     1.2634     1.1147         21         17         16         15
                                         cord injury: M>29.25
                                         and M<31.25.
0505..................................  Non-traumatic spinal         2.0360     1.6066     1.4930     1.3173         23         21         19         17
                                         cord injury: M>23.75
                                         and M<29.25.
0506..................................  Non-traumatic spinal         2.8325     2.2351     2.0770     1.8325         32         27         25         23
                                         cord injury: M<23.75.
0601..................................  Neurological: M>47.75...     0.9245     0.7546     0.7174     0.6542         11          9         10          9
0602..................................  Neurological: M>37.35        1.2366     1.0094     0.9596     0.8750         12         13         12         12
                                         and M<47.75.
0603..................................  Neurological: M>25.85        1.5763     1.2866     1.2232     1.1154         16         16         15         14
                                         and M<37.35.
0604..................................  Neurological: M<25.85...     2.0887     1.7049     1.6208     1.4780         24         21         20         18
0701..................................  Fracture of lower            0.9187     0.7742     0.7300     0.6563         11         10         10          9
                                         extremity: M>42.15.
0702..................................  Fracture of lower            1.2116     1.0209     0.9627     0.8655         14         14         12         12
                                         extremity: M>34.15 and
                                         M<42.15.
0703..................................  Fracture of lower            1.4846     1.2510     1.1797     1.0606         16         16         15         14
                                         extremity: M>28.15 and
                                         M<34.15.
0704..................................  Fracture of lower            1.8994     1.6005     1.5093     1.3569         20         20         19         17
                                         extremity: M<28.15.
0801..................................  Replacement of lower         0.7000     0.5704     0.5172     0.4714          8          7          8          7
                                         extremity joint:
                                         M>49.55.
0802..................................  Replacement of lower         0.9380     0.7643     0.6931     0.6317         10         10          9          9
                                         extremity joint:
                                         M>37.05 and M<49.55.
0803..................................  Replacement of lower         1.3383     1.0905     0.9889     0.9013         14         13         13         12
                                         extremity joint:
                                         M>28.65 and M<37.05 and
                                         A>83.5.
0804..................................  Replacement of lower         1.1745     0.9571     0.8679     0.7910         13         12         11         10
                                         extremity joint:
                                         M>28.65 and M<37.05 and
                                         A<83.5.
0805..................................  Replacement of lower         1.4661     1.1947     1.0833     0.9874         16         16         13         13
                                         extremity joint:
                                         M>22.05 and M<28.65.
0806..................................  Replacement of lower         1.8139     1.4780     1.3403     1.2215         18         18         17         15
                                         extremity joint:
                                         M<22.05.
0901..................................  Other orthopedic:            0.8584     0.7574     0.6829     0.6041         10         10          9          9
                                         M>44.75.
0902..................................  Other orthopedic:            1.1473     1.0122     0.9127     0.8074         13         13         12         11
                                         M>34.35 and M<44.75.

[[Page 46376]]

 
0903..................................  Other orthopedic:            1.4840     1.3093     1.1806     1.0443         16         16         15         14
                                         M>24.15 and M<34.35.
0904..................................  Other orthopedic:            1.9620     1.7310     1.5608     1.3807         22         22         19         18
                                         M<24.15.
1001..................................  Amputation, lower            0.9356     0.9061     0.7797     0.7137         11         12         11         10
                                         extremity: M>47.65.
1002..................................  Amputation, lower            1.2522     1.2127     1.0435     0.9552         14         15         13         12
                                         extremity: M>36.25 and
                                         M<47.65.
1003..................................  Amputation, lower            1.8193     1.7619     1.5161     1.3877         19         21         19         17
                                         extremity: M<36.25.
1101..................................  Amputation, non-lower        1.1846     0.9851     0.9851     0.8558         12         12         13         11
                                         extremity: M>36.35.
1102..................................  Amputation, non-lower        1.7288     1.4377     1.4377     1.2490         17         18         17         15
                                         extremity: M<36.35.
1201..................................  Osteoarthritis: M>37.65.     1.0319     0.9668     0.8483     0.7541         11         12         11         10
1202..................................  Osteoarthritis: M>30.75      1.3034     1.2212     1.0715     0.9525         14         15         13         13
                                         and M<37.65.
1203..................................  Osteoarthritis: M<30.75.     1.6379     1.5346     1.3465     1.1969         16         18         17         15
1301..................................  Rheumatoid, other            1.0983     0.9874     0.8499     0.7648         12         12         11         10
                                         arthritis: M>36.35.
1302..................................  Rheumatoid, other            1.4790     1.3296     1.1445     1.0299         15         16         14         13
                                         arthritis: M>26.15 and
                                         M<36.35.
1303..................................  Rheumatoid, other            1.9140     1.7208     1.4812     1.3329         24         22         18         17
                                         arthritis: M<26.15.
1401..................................  Cardiac: M>48.85........     0.8003     0.7221     0.6388     0.5667         10         11          9          8
1402..................................  Cardiac: M>38.55 and         1.1095     1.0010     0.8856     0.7856         13         13         12         11
                                         M<48.85.
1403..................................  Cardiac: M>31.15 and         1.3578     1.2251     1.0838     0.9615         15         15         13         13
                                         M<38.55.
1404..................................  Cardiac: M<31.15........     1.7628     1.5905     1.4071     1.2483         20         20         17         16
1501..................................  Pulmonary: M>49.25......     0.9603     0.8386     0.7413     0.7038         11         12         10          9
1502..................................  Pulmonary: M>39.05 and       1.2297     1.0739     0.9494     0.9013         13         13         12         11
                                         M<49.25.
1503..................................  Pulmonary: M>29.15 and       1.5640     1.3658     1.2074     1.1463         16         17         14         14
                                         M<39.05.
1504..................................  Pulmonary: M<29.15......     1.9525     1.7051     1.5073     1.4310         22         19         17         17
1601..................................  Pain syndrome: M>37.15..     1.1094     0.8968     0.7667     0.7068         13         13         10         10
1602..................................  Pain syndrome: M>26.75       1.4978     1.2108     1.0351     0.9543         16         16         13         13
                                         and M<37.15.
1603..................................  Pain syndrome: M<26.75..     1.9287     1.5590     1.3328     1.2287         22         19         17         16
1701..................................  Major multiple trauma        1.0454     0.9189     0.8461     0.7419         11         12         11         10
                                         without brain or spinal
                                         cord injury: M>39.25.
1702..................................  Major multiple trauma        1.3777     1.2110     1.1151     0.9778         14         15         14         13
                                         without brain or spinal
                                         cord injury: M>31.05
                                         and M<39.25.
1703..................................  Major multiple trauma        1.6566     1.4561     1.3408     1.1757         18         17         16         15
                                         without brain or spinal
                                         cord injury: M>25.55
                                         and M<31.05.
1704..................................  Major multiple trauma        2.0776     1.8261     1.6815     1.4744         23         24         21         19
                                         without brain or spinal
                                         cord injury: M<25.55.
1801..................................  Major multiple trauma        1.2189     0.9629     0.9044     0.7757         15         13         13         10
                                         with brain or spinal
                                         cord injury: M>40.85.
1802..................................  Major multiple trauma        1.8398     1.4533     1.3651     1.1708         19         17         16         15
                                         with brain or spinal
                                         cord injury: M>23.05
                                         and M<40.85.
1803..................................  Major multiple trauma        3.1442     2.4838     2.3329     2.0009         37         31         26         24
                                         with brain or spinal
                                         cord injury: M<23.05.
1901..................................  Guillian Barre: M>35.95.     1.1582     0.9288     0.9288     0.8782         15         11         11         12
1902..................................  Guillian Barre: M>18.05      2.3408     1.8772     1.8772     1.7749         26         22         25         22
                                         and M<35.95.
1903..................................  Guillian Barre: M<18.05.     3.5944     2.8825     2.8825     2.7254         33         35         41         31
2001..................................  Miscellaneous: M>49.15..     0.8820     0.7282     0.6614     0.5928         11          9          9          8

[[Page 46377]]

 
2002..................................  Miscellaneous: M>38.75       1.1873     0.9803     0.8904     0.7980         12         13         11         11
                                         and M<49.15.
2003..................................  Miscellaneous: M>27.85       1.5231     1.2575     1.1422     1.0237         16         16         14         13
                                         and M<38.75.
2004..................................  Miscellaneous: M<27.85..     2.0363     1.6812     1.5271     1.3686         22         20         19         17
2101..................................  Burns: M>0..............     2.3666     2.3666     2.1481     1.7454         25         25         25         17
5001..................................  Short-stay cases, length  .........  .........  .........     0.1476  .........  .........  .........          3
                                         of stay is 3 days or
                                         fewer.
5101..................................  Expired, orthopedic,      .........  .........  .........     0.6783  .........  .........  .........          8
                                         length of stay is 13
                                         days or fewer.
5102..................................  Expired, orthopedic,      .........  .........  .........     1.5432  .........  .........  .........         19
                                         length of stay is 14
                                         days or more.
5103..................................  Expired, not orthopedic,  .........  .........  .........     0.7086  .........  .........  .........          9
                                         length of stay is 15
                                         days or fewer.
5104..................................  Expired, not orthopedic,  .........  .........  .........     1.9586  .........  .........  .........         23
                                         length of stay is 16
                                         days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

V. FY 2009 IRF PPS Federal Prospective Payment Rates

A. Increase Factor and Labor-Related Share for FY 2009

    Section 1886(j)(3)(C) of the Act requires the Secretary to 
establish an increase factor that reflects changes over time in the 
prices of an appropriate mix of goods and services included in the 
covered IRF services, which is referred to as a market basket index. 
According to section 1886(j)(3)(A)(i) of the Act, the increase factor 
shall be used to update the IRF Federal prospective payment rates for 
each FY. However, section 115 of the MMSEA, amended section 
1886(j)(3)(C) of the Act to apply a zero percent increase factor for 
FYs 2008 and 2009, effective for IRF discharges occurring on or after 
April 1, 2008. Thus, we are applying an increase factor of zero percent 
to update the IRF Federal prospective payment rates for FY 2009 in this 
final rule.
    We continue to use the methodology described in the FY 2006 IRF PPS 
final rule to update the IRF labor-related share for FY 2009 (70 FR 
47880, 47908 through 47917). The IRF labor-related share for FY 2009 is 
the sum of the FY 2009 relative importance of each labor-related cost 
category, and reflects the different rates of price change for these 
cost categories between the base year (FY 2002) and FY 2009. Consistent 
with our proposal to update the labor-related share with the most 
recent available data, the labor-related share for this final rule 
reflects Global Insight's second quarter 2008 forecast. (Global Insight 
is a nationally recognized economic and financial forecasting firm that 
contracts with CMS to forecast the components of providers' market 
baskets.) As shown in Table 2, the total FY 2009 Rehabilitation, 
Psychiatric, and Long-Term Care Hospital Market Basket (RPL) labor-
related share in this final rule is 75.464 percent.

    Table 2--FY 2009 IRF RPL Labor-Related Share Relative Importance
------------------------------------------------------------------------
                                                           FY 2009 IRF
                                                          labor-related
                     Cost category                       share relative
                                                           importance
------------------------------------------------------------------------
Wages and salaries....................................            52.552
Employee benefits.....................................            13.982
Professional fees.....................................             2.890
All other labor intensive services....................             2.120
                                                       -----------------
    Subtotal..........................................            71.544
Labor-related share of capital costs (.46)............             3.920
                                                       =================
        Total.........................................           75.464
------------------------------------------------------------------------
SOURCE: GLOBAL INSIGHT, INC, 2nd QTR, 2008; @USMACRO/CONTROL0508 @CISSIM/
  TL0508.SIM Historical Data through 1st QTR, 2008.

    We received five comments on the increase factor and labor-related 
share for FY 2009, which are summarized below.
    Comment: Two commenters expressed concern that the zero percent 
increase factor that we are applying to the IRF Federal prospective 
payment rates for FY 2009, would impose a financial burden on IRFs. 
These commenters noted that the zero percent increase factor for FY 
2009 was required by section 115 of the MMSEA, which also made 
revisions to the 60 percent rule. The commenters requested that any 
future legislative changes to the 60 percent rule also be considered in 
combination with updates to the IRF Federal prospective payment rates.
    Response: As we discussed in the FY 2009 IRF PPS proposed rule (73 
FR 22674, 22680 through 22681), section 115 of the MMSEA amended 
section 1886(j)(3)(C) of the Act to apply a zero percent increase 
factor for FYs 2008 and 2009, effective for IRF discharges occurring on 
or after April 1, 2008. While we understand that the effect of the zero 
percent increase factor is to maintain FY 2009 IRF PPS payment rates at 
FY 2008 levels, the statute does not give CMS the discretion to 
implement an increase factor other than zero percent for FY 2009. We 
will respond to any future legislative changes to the 60 percent rule 
accordingly.
    Comment: One commenter requested that CMS calculate the IRF PPS 
market basket estimates using more current market basket data. This 
commenter stated that the FY 2009 market basket estimate is based on 
data from FY 2002, and that the FY 2002 data underestimate the increase 
in costs, especially labor costs, that IRFs have experienced. The 
commenter suggested that CMS use Medicare cost report data to compute 
the market basket estimate, rather than data from the Bureau of Labor 
Statistics, in order to make the estimate more current.
    Response: The IRF PPS market basket, which is a fixed weight, 
Laspeyres-type price index, is constructed in three

[[Page 46378]]

steps. First, a base period is selected (FY 2002 in the current market 
basket) and total base period expenditures are estimated for a set of 
mutually exclusive and exhaustive spending categories based upon type 
of expenditure. The proportion of total operating costs that each 
category represents is called a cost or expenditure weight.
    Medicare Cost Report (MCR) data are used to derive the primary cost 
weights for the market basket. We monitor the stability of these cost 
weights and have determined that they do not tend to fluctuate over 
short periods of time (such as a period of less than 5 years). In 
general, we have typically rebased (recalculated market basket cost 
weights) approximately every 5 years. We note that we last revised and 
rebased the market basket in the FY 2006 IRF PPS final rule (70 FR 
47880, 47915 through 47917).
    Second, the FY 2002 expenditure weight for each cost category is 
matched to an appropriate price or wage variable, referred to as a 
price proxy. These price proxies are selected to reflect the rate-of-
price change for each expenditure category and are primarily obtained 
from the Bureau of Labor Statistics (BLS).
    Finally, each FY 2002 cost weight is multiplied by the level of its 
respective price proxy. The sum of these products (that is, the 
expenditure weights multiplied by their price levels) for all cost 
categories yields the composite index level of the market basket in a 
given period. Repeating this step for other periods produces a series 
of market basket levels over time.
    The final IRF market basket update for FY 2009 is calculated using 
the market basket levels from the second quarter of 2008 (2008Q2) 
forecast prepared by Global Insight, Inc. (GII). These levels reflect 
the most recent price data available (historical price data through 
2008Q1 and forecasted price data for 2008Q2 and beyond).
    Given the methodology described above, the current market basket 
estimate is not based solely on FY 2002 data, but rather is calculated 
by applying the most recent available price data for each quarter to 
the FY 2002 cost weights. Thus, the current FY 2009 market basket 
estimate does in fact reflect recent price increases experienced by 
IRFs.
    Comment: Several commenters expressed concern about the methodology 
for computing the labor-related share. One commenter requested that we 
begin updating the labor-related share more frequently using the most 
recent available data. The commenter stated that the current 
calculation of the labor-related share is based on 2002 data. Another 
commenter said that the methodology does not adequately reflect the 
difficulty IRFs have in recruiting a skilled labor force.
    Response: The FY 2009 labor-related share is intended to reflect 
those costs that are related to, influenced by, or vary with the local 
labor market. Accordingly, the share is calculated as the sum of the 
relative importance of the appropriate categories which include wages 
and salaries, fringe benefits, professional fees, labor-intensive 
services, and a portion of capital costs. We calculate this share based 
on the RPL market basket, which we believe adequately captures the 
current cost structures of Medicare-participating IRFs.
    By following a four-step process to estimate the labor-related 
relative importance for FY 2009, we are making use of up-to-date data 
that reflect current trends. As a result, the labor-related share 
appropriately reflects current labor market price pressures experienced 
by IRFs. The process is as follows: First, we compute the FY 2009 price 
index level for the total market basket and each cost category of the 
market basket. Second, we calculate a ratio for each cost category by 
dividing the FY 2009 price index level for that cost category by the 
total market basket price index level. Third, we determine the FY 2009 
relative importance for each cost category by multiplying this ratio by 
the base year (FY 2002) weight. Finally, we sum the FY 2009 relative 
importance for each of the labor-related categories to produce the FY 
2009 labor-related relative importance.
    The price proxies that move the different cost categories in the 
market basket do not necessarily change at the same rate, and the 
relative importance captures these potential differential growth rates. 
Accordingly, the relative importance figure more closely reflects the 
cost share weights for FY 2009 when compared to the base year weights 
from the 2002-based RPL market basket. We revised and rebased the 
market basket and labor-related share in FY 2006 and expect to conduct 
additional updates on a regular basis.
    Final Decision: We will continue to apply a zero percent increase 
factor to the IRF Federal prospective payment rates for FY 2009, in 
accordance with section 115 of the MMSEA. Further, we will continue to 
update the IRF labor-related share using our current methodology, which 
reflects the most recent available data. Thus, for this final rule, the 
labor-related share is 75.464 percent. This is based on the GII's 
forecast for the second quarter of 2008 (2008Q2) with historical data 
through the first quarter of 2008 (2008Q1).

