[Federal Register Volume 73, Number 154 (Friday, August 8, 2008)]
[Rules and Regulations]
[Pages 46416-46462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17948]



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Part III





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services



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42 CFR Part 413



 Medicare Program; Prospective Payment System and Consolidated Billing 
for Skilled Nursing Facilities for FY 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 413

[CMS-1534-F]
RIN 0938-AP11


Medicare Program; Prospective Payment System and Consolidated 
Billing for Skilled Nursing Facilities for FY 2009

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

ACTION: Final rule.

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SUMMARY: This final rule updates the payment rates used under the 
prospective payment system (PPS) for skilled nursing facilities (SNFs), 
for fiscal year (FY) 2009. It also discusses our ongoing analysis of 
nursing home staff time measurement data collected in the Staff Time 
and Resource Intensity Verification (STRIVE) project. Finally, this 
final rule makes technical corrections in the regulations text with 
respect to Medicare bad debt payments to SNFs and the reference to the 
definition of urban and rural as applied to SNFs.

DATES: Effective Date: This final rule becomes effective on October 1, 
2008.

FOR FURTHER INFORMATION CONTACT:
    Ellen Berry, (410) 786-4528 (for information related to clinical 
issues).
    Jeanette Kranacs, (410) 786-9385 (for information related to the 
development of the payment rates and case-mix indexes).
    Bill Ullman, (410) 786-5667 (for information related to level of 
care determinations, consolidated billing, and general information).

SUPPLEMENTARY INFORMATION: To assist readers in referencing sections 
contained in this document, we are providing the following Table of 
Contents.

Table of Contents

I. Background
    A. Current System for Payment of Skilled Nursing Facility 
Services Under Part A of the Medicare Program
    B. Requirements of the Balanced Budget Act of 1997 (BBA) for 
Updating the Prospective Payment System for Skilled Nursing 
Facilities
    C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement 
Act of 1999 (BBRA)
    D. The Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA)
    E. The Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA)
    F. Skilled Nursing Facility Prospective Payment--General 
Overview
    1. Payment Provisions--Federal Rate
    2. Rate Updates Using the Skilled Nursing Facility Market Basket 
Index
II. Summary of the Provisions of the FY 2009 Proposed Rule
III. Analysis of and Response to Public Comments on the FY 2009 
Proposed Rule
    A. General Comments on the FY 2009 Proposed Rule
    B. Annual Update of Payment Rates Under the Prospective Payment 
System for Skilled Nursing Facilities
    1. Federal Prospective Payment System
    a. Costs and Services Covered by the Federal Rates
    b. Methodology Used for the Calculation of the Federal Rates
    2. Case-Mix Adjustments
    a. Background
    b. Development of the Case-Mix Indexes
    3. Wage Index Adjustment to Federal Rates
    a. Clarification of New England Deemed Counties
    b. Multi-Campus Hospital Wage Index Data
    4. Updates to the Federal Rates
    5. Relationship of RUG-III Classification System to Existing 
Skilled Nursing Facility Level-of-Care Criteria
    6. Example of Computation of Adjusted PPS Rates and SNF Payment
    7. Other Issues
    a. Staff Time and Resource Intensity Verification (STRIVE) 
Project
    b. Minimum Data Set (MDS) 3.0
    c. Integrated Post Acute Care Payment
    8. Miscellaneous Technical Corrections and Clarifications
    a. Bad Debt Payments
    b. Additional Clarifications
IV. The Skilled Nursing Facility Market Basket Index
    A. Use of the Skilled Nursing Facility Market Basket Percentage
    B. Market Basket Forecast Error Adjustment
    C. Federal Rate Update Factor
V. Consolidated Billing
VI. Application of the SNF PPS to SNF Services Furnished by Swing-
Bed Hospitals
VII. Provisions of the Final Rule
VIII. Collection of Information Requirements
IX. Regulatory Impact Analysis
    A. Overall Impact
    B. Anticipated Effects
    C. Alternatives Considered
    D. Accounting Statement
    E. Conclusion
Regulation Text
Addendum: FY 2009 CBSA-Based Wage Index Tables (Tables 8 & 9)

Abbreviations

    Because of the many terms to which we refer by abbreviation in this 
final rule, we are listing these abbreviations and their corresponding 
terms in alphabetical order below:

AIDS Acquired Immune Deficiency Syndrome
ARD Assessment Reference Date
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Public Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
CAH Critical Access Hospital
CARE Continuity Assessment Record and Evaluation
CBSA Core-Based Statistical Area
CFR Code of Federal Regulations
CMI Case-Mix Index
CMS Centers for Medicare & Medicaid Services
DRA Deficit Reduction Act of 2005, Public Law 109-171
FQHC Federally Qualified Health Center
FR Federal Register
FY Fiscal Year
GAO Government Accountability Office
HAC Hospital-Acquired Condition
HCPCS Healthcare Common Procedure Coding System
HIPPS Health Insurance Prospective Payment System
HIT Health Information Technology
IFC Interim Final Rule with Comment Period
IPPS Hospital Inpatient Prospective Payment System
MDS Minimum Data Set
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MSA Metropolitan Statistical Area
MS-DRG Medicare Severity Diagnosis-Related Group
NRST Non-Resident Specific Time
NTA Non-Therapy Ancillary
OBRA Omnibus Budget Reconciliation Act of 1987, Public Law 100-203
OIG Office of the Inspector General
OMB Office of Management and Budget
OMRA Other Medicare Required Assessment
PAC-PRD Post-Acute Care Payment Reform Demonstration
POA Present on Admission
PPS Prospective Payment System
RAI Resident Assessment Instrument
RAP Resident Assessment Protocol
RAVEN Resident Assessment Validation Entry
RFA Regulatory Flexibility Act, Public Law 96-354
RHC Rural Health Clinic
RIA Regulatory Impact Analysis
RUG-III Resource Utilization Groups, Version III
RUG-53 Refined 53-Group RUG-III Case-Mix Classification System
RST Resident Specific Time
SCHIP State Children's Health Insurance Program
SNF Skilled Nursing Facility
STM Staff Time Measurement
STRIVE Staff Time and Resource Intensity Verification
TEP Technical Expert Panel
UMRA Unfunded Mandates Reform Act, Public Law 104-4
VBP Value-Based Purchasing