B. Area Wage Adjustment

    Section 1886(j)(6) of the Act requires the Secretary to adjust the 
proportion (as estimated by the Secretary from time to time) of 
rehabilitation facilities' costs attributable to wages and wage-related 
costs by a factor (established by the Secretary) reflecting the 
relative hospital wage level in the geographic area of the 
rehabilitation facility compared to the national average wage level for 
those facilities. The Secretary is required to update the IRF PPS wage 
index on the basis of information available to the Secretary on the 
wages and wage-related costs to furnish rehabilitation services. Any 
adjustments or updates made under section 1886(j)(6) of the Act for a 
FY are made in a budget neutral manner.
    In the FY 2008 IRF PPS final rule (72 FR 44284 at 44299), we 
maintained the methodology described in the FY 2006 IRF PPS final rule 
to determine the wage index, labor market area definitions, and hold 
harmless policy consistent with the rationale outlined in the FY 2006 
IRF PPS final rule (70 FR 47880, 47917 through 47933).
    For FY 2009, we proposed to and will maintain the policies and 
methodologies described in the FY 2008 IRF PPS final rule relating to 
the labor market area definitions and the wage index methodology for 
areas with wage data. Therefore, this final rule continues to use the 
Core-Based Statistical Area (CBSA) labor market area definitions and 
the pre-reclassification and pre-floor hospital wage index data based 
on 2004 cost report data.
    When adopting new labor market designations made by the Office of 
Management and Budget (OMB), we identified some geographic areas where 
there were no hospitals and, thus, no hospital wage index data on which 
to base the calculation of the IRF PPS wage index. We continue to use 
the same methodology discussed in the FY 2008 IRF PPS final rule (72 FR 
44284 at 44299) to address those geographic areas where there are no 
hospitals and, thus, no hospital wage index data on which to base the 
calculation of the FY 2009 IRF PPS wage index.
    Additionally, this final rule incorporates the CBSA changes 
published in the most recent OMB bulletin that applies to the hospital 
wage data used to determine the current IRF PPS wage index. The changes 
were nomenclature and did not represent substantive changes to the 
CBSA-based designations. Specifically, OMB added or deleted certain 
CBSA numbers and revised certain titles. The OMB bulletins

[[Page 46379]]

are available online at http://www.whitehouse.gov/omb/bulletins/index.html.
1. Clarification of New England Deemed Counties
    We are taking this opportunity to address the change in the 
treatment of ``New England deemed counties'' (that is, those counties 
in New England listed in Sec.  412.64(b)(1)(ii)(B) of the regulations 
that were deemed to be parts of urban areas under section 601(g) of the 
Social Security Amendments of 1983) that was made in the FY 2008 
Inpatient Prospective Payment System (IPPS) final rule with comment 
period (72 FR 47337). These counties include the following: Litchfield 
County, CT; York County, ME; Sagadahoc County, ME; Merrimack County, 
NH; and Newport County, RI. Of these five ``New England deemed 
counties,'' three (York County, ME, Sagadahoc County, ME, and Newport 
County, RI) are also included in metropolitan statistical areas (MSAs) 
defined by OMB and are considered urban under both the current IPPS and 
IRF PPS labor market area definitions in Sec.  412.64(b)(1)(ii)(A). The 
remaining two, Litchfield County, CT and Merrimack County, NH, are 
geographically located in areas that are considered rural under the 
current IPPS (and IRF PPS) labor market area definitions, but have been 
previously deemed urban under the IPPS in certain circumstances, as 
discussed below.
    In the FY 2008 IPPS final rule with comment period, (72 FR 47337 
through 47338), Sec.  412.64(b)(1)(ii)(B) was revised that the two 
``New England deemed counties'' that are still considered rural under 
the OMB definitions (Litchfield County, CT and Merrimack County, NH), 
are no longer considered urban, effective for discharges occurring on 
or after October 1, 2007, and, therefore, are considered rural in 
accordance with Sec.  412.64(b)(1)(ii)(C). However, for purposes of 
payment under the IPPS, acute care hospitals located within those areas 
are treated as being reclassified to their deemed urban area effective 
for discharges occurring on or after October 1, 2007 (see 72 FR 47337 
through 47338). We note that the IRF PPS does not provide for 
geographic reclassification. Also, in the FY 2008 IPPS final rule with 
comment period (72 FR 47338), we explained that we limited this policy 
change for the ``New England deemed counties'' only to IPPS hospitals, 
and any change to non-IPPS provider wage indexes would be addressed in 
the respective payment system rules.
    Accordingly, as stated above, we are taking this opportunity to 
clarify the treatment of ``New England deemed counties'' under the IRF 
PPS in this final rule.
    As discussed above, the IRF PPS has consistently used the IPPS 
definition of ``urban'' and ``rural'' with regard to the wage index 
used in the IRF PPS. Under existing Sec.  412.602, an IRF's wage index 
is determined based on the location of the IRF in an urban or rural 
area as defined in Sec. Sec.  412.64(b)(1)(ii)(A) through (C).
    Historical changes to the labor market area/geographic 
classifications and annual updates to the wage index values under the 
IRF PPS are made effective October 1 each year. When we established the 
most recent IRF PPS payment rate update, effective for discharges 
occurring on or after October 1, 2007 through September 30, 2008, we 
considered the ``New England deemed counties'' (including Litchfield 
County, CT and Merrimack County, NH) as urban for FY 2008, as evidenced 
by the inclusion of Litchfield County, CT as one of the constituent 
counties of urban CBSA 25540 (Hartford-West Hartford-East Hartford, 
CT), and the inclusion of Merrimack County, NH as one of the 
constituent counties of urban CBSA 31700 (Manchester-Nashua, NH).
    As noted above, Sec.  412.602 indicates that the terms ``rural'' 
and ``urban'' are defined according to the definitions of those terms 
in Sec. Sec.  412.64(b)(1)(ii)(A) through (C). Applying the IPPS 
definitions, Litchfield County, CT and Merrimack County, NH are not 
considered ``urban'' under Sec. Sec.  412.64(b)(1)(ii)(A) and (B) as 
revised under the FY 2008 IPPS final rule and, therefore, are 
considered ``rural'' under Sec.  412.64(b)(1)(ii)(C). Accordingly, 
reflecting our policy to use the IPPS definitions of ``urban'' and 
``rural'', these two counties would be considered ``rural'' under the 
IRF PPS effective with the next update of the IRF PPS payment rates, 
October 1, 2008, and would no longer be included in urban CBSA 25540 
(Hartford-West Hartford-East Hartford, CT) and urban CBSA 31700 
(Manchester-Nashua, NH), respectively. We note that this policy is 
consistent with our policy of not taking into account IPPS geographic 
reclassifications in determining payments under the IRF PPS. We do not 
need to make any changes to our regulations to effectuate this change.
    There is one IRF (in Merrimack County, NH) that greatly benefits 
from treating these counties as rural. This IRF would begin to receive 
a higher wage index value and the 21.3 percent adjustment that is 
applied to IRF PPS payments for rural facilities. Currently, there are 
no IRFs in the following areas: Litchfield County, CT; rural 
Connecticut; or rural New Hampshire.
2. Multi-Campus Hospital Wage Index Data
    In the FY 2008 IRF PPS final rule (72 FR 44284, August 7, 2007), we 
established IRF PPS wage index values for FY 2008 calculated from the 
same data (collected from cost reports submitted by hospitals for cost 
reporting periods beginning during FY 2003) used to compute the FY 2007 
acute care hospital inpatient wage index, without taking into account 
geographic reclassification under sections 1886(d)(8) and (d)(10) of 
the Act. The IRF PPS wage index values applicable for discharges 
occurring on or after October 1, 2007 through September 30, 2008 are 
shown in Table 1 (for urban areas) and Table 2 (for rural areas) in the 
addendum to the FY 2008 IRF PPS final rule (72 FR 44284, 44312 through 
44335).
    We are continuing to use IPPS wage data for the FY 2009 IRF PPS 
Wage Index, because we believe that using the hospital inpatient wage 
data is appropriate and reasonable for the IRF PPS. We note that the 
IPPS wage data used to determine the FY 2009 IRF wage index values 
reflect our policy that was adopted under the IPPS beginning in FY 
2008. The wage data for multi-campus hospitals located in different 
labor market areas (CBSAs) are apportioned to each CBSA where the 
campuses are located (see the FY 2008 IPPS final rule with comment 
period (72 FR 47317 through 47320)). We computed the FY 2009 IRF PPS 
wage index values presented in this final rule consistent with our pre-
reclassified IPPS wage index policy (that is, our historical policy of 
not taking into account IPPS geographic reclassifications in 
determining payments under the IRF PPS).
    For the FY 2009 IRF PPS, we computed the wage index from IPPS wage 
data (submitted by hospitals for cost reporting periods beginning in FY 
2004 and used in the FY 2008 IPPS wage index), which allocated salaries 
and hours to the campuses of two multi-campus hospitals with campuses 
that are located in different labor areas, one in Massachusetts and 
another in Illinois. Thus, the FY 2009 IRF PPS wage index values for 
the following CBSAs are affected by this policy: Boston-Quincy, MA 
(CBSA 14484), Providence-New Bedford-Falls River, RI-MA (CBSA 39300), 
Chicago-Naperville-Joliet, IL (CBSA 16974) and Lake County-Kenosha 
County, IL-WI (CBSA 29404) (please refer to Table 1 in the addendum of 
this final rule).

[[Page 46380]]

3. Methodology for Applying the Revisions to the Area Wage Adjustment 
for FY 2009 in a Budget-Neutral Manner
    To calculate the wage-adjusted facility payment for the payment 
rates set forth in this final rule, we multiply the unadjusted Federal 
prospective payment by the FY 2009 RPL labor-related share (75.464 
percent) to determine the labor-related portion of the Federal 
prospective payments. We then multiply this labor-related portion by 
the applicable IRF wage index shown in Table 1 for urban areas and 
Table 2 for rural areas in the addendum.
    Adjustments or updates to the IRF wage index made under section 
1886(j)(6) of the Act must be made in a budget neutral manner; 
therefore, we calculated a budget neutral wage adjustment factor as 
established in the FY 2004 IRF PPS final rule (68 FR 45674 at 45689), 
codified at Sec.  412.624(e)(1), and described in the steps below. We 
proposed to use (and have used for this final rule) the following steps 
to ensure that the FY 2009 IRF standard payment conversion factor 
reflects the update to the proposed wage indexes (based on the FY 2004 
pre-reclassified and pre-floor hospital wage data) and the labor-
related share in a budget neutral manner:
    Step 1. Determine the total amount of the estimated FY 2008 IRF PPS 
rates, using the FY 2008 standard payment conversion factor and the 
labor-related share and the wage indexes from FY 2008 (as published in 
the FY 2008 IRF PPS final rule (72 FR 44284 at 44301, 44298, and 44312 
through 44335, respectively)).
    Step 2. Calculate the total amount of estimated IRF PPS payments, 
using the FY 2008 standard payment conversion factor and the FY 2009 
labor-related share and CBSA urban and rural wage indexes.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2, which equals the final FY 2009 budget neutral 
wage adjustment factor of 1.0003. (Note that this final budget neutral 
wage adjustment factor differs from the one we proposed in the proposed 
rule (1.0004) because of the use of updated data to calculate the 
labor-related share for this final rule and the use of updated FY 2007 
IRF claims data for this final rule.)
    Step 4. Apply the FY 2009 budget neutral wage adjustment factor 
from step 3 to the FY 2008 IRF PPS standard payment conversion factor 
after the application of the estimated market basket update to 
determine the FY 2009 standard payment conversion factor.
    We received 4 comments on the proposed FY 2009 IRF PPS wage index, 
which are summarized below.
    Comment: Several commenters recommended that we consider wage index 
policies under the acute IPPS because IRFs compete in a similar labor 
pool as acute care hospitals. The IPPS wage index policies would allow 
IRFs to benefit from the IPPS reclassification and/or floor policies. 
Several commenters also recommended that CMS conduct further analysis 
of the wage index methodology to ensure that fluctuations in the annual 
wage index for hospitals are minimized, that all future updates match 
the costs of labor in the market, that IRF's occupational mix is 
appropriately recognized, and that payments are ``smoothed'' across 
geography and across time. Further, one provider requested that the 
same wage index policies be used for all healthcare providers, to 
maintain consistency.
    Response: We do not believe IPPS wage index policies should be 
applied to IRFs. We note the IRF PPS does not account for geographic 
reclassification under sections 1886(d)(8) and (d)(10) of the Act and 
does not apply the ``rural floor'' under section 4410 of Public Law 
105-33(BBA). Because we do not have an IRF specific wage index we are 
unable to determine at this time the degree, if any, to which a 
geographic reclassification adjustment under the IRF PPS is 
appropriate. Furthermore, we believe the ``rural floor'' is applicable 
only to the acute care hospital payment system. The rationale for our 
current wage index policies is fully described in the FY 2006 final 
rule (70 FR 47880, 47926 through 47928).
    In addition, we reviewed the Medicare Payment Advisory Commission's 
(MedPAC) wage index recommendations as discussed in MedPAC's June 2007 
report titled, ``Report to Congress: Promoting Greater Efficiency in 
Medicare.'' Although some commenters recommended that we adopt the IPPS 
wage index policies such as reclassification and floor policies, we 
note that MedPAC's June 2007 report to Congress recommends that 
Congress ``repeal the existing hospital wage index statute, including 
reclassification and exceptions, and give the Secretary authority to 
establish new wage index systems.'' We believe that adopting the IPPS 
wage index policies, such as reclassification or floor, would not be 
prudent at this time because MedPAC suggests that the reclassification 
and exception policies in the IPPS wage index alters the wage index 
values for one-third of IPPS hospitals. In addition, MedPAC found that 
the exceptions may lead to anomalies in the wage index. By adopting the 
IPPS reclassification and exceptions at this time, the IRF PPS wage 
index may be vulnerable to similar issues that MedPAC identified in 
their June 2007 Report to Congress. However, we will continue to review 
and consider MedPAC's recommendations on a refined or an alternative 
wage index methodology for the IRF PPS in future years.
    We would also like to inform the commenter about our current 
research with respect to wage index methodology, including the issues 
the commenter mentioned about ensuring that the wage index minimizes 
fluctuations, matches the costs of labor in the market, and provides 
for a single wage index policy. Section 106(b)(2) of the MIEA-TRHCA 
instructed the Secretary of Health and Human Services, to take into 
account MedPAC's recommendations on the Medicare wage index 
classification system, to include in the FY 2009 IPPS proposed rule one 
or more proposals to revise the wage index adjustment applied under 
section 1886(d)(3)(E) of the Act for purposes of the IPPS. The proposal 
(or proposals) must consider each of the following:
     Problems associated with the definition of labor markets 
for the wage index adjustment.
     The modification or elimination of geographic 
reclassifications and other adjustments.
     The use of Bureau of Labor of Statistics data or other 
data or methodologies to calculate relative wages for each geographic 
area.
     Minimizing variations in wage index adjustments between 
and within MSAs and statewide rural areas.
     The feasibility of applying all components of CMS's 
proposal to other settings.
     Methods to minimize the volatility of wage index 
adjustments while maintaining the principle of budget neutrality.
     The effect that the implementation of the proposal would 
have on health care providers on each region of the country.
     Methods for implementing the proposal(s) including methods 
to phase in such implementations.
     Issues relating to occupational mix such as staffing 
practices and any evidence on quality of care and patient safety 
including any recommendation for alternative calculations to the 
occupational mix.
    To assist us in meeting the requirements of section 106(b)(2) of 
Public Law 109-432, in February 2008, we awarded a Task Order under its 
Expedited Research and Demonstration Contract, to Acumen, LLC. A

[[Page 46381]]

comparison of the current IPPS wage index and MedPAC's recommendations 
will be presented in the FY 2009 IPPS final rule. We plan to monitor 
these efforts and the impact or influence they may have to the IRF PPS 
wage index.
    Comment: One commenter requested that the IRF wage index values for 
FY 2009 be capped at plus or minus 2 percent of the IRF wage index 
values for FY 2008 to provide for more stable, and thus more 
predictable, changes in the IRF wage index between FY 2008 and FY 2009.
    Response: We will take the commenter's suggestion into account for 
the future. However, we do not believe that the IRF wage index would 
accurately reflect geographic variations in the costs of labor, which 
is the purpose of the IRF wage index, if we were to constrain changes 
in the wage index adjustment from year to year. Thus, we believe it is 
best at this point to continue the analysis of the wage index 
methodology, as described above, and to consider developing wage index 
policies that are consistent across settings as noted in the previous 
response.
    Final Decision: We will continue to use the policies and 
methodologies described in the FY 2008 IRF PPS final rule relating to 
the labor market area definitions and the wage index methodology for 
areas with wage data. Therefore, this final rule continues to use the 
Core-Based Statistical Area (CBSA) labor market area definitions and 
the pre-reclassification and pre-floor hospital wage index data based 
on 2004 cost report data. We discuss the final standard payment 
conversion factor for FY 2009 in the next section below.

C. Description of the IRF Standard Payment Conversion Factor and 
Payment Rates for FY 2009

    To calculate the standard payment conversion factor for FY 2009, as 
illustrated in Table 4 below, we begin with the standard payment 
conversion factor for FY 2008. To explain how we determined the 
standard payment conversion factor for FY 2008, we include Table 3 
below. The final FY 2008 IRF standard payment conversion factor that we 
show in Tables 3 and 4 below is different than the IRF standard payment 
conversion factor that we published in the FY 2008 IRF PPS final rule 
(72 FR 44284 at 44301) due to a legislative change. We adjusted the IRF 
standard payment conversion factor for IRF discharges occurring on or 
after April 1, 2008 to reflect the changes codified in section 115 of 
the MMSEA that require the Secretary to apply a zero percent increase 
factor for FYs 2008 and 2009, effective for discharges occurring on or 
after April 1, 2008.
    In the FY 2008 IRF PPS final rule (72 FR 44284, 44300 through 
44301), we used the RPL market basket estimate described in that final 
rule (3.2 percent) to update the IRF standard payment conversion 
factor. As shown in Table 3 of the FY 2008 IRF PPS final rule (72 FR 
44284 at 44301), applying this market basket estimate to the standard 
payment amount resulted in a final standard payment conversion factor 
for FY 2008 of $13,451.
    However, section 115 of the MMSEA had the effect of changing the 
increase factor for FY 2008 from 3.2 percent to zero percent for 
discharges occurring on or after April 1, 2008. This, in turn, had the 
effect of decreasing the IRF standard payment conversion factor for 
discharges occurring on or after April 1, 2008.
    As shown in Table 3 below, to develop the FY 2008 standard payment 
conversion factor for discharges beginning on or after April 1, 2008, 
we started with the FY 2007 standard payment conversion factor that was 
finalized in the FY 2007 IRF PPS final rule (71 FR 48354 at 48378). We 
then multiplied this by the zero percent increase factor, as described 
above. Then, we applied the same FY 2008 budget neutrality factor 
(1.0041) for the Wage Index, Labor-Related Share, and the Hold Harmless 
Provision that was published in the FY 2008 IRF PPS Final Rule (72 FR 
44284 at 44301). This resulted in the final FY 2008 standard payment 
conversion factor, effective for discharges occurring on or after April 
1, 2008, of $13,034.

   Table 3--Calculations To Determine the FY 2008 IRF Standard Payment
  Conversion Factor for Discharges Beginning on or After April 1, 2008
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
FY 2007 Standard Payment Conversion Factor (published in         $12,981
 the FY 2007 IRF PPS Final Rule (71 FR 48354))..........
Zero Percent Increase Factor for Discharges Occurring on        x 1.0000
 or after April 1, 2008.................................
Budget Neutrality Factor for the Wage Index, Labor-             x 1.0041
 Related Share, and the Hold Harmless Provision that was
 published in the FY 2008 IRF PPS Final Rule (72 FR
 44284).................................................
                                                         ---------------
Standard Payment Conversion Factor for Discharges              = $13,034
 Occurring on or after April 1, 2008....................
------------------------------------------------------------------------

    As a result, the IRF standard payment conversion factor changed 
from $13,451 for discharges occurring on or after October 1, 2007 to 
$13,034 for discharges occurring on or after April 1, 2008.
    Further, as required by section 115 of the MMSEA, we apply an 
increase factor of zero percent to the standard payment conversion 
factor for FY 2009, meaning that it does not change from the current 
value of $13,034. Next, we apply the combined final budget neutrality 
factor for the FY 2009 wage index and labor related share of 1.0003, 
which results in a standard payment amount of $13,038. Finally, we 
apply the final budget neutrality factor for the revised CMG relative 
weights of 0.9939, which results in the final FY 2009 standard payment 
conversion factor of $12,958.
    As stated previously, we note that the budget neutrality factor for 
the FY 2009 wage index and labor related share changed from 1.0004 in 
the proposed rule to 1.0003 in this final rule due to the use of 
updated FY 2007 IRF claims data in this final rule and the update to 
the FY 2009 labor-related share for this final rule using the most 
recent available data. Similarly, the budget neutrality factor used to 
update the CMG relative weights and average length of stay values 
changed from 0.9969 in the proposed rule to 0.9939 in this final rule 
due to the use of updated FY 2007 IRF claims data in this final rule. 
Furthermore, the methodology that we used to compute the final budget 
neutrality factors for this final rule is the same methodology (as 
discussed above and in section IV of this final rule) that we used to 
compute the proposed budget neutrality factors in the proposed rule (73 
FR 22674 at 22677 and 22683).

[[Page 46382]]



     Table 4--Calculations To Determine the FY 2009 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
               Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for Discharges                $13,034
 Occurring on or after April 1, 2008....................
Zero Percent Increase Factor for FY 2009................        x 1.0000
Budget Neutrality Factor for the Wage Index and Labor-          x 1.0003
 Related Share..........................................
Budget Neutrality Factor for the Revisions to the CMG           x 0.9939
 Relative Weights.......................................
                                                         ---------------
FY 2009 Standard Payment Conversion Factor..............       = $12,958
------------------------------------------------------------------------

    After the application of the CMG relative weights described in 
section IV of this final rule, the resulting unadjusted IRF prospective 
payment rates for FY 2009 are shown below in Table 5, ``FY 2009 Payment 
Rates.''

                                         Table 5--FY 2009 Payment Rates
----------------------------------------------------------------------------------------------------------------
                                                   Payment rate    Payment rate    Payment rate    Payment rate
                       CMG                            tier 1          tier 2          tier 3      no comorbidity
----------------------------------------------------------------------------------------------------------------
0101............................................       $9,993.21       $9,210.55       $8,268.50       $7,851.25
0102............................................       12,561.49       11,579.27       10,393.61        9,870.11
0103............................................       14,873.19       13,709.56       12,304.92       11,685.52
0104............................................       15,798.39       14,562.20       13,070.73       12,412.47
0105............................................       18,555.86       17,103.26       15,352.64       14,579.05
0106............................................       21,551.75       19,864.61       17,831.50       16,932.22
0107............................................       24,581.33       22,657.06       20,337.58       19,312.60
0108............................................       29,537.76       27,226.05       24,438.79       23,207.78
0109............................................       28,230.30       26,020.96       23,356.80       22,180.21
0110............................................       35,267.79       32,507.73       29,178.82       27,709.39
0201............................................        9,791.06        8,376.05        7,538.96        6,861.26
0202............................................       13,353.22       11,425.07       10,282.17        9,358.27
0203............................................       14,884.85       12,735.12       11,462.65       10,432.49
0204............................................       16,759.88       14,339.32       12,904.87       11,745.13
0205............................................       20,394.60       17,449.24       15,703.80       14,292.67
0206............................................       25,306.97       21,651.52       19,487.54       17,735.61
0207............................................       34,088.61       29,165.87       26,249.02       23,890.66
0301............................................       14,362.65       12,061.31       10,830.30        9,912.87
0302............................................       18,296.70       15,364.30       13,796.38       12,628.87
0303............................................       21,948.26       18,431.46       16,549.96       15,149.20
0304............................................       29,971.85       25,169.62       22,600.05       20,688.74
0401............................................       11,992.63       10,214.79       10,019.13        8,508.22
0402............................................       18,054.38       15,378.55       15,083.11       12,810.28
0403............................................       29,574.04       25,190.35       24,707.02       20,984.19
0404............................................       51,528.78       43,891.34       43,049.07       36,561.00
0405............................................       39,323.64       33,496.43       32,853.71       27,901.17
0501............................................       10,505.05        8,289.23        7,703.53        6,796.47
0502............................................       14,246.03       11,241.07       10,446.74        9,217.03
0503............................................       18,549.38       14,637.36       13,602.01       12,000.40
0504............................................       22,325.34       17,617.70       16,371.14       14,444.28
0505............................................       26,382.49       20,818.32       19,346.29       17,069.57
0506............................................       36,703.54       28,962.43       26,913.77       23,745.54
0601............................................       11,979.67        9,778.11        9,296.07        8,477.12
0602............................................       16,023.86       13,079.81       12,434.50       11,338.25
0603............................................       20,425.70       16,671.76       15,850.23       14,453.35
0604............................................       27,065.37       22,092.09       21,002.33       19,151.92
0701............................................       11,904.51       10,032.08        9,459.34        8,504.34
0702............................................       15,699.91       13,228.82       12,474.67       11,215.15
0703............................................       19,237.45       16,210.46       15,286.55       13,743.25
0704............................................       24,612.43       20,739.28       19,557.51       17,582.71
0801............................................        9,070.60        7,391.24        6,701.88        6,108.40
0802............................................       12,154.60        9,903.80        8,981.19        8,185.57
0803............................................       17,341.69       14,130.70       12,814.17       11,679.05
0804............................................       15,219.17       12,402.10       11,246.25       10,249.78
0805............................................       18,997.72       15,480.92       14,037.40       12,794.73
0806............................................       23,504.52       19,151.92       17,367.61       15,828.20
0901............................................       11,123.15        9,814.39        8,849.02        7,827.93
0902............................................       14,866.71       13,116.09       11,826.77       10,462.29
0903............................................       19,229.67       16,965.91       15,298.21       13,532.04
0904............................................       25,423.60       22,430.30       20,224.85       17,891.11
1001............................................       12,123.50       11,741.24       10,103.35        9,248.12
1002............................................       16,226.01       15,714.17       13,521.67       12,377.48
1003............................................       23,574.49       22,830.70       19,645.62       17,981.82
1101............................................       15,350.05       12,764.93       12,764.93       11,089.46
1102............................................       22,401.79       18,629.72       18,629.72       16,184.54

[[Page 46383]]

 
1201............................................       13,371.36       12,527.79       10,992.27        9,771.63
1202............................................       16,889.46       15,824.31       13,884.50       12,342.50
1203............................................       21,223.91       19,885.35       17,447.95       15,509.43
1301............................................       14,231.77       12,794.73       11,013.00        9,910.28
1302............................................       19,164.88       17,228.96       14,830.43       13,345.44
1303............................................       24,801.61       22,298.13       19,193.39       17,271.72
1401............................................       10,370.29        9,356.97        8,277.57        7,343.30
1402............................................       14,376.90       12,970.96       11,475.60       10,179.80
1403............................................       17,594.37       15,874.85       14,043.88       12,459.12
1404............................................       22,842.36       20,609.70       18,233.20       16,175.47
1501............................................       12,443.57       10,866.58        9,605.77        9,119.84
1502............................................       15,934.45       13,915.60       12,302.33       11,679.05
1503............................................       20,266.31       17,698.04       15,645.49       14,853.76
1504............................................       25,300.50       22,094.69       19,531.59       18,542.90
1601............................................       14,375.61       11,620.73        9,934.90        9,158.71
1602............................................       19,408.49       15,689.55       13,412.83       12,365.82
1603............................................       24,992.09       20,201.52       17,270.42       15,921.49
1701............................................       13,546.29       11,907.11       10,963.76        9,613.54
1702............................................       17,852.24       15,692.14       14,449.47       12,670.33
1703............................................       21,466.22       18,868.14       17,374.09       15,234.72
1704............................................       26,921.54       23,662.60       21,788.88       19,105.28
1801............................................       15,794.51       12,477.26       11,719.22       10,051.52
1802............................................       23,840.13       18,831.86       17,688.97       15,171.23
1803............................................       40,742.54       32,185.08       30,229.72       25,927.66
1901............................................       15,007.96       12,035.39       12,035.39       11,379.72
1902............................................       30,332.09       24,324.76       24,324.76       22,999.15
1903............................................       46,576.24       37,351.44       37,351.44       35,315.73
2001............................................       11,428.96        9,436.02        8,570.42        7,681.50
2002............................................       15,385.03       12,702.73       11,537.80       10,340.48
2003............................................       19,736.33       16,294.69       14,800.63       13,265.10
2004............................................       26,386.38       21,784.99       19,788.16       17,734.32
2101............................................       30,666.40       30,666.40       27,835.08       22,616.89
5001............................................            0.00            0.00            0.00        1,912.60
5101............................................            0.00            0.00            0.00        8,789.41
5102............................................            0.00            0.00            0.00       19,996.79
5103............................................            0.00            0.00            0.00        9,182.04
5104............................................            0.00            0.00            0.00       25,379.54
----------------------------------------------------------------------------------------------------------------

    We received 3 comments on the proposed standard payment conversion 
factor and the proposed unadjusted IRF prospective payment rates for FY 
2009, which are summarized below.
    Comment: One commenter recommended that CMS use the most recent 
available data in computing the FY 2009 CMG relative weights, because 
these have an impact on the FY 2009 IRF prospective payment rates and 
the budget neutrality factors used in computing the FY 2009 standard 
payment conversion factor.
    Response: We agree that we should use the most recent available 
data in computing the FY 2009 CMG relative weights. We typically update 
the data we use in our analysis each year between the proposed and 
final rules in order to ensure that we are using the most current 
available data. Specifically, in the proposed rule (73 FR 22674 at 
22677), we proposed to update our analysis for this final rule using 
more current data. Thus, we updated our data analysis using FY 2007 IRF 
claims data for the final rule, whereas we had used FY 2006 IRF claims 
data in conducting the analysis for the FY 2009 IRF PPS proposed rule 
(73 FR 22674 at 22677). As discussed in detail in section IV of this 
final rule, we did not use IRF-PAI data for this final rule because the 
CMG information on the FY 2007 IRF claims data incorporated all of the 
most recent changes to the IRF classification system that were 
implemented in the FY 2007 IRF PPS final rule (71 FR 48354). Moreover, 
we did not implement any changes to the IRF classification system in 
the FY 2008 IRF PPS final rule (72 FR 44284).
    The revised final budget neutrality factors for FY 2009 reflect the 
updated FY 2009 IRF labor-related share and the revised CMG relative 
weights and average length of stay values described above.
    Comment: Several commenters requested that we keep the same 
standard payment conversion factor of $13,034 for FY 2009 that was used 
for determining IRF PPS payments in FY 2008, for discharges occurring 
on or after April 1, 2008. In effect, we believe that these commenters 
were asking us not to apply the combined budget neutrality factor for 
the wage index and labor-related share or the budget neutrality factor 
for the revisions to the CMG relative weights to the FY 2008 standard 
payment conversion factor in determining the FY 2009 standard payment 
conversion factor. Another commenter asked us to provide a more 
extensive explanation of the methodology that we use to compute the 
budget neutrality factors, including any background studies on the 
methodology and calculations for the budget neutrality factors.
    Response: Section 1886(j)(6) of the Act requires CMS to make any 
adjustments or updates to the IRF wage index in a budget neutral 
manner. To do this, we ensure that estimated aggregate payments to IRFs 
in the FY are not greater or less than estimated aggregate payments 
would have been without such adjustments or updates to the wage index. 
Thus, in accordance with the statute and using the same general 
methodology that was described and

[[Page 46384]]

finalized in the FY 2004 IRF PPS final rule (68 FR 45674 at 45689), we 
are required to adjust the FY 2008 standard payment conversion factor 
of $13,034 by the combined final budget neutrality factor for the FY 
2009 wage index and labor related share of 1.0003, which results in a 
standard payment amount of $13,038.
    Further, in accordance with the regulations at Sec.  412.624(d)(4), 
as discussed in the FY 2006 IRF PPS final rule (70 FR 47880 at 47937), 
we apply an additional budget neutrality factor to make the updates to 
the CMG relative weights and average length of stay values budget 
neutral. The final budget neutrality factor used to update the CMG 
relative weights and average length of stay values for this final rule 
is 0.9939, which results in a standard payment amount of $12,958. As 
discussed above, the budget neutrality factor used to update the CMG 
relative weights and average length of stay values changed from 0.9969 
in the proposed rule to 0.9939 in this final rule due to the use of 
updated FY 2007 IRF claims data in this final rule. Although the 
standard payment conversion factor for FY 2009 of $12,958 is lower than 
the standard payment conversion factor applicable for discharges 
occurring on or after April 1, 2008, of $13,034, estimated aggregate 
IRF payments for FY 2009, excluding outlier payments, are the same. 
This is because we estimate that aggregate IRF payments would have 
increased by about $37 million, due to the update to the CMG relative 
weights for FY 2009, if we had not applied the budget-neutrality factor 
used to update the CMG relative weights and average length of stay 
values.
    We have consistently implemented any revisions to the IRF 
classification and weighting factors in a budget-neutral manner, such 
that estimated aggregate payments to IRFs remain the same with and 
without the revisions. The methodology for computing the budget 
neutrality factor is the same general methodology that we have 
consistently used to ensure that the changes to the classification and 
weighting factors that we implemented in the FY 2006 IRF PPS final rule 
(70 FR 47880) and in the FY 2007 IRF PPS final rule (71 FR 48354) were 
done in a budget-neutral manner. (Note that we did not implement any 
changes to the IRF classification or weighting factors in the FY 2008 
IRF PPS final rule (72 FR 44284)). The methodology that we are using in 
this final rule to compute the budget neutrality factor for the updates 
to the CMG relative weights is the same general methodology that we 
have used to ensure that updates to the IRF wage index are implemented 
in a budget-neutral manner, as discussed above and as finalized in the 
FY 2004 IRF PPS final rule (68 FR 45674 at 45689). The methodology, as 
proposed in the FY 2009 IRF PPS proposed rule (73 FR 22674 at 22677) 
and finalized in this final rule, applied to the update to the CMG 
relative weights for FY 2009 involves the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2009 (with no changes to the CMG relative weights).
    Step 2. Apply the changes to the CMG relative weights (as discussed 
in section IV of this final rule) to calculate the estimated total 
amount of IRF PPS payments for FY 2009 (with the changes).
    Step 3. Divide the amount calculated in step 1 ($6,003,947,007) by 
the amount calculated in step 2 ($6,040,824,839) to determine the 
factor (0.9939) that maintains the same total estimated aggregate 
payments in FY 2009 with and without the changes to the CMG relative 
weights.
    Step 4. Apply the final budget neutrality factor (0.9939) to the FY 
2008 IRF PPS standard payment amount after the application of the 
budget-neutral wage adjustment factor.
    The FY 2004 IRF PPS final rule (68 FR 45674 at 45689) contains 
additional information on the methodology for computing the budget 
neutrality factor for the IRF wage index and labor-related share, and 
the FY 2006 IRF PPS final rule (70 FR 47880, 47937 through 47938) 
contains additional information on the methodology for computing the 
budget neutrality factor for the updates to the CMG relative weights 
and average length of stay values.
    Final Decision: After reviewing the comments that we received on 
the proposed methodology for calculating the budget neutrality factors 
for the wage index and labor-related share and for the CMG relative 
weights and average length of stay values, we are finalizing the 
proposed methodology. We are also finalizing the FY 2009 standard 
payment conversion factor at $12,958. This differs from the standard 
payment conversion factor of $12,999 that we had proposed in the 
proposed rule because of the use of updated FY 2007 IRF claims data for 
analyzing the final CMG relative weights and average length of stay 
values for this final rule, as discussed in section IV of this final 
rule.

D. Example of the Methodology for Adjusting the Federal Prospective 
Payment Rates

    Table 6 illustrates the methodology for adjusting the Federal 
prospective payments (as described in sections III.A through III.C of 
the FY 2009 proposed rule (73 FR 22674, 22680 through 22685)). The 
examples below are based on two hypothetical Medicare beneficiaries, 
both classified into CMG 0110 (without comorbidities). The unadjusted 
Federal prospective payment rate for CMG 0110 (without comorbidities) 
appears in Table 5 above.
    One beneficiary is in Facility A, an IRF located in rural Spencer 
County, Indiana, and another beneficiary is in Facility B, an IRF 
located in urban Harrison County, Indiana. Facility A, a non-teaching 
hospital, has a disproportionate share hospital (DSH) percentage of 5 
percent (which results in a low-income percentage (LIP) adjustment of 
1.0309), a wage index of 0.8576, and an applicable rural adjustment of 
21.3 percent. Facility B, a teaching hospital, has a DSH percentage of 
15 percent (which results in a LIP adjustment of 1.0910), a wage index 
of 0.9065, and an applicable teaching status adjustment of 0.109.
    To calculate each IRF's labor and non-labor portion of the Federal 
prospective payment, we begin by taking the unadjusted Federal 
prospective payment rate for CMG 0110 (without comorbidities) from 
Table 5 above. Then, we multiply the estimated labor-related share 
(75.464) described in section V.A of this final rule by the unadjusted 
Federal prospective payment rate. To determine the non-labor portion of 
the Federal prospective payment rate, we subtract the labor portion of 
the Federal payment from the unadjusted Federal prospective payment.
    To compute the wage-adjusted Federal prospective payment, we 
multiply the result of the labor portion of the Federal payment by the 
appropriate wage index found in the addendum in Tables 1 and 2, which 
would result in the wage-adjusted amount. Next, we compute the wage-
adjusted Federal payment by adding the wage-adjusted amount to the non-
labor portion.
    Adjusting the Federal prospective payment by the facility-level 
adjustments involves several steps. First, we take the wage-adjusted 
Federal prospective payment and multiply it by the appropriate rural 
and LIP adjustments (if applicable). Second, to determine the 
appropriate amount of additional payment for the teaching

[[Page 46385]]

status adjustment (if applicable), we multiply the teaching status 
adjustment (0.109, in this example) by the wage-adjusted and rural-
adjusted amount (if applicable). Finally, we add the additional 
teaching status payments (if applicable) to the wage, rural, and LIP-
adjusted Federal prospective payment rates. Table 6 illustrates the 
components of the adjusted payment calculation.