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I. Background

    On May 7, 2008, we published a proposed rule (73 FR 25918) in the 
Federal Register (hereafter referred to as the FY 2009 proposed rule), 
setting forth updates to the payment rates used under the prospective 
payment system (PPS) for skilled nursing facilities (SNFs), for fiscal 
year (FY) 2009. Annual updates to the prospective payment system rates 
for skilled nursing facilities are required by section 1888(e) of the 
Social Security Act (the Act), as added by section 4432 of the Balanced 
Budget Act of 1997 (BBA), and amended by the Medicare, Medicaid, and 
SCHIP Balanced Budget Refinement Act of 1999 (BBRA), the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA), and the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA). Our most recent annual update occurred 
in the August 3, 2007 final rule (72 FR 43412) that set forth updates 
to the SNF PPS payment rates for FY 2008. We subsequently published two 
correction notices (72 FR 55085, September 28, 2007, and 72 FR 67652, 
November 30, 2007) with respect to those payment rate updates.

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

    Section 4432 of the BBA amended section 1888 of the Act to provide 
for the implementation of a per diem PPS for SNFs, covering all costs 
(routine, ancillary, and capital-related) of covered SNF services 
furnished to beneficiaries under Part A of the Medicare program, 
effective for cost reporting periods beginning on or after July 1, 
1998. In this final rule, we are updating the per diem payment rates 
for SNFs for FY 2009. Major elements of the SNF PPS include:
     Rates. As discussed in section I.F.1. of this final rule, 
we established per diem Federal rates for urban and rural areas using 
allowable costs from FY 1995 cost reports. These rates also included an 
estimate of the cost of services that, before July 1, 1998, had been 
paid under Part B but were furnished to Medicare beneficiaries in a SNF 
during a Part A covered stay. We update the rates annually using a SNF 
market basket index, and we adjust them by the hospital inpatient wage 
index to account for geographic variation in wages. We also apply a 
case-mix adjustment to account for the relative resource utilization of 
different patient types. This adjustment utilizes a refined, 53-group 
version of the Resource Utilization Groups, version III (RUG-III) case-
mix classification system, based on information obtained from the 
required resident assessments using the Minimum Data Set (MDS) 2.0. 
Additionally, as noted in sections I.C through I.E of this final rule, 
the payment rates at various times have also reflected specific 
legislative provisions, including section 101 of the BBRA, sections 
311, 312, and 314 of the BIPA, and section 511 of the MMA.
     Transition. Under sections 1888(e)(1)(A) and (e)(11) of 
the Act, the SNF PPS included an initial, three-phase transition that 
blended a facility-specific rate (reflecting the individual facility's 
historical cost experience) with the Federal case-mix adjusted rate. 
The transition extended through the facility's first three cost 
reporting periods under the PPS, up to and including the one that began 
in FY 2001. Thus, the SNF PPS is no longer operating under the 
transition, as all facilities have been paid at the full Federal rate 
effective with cost reporting periods beginning in FY 2002. As we now 
base payments entirely on the adjusted Federal per diem rates, we no 
longer include adjustment factors related to facility-specific rates 
for the coming FY.
     Coverage. The establishment of the SNF PPS did not change 
Medicare's fundamental requirements for SNF coverage. However, because 
the RUG-III classification is based, in part, on the beneficiary's need 
for skilled nursing care and therapy, we have attempted, where 
possible, to coordinate claims review procedures with the output of 
beneficiary assessment and RUG-III classifying activities. This 
approach includes an administrative presumption that utilizes a 
beneficiary's initial classification in one of the upper 35 RUGs of the 
refined 53-group system to assist in making certain SNF level of care 
determinations, as discussed in greater detail in section III.B.5 of 
this final rule.
     Consolidated Billing. The SNF PPS includes a consolidated 
billing provision that requires a SNF to submit consolidated Medicare 
bills to its fiscal intermediary or Medicare Administrative Contractor 
for almost all of the services that its residents receive during the 
course of a covered Part A stay. In addition, this provision places 
with the SNF the Medicare billing responsibility for physical, 
occupational, and speech-language therapy that the resident receives 
during a noncovered stay. The statute excludes a small list of services 
from the consolidated billing provision (primarily those of physicians 
and certain other types of practitioners), which remain separately 
billable under Part B when furnished to a SNF's Part A resident. A more 
detailed discussion of this provision appears in section V. of this 
final rule.
     Application of the SNF PPS to SNF services furnished by 
swing-bed hospitals. Section 1883 of the Act permits certain small, 
rural hospitals to enter into a Medicare swing-bed agreement, under