Table 6--Example of Computing an IRF FY 2009 Federal Prospective Payment
------------------------------------------------------------------------
                                          Rural facility  Urban Facility
                  Steps                     A (Spencer      B (Harrison
                                             Co., IN)        Co., IN)
------------------------------------------------------------------------
1. Unadjusted Federal Prospective             $27,709.39      $27,709.39
 Payment................................
2. Labor Share..........................       x 0.75464       x 0.75464
                                         -------------------------------
3. Labor Portion of Federal Payment.....    = $20,910.61    = $20,910.61
4. CBSA Based Wage Index (shown in the          x 0.8576        x 0.9065
 Addendum, Tables 1 and 2)..............
                                         -------------------------------
5. Wage-Adjusted Amount.................    = $17,932.94    = $18,955.47
6. Non-labor Amount.....................     + $6,798.78     + $6,798.78
                                         -------------------------------
7. Wage-Adjusted Federal Payment........    = $24,731.72    = $25,754.25
8. Rural Adjustment.....................         x 1.213         x 1.000
                                         -------------------------------
9. Wage- and Rural-Adjusted Federal         = $29,999.57    = $25,754.25
 Payment................................
10. LIP Adjustment......................        x 1.0309        x 1.0910
                                         -------------------------------
11. FY 2009 Wage-, Rural- and LIP-          = $30,926.56    = $28,097.88
 Adjusted Federal Prospective Payment
 Rate...................................
12. FY 2009 Wage- and Rural-Adjusted          $29,999.57      $25,754.25
 Federal Prospective Payment............
13. Teaching Status Adjustment..........         x 0.000         x 0.109
                                         -------------------------------
14. Teaching Status Adjustment Amount...         = $0.00     = $2,807.21
15. FY 2009 Wage-, Rural-, and LIP-         + $30,926.56    + $28,097.88
 Adjusted Federal Prospective Payment
 Rate...................................
                                         -------------------------------
16. Total FY 2009 Adjusted Federal          = $30,926.56    = $30,905.10
 Prospective Payment....................
------------------------------------------------------------------------

    Thus, the adjusted payment for Facility A would be $30,926.56 and 
the adjusted payment for Facility B would be $30,905.10.

VI. Update to Payments for High-Cost Outliers Under the IRF PPS

A. Update to the Outlier Threshold Amount for FY 2009

    Section 1886(j)(4) of the Act provides the Secretary with the 
authority to make payments in addition to the basic IRF prospective 
payments for cases incurring extraordinarily high costs. A case 
qualifies for an outlier payment if the estimated cost of the case 
exceeds the adjusted outlier threshold. We calculate the adjusted 
outlier threshold by adding the IRF PPS payment for the case (that is, 
the CMG payment adjusted by all of the relevant facility-level 
adjustments) and the adjusted threshold amount (also adjusted by all of 
the relevant facility-level adjustments). Then, we calculate the 
estimated cost of a case by multiplying the IRF's overall CCR by the 
Medicare allowable covered charge. If the estimated cost of the case is 
higher than the adjusted outlier threshold, we make an outlier payment 
for the case equal to 80 percent of the difference between the 
estimated cost of the case and the outlier threshold.
    In the FY 2002 IRF PPS final rule (66 FR 41316, 41362 through 
41363), we discussed our rationale for setting the outlier threshold 
amount for the IRF PPS so that estimated outlier payments would equal 3 
percent of total estimated payments. Subsequently, we updated the IRF 
outlier threshold amount in the FYs 2006, 2007, and 2008 IRF PPS final 
rules (70 FR 47880, 70 FR 57166, 71 FR 48354, and 72 FR 44284, 
respectively) to maintain estimated outlier payments at 3 percent of 
total estimated payments. We also stated that we would continue to 
analyze the estimated outlier payments for subsequent years and adjust 
the outlier threshold amount as appropriate to maintain the 3 percent 
target.
    As was proposed, for this final rule, we used updated data for 
calculating the high-cost outlier threshold amount. Specifically, we 
performed an updated analysis using FY 2007 claims data using the same 
methodology that we used to set the initial outlier threshold amount in 
the FY 2002 IRF PPS final rule (66 FR 41316, 41362 through 41363), 
which is also the same methodology that we used to update the outlier 
threshold amounts for FYs 2006, 2007, and 2008. (Note: the methodology 
that we use to calculate the appropriate outlier threshold amount for 
each FY requires us to simulate Medicare payments for that FY, using 
the most recent available IRF claims data from a previous FY. If the 
previous FY's data that we are using for the analysis does not contain 
exactly the same CMGs as the future FY for which we are calculating the 
update to the outlier threshold, then we cannot rely on the CMGs from 
the previous FY's IRF claims data and must instead use IRF-PAI data to 
assign the appropriate CMG for each IRF claim.) The CMGs and tiers in 
effect for FY 2009 would be slightly different than those that were in 
effect for FY 2006, due to revisions that were implemented in the FY 
2007 IRF PPS final rule (71 FR 48354, 48360 through 48370). Use of the 
IRF-PAI data was no longer necessary when we used the updated FY 2007 
IRF claims data for this final rule because the CMG information on the 
FY 2007 IRF claims data incorporated all of the changes to the IRF 
classification system that were implemented in the FY 2007 IRF PPS 
final rule (71 FR 48354, 48360 through 48370). We did not implement any 
changes to the IRF classification system in the FY 2008 IRF PPS final 
rule (72 FR 44284).
    For FY 2009, based on an analysis of updated FY 2007 claims data, 
we estimate that IRF outlier payments as a percentage of total 
estimated payments would be 4.2 percent without the change to the 
outlier threshold amount. The need to revise the high-cost outlier

[[Page 46386]]

threshold is discussed in detail in section IV.A of the FY 2009 
proposed rule (73 FR 22674, 22686 through 22687). Generally, we note 
that the zero percent IRF increase factor for FYs 2008 and 2009, for 
discharges occurring on or after April 1, 2008, implemented by section 
115 of the MMSEA resulted in lower IRF PPS payments for FYs 2008 and 
2009 than would otherwise have been implemented. In addition, IRF 
charges found in the FY 2007 IRF claims data were higher than those in 
the FY 2006 IRF claims data, resulting in higher estimated outlier 
payments for FY 2009.
    Based on the updated analysis of FY 2007 claims data (for the 
reasons discussed previously, IRF-PAI data was not needed in this 
analysis), we are updating the outlier threshold amount to $10,250 to 
maintain estimated outlier payments at 3 percent of total estimated 
aggregate IRF payments for FY 2009.

B. Update to the IRF Cost-to-Charge Ratio Ceilings

    In accordance with the methodology stated in the FY 2004 IRF PPS 
final rule (68 FR 45674, 45692 through 45694), we apply a ceiling to 
IRFs' CCRs. Using the methodology described in that final rule, as 
discussed in more detail in section IV.B of the FY 2009 proposed rule 
(73 FR 22674 at 22687), we are updating the national urban and rural 
CCRs for IRFs. As was proposed, the national average rural and urban 
CCRs and our estimate of the national CCR ceiling are changing in this 
final rule based on the analysis of updated data. We apply the national 
urban and rural CCRs in the following situations:
     New IRFs that have not yet submitted their first Medicare 
cost report.
     IRFs whose overall CCR is in excess of the national CCR 
ceiling for FY 2009, as discussed below.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2009, we estimate a national average CCR of 
0.619 for rural IRFs and 0.490 for urban IRFs based on the most recent 
available IRF cost report data. For this final rule, we have used FY 
2006 IRF cost report data, updated through March 31, 2008. If, for any 
IRF, the FY 2006 cost report was missing or had an ``as submitted'' 
status, we use data from a previous fiscal year's report for that IRF. 
However, we do not use cost report data from before FY 2003 for any 
IRF. For new IRFs, we use these national CCRs until the facility's 
actual CCR can be computed using the first settled cost report (either 
tentative or final, whichever is earlier).
    In addition, we estimate the national CCR ceiling at 1.60 for FY 
2009. This means that, if an individual IRF's CCR exceeds this ceiling 
of 1.60 for FY 2009, we would replace the IRF's CCR with the 
appropriate national average CCR (either rural or urban, depending on 
the geographic location of the IRF). For a complete description of the 
methodology used to calculate the national CCR ceiling for this final 
rule, see section IV.B of the FY 2009 proposed rule (73 FR 22674 at 
22687).
    We received seven comments on the proposed high-cost outlier 
updates under the IRF PPS, which are summarized below.
    Comment: Most commenters supported our proposal to increase the 
outlier threshold amount to maintain estimated outlier payments at 3 
percent of total estimated payments. However, several other commenters 
expressed concerns that the change would mean that fewer cases would 
qualify for outlier payments and that it would affect IRFs' ability to 
provide care to Medicare beneficiaries. Several commenters asked that 
we further explain the reasons behind the increase in the IRF outlier 
threshold amount and provide proof that we would be paying more than 3 
percent in outliers without the change. Finally, one commenter said 
that the increases in the outlier threshold amount in recent years 
appear excessive and recommended that CMS look more closely to 
determine if there are anomalies in the IRF outlier data or 
institutional practices that may be causing the changes.
    Response: Based on our analysis of FY 2007 IRF claims and FY 2006 
IRF cost report data (as previously discussed, we did not need to use 
IRF-PAI data in conjunction with the FY 2007 IRF claims data), we need 
to increase the IRF outlier threshold amount to maintain estimated 
outlier payments at 3 percent of total estimated payments for FY 2009 
for the following reasons. First, as discussed in detail in the FY 2009 
IRF PPS proposed rule (73 FR 22674, 22686 through 22687), section 115 
of the MMSEA, which amended section 1886(j)(3)(C) of the Social 
Security Act, required the Secretary to apply a zero percent increase 
factor for FYs 2008 and 2009, effective for discharges occurring on or 
after April 1, 2008. The effect of this change was to decrease 
projected IRF PPS payments. As a direct result of a zero percent 
update, we would exceed our projected 3 percent target for the 
proportion of estimated IRF outlier payment to estimated IRF total 
payments.
    Second, because the average charges per case in the FY 2007 data 
are significantly higher than the average charges per case in the FY 
2006 data, we believe that our increase to the outlier threshold amount 
for FY 2009 is warranted. Specifically, higher charges directly result 
in more cases being estimated to qualify for outlier payments and 
higher estimated outlier payments, which in turn lead to higher 
estimates of outlier payments as a percentage of total estimated 
payments. In this case, higher charges result in estimated outlier 
payments as a percentage of total estimated payments in FY 2009 of 4.2 
percent, well above the 3 percent target. To decrease estimated outlier 
payments as a percentage of total estimated payments from 4.2 percent 
to 3 percent, we must increase the outlier threshold.
    The higher charges in the FY 2007 may be due to several factors, 
including the ``75 percent'' rule and the IRF medical review 
activities, which have led to declines in the number of IRF discharges 
and may have led to increases in the complexity of IRF cases. Thus, 
based on our analysis of updated data (that is, FY 2007 IRF claims 
data), we now project that estimated IRF outlier payments as a 
percentage of total estimated payments for FY 2008 increased from 3.0 
percent to 3.7 percent.
    Thus, given the recent changes in IRF aggregate payments resulting 
from section 115 of the MMSEA and recent increases in IRFs' charges 
that are being reflected in the IRF claims data for FY 2007, we believe 
that it is necessary to adjust the outlier threshold amount for FY 2009 
to maintain estimated IRF outlier payments equal to 3 percent of 
estimated total payments.
    As several of the commenters suggested, increasing the outlier 
threshold amount for FY 2009 would mean that fewer cases would qualify 
for IRF outlier payments. As discussed above, this is necessary to 
maintain estimated IRF outlier payments at 3 percent of estimated total 
payments. However, we do not believe that this will affect IRFs' 
ability to provide care to Medicare beneficiaries because the IRF 
outlier policy is designed to reduce the financial risk to IRFs, which 
could be substantial for many smaller IRFs, of admitting unusually 
high-cost cases. The additional IRF outlier payments reduce the 
financial losses caused by treating these patients and, therefore, 
reduce the incentives to underserve these patients. As discussed at 
length in the FY 2002 IRF PPS final rule (66 FR 41316 at 41362), we 
considered various options for setting the target percentage of 
estimated outlier payments as a percentage of total payments. In that

[[Page 46387]]

final rule, we finalized our proposal to set an outlier policy of 3 
percent of total estimated payments because we believed (and continue 
to believe) that this option optimizes the extent to which we protect 
vulnerable IRFs for treating unusually high-cost cases, while still 
providing adequate payment for all other IRF cases. If we were to 
increase the percentage of total estimated IRF payments that we paid in 
IRF outlier payments, then we would have to reduce IRF PPS payments for 
all other IRF cases in order to implement this change in a budget 
neutral manner. This could negatively affect the adequacy of IRF PPS 
payments for other, non-outlier IRF cases. Thus, we continue to believe 
that the 3 percent outlier policy ensures that all IRF cases, outlier 
and non-outlier, continue to be reimbursed appropriately.
    As one of the commenters suggested, we will continue to analyze IRF 
outliers to determine if there are any anomalies in the IRF outlier 
data or any institutional practices which may be affecting our analysis 
of IRF outliers. To the extent that we find any such anomalies, we 
would propose to implement future refinements to the IRF outlier 
policies to ensure that IRF outlier payments continue to fulfill their 
intended purpose of reducing the risks to IRFs of treating unusually 
high-cost cases and ensuring access to care for all patients who 
require and can benefit from an IRF level of care.
    Comment: One commenter recommended that we continue to refine our 
methodology for calculating the outlier threshold amount, and that we 
use the most accurate CCR data available.
    Response: The CCR data that we use in our analyses comes directly 
from the Medicare cost reports submitted to Medicare by IRFs and is 
continually updated each time a more recent cost report is tentatively 
settled. Therefore, we believe that it is the most accurate and most 
recent CCR data available. However, we agree with the commenter about 
the need to continually examine our methodology and the CCR data to 
ensure that we are setting the IRF outlier threshold at the appropriate 
level to maintain estimated outlier payments at 3 percent of total 
estimated payments.
    Comment: One commenter requested that we conduct an analysis of IRF 
outlier payments to ensure that we are not rewarding IRFs with outlier 
payments for the ``wrong'' reasons, such as the cost effects of 
declines in patient volume. This commenter suggested that we should 
either ``hold back'' outlier payments from facilities if we find that 
the outlier payments were paid for the ``wrong'' reasons, or that we 
should reduce the outlier pool from 3 percent to 1.5 percent.
    Response: We are continuing to analyze IRF outlier payments to 
ensure that they continue to compensate IRFs for treating unusually 
high-cost patients and promote access to care for patients who are 
likely to require unusually high-cost care. At this time, we do not 
have indications to suggest that any IRF outlier payments are being 
paid for the ``wrong'' reasons. Further, we do not have indications to 
suggest that the outlier pool would be better set at 1.5 percent than 
at 3 percent. However, we will carefully consider this commenter's 
suggestions, and will consider proposing additional refinements to the 
IRF outlier policies in the future if we find that such refinements are 
necessary.
    Comment: Several commenters requested that CMS provide additional 
data and information to the public to allow the IRF industry and 
external researchers to conduct a more thorough review of CMS's 
proposed updates to the outlier threshold amount and to verify our 
estimates of outlier payments as a percentage of total payments for FY 
2009. Specifically, one commenter asked that we provide information on 
actual charge increases and CCR declines that have been utilized in the 
outlier threshold calculation, a discussion of the data sources and 
time periods used in computing the outlier threshold, an IRF Medpar 
file (including total payments, outlier payments, and actual, 
estimated, and proposed CMGs), historical information on IRF facility-
level payment factors (specifically CCRs), and actual levels and 
percentages of outlier payments. The commenter also asked that we 
provide data on actual outlier payments and the percentage of outlier 
payments by FY.
    Response: We will carefully consider all of the commenter's 
suggestions in updating the IRF rate setting files that we post on the 
IRF PPS Web site in conjunction with each IRF PPS proposed and final 
rule. These files are available for download from the IRF PPS Web site 
at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles.asp#TopOfPage. These files already contain much of the 
facility-level payment data requested by the commenter, including the 
CCRs used to compute the IRF outlier threshold amount. For this final 
rule, we used FY 2007 IRF claims data to conduct patient-level payment 
simulations to estimate the outlier threshold amount for FY 2009. This 
data file contains information that can be used to identify individual 
Medicare beneficiaries and is therefore not publicly available. We 
obtained the provider-level CCR data used in this analysis from the 
Provider-Specific Files, which contain historical CCR data and are 
available for download from the CMS Web site at http://www.cms.hhs.gov/ProspMedicareFeeSvcPmtGen/03_psf.asp.
    The modified Medpar data files that CMS provides to IPPS hospitals 
already contain IRF stay data. However, we have recently discovered 
that these files do not include the CMGs, and we recognize that there 
may be other limitations to the usefulness of these files for analyzing 
IRF payments. Based on the commenters' requests, we will carefully 
consider the usefulness and feasibility of including additional 
variables, such as actual IRF outlier payments and the percentage of 
outlier payments, on the Medpar file in the future to facilitate IRF 
analyses.
    Comment: One commenter suggested that CMS utilize the same concepts 
that the IPPS uses for modeling charge increases and cost-to-charge 
ratio (CCR) changes in estimating the outlier threshold amount, as 
noted in the methodology implemented for IPPS hospitals in the FY 2007 
IPPS final rule (71 FR 47870, 48150 through 48151).
    Response: We considered proposing the same methodology described in 
the FY 2007 IPPS final rule (71 FR 47870, 48150 through 48151) for 
projecting cost and charge growth in estimating the FY 2008 and FY 2009 
IRF outlier threshold amount. However, we discovered that the accuracy 
of the projections depends on the case mix of patients in the 
facilities remaining similar from year to year, as it does in IPPS 
hospitals. With the recent phase in of the enforcement of the 75 
percent rule criteria and increases in IRF medical review activities, 
we find evidence of relatively large changes in the case mix of 
patients in IRFs, especially in recent years (FYs 2004 through 2007). 
In performing our analysis, we noted that, if we based future 
projections of cost and charge growth on data from years in which IRFs 
were experiencing abnormal fluctuations in case mix, the results 
appeared dramatically skewed. Rather than implementing an outlier 
threshold amount for FY 2009 based on such skewed results, we thought a 
better approach would be to wait until we could further analyze the 
interactions between case mix changes and IRF cost and charge growth.
    We are encouraged that IRF case mix may stabilize in the near 
future now that the IRF compliance percentage is set at

[[Page 46388]]

60 percent for FY 2009. However, as recently as FY 2007, we are still 
observing large shifts in IRFs' patient populations, and we believe it 
is prudent at this time to defer adopting a methodology for projecting 
cost and charge growth in IRFs until the patient populations have 
stabilized.
    Final Decision: Based on careful consideration of the comments that 
we received on the proposed update to the outlier threshold amount for 
FY 2009 and based on updated analysis of the FY 2007 data explained 
previously in this section and for the reasons explained in the 
proposed rule (73 FR 22674, 22686 through 22687), we are finalizing our 
decision to update the outlier threshold amount for FY 2009. Based on 
our proposed policy, the outlier threshold amount for FY 2009 is 
$10,250. In addition, we did not receive any comments on the IRF cost-
to-charge ratio ceiling. Based on our proposed policy and the reasons 
set forth in the proposed rule (73 FR 22674 at 22687), we are 
finalizing the national average urban CCR at 0.490 and the national 
average rural CCR at 0.619. We are also finalizing our estimate of the 
IRF national CCR ceiling at 1.60 for FY 2009.

VII. Revisions to the Regulation Text in Response to the Medicare, 
Medicaid, and SCHIP Extension Act of 2007

    Section 115 of the MMSEA amended section 5005 of the Deficit 
Reduction Act of 2005 (DRA, Pub. L. 109-171) to revise the following 
elements of the 75 percent rule that are used to classify IRFs:
     The compliance rate that IRFs must meet to be excluded 
from the IPPS and to be paid under the IRF PPS shall be no greater than 
the 60 percent compliance rate that became effective for cost reporting 
periods beginning on or after July 1, 2006.
     Patient comorbidities that satisfy the criteria specified 
in 42 CFR 412.23(b)(2)(i) shall be included in the calculations used to 
determine whether an IRF meets the 60 percent compliance percentage for 
cost reporting periods beginning on or after July 1, 2007.
    Although section 115 of the MMSEA grants the Secretary broad 
discretion to implement compliance criteria up to 60 percent, we are 
setting the compliance rate at 60 percent, the highest level possible 
within current statutory authority, for the reasons discussed in detail 
in the proposed rule (73 FR 22674, 22687 through 22688). Generally, we 
are setting the compliance rate at 60 percent because we believe that 
it implements the provisions of the statute with minimal disruption to 
IRF operations, thus allowing us to more effectively analyze changes in 
IRF operations and admissions patterns over time as well as helping us 
to ensure that IRFs predominantly treat patients who benefit most from 
this level of care.
    Specifically, we proposed the following revisions to the regulation 
text in Sec.  412.23(b). We proposed to remove the following phrases 
from the first sentence of Sec.  412.23(b)(2)(i):
     ``and before July 1, 2007;'' and
     ``and for cost reporting periods beginning on or after 
July 1, 2007 and before July 1, 2008, the hospital has served an 
inpatient population of whom at least 65 percent,''
    We also proposed to remove Sec.  412.23(b)(2)(ii) in its entirety, 
redesignate the existing Sec.  412.23(b)(2)(iii) to Sec.  
412.23(b)(2)(ii), and revise all references to the previously numbered 
Sec.  412.23(b)(2)(iii) accordingly.
    We received 3 comments on the proposed revisions to the regulation 
text in response to section 115 of the MMSEA, which are summarized 
below.
    Comment: Although several commenters supported the revisions to the 
regulation text in response to section 115 of the MMSEA, one commenter 
was concerned that CMS was confusing the 75 percent rule policies, 
hereinafter referred to as the 60 percent rule policies, and the IRF 
medical necessity policies.
    Response: We agree with the commenter that the IRF 60 percent rule 
policies and the IRF medical necessity policies are different.
    While both policies relate to ensuring that patients who need the 
intensive rehabilitation services provided in IRFs have access to this 
level of care, the two policies serve different functions and are 
applied differently.
    The Medicare statute excludes payment for services that ``* * * are 
not reasonable and necessary'' (see section 1862(a) of the Social 
Security Act). This applies to all Medicare settings of care, including 
IRFs, and it applies to all Medicare beneficiaries receiving treatment 
in those settings. Thus, all IRF discharges for which providers seek 
payment from Medicare must meet the criteria for establishing the 
medical necessity of the treatment, regardless of whether the patient's 
condition is one of the conditions listed in Sec.  412.23(b)(2)(iii), 
herein redesignated as Sec.  412.23(b)(2)(ii), or not. CMS has 
specifically instructed its contractors to make medical review 
determinations based on reviews of individual medical records by 
qualified clinicians, not on the basis of diagnosis alone. In addition, 
we do not believe that the 60 percent rule should be used to make 
individual medical review claim determinations.
    Conversely, the IRF 60 percent rule is intended to distinguish IRFs 
from other inpatient hospital settings of care, including acute care 
hospitals and traditional post-acute care settings (such as skilled 
nursing facilities). The 60 percent rule specifies that an IRF's 
patient population must consist of at least 60 percent of the patients 
who need intensive rehabilitation services for one or more of 13 
specified conditions. The remaining 40 percent of patients in an IRF 
may be admitted for treatment of conditions not included on the list of 
qualifying conditions. We recognize that the list of 13 conditions does 
not identify all possible conditions for which it would generally be 
considered reasonable and necessary for a patient to be treated in an 
IRF, and thus we believe that it is appropriate to allow some 
percentage of an IRF's patient population to be made up of patients 
with other conditions. However, every patient must meet the medical 
necessity criteria.
    We believe that it is particularly important to ensure that all 
patients being treated in IRFs meet the medical necessity criteria, so 
that the data on which we base IRF PPS payments is as accurate as 
possible.
    Comment: One commenter expressed a number of concerns about 
Medicare's policies concerning IRF medical necessity. This commenter 
indicated that IRFs are confused about the interpretation of the 
medical necessity policies. The commenter also expressed concerns that 
the data that CMS uses to analyze and update IRF PPS payment rates may 
not be as accurate as it could be because it may include patients who 
do not meet medical necessity requirements for receiving care in IRFs. 
The commenter suggested that this could lead to inaccuracies in CMS's 
rate setting for IRFs.
    Response: We note that we did not propose anything regarding the 
IRF medical necessity policies in the proposed rule. However, we will 
carefully consider the commenter's concerns and suggestions and will 
consider refinements to the IRF medical necessity criteria in the 
future.
    Comment: Several commenters requested that CMS implement changes to 
the operational policies used in determining IRFs' compliance with the 
60 percent rule, to correspond with the statutory changes to the 
compliance percentage and the continued use of comorbidites. For 
example, several commenters asked CMS to revise its policies to include 
Medicare Advantage patients in determining whether at least

[[Page 46389]]

50 percent of an IRF's patient population is made up of Medicare 
patients. In addition, one commenter asked that CMS revise its policies 
to allow individual IRFs to view the same IRF-PAI database information 
that the fiscal intermediaries use in determining the IRFs' compliance 
using the presumptive methodology.
    Response: We appreciate the suggestions provided by the commenters 
and are considering making future changes to some of the operational 
policies for determining compliance with the 60 percent rule, including 
changes to some of the policies mentioned by the commenters. We are 
currently evaluating whether we could include Medicare Advantage 
patients in determining whether 50 percent of an IRF's patient 
population is made up of Medicare patients, including our statutory 
authority for doing so. We are also currently evaluating whether 
modifications to the current system for collecting and compiling IRF-
PAI data could be made to allow individual IRFs to view copies of the 
reports that the Medicare contractors use in determining the individual 
IRF's compliance using the presumptive methodology. Our goal is to 
continue to ensure that the 60 percent rule compliance determinations 
are as transparent and equitable as possible both for providers and for 
Medicare contractors. We are continuing to work toward this end.
    Comment: One commenter suggested that we remove the phrase 
``(b)(2)(ii)'' from the end of the paragraph in the regulations at 
Sec.  412.23(b)(2), as the original Sec.  412.23(b)(2)(ii) to which the 
paragraph referred will no longer exist.
    Response: We agree with the commenter's suggestion and will make 
the suggested revision.
    Final Decision: As all of the commenters supported the proposed 
revisions to the regulation text, we are finalizing our revisions to 
the regulation text at Sec.  412.23(b) by removing the following 
phrases from the first sentence of Sec.  412.23(b)(2)(i):
     ``and before July 1, 2007;'' and
     ``and for cost reporting periods beginning on or after 
July 1, 2007 and before July 1, 2008, the hospital has served an 
inpatient population of whom at least 65 percent,''
    We are also removing Sec.  412.23(b)(2)(ii) in its entirety, 
redesignating the existing Sec.  412.23(b)(2)(iii) to Sec.  
412.23(b)(2)(ii), and revising all references to the previously 
numbered Sec.  412.23(b)(2)(iii) accordingly. In response to a comment, 
we are also deleting the phrase ``or (b)(2)(ii)'' from the end of the 
paragraph in section Sec.  412.23(b)(2).

VIII. Post Acute Care Payment Reform

    In the proposed rule, we discussed our ongoing examination of 
possible steps toward achieving a more seamless system for the delivery 
and payment of post-acute care (PAC) services in various care settings. 
These include the PAC Payment Reform Demonstration (PAC-PRD) and its 
standardized patient assessment tool, the Continuity Assessment Record 
and Evaluation (CARE) tool. In the related area of value-based 
purchasing (VBP) initiatives, we described the IPPS preventable 
hospital-acquired conditions (HAC) payment provision, which is designed 
to ensure that the occurrence of selected, preventable conditions 
during hospitalization does not have the unintended effect of 
generating higher Medicare payments under the IPPS. We then discussed 
the potential application of this same underlying principle to other 
care settings in addition to IPPS hospitals. For a full and complete 
discussion of this issue as it pertains to the IRF setting, please 
refer to the FY 2009 IRF PPS proposed rule (73 FR 22674, 22688 through 
22689).
    We received 12 responses to our request for comments on the post 
acute care payment reform.
    Comment: We received several comments concerning the use of the 
CARE tool. While most of these comments acknowledged that the CARE tool 
holds long-term promise in terms of potentially facilitating the 
efficient flow of secure electronic patient information, they also 
cautioned that it would be far too premature at this point in time to 
draw any definitive conclusions about its use, given the very early 
stage of the research currently being conducted in this area.
    Response: We agree with the commenters' observations about the CARE 
tool, both in terms of its significant future potential and the need to 
await the results of ongoing research before reaching any specific 
conclusions about its use. We will continue to evaluate the CARE tool 
closely during the remainder of the current demonstration, and we plan 
to keep the commenters' concerns in mind as we proceed with our 
research in this area.
    Comment: A number of commenters stressed the need for external 
research in the area of PAC payment reform, as well as the importance 
of obtaining input from the stakeholder community.
    Response: We agree with the commenters regarding the value of 
obtaining stakeholder input, and believe that this is, in fact, crucial 
to the success of our PAC payment reform efforts. We also recognize the 
importance of obtaining the benefit of findings from research that is 
currently underway. We note that our own activities in this regard 
primarily involve applied research through our demonstration projects 
and internal analysis of changes in program policy. However, while our 
limited resources in this area preclude us from sponsoring any external 
research projects on PAC payment reform, we strongly favor such 
activity and encourage interested parties to engage in it.
    Comment: We received a number of comments regarding the HAC payment 
provision under the IPPS, and the possible adoption of a similar 
approach in care settings other than IPPS hospitals. The commenters 
urged us to conduct a thorough evaluation of the HAC policy's 
implementation under the IPPS to determine its actual impact and 
efficacy prior to considering whether to adopt this type of approach in 
other care settings. Some also questioned the legal authority under 
existing Medicare law to expand the HAC payment provision beyond the 
IPPS hospital setting. Others raised concerns about the specific 
implications of applying this type of policy to the IRF setting. They 
cited ``falls'' as an example of something that might be less 
appropriately characterized as ``never events'' in the IRF setting than 
in the acute care hospital setting. They also argued that it would be 
unfair to penalize an IRF financially for a condition that actually 
developed during the preceding hospital stay but was not detected until 
after transfer to the IRF. In addition, they indicated that it might be 
difficult to differentiate a preventable healthcare-acquired 
complication from a normal, unavoidable aspect of a terminal illness.
    Response: We appreciate the commenters' thoughtful input about 
application of the principal embodied in the IPPS HAC payment provision 
to the IRF setting. While we acknowledge that ``falls'' are among the 
selected HACs in the IPPS acute care setting that potentially have 
significant implications for the IRF setting, we agree that these and 
other conditions may have different implications in the IRF setting. We 
agree with the commenters that it would be unfair to penalize an IRF 
financially for a condition that developed in another care setting. We 
note that the IPPS HAC payment provision uses Present on Admission 
(POA) indicator data to exclude from payment consequences conditions 
that develop outside of the IPPS acute care stay, and a similar 
mechanism would be needed to apply this type of payment provision to 
the IRF setting. Regarding the commenters' concerns about the 
difficulty in

[[Page 46390]]

differentiating a preventable healthcare-acquired complication from a 
normal, unavoidable aspect of a terminal illness, we would expect to 
work closely with stakeholders to determine which conditions could 
reasonably be prevented through the application of evidence-based 
guidelines. Finally, with regard to the comments that questioned the 
existing legal authority for expanding the HAC payment provision beyond 
the IPPS hospital setting, we note that in this final rule, we are not 
establishing any new Medicare policies in this area. However, we will 
keep the commenters' concerns in mind as our implementation of value-
based purchasing for all Medicare payment systems proceeds, and we look 
forward to working with stakeholders in continuing to explore possible 
ways to reduce the occurrence of these preventable conditions in 
various care settings.

IX. Miscellaneous Comments

    Comment: One commenter recommended that CMS update the IRF 
facility-level adjustments, including the rural adjustment, the low-
income percentage adjustment, and the teaching status adjustment, as 
these adjustments were last updated in FY 2006 based on analysis of FY 
2003 data. This commenter also suggested a number of methodological 
changes to the way that CMS computes the facility-level adjustments, 
including standardizing cost-per-case by outlier payments and computing 
three-year moving averages of the adjustments to promote added 
stability and predictability in the payment system.
    Response: We note that we did not propose any refinements to the 
IRF facility-level adjustment for FY 2009. However, we are in the 
process of analyzing the data to determine whether future updates to 
the IRF facility-level adjustments are needed. At the same time, we are 
also analyzing the commenter's suggested revisions to the methodology 
for computing these adjustments to determine whether these revisions 
would improve the precision of our estimates of the appropriate 
facility-level adjustment parameters. We will consider proposing to 
update the IRF facility-level adjustments in future rules if our 
analysis indicates that such updates are necessary to ensure that IRF 
PPS payments continue to reflect the costs of caring for IRF patients 
appropriately.
    Comment: One commenter recommended that CMS re-examine the weights 
used to compute the weighted motor score for classifying IRF patients. 
The weights that are currently being used to compute patients' motor 
scores were finalized in the FY 2006 IRF PPS final rule (70 FR 47880 at 
47900) and were based on FY 2003 data. The commenter expressed concerns 
that the appropriate weights may change over time and may need to be 
updated using more recent data.
    Response: We did not propose any changes to the weighted motor 
score in the proposed rule. However, we will consider the commenter's 
suggestions for future updates to the weighted motor score methodology.
    Comment: Several commenters expressed interest in assisting CMS in 
the development of the IRF Report to Congress that was mandated in 
section 115 of the MMSEA.
    Response: We appreciate the commenters' interest in this important 
project and, as required by statute, we will consult with interested 
parties and stakeholders in developing this report.
    Comment: Several commenters noted that we reported IRF spending 
estimates of $6.4 billion for FY 2008 in the proposed rule (73 FR 22674 
at 22686) and IRF spending projections of $5.6 billion for FY 2009 in 
the press release that was issued in conjunction with the proposed 
rule. We believe that these commenters mistakenly interpreted these 
spending estimates to mean that a 12.5 percent decrease in IRF PPS 
payments is estimated to occur between FY 2008 and FY 2009.
    Response: The IRF spending estimate of $6.4 billion for FY 2008 
that was reported in the proposed rule (73 FR 22674 at 22686) did not 
account for any changes in IRF utilization that might occur between FYs 
2006 and 2008. It was based on an analysis of simulated IRF payments 
using IRF claims data from FY 2006 (that is, the number and types of 
patients that were being treated in IRFs in FY 2006) and the policies 
that were being proposed for FY 2009 with IRF utilization held 
constant. The $6.4 billion spending estimate should not be compared 
with the $5.6 billion IRF spending projection developed by the Office 
of the Actuary for FY 2008, which accounts for expected changes in IRF 
utilization between FYs 2006 and 2008. The Office of the Actuary 
projects that total IRF spending for both FY 2008 and FY 2009 will be 
$5.6 billion under both the FY 2009 IRF PPS proposed and final rules. 
Thus, for this final rule, we estimate only a $40 million decrease in 
IRF PPS spending between FY 2008 and FY 2009, which is equal to only 
0.7 percent of total estimated IRF PPS payments. We note that this is 
different than the $20 million decrease in IRF PPS spending that we had 
estimated for the proposed rule due to the use of updated data (that 
is, FY 2007 IRF claims data). The estimated $40 million decrease for 
this final rule is entirely due to the adjustment to the outlier 
threshold amount for FY 2009 to set estimated IRF outlier payments at 3 
percent of total estimated payments, as discussed in detail in section 
XII of this final rule.

X. Provisions of the Final Rule

    In this final rule, we are adopting the provisions as set forth in 
the FY 2009 IRF PPS proposed rule (73 FR 22674), except as noted 
elsewhere in the preamble. Specifically:
     We will update the pre-reclassified and pre-floor wage 
indexes based on the CBSA changes published in the most recent OMB 
bulletins that apply to the hospital wage data used to determine the 
current IRF PPS wage index, as discussed in section V.B of this final 
rule.
     We will update the FY 2009 IRF PPS relative weights and 
average length of stay values using the most current and complete 
Medicare claims and cost report data, as discussed in section IV of 
this final rule.
     We will update the FY 2009 IRF PPS payment rates by the 
wage index and labor related share in a budget neutral manner, as 
discussed in section V.A and B of this final rule.
     We will update the outlier threshold amount for FY 2009, 
as discussed in section VI.A of this final rule.
     We will update the cost-to-charge ratio ceiling and the 
national average urban and rural cost-to-charge ratios for purposes of 
determining outlier payments under the IRF PPS, as discussed in section 
VI.B of this final rule.
     With respect to Sec.  412.23, we will revise the 
regulation text in paragraph (b)(2) and (b)(2)(i) and remove paragraph 
(b)(2)(ii) to reflect section 115 of the MMSEA, as discussed in section 
VII of this final rule.

XI. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

XII. Regulatory Impact Statement

    We have examined the impact of this final rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA,

[[Page 46391]]

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), 
Executive Order 13132 on Federalism, and the Congressional Review Act 
(5 U.S.C. 804(2)).
    Executive Order 12866, as amended, directs agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any one 
year). This final rule does not reach the $100 million economic 
threshold and thus is not considered a major rule. We estimate that the 
total impact of the changes in this final rule would be a decrease of 
approximately $40 million or 0.7 percent of total IRF PPS payments 
(this reflects a $40 million decrease due to the update to the outlier 
threshold amount to decrease estimated outlier payments from 
approximately 3.7 percent in FY 2008 to 3 percent in FY 2009).
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most IRFs and most other providers and suppliers are 
small entities, either by nonprofit status or by having revenues of 
$6.5 million to $31.5 million in any one year. (For details, see the 
Small Business Administration's final rule that set forth size 
standards for health care industries, at 65 FR 69432, November 17, 
2000.) Because we lack data on individual hospital receipts, we cannot 
determine the number of small proprietary IRFs or the proportion of 
IRFs' revenue that is derived from Medicare payments. Therefore, we 
assume that all IRFs (an approximate total of 1,200 IRFs, of which 
approximately 60 percent are nonprofit facilities) are considered small 
entities and that Medicare payment constitutes the majority of their 
revenues. The Department of Health and Human Services generally uses a 
revenue impact of 3 to 5 percent as a significance threshold under the 
RFA. Medicare fiscal intermediaries and carriers are not considered to 
be small entities. Individuals and States are not included in the 
definition of a small entity. The Secretary has determined that this 
final rule (which we estimate will result in a decrease in total 
estimated payments to IRFs of 0.7 percent) would not have a significant 
economic impact on a substantial number of small entities and therefore 
an analysis as outlined by the RFA was not prepared.
    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 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. The Secretary has 
determined that this final rule would not have a significant impact on 
the operations of a substantial number of small rural hospitals and 
therefore an analysis for section 1102(b) of the Act was not prepared.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any one year of 
$100 million in 1995 dollars, updated annually for inflation. That 
threshold level is currently approximately $130 million. This final 
rule would not mandate any cost requirements on State, local, or tribal 
governments in the aggregate, or by the private sector, of $130 
million.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. As stated above, this final rule would not have a 
substantial effect on State and local governments.
    We received one comment on the regulatory impact statement included 
in the proposed rule, which is summarized below.
    Comment: One commenter expressed concern that the regulatory impact 
information provided in the proposed rule was not sufficient to 
calculate the projected impact to individual providers, and that data 
on FY 2007 actual payments, FY 2008 estimated payments, and FY 2009 
proposed payments would be required to fully estimate the effects on 
individual IRFs. The commenter requested that CMS make information 
available to allow interested parties to recreate CMS's impact table 
and to make projections on a facility-specific basis.
    Response: As discussed above, we did not prepare a regulatory 
impact analysis for this final rule (or for the proposed rule) because 
this final rule does not reach the $100 million economic threshold and 
thus is not considered a major rule. However, we provided an IRF rate 
setting file in conjunction with the proposed rule to allow interested 
parties to calculate the payment effects of the proposed policies for 
individual IRFs. In addition, we will carefully consider all of the 
commenter's suggestions in updating the final FY 2009 IRF rate setting 
file that will be posted on the IRF PPS Web site in conjunction with 
this final rule. This file will be available for download from the IRF 
PPS Web site soon after publication of this final rule at http://www.cms.hhs.gov/InpatientRehabFacPPS/07_DataFiles.asp#TopOfPage. The 
IRF rate setting files posted in conjunction with each proposed and 
final rule already contain much of the facility-level payment data 
needed to allow interested parties to recreate CMS's analysis and to 
make projections on a facility-specific basis.
    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 412

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

0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV as follows:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

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

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

Subpart B--Hospital Services Subject to and Excluded From the 
Prospective Payment Systems for Inpatient Operating Costs and 
Inpatient Capital--Related Costs

0
2. Section 412.23 is amended by--
0
A. Revising introductory text of paragraph (b)(2).
0
B. Revising introductory text of paragraph (b)(2)(i).
0
C. Revising paragraphs (b)(2)(i)(A) and (B).
0
D. Removing paragraph (b)(2)(ii).

[[Page 46392]]

0
E. Redesignating paragraph (b)(2)(iii) as (b)(2)(ii).
    The revision reads as follows:


Sec.  412.23   Excluded hospitals: Classifications.

* * * * *
    (b) * * *
    (2) Except in the case of a newly participating hospital seeking 
classification under this paragraph as a rehabilitation hospital for 
its first 12-month cost reporting period, as described in paragraph 
(b)(8) of this section, a hospital must show that during its most 
recent, consecutive, and appropriate 12-month time period (as defined 
by CMS or the fiscal intermediary), it served an inpatient population 
that meets the criteria under paragraph (b)(2)(i) of this section.
    (i) For cost reporting periods beginning on or after July 1, 2004 
and before July 1, 2005, the hospital has served an inpatient 
population of whom at least 50 percent, and for cost reporting periods 
beginning on or after July 1, 2005, the hospital has served an 
inpatient population of whom at least 60 percent required intensive 
rehabilitation services for treatment of one or more of the conditions 
specified at paragraph (b)(2)(ii) of this section. A patient with a 
comorbidity, as defined at Sec.  412.602, may be included in the 
inpatient population that counts toward the required applicable 
percentage if--
    (A) The patient is admitted for inpatient rehabilitation for a 
condition that is not one of the conditions specified in paragraph 
(b)(2)(ii) of this section;
    (B) The patient has a comorbidity that falls in one of the 
conditions specified in paragraph (b)(2)(ii) of this section; and
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplemental Medical Insurance Program).

    Dated: July 18, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: July 25, 2008.
Michael O. Leavitt,
Secretary.
    The following addendum will not appear in the Code of Federal 
Regulations.

Addendum

    This addendum contains the tables referred to throughout the 
preamble of this final rule. The tables presented below are as 
follows:
    Table 1.--Inpatient Rehabilitation Facility Wage Index for Urban 
Areas for Discharges Occurring from October 1, 2008 through 
September 30, 2009
    Table 2.--Inpatient Rehabilitation Facility Wage Index for Rural 
Areas for Discharges Occurring from October 1, 2008 through 
September 30, 2009

  Table 1--Inpatient Rehabilitation Facility Wage Index for Urban Areas
for Discharges Occurring From October 1, 2008 Through September 30, 2009
------------------------------------------------------------------------
                                Urban area (constituent
        CBSA code                      counties)              Wage index
------------------------------------------------------------------------
10180....................  Abilene, TX.....................       0.7957
                             Callahan County, TX
                             Jones County, TX
                             Taylor County, TX
10380....................  Aguadilla-Isabela-San                  0.3448
                            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.......................       0.8794
                             Portage County, OH
                             Summit County, OH
10500....................  Albany, GA......................       0.8514
                             Baker County, GA
                             Dougherty County, GA
                             Lee County, GA
                             Terrell County, GA
                             Worth County, GA
10580....................  Albany-Schenectady-Troy, NY.....       0.8588
                             Albany County, NY
                             Rensselaer County, NY
                             Saratoga County, NY
                             Schenectady County, NY
                             Schoharie County, NY
10740....................  Albuquerque, NM.................       0.9554
                             Bernalillo County, NM
                             Sandoval County, NM
                             Torrance County, NM
                             Valencia County, NM
10780....................  Alexandria, LA..................       0.7979
                             Grant Parish, LA
                             Rapides Parish, LA
10900....................  Allentown-Bethlehem-Easton, PA-        0.9865
                            NJ.
                             Warren County, NJ
                             Carbon County, PA
                             Lehigh County, PA
                             Northampton County, PA
11020....................  Altoona, PA.....................       0.8618

[[Page 46393]]

 
                             Blair County, PA
11100....................  Amarillo, TX....................       0.9116
                             Armstrong County, TX
                             Carson County, TX
                             Potter County, TX
                             Randall County, TX
11180....................  Ames, IA........................       1.0046
                             Story County, IA
11260....................  Anchorage, AK...................       1.1913
                             Anchorage Municipality, AK
                             Matanuska-Susitna Borough, AK
11300....................  Anderson, IN....................       0.8827
                             Madison County, IN
11340....................  Anderson, SC....................       0.9086
                             Anderson County, SC
11460....................  Ann Arbor, MI...................       1.0539
                             Washtenaw County, MI
11500....................  Anniston-Oxford, AL.............       0.7926
                             Calhoun County, AL
11540....................  Appleton, WI....................       0.9598
                             Calumet County, WI
                             Outagamie County, WI
11700....................  Asheville, NC...................       0.9185
                             Buncombe County, NC
                             Haywood County, NC
                             Henderson County, NC
                             Madison County, NC
12020....................  Athens-Clarke County, GA........       1.0517
                             Clarke County, GA
                             Madison County, GA
                             Oconee County, GA
                             Oglethorpe County, GA
12060....................  Atlanta-Sandy Springs-Marietta,        0.9828
                            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...............       1.2198
                             Atlantic County, NJ
12220....................  Auburn-Opelika, AL..............       0.8090
                             Lee County, AL
12260....................  Augusta-Richmond County, GA-SC..       0.9645
                             Burke County, GA
                             Columbia County, GA
                             McDuffie County, GA
                             Richmond County, GA
                             Aiken County, SC

[[Page 46394]]

 
                             Edgefield County, SC
12420....................  Austin-Round Rock, TX...........       0.9544
                             Bastrop County, TX
                             Caldwell County, TX
                             Hays County, TX
                             Travis County, TX
                             Williamson County, TX
12540....................  Bakersfield, CA.................       1.1051
                             Kern County, CA
12580....................  Baltimore-Towson, MD............       1.0134
                             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......................       0.9978
                             Penobscot County, ME
12700....................  Barnstable Town, MA.............       1.2603
                             Barnstable County, MA
12940....................  Baton Rouge, LA.................       0.8034
                             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................       1.0179
                             Calhoun County, MI
13020....................  Bay City, MI....................       0.8897
                             Bay County, MI
13140....................  Beaumont-Port Arthur, TX........       0.8531
                             Hardin County, TX
                             Jefferson County, TX
                             Orange County, TX
13380....................  Bellingham, WA..................       1.1474
                             Whatcom County, WA
13460....................  Bend, OR........................       1.0942
                             Deschutes County, OR
13644....................  Bethesda-Gaithersburg-Frederick,       1.0511
                            MD.
                             Frederick County, MD
                             Montgomery County, MD
13740....................  Billings, MT....................       0.8666
                             Carbon County, MT
                             Yellowstone County, MT
13780....................  Binghamton, NY..................       0.8949
                             Broome County, NY
                             Tioga County, NY
13820....................  Birmingham-Hoover, AL...........       0.8898
                             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....................       0.7225
                             Burleigh County, ND
                             Morton County, ND
13980....................  Blacksburg-Christiansburg-             0.8192
                            Radford, VA.
                             Giles County, VA
                             Montgomery County, VA
                             Pulaski County, VA
                             Radford City, VA
14020....................  Bloomington, IN.................       0.8915
                             Greene County, IN
                             Monroe County, IN

[[Page 46395]]

 
                             Owen County, IN
14060....................  Bloomington-Normal, IL..........       0.9325
                             McLean County, IL
14260....................  Boise City-Nampa, ID............       0.9465
                             Ada County, ID
                             Boise County, ID
                             Canyon County, ID
                             Gem County, ID
                             Owyhee County, ID
14484....................  Boston-Quincy, MA...............       1.1792
                             Norfolk County, MA
                             Plymouth County, MA
                             Suffolk County, MA
14500....................  Boulder, CO.....................       1.0426
                             Boulder County, CO
14540....................  Bowling Green, KY...............       0.8159
                             Edmonson County, KY
                             Warren County, KY
14740....................  Bremerton-Silverdale, WA........       1.0904
                             Kitsap County, WA
14860....................  Bridgeport-Stamford-Norwalk, CT.       1.2735
                             Fairfield County, CT
15180....................  Brownsville-Harlingen, TX.......       0.8914
                             Cameron County, TX
15260....................  Brunswick, GA...................       0.9475
                             Brantley County, GA
                             Glynn County, GA
                             McIntosh County, GA
15380....................  Buffalo-Niagara Falls, NY.......       0.9568
                             Erie County, NY
                             Niagara County, NY
15500....................  Burlington, NC..................       0.8747
                             Alamance County, NC
15540....................  Burlington-South Burlington, VT.       0.9660
                             Chittenden County, VT
                             Franklin County, VT
                             Grand Isle County, VT
15764....................  Cambridge-Newton-Framingham, MA.       1.1215
                             Middlesex County, MA
15804....................  Camden, NJ......................       1.0411
                             Burlington County, NJ
                             Camden County, NJ
                             Gloucester County, NJ
15940....................  Canton-Massillon, OH............       0.8935
                             Carroll County, OH
                             Stark County, OH
15980....................  Cape Coral-Fort Myers, FL.......       0.9396
                             Lee County, FL
16180....................  Carson City, NV.................       1.0003
                             Carson City, NV
16220....................  Casper, WY......................       0.9385
                             Natrona County, WY
16300....................  Cedar Rapids, IA................       0.8852
                             Benton County, IA
                             Jones County, IA
                             Linn County, IA
16580....................  Champaign-Urbana, IL............       0.9392
                             Champaign County, IL
                             Ford County, IL
                             Piatt County, IL
16620....................  Charleston, WV..................       0.8289
                             Boone County, WV
                             Clay County, WV
                             Kanawha County, WV
                             Lincoln County, WV
                             Putnam County, WV
16700....................  Charleston-North Charleston, SC.       0.9124
                             Berkeley County, SC
                             Charleston County, SC
                             Dorchester County, SC
16740....................  Charlotte-Gastonia-Concord, NC-        0.9520
                            SC.

[[Page 46396]]

 
                             Anson County, NC
                             Cabarrus County, NC
                             Gaston County, NC
                             Mecklenburg County, NC
                             Union County, NC
                             York County, SC
16820....................  Charlottesville, VA.............       0.9277
                             Albemarle County, VA
                             Fluvanna County, VA
                             Greene County, VA
                             Nelson County, VA
                             Charlottesville City, VA
16860....................  Chattanooga, TN-GA..............       0.8994
                             Catoosa County, GA
                             Dade County, GA
                             Walker County, GA
                             Hamilton County, TN
                             Marion County, TN
                             Sequatchie County, TN
16940....................  Cheyenne, WY....................       0.9308
                             Laramie County, WY
16974....................  Chicago-Naperville-Joliet, IL...       1.0715
                             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.......................       1.1290
                             Butte County, CA
17140....................  Cincinnati-Middletown, OH-KY-IN.       0.9784
                             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..............       0.8251
                             Christian County, KY
                             Trigg County, KY
                             Montgomery County, TN
                             Stewart County, TN
17420....................  Cleveland, TN...................       0.8052
                             Bradley County, TN
                             Polk County, TN
17460....................  Cleveland-Elyria-Mentor, OH.....       0.9339
                             Cuyahoga County, OH
                             Geauga County, OH
                             Lake County, OH
                             Lorain County, OH
                             Medina County, OH
17660....................  Coeur d'Alene, ID...............       0.9532
                             Kootenai County, ID
17780....................  College Station-Bryan, TX.......       0.9358
                             Brazos County, TX
                             Burleson County, TX
                             Robertson County, TX
17820....................  Colorado Springs, CO............       0.9719
                             El Paso County, CO
                             Teller County, CO

[[Page 46397]]

 
17860....................  Columbia, MO....................       0.8658
                             Boone County, MO
                             Howard County, MO
17900....................  Columbia, SC....................       0.8800
                             Calhoun County, SC
                             Fairfield County, SC
                             Kershaw County, SC
                             Lexington County, SC
                             Richland County, SC
                             Saluda County, SC
17980....................  Columbus, GA-AL.................       0.8729
                             Russell County, AL
                             Chattahoochee County, GA
                             Harris County, GA
                             Marion County, GA
                             Muscogee County, GA
18020....................  Columbus, IN....................       0.9537
                             Bartholomew County, IN
18140....................  Columbus, OH....................       1.0085
                             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..............       0.8588
                             Aransas County, TX
                             Nueces County, TX
                             San Patricio County, TX
18700....................  Corvallis, OR...................       1.0959
                             Benton County, OR
19060....................  Cumberland, MD-WV...............       0.8294
                             Allegany County, MD
                             Mineral County, WV
19124....................  Dallas-Plano-Irving, TX.........       0.9915
                             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......................       0.8760
                             Murray County, GA
                             Whitfield County, GA
19180....................  Danville, IL....................       0.8957
                             Vermilion County, IL
19260....................  Danville, VA....................       0.8240
                             Pittsylvania County, VA
                             Danville City, VA
19340....................  Davenport-Moline-Rock Island, IA-      0.8830
                            IL.
                             Henry County, IL
                             Mercer County, IL
                             Rock Island County, IL
                             Scott County, IA
19380....................  Dayton, OH......................       0.9190
                             Greene County, OH
                             Miami County, OH
                             Montgomery County, OH
                             Preble County, OH
19460....................  Decatur, AL.....................       0.7885
                             Lawrence County, AL
                             Morgan County, AL
19500....................  Decatur, IL.....................       0.8074
                             Macon County, IL
19660....................  Deltona-Daytona Beach-Ormond           0.9031
                            Beach, FL.
                             Volusia County, FL
19740....................  Denver-Aurora, CO...............       1.0718

[[Page 46398]]

 
                             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-West Des Moines, IA..       0.9226
                             Dallas County, IA
                             Guthrie County, IA
                             Madison County, IA
                             Polk County, IA
                             Warren County, IA
19804....................  Detroit-Livonia-Dearborn, MI....       0.9999
                             Wayne County, MI
20020....................  Dothan, AL......................       0.7270
                             Geneva County, AL
                             Henry County, AL
                             Houston County, AL
20100....................  Dover, DE.......................       1.0099
                             Kent County, DE
20220....................  Dubuque, IA.....................       0.9058
                             Dubuque County, IA
20260....................  Duluth, MN-WI...................       0.9975
                             Carlton County, MN
                             St. Louis County, MN
                             Douglas County, WI
20500....................  Durham, NC......................       0.9816
                             Chatham County, NC
                             Durham County, NC
                             Orange County, NC
                             Person County, NC
20740....................  Eau Claire, WI..................       0.9475
                             Chippewa County, WI
                             Eau Claire County, WI
20764....................  Edison, NJ......................       1.1181
                             Middlesex County, NJ
                             Monmouth County, NJ
                             Ocean County, NJ
                             Somerset County, NJ
20940....................  El Centro, CA...................       0.8914
                             Imperial County, CA
21060....................  Elizabethtown, KY...............       0.8711
                             Hardin County, KY
                             Larue County, KY
21140....................  Elkhart-Goshen, IN..............       0.9611
                             Elkhart County, IN
21300....................  Elmira, NY......................       0.8264
                             Chemung County, NY
21340....................  El Paso, TX.....................       0.8989
                             El Paso County, TX
21500....................  Erie, PA........................       0.8495
                             Erie County, PA
21660....................  Eugene-Springfield, OR..........       1.0932
                             Lane County, OR
21780....................  Evansville, IN-KY...............       0.8662
                             Gibson County, IN
                             Posey County, IN
                             Vanderburgh County, IN
                             Warrick County, IN
                             Henderson County, KY
                             Webster County, KY
21820....................  Fairbanks, AK...................       1.1050
                             Fairbanks North Star Borough,
                           AK
21940....................  Fajardo, PR.....................       0.4375
                             Ceiba Municipio, PR
                             Fajardo Municipio, PR
                             Luquillo Municipio, PR

[[Page 46399]]

 
22020....................  Fargo, ND-MN....................       0.8042
                             Cass County, ND
                             Clay County, MN
22140....................  Farmington, NM..................       0.9587
                             San Juan County, NM
22180....................  Fayetteville, NC................       0.9368
                             Cumberland County, NC
                             Hoke County, NC
22220....................  Fayetteville-Springdale-Rogers,        0.8742
                            AR-MO.
                             Benton County, AR
                             Madison County, AR
                             Washington County, AR
                             McDonald County, MO
22380....................  Flagstaff, AZ...................       1.1687
                             Coconino County, AZ
22420....................  Flint, MI.......................       1.1220
                             Genesee County, MI
22500....................  Florence, SC....................       0.8249
                             Darlington County, SC
                             Florence County, SC
22520....................  Florence-Muscle Shoals, AL......       0.7680
                             Colbert County, AL
                             Lauderdale County, AL
22540....................  Fond du Lac, WI.................       0.9667
                             Fond du Lac County, WI
22660....................  Fort Collins-Loveland, CO.......       0.9897
                             Larimer County, CO
22744....................  Fort Lauderdale-Pompano Beach-         1.0229
                            Deerfield Beach, FL.
                             Broward County, FL
22900....................  Fort Smith, AR-OK...............       0.7933
                             Crawford County, AR
                             Franklin County, AR
                             Sebastian County, AR
                             Le Flore County, OK
                             Sequoyah County, OK
23020....................  Fort Walton Beach-Crestview-           0.8743
                            Destin, FL.
                             Okaloosa County, FL
23060....................  Fort Wayne, IN..................       0.9284
                             Allen County, IN
                             Wells County, IN
                             Whitley County, IN
23104....................  Fort Worth-Arlington, TX........       0.9693
                             Johnson County, TX
                             Parker County, TX
                             Tarrant County, TX
                             Wise County, TX
23420....................  Fresno, CA......................       1.0993
                             Fresno County, CA
23460....................  Gadsden, AL.....................       0.8159
                             Etowah County, AL
23540....................  Gainesville, FL.................       0.9196
                             Alachua County, FL
                             Gilchrist County, FL
23580....................  Gainesville, GA.................       0.9216
                             Hall County, GA
23844....................  Gary, IN........................       0.9224
                             Jasper County, IN
                             Lake County, IN
                             Newton County, IN
                             Porter County, IN
24020....................  Glens Falls, NY.................       0.8256
                             Warren County, NY
                             Washington County, NY
24140....................  Goldsboro, NC...................       0.9288
                             Wayne County, NC
24220....................  Grand Forks, ND-MN..............       0.7881
                             Polk County, MN
                             Grand Forks County, ND
24300....................  Grand Junction, CO..............       0.9864
                             Mesa County, CO
24340....................  Grand Rapids-Wyoming, MI........       0.9315

[[Page 46400]]

 
                             Barry County, MI
                             Ionia County, MI
                             Kent County, MI
                             Newaygo County, MI
24500....................  Great Falls, MT.................       0.8675
                             Cascade County, MT
24540....................  Greeley, CO.....................       0.9658
                             Weld County, CO
24580....................  Green Bay, WI...................       0.9727
                             Brown County, WI
                             Kewaunee County, WI
                             Oconto County, WI
24660....................  Greensboro-High Point, NC.......       0.9010
                             Guilford County, NC
                             Randolph County, NC
                             Rockingham County, NC
24780....................  Greenville, NC..................       0.9402
                             Greene County, NC
                             Pitt County, NC
24860....................  Greenville-Mauldin-Easley, SC...       0.9860
                             Greenville County, SC
                             Laurens County, SC
                             Pickens County, SC
25020....................  Guayama, PR.....................       0.3064
                             Arroyo Municipio, PR
                             Guayama Municipio, PR
                             Patillas Municipio, PR
25060....................  Gulfport-Biloxi, MS.............       0.8773
                             Hancock County, MS
                             Harrison County, MS
                             Stone County, MS
25180....................  Hagerstown-Martinsburg, MD-WV...       0.9013
                             Washington County, MD
                             Berkeley County, WV
                             Morgan County, WV
25260....................  Hanford-Corcoran, CA............       1.0499
                             Kings County, CA
25420....................  Harrisburg-Carlisle, PA.........       0.9280
                             Cumberland County, PA
                             Dauphin County, PA
                             Perry County, PA
25500....................  Harrisonburg, VA................       0.8867
                             Rockingham County, VA
                             Harrisonburg City, VA
25540....................  Hartford-West Hartford-East            1.0959
                            Hartford, CT.
                             Hartford County, CT
                             Middlesex County, CT
                             Tolland County, CT
25620....................  Hattiesburg, MS.................       0.7366
                             Forrest County, MS
                             Lamar County, MS
                             Perry County, MS
25860....................  Hickory-Lenoir-Morganton, NC....       0.9028
                             Alexander County, NC
                             Burke County, NC
                             Caldwell County, NC
                             Catawba County, NC
25980....................  Hinesville-Fort Stewart, GA \1\.       0.9187
                             Liberty County, GA
                             Long County, GA
26100....................  Holland-Grand Haven, MI.........       0.9006
                             Ottawa County, MI
26180....................  Honolulu, HI....................       1.1556
                             Honolulu County, HI
26300....................  Hot Springs, AR.................       0.9109
                             Garland County, AR
26380....................  Houma-Bayou Cane-Thibodaux, LA..       0.7892
                             Lafourche Parish, LA
                             Terrebonne Parish, LA
26420....................  Houston-Sugar Land-Baytown, TX..       0.9939
                             Austin County, TX

[[Page 46401]]

 
                             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....       0.9041
                             Boyd County, KY
                             Greenup County, KY
                             Lawrence County, OH
                             Cabell County, WV
                             Wayne County, WV
26620....................  Huntsville, AL..................       0.9146
                             Limestone County, AL
                             Madison County, AL
26820....................  Idaho Falls, ID.................       0.9264
                             Bonneville County, ID
                             Jefferson County, ID
26900....................  Indianapolis-Carmel, IN.........       0.9844
                             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...................       0.9568
                             Johnson County, IA
                             Washington County, IA
27060....................  Ithaca, NY......................       0.9630
                             Tompkins County, NY
27100....................  Jackson, MI.....................       0.9329
                             Jackson County, MI
27140....................  Jackson, MS.....................       0.8011
                             Copiah County, MS
                             Hinds County, MS
                             Madison County, MS
                             Rankin County, MS
                             Simpson County, MS
27180....................  Jackson, TN.....................       0.8676
                             Chester County, TN
                             Madison County, TN
27260....................  Jacksonville, FL................       0.9021
                             Baker County, FL
                             Clay County, FL
                             Duval County, FL
                             Nassau County, FL
                             St. Johns County, FL
27340....................  Jacksonville, NC................       0.8079
                             Onslow County, NC
27500....................  Janesville, WI..................       0.9702
                             Rock County, WI
27620....................  Jefferson City, MO..............       0.8478
                             Callaway County, MO
                             Cole County, MO
                             Moniteau County, MO
                             Osage County, MO
27740....................  Johnson City, TN................       0.7677
                             Carter County, TN
                             Unicoi County, TN
                             Washington County, TN
27780....................  Johnstown, PA...................       0.7543
                             Cambria County, PA
27860....................  Jonesboro, AR...................       0.7790
                             Craighead County, AR

[[Page 46402]]

 
                             Poinsett County, AR
27900....................  Joplin, MO......................       0.8951
                             Jasper County, MO
                             Newton County, MO
28020....................  Kalamazoo-Portage, MI...........       1.0433
                             Kalamazoo County, MI
                             Van Buren County, MI
28100....................  Kankakee-Bradley, IL............       1.0238
                             Kankakee County, IL
28140....................  Kansas City, MO-KS..............       0.9504
                             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....       1.0075
                             Benton County, WA
                             Franklin County, WA
28660....................  Killeen-Temple-Fort Hood, TX....       0.8249
                             Bell County, TX
                             Coryell County, TX
                             Lampasas County, TX
28700....................  Kingsport-Bristol-Bristol, TN-VA       0.7658
                             Hawkins County, TN
                             Sullivan County, TN
                             Bristol City, VA
                             Scott County, VA
                             Washington County, VA
28740....................  Kingston, NY....................       0.9556
                             Ulster County, NY
28940....................  Knoxville, TN...................       0.8036
                             Anderson County, TN
                             Blount County, TN
                             Knox County, TN
                             Loudon County, TN
                             Union County, TN
29020....................  Kokomo, IN......................       0.9591
                             Howard County, IN
                             Tipton County, IN
29100....................  La Crosse, WI-MN................       0.9685
                             Houston County, MN
                             La Crosse County, WI
29140....................  Lafayette, IN...................       0.8869
                             Benton County, IN
                             Carroll County, IN
                             Tippecanoe County, IN
29180....................  Lafayette, LA...................       0.8247
                             Lafayette Parish, LA
                             St. Martin Parish, LA
29340....................  Lake Charles, LA................       0.7777
                             Calcasieu Parish, LA
                             Cameron Parish, LA
29404....................  Lake County-Kenosha County, IL-        1.0603
                            WI.
                             Lake County, IL
                             Kenosha County, WI
29420....................  Lake Havasu City-Kingman, AZ....       0.9333
                             Mohave County, AZ
29460....................  Lakeland, FL....................       0.8661
                             Polk County, FL
29540....................  Lancaster, PA...................       0.9252
                             Lancaster County, PA

[[Page 46403]]

 
29620....................  Lansing-East Lansing, MI........       1.0119
                             Clinton County, MI
                             Eaton County, MI
                             Ingham County, MI
29700....................  Laredo, TX......................       0.8093
                             Webb County, TX
29740....................  Las Cruces, NM..................       0.8676
                             Dona Ana County, NM
29820....................  Las Vegas-Paradise, NV..........       1.1799
                             Clark County, NV
29940....................  Lawrence, KS....................       0.8227
                             Douglas County, KS
30020....................  Lawton, OK......................       0.8025
                             Comanche County, OK
30140....................  Lebanon, PA.....................       0.8192
                             Lebanon County, PA
30300....................  Lewiston, ID-WA.................       0.9454
                             Nez Perce County, ID
                             Asotin County, WA
30340....................  Lewiston-Auburn, ME.............       0.9193
                             Androscoggin County, ME
30460....................  Lexington-Fayette, KY...........       0.9191
                             Bourbon County, KY
                             Clark County, KY
                             Fayette County, KY
                             Jessamine County, KY
                             Scott County, KY
                             Woodford County, KY
30620....................  Lima, OH........................       0.9424
                             Allen County, OH
30700....................  Lincoln, NE.....................       1.0051
                             Lancaster County, NE
                             Seward County, NE
30780....................  Little Rock-North Little Rock-         0.8863
                            Conway, AR.
                             Faulkner County, AR
                             Grant County, AR
                             Lonoke County, AR
                             Perry County, AR
                             Pulaski County, AR
                             Saline County, AR
30860....................  Logan, UT-ID....................       0.9183
                             Franklin County, ID
                             Cache County, UT
30980....................  Longview, TX....................       0.8717
                             Gregg County, TX
                             Rusk County, TX
                             Upshur County, TX
31020....................  Longview, WA....................       1.0827
                             Cowlitz County, WA
31084....................  Los Angeles-Long Beach-Santa           1.1771
                            Ana, CA.
                             Los Angeles County, CA
31140....................  Louisville-Jefferson County, KY-       0.9065
                            IN.
                             Clark County, IN
                             Floyd County, IN
                             Harrison County, IN
                             Washington County, IN
                             Bullitt County, KY
                             Henry County, KY
                             Meade County, KY
                             Nelson County, KY
                             Oldham County, KY
                             Shelby County, KY
                             Spencer County, KY
                             Trimble County, KY
31180....................  Lubbock, TX.....................       0.8680
                             Crosby County, TX
                             Lubbock County, TX
31340....................  Lynchburg, VA...................       0.8732
                             Amherst County, VA
                             Appomattox County, VA
                             Bedford County, VA

[[Page 46404]]

 
                             Campbell County, VA
                             Bedford City, VA
                             Lynchburg City, VA
31420....................  Macon, GA.......................       0.9541
                             Bibb County, GA
                             Crawford County, GA
                             Jones County, GA
                             Monroe County, GA
                             Twiggs County, GA
31460....................  Madera, CA......................       0.8069
                             Madera County, CA
31540....................  Madison, WI.....................       1.0935
                             Columbia County, WI
                             Dane County, WI
                             Iowa County, WI
31700....................  Manchester-Nashua, NH...........       1.0273
                             Hillsborough County, NH
31900....................  Mansfield, OH \1\...............       0.9271
                             Richland County, OH
32420....................  Mayag[uuml]ez, PR...............       0.3711
                             Hormigueros Municipio, PR
                             Mayag[uuml]ez Municipio, PR
32580....................  McAllen-Edinburg-Mission, TX....       0.9123
                             Hidalgo County, TX
32780....................  Medford, OR.....................       1.0318
                             Jackson County, OR
32820....................  Memphis, TN-MS-AR...............       0.9250
                             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......................       1.2120
                             Merced County, CA
33124....................  Miami-Miami Beach-Kendall, FL...       1.0002
                             Miami-Dade County, FL
33140....................  Michigan City-La Porte, IN......       0.8914
                             LaPorte County, IN
33260....................  Midland, TX.....................       1.0017
                             Midland County, TX
33340....................  Milwaukee-Waukesha-West Allis,         1.0214
                            WI.
                             Milwaukee County, WI
                             Ozaukee County, WI
                             Washington County, WI
                             Waukesha County, WI
33460....................  Minneapolis-St. Paul--                 1.1093
                            Bloomington, MN-WI.
                             Anoka County, MN
                             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....................       0.8953
                             Missoula County, MT
33660....................  Mobile, AL......................       0.8033
                             Mobile County, AL
33700....................  Modesto, CA.....................       1.1962
                             Stanislaus County, CA
33740....................  Monroe, LA......................       0.7832
                             Ouachita Parish, LA
                             Union Parish, LA

[[Page 46405]]

 
33780....................  Monroe, MI......................       0.9414
                             Monroe County, MI
33860....................  Montgomery, AL..................       0.8088
                             Autauga County, AL
                             Elmore County, AL
                             Lowndes County, AL
                             Montgomery County, AL
34060....................  Morgantown, WV..................       0.8321
                             Monongalia County, WV
                             Preston County, WV
34100....................  Morristown, TN..................       0.7388
                             Grainger County, TN
                             Hamblen County, TN
                             Jefferson County, TN
34580....................  Mount Vernon-Anacortes, WA......       1.0529
                             Skagit County, WA
34620....................  Muncie, IN......................       0.8214
                             Delaware County, IN
34740....................  Muskegon-Norton Shores, MI......       0.9836
                             Muskegon County, MI
34820....................  Myrtle Beach-Conway-North Myrtle       0.8634
                            Beach, SC.
                             Horry County, SC
34900....................  Napa, CA........................       1.4476
                             Napa County, CA
34940....................  Naples-Marco Island, FL.........       0.9487
                             Collier County, FL
34980....................  Nashville-Davidson-Murfreesboro-       0.9689
                            Franklin, 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..............       1.2640
                             Nassau County, NY
                             Suffolk County, NY
35084....................  Newark-Union, NJ-PA.............       1.1862
                             Essex County, NJ
                             Hunterdon County, NJ
                             Morris County, NJ
                             Sussex County, NJ
                             Union County, NJ
                             Pike County, PA
35300....................  New Haven-Milford, CT...........       1.1871
                             New Haven County, CT
35380....................  New Orleans-Metairie-Kenner, LA.       0.8897
                             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-White Plains-Wayne, NY-       1.3115
                            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

[[Page 46406]]

 
                             Westchester County, NY
35660....................  Niles-Benton Harbor, MI.........       0.9141
                             Berrien County, MI
35980....................  Norwich-New London, CT..........       1.1432
                             New London County, CT
36084....................  Oakland-Fremont-Hayward, CA.....       1.5685
                             Alameda County, CA
                             Contra Costa County, CA
36100....................  Ocala, FL.......................       0.8627
                             Marion County, FL
36140....................  Ocean City, NJ..................       1.0988
                             Cape May County, NJ
36220....................  Odessa, TX......................       1.0042
                             Ector County, TX
36260....................  Ogden-Clearfield, UT............       0.9000
                             Davis County, UT
                             Morgan County, UT
                             Weber County, UT
36420....................  Oklahoma City, OK...............       0.8815
                             Canadian County, OK
                             Cleveland County, OK
                             Grady County, OK
                             Lincoln County, OK
                             Logan County, OK
                             McClain County, OK
                             Oklahoma County, OK
36500....................  Olympia, WA.....................       1.1512
                             Thurston County, WA
36540....................  Omaha-Council Bluffs, NE-IA.....       0.9561
                             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-Kissimmee, FL...........       0.9226
                             Lake County, FL
                             Orange County, FL
                             Osceola County, FL
                             Seminole County, FL
36780....................  Oshkosh-Neenah, WI..............       0.9551
                             Winnebago County, WI
36980....................  Owensboro, KY...................       0.8652
                             Daviess County, KY
                             Hancock County, KY
                             McLean County, KY
37100....................  Oxnard-Thousand Oaks-Ventura, CA       1.1852
                             Ventura County, CA
37340....................  Palm Bay-Melbourne-Titusville,         0.9325
                            FL.
                             Brevard County, FL
37380....................  Palm Coast, FL..................       0.8945
                             Flagler County, FL
37460....................  Panama City-Lynn Haven, FL......       0.8313
                             Bay County, FL
37620....................  Parkersburg-Marietta-Vienna, WV-       0.8105
                            OH.
                             Washington County, OH
                             Pleasants County, WV
                             Wirt County, WV
                             Wood County, WV
37700....................  Pascagoula, MS..................       0.8647
                             George County, MS
                             Jackson County, MS
37764....................  Peabody, MA.....................       1.0650
                             Essex County, MA
37860....................  Pensacola-Ferry Pass-Brent, FL..       0.8281
                             Escambia County, FL
                             Santa Rosa County, FL
37900....................  Peoria, IL......................       0.9299
                             Marshall County, IL

[[Page 46407]]

 
                             Peoria County, IL
                             Stark County, IL
                             Tazewell County, IL
                             Woodford County, IL
37964....................  Philadelphia, PA................       1.0925
                             Bucks County, PA
                             Chester County, PA
                             Delaware County, PA
                             Montgomery County, PA
                             Philadelphia County, PA
38060....................  Phoenix-Mesa-Scottsdale, AZ.....       1.0264
                             Maricopa County, AZ
                             Pinal County, AZ
38220....................  Pine Bluff, AR..................       0.7839
                             Cleveland County, AR
                             Jefferson County, AR
                             Lincoln County, AR
38300....................  Pittsburgh, PA..................       0.8525
                             Allegheny County, PA
                             Armstrong County, PA
                             Beaver County, PA
                             Butler County, PA
                             Fayette County, PA
                             Washington County, PA
                             Westmoreland County, PA
38340....................  Pittsfield, MA..................       1.0091
                             Berkshire County, MA
38540....................  Pocatello, ID...................       0.9465
                             Bannock County, ID
                             Power County, ID
38660....................  Ponce, PR.......................       0.4450
                             Juana D[iacute]az Municipio,
                           PR
                             Ponce Municipio, PR
                             Villalba Municipio, PR
38860....................  Portland-South Portland-               1.0042
                            Biddeford, ME.
                             Cumberland County, ME
                             Sagadahoc County, ME
                             York County, ME
38900....................  Portland-Vancouver-Beaverton, OR-      1.1498
                            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, FL..............       1.0016
                             Martin County, FL
                             St. Lucie County, FL
39100....................  Poughkeepsie-Newburgh-                 1.0982
                            Middletown, NY.
                             Dutchess County, NY
                             Orange County, NY
39140....................  Prescott, AZ....................       1.0020
                             Yavapai County, AZ
39300....................  Providence-New Bedford-Fall            1.0574
                            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..................       0.9557
                             Juab County, UT
                             Utah County, UT
39380....................  Pueblo, CO......................       0.8851
                             Pueblo County, CO
39460....................  Punta Gorda, FL.................       0.9254
                             Charlotte County, FL
39540....................  Racine, WI......................       0.9498
                             Racine County, WI
39580....................  Raleigh-Cary, NC................       0.9839

[[Page 46408]]

 
                             Franklin County, NC
                             Johnston County, NC
                             Wake County, NC
39660....................  Rapid City, SD..................       0.8811
                             Meade County, SD
                             Pennington County, SD
39740....................  Reading, PA.....................       0.9356
                             Berks County, PA
39820....................  Redding, CA.....................       1.3541
                             Shasta County, CA
39900....................  Reno-Sparks, NV.................       1.0715
                             Storey County, NV
                             Washoe County, NV
40060....................  Richmond, VA....................       0.9425
                             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-              1.1100
                            Ontario, CA.
                             Riverside County, CA
                             San Bernardino County, CA
40220....................  Roanoke, VA.....................       0.8691
                             Botetourt County, VA
                             Craig County, VA
                             Franklin County, VA
                             Roanoke County, VA
                             Roanoke City, VA
                             Salem City, VA
40340....................  Rochester, MN...................       1.0755
                             Dodge County, MN
                             Olmsted County, MN
                             Wabasha County, MN
40380....................  Rochester, NY...................       0.8858
                             Livingston County, NY
                             Monroe County, NY
                             Ontario County, NY
                             Orleans County, NY
                             Wayne County, NY
40420....................  Rockford, IL....................       0.9814
                             Boone County, IL
                             Winnebago County, IL
40484....................  Rockingham County, NH...........       1.0111
                             Rockingham County, NH
                             Strafford County, NH
40580....................  Rocky Mount, NC.................       0.9001
                             Edgecombe County, NC
                             Nash County, NC
40660....................  Rome, GA........................       0.9042
                             Floyd County, GA
40900....................  Sacramento--Arden-Arcade--             1.3505
                            Roseville, CA.
                             El Dorado County, CA
                             Placer County, CA
                             Sacramento County, CA
                             Yolo County, CA
40980....................  Saginaw-Saginaw Township North,        0.8812
                            MI.

[[Page 46409]]

 
                             Saginaw County, MI
41060....................  St. Cloud, MN...................       1.0549
                             Benton County, MN
                             Stearns County, MN
41100....................  St. George, UT..................       0.9358
                             Washington County, UT
41140....................  St. Joseph, MO-KS...............       0.8762
                             Doniphan County, KS
                             Andrew County, MO
                             Buchanan County, MO
                             DeKalb County, MO
41180....................  St. Louis, MO-IL................       0.9024
                             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.......................       1.0572
                             Marion County, OR
                             Polk County, OR
41500....................  Salinas, CA.....................       1.4775
                             Monterey County, CA
41540....................  Salisbury, MD...................       0.8994
                             Somerset County, MD
                             Wicomico County, MD
41620....................  Salt Lake City, UT..............       0.9399
                             Salt Lake County, UT
                             Summit County, UT
                             Tooele County, UT
41660....................  San Angelo, TX..................       0.8579
                             Irion County, TX
                             Tom Green County, TX
41700....................  San Antonio, TX.................       0.8834
                             Atascosa County, TX
                             Bandera County, TX
                             Bexar County, TX
                             Comal County, TX
                             Guadalupe County, TX
                             Kendall County, TX
                             Medina County, TX
                             Wilson County, TX
41740....................  San Diego-Carlsbad-San Marcos,         1.1492
                            CA.
                             San Diego County, CA
41780....................  Sandusky, OH....................       0.8822
                             Erie County, OH
41884....................  San Francisco-San Mateo-Redwood        1.5195
                            City, CA.
                             Marin County, CA
                             San Francisco County, CA
                             San Mateo County, CA
41900....................  San Germ[aacute]n-Cabo Rojo, PR.       0.4729
                             Cabo Rojo Municipio, PR
                             Lajas Municipio, PR
                             Sabana Grande Municipio, PR
                             San Germ[aacute]n Municipio,
                           PR
41940....................  San Jose-Sunnyvale-Santa Clara,        1.5735
                            CA.
                             San Benito County, CA
                             Santa Clara County, CA
41980....................  San Juan-Caguas-Guaynabo, PR....       0.4528
                             Aguas Buenas Municipio, PR

[[Page 46410]]

 
                             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.       1.2488
                             San Luis Obispo County, CA
42044....................  Santa Ana-Anaheim-Irvine, CA....       1.1766
                             Orange County, CA
42060....................  Santa Barbara-Santa Maria-             1.1714
                            Goleta, CA.
                             Santa Barbara County, CA
42100....................  Santa Cruz-Watsonville, CA......       1.6122
                             Santa Cruz County, CA
42140....................  Santa Fe, NM....................       1.0734
                             Santa Fe County, NM
42220....................  Santa Rosa-Petaluma, CA.........       1.4696
                             Sonoma County, CA
42260....................  Sarasota-Bradenton-Venice, FL...       0.9933
                             Manatee County, FL
                             Sarasota County, FL
42340....................  Savannah, GA....................       0.9131
                             Bryan County, GA
                             Chatham County, GA
                             Effingham County, GA
42540....................  Scranton--Wilkes-Barre, PA......       0.8457
                             Lackawanna County, PA
                             Luzerne County, PA
                             Wyoming County, PA
42644....................  Seattle-Bellevue-Everett, WA....       1.1572
                             King County, WA
                             Snohomish County, WA
42680....................  Sebastian-Vero Beach, FL........       0.9412
                             Indian River County, FL
43100....................  Sheboygan, WI...................       0.8975
                             Sheboygan County, WI
43300....................  Sherman-Denison, TX.............       0.8320

[[Page 46411]]

 
                             Grayson County, TX
43340....................  Shreveport-Bossier City, LA.....       0.8476
                             Bossier Parish, LA
                             Caddo Parish, LA
                             De Soto Parish, LA
43580....................  Sioux City, IA-NE-SD............       0.9251
                             Woodbury County, IA
                             Dakota County, NE
                             Dixon County, NE
                             Union County, SD
43620....................  Sioux Falls, SD.................       0.9563
                             Lincoln County, SD
                             McCook County, SD
                             Minnehaha County, SD
                             Turner County, SD
43780....................  South Bend-Mishawaka, IN-MI.....       0.9617
                             St. Joseph County, IN
                             Cass County, MI
43900....................  Spartanburg, SC.................       0.9422
                             Spartanburg County, SC
44060....................  Spokane, WA.....................       1.0455
                             Spokane County, WA
44100....................  Springfield, IL.................       0.8944
                             Menard County, IL
                             Sangamon County, IL
44140....................  Springfield, MA.................       1.0366
                             Franklin County, MA
                             Hampden County, MA
                             Hampshire County, MA
44180....................  Springfield, MO.................       0.8695
                             Christian County, MO
                             Dallas County, MO
                             Greene County, MO
                             Polk County, MO
                             Webster County, MO
44220....................  Springfield, OH.................       0.8694
                             Clark County, OH
44300....................  State College, PA...............       0.8768
                             Centre County, PA
44700....................  Stockton, CA....................       1.1855
                             San Joaquin County, CA
44940....................  Sumter, SC......................       0.8599
                             Sumter County, SC
45060....................  Syracuse, NY....................       0.9910
                             Madison County, NY
                             Onondaga County, NY
                             Oswego County, NY
45104....................  Tacoma, WA......................       1.1055
                             Pierce County, WA
45220....................  Tallahassee, FL.................       0.9025
                             Gadsden County, FL
                             Jefferson County, FL
                             Leon County, FL
                             Wakulla County, FL
45300....................  Tampa-St. Petersburg-Clearwater,       0.9020
                            FL.
                             Hernando County, FL
                             Hillsborough County, FL
                             Pasco County, FL
                             Pinellas County, FL
45460....................  Terre Haute, IN.................       0.8805
                             Clay County, IN
                             Sullivan County, IN
                             Vermillion County, IN
                             Vigo County, IN
45500....................  Texarkana, TX-Texarkana, AR.....       0.7770
                             Miller County, AR
                             Bowie County, TX
45780....................  Toledo, OH......................       0.9431
                             Fulton County, OH
                             Lucas County, OH
                             Ottawa County, OH

[[Page 46412]]

 
                             Wood County, OH
45820....................  Topeka, KS......................       0.8538
                             Jackson County, KS
                             Jefferson County, KS
                             Osage County, KS
                             Shawnee County, KS
                             Wabaunsee County, KS
45940....................  Trenton-Ewing, NJ...............       1.0699
                             Mercer County, NJ
46060....................  Tucson, AZ......................       0.9245
                             Pima County, AZ
46140....................  Tulsa, OK.......................       0.8340
                             Creek County, OK
                             Okmulgee County, OK
                             Osage County, OK
                             Pawnee County, OK
                             Rogers County, OK
                             Tulsa County, OK
                             Wagoner County, OK
46220....................  Tuscaloosa, AL..................       0.8303
                             Greene County, AL
                             Hale County, AL
                             Tuscaloosa County, AL
46340....................  Tyler, TX.......................       0.9114
                             Smith County, TX
46540....................  Utica-Rome, NY..................       0.8486
                             Herkimer County, NY
                             Oneida County, NY
46660....................  Valdosta, GA....................       0.8098
                             Brooks County, GA
                             Echols County, GA
                             Lanier County, GA
                             Lowndes County, GA
46700....................  Vallejo-Fairfield, CA...........       1.4666
                             Solano County, CA
47020....................  Victoria, TX....................       0.8302
                             Calhoun County, TX
                             Goliad County, TX
                             Victoria County, TX
47220....................  Vineland-Millville-Bridgeton, NJ       1.0133
                             Cumberland County, NJ
47260....................  Virginia Beach-Norfolk-Newport         0.8818
                            News, VA-NC.
                             Currituck County, NC
                             Gloucester County, VA
                             Isle of Wight County, VA
                             James City County, VA
                             Mathews County, VA
                             Surry County, VA
                             York County, VA
                             Chesapeake City, VA
                             Hampton City, VA
                             Newport News City, VA
                             Norfolk City, VA
                             Poquoson City, VA
                             Portsmouth City, VA
                             Suffolk City, VA
                             Virginia Beach City, VA
                             Williamsburg City, VA
47300....................  Visalia-Porterville, CA.........       1.0091
                             Tulare County, CA
47380....................  Waco, TX........................       0.8518
                             McLennan County, TX
47580....................  Warner Robins, GA...............       0.9128
                             Houston County, GA
47644....................  Warren-Troy-Farmington Hills, MI       1.0001
                             Lapeer County, MI
                             Livingston County, MI
                             Macomb County, MI
                             Oakland County, MI
                             St. Clair County, MI
47894....................  Washington-Arlington-Alexandria,       1.0855
                            DC-VA-MD-WV.

[[Page 46413]]

 
                             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........       0.8519
                             Black Hawk County, IA
                             Bremer County, IA
                             Grundy County, IA
48140....................  Wausau, WI......................       0.9679
                             Marathon County, WI
48260....................  Weirton-Steubenville, WV-OH.....       0.7924
                             Jefferson County, OH
                             Brooke County, WV
                             Hancock County, WV
48300....................  Wenatchee, WA...................       1.1469
                             Chelan County, WA
                             Douglas County, WA
48424....................  West Palm Beach-Boca Raton-            0.9728
                            Boynton Beach, FL.
                             Palm Beach County, FL
48540....................  Wheeling, WV-OH.................       0.6961
                             Belmont County, OH
                             Marshall County, WV
                             Ohio County, WV
48620....................  Wichita, KS.....................       0.9062
                             Butler County, KS
                             Harvey County, KS
                             Sedgwick County, KS
                             Sumner County, KS
48660....................  Wichita Falls, TX...............       0.7920
                             Archer County, TX
                             Clay County, TX
                             Wichita County, TX
48700....................  Williamsport, PA................       0.8043
                             Lycoming County, PA
48864....................  Wilmington, DE-MD-NJ............       1.0824
                             New Castle County, DE
                             Cecil County, MD
                             Salem County, NJ
48900....................  Wilmington, NC..................       0.9410
                             Brunswick County, NC
                             New Hanover County, NC
                             Pender County, NC
49020....................  Winchester, VA-WV...............       0.9913
                             Frederick County, VA
                             Winchester City, VA
                             Hampshire County, WV
49180....................  Winston-Salem, NC...............       0.9118
                             Davie County, NC
                             Forsyth County, NC
                             Stokes County, NC
                             Yadkin County, NC
49340....................  Worcester, MA...................       1.1287
                             Worcester County, MA
49420....................  Yakima, WA......................       1.0267
                             Yakima County, WA

[[Page 46414]]

 
49500....................  Yauco, PR.......................       0.3284
                             Gu[aacute]nica Municipio, PR
                             Guayanilla Municipio, PR
                             Pe[ntilde]uelas Municipio, PR
                             Yauco Municipio, PR
49620....................  York-Hanover, PA................       0.9359
                             York County, PA
49660....................  Youngstown-Warren-Boardman, OH-        0.9002
                            PA.
                             Mahoning County, OH
                             Trumbull County, OH
                             Mercer County, PA
49700....................  Yuba City, CA...................       1.0756
                             Sutter County, CA
                             Yuba County, CA
49740....................  Yuma, AZ........................       0.9488
                             Yuma County, AZ
------------------------------------------------------------------------
\1\ At this time, there are no hospitals located in this urban area on
  which to base a wage index.


  Table 2--Inpatient Rehabilitation Facility Wage Index for Rural Areas
for Discharges Occurring From October 1, 2008 Through September 30, 2009
------------------------------------------------------------------------
             CBSA code                    Nonurban area       Wage index
------------------------------------------------------------------------
1..................................  Alabama...............       0.7533
2..................................  Alaska................       1.2109
3..................................  Arizona...............       0.8479
4..................................  Arkansas..............       0.7371
5..................................  California............       1.2023
6..................................  Colorado..............       0.9704
7..................................  Connecticut...........       1.1119
8..................................  Delaware..............       0.9727
10.................................  Florida...............       0.8465
11.................................  Georgia...............       0.7659
12.................................  Hawaii................       1.0612
13.................................  Idaho.................       0.7920
14.................................  Illinois..............       0.8335
15.................................  Indiana...............       0.8576
16.................................  Iowa..................       0.8566
17.................................  Kansas................       0.7981
18.................................  Kentucky..............       0.7793
19.................................  Louisiana.............       0.7373
20.................................  Maine.................       0.8476
21.................................  Maryland..............       0.9034
22.................................  Massachusetts \1\.....       1.1589
23.................................  Michigan..............       0.8953
24.................................  Minnesota.............       0.9079
25.................................  Mississippi...........       0.7700
26.................................  Missouri..............       0.7930
27.................................  Montana...............       0.8379
28.................................  Nebraska..............       0.8849
29.................................  Nevada................       0.9272
30.................................  New Hampshire.........       0.0470
31.................................  New Jersey \1\........           --
32.................................  New Mexico............       0.8940
33.................................  New York..............       0.8268
34.................................  North Carolina........       0.8603
35.................................  North Dakota..........       0.7182
36.................................  Ohio..................       0.8714
37.................................  Oklahoma..............       0.7492
38.................................  Oregon................       0.9906
39.................................  Pennsylvania..........       0.8385
40.................................  Puerto Rico \1\.......       0.4047
41.................................  Rhode Island \1\......           --
42.................................  South Carolina........       0.8656
43.................................  South Dakota..........       0.8549
44.................................  Tennessee.............       0.7723
45.................................  Texas.................       0.7968
46.................................  Utah..................       0.8116
47.................................  Vermont...............       0.9919
48.................................  Virgin Islands........       0.6830
49.................................  Virginia..............       0.7896
50.................................  Washington............       1.0259
51.................................  West Virginia.........       0.7454
52.................................  Wisconsin.............       0.9667
53.................................  Wyoming...............       0.9287
65.................................  Guam..................       0.9611
------------------------------------------------------------------------
\1\ All counties within the State are classified as urban, with the
  exception of Massachusetts and Puerto Rico. Massachusetts and Puerto
  Rico have areas designated as rural; however, no short-term, acute
  care hospitals are located in the area(s) for FY 2009. The rural
  Massachusetts wage index is calculated as the average of all
  contiguous CBSAs. The Puerto Rico wage index is the same as FY 2008.

[FR Doc. E8-17797 Filed 7-31-08; 4:15 pm]
BILLING CODE 4120-01-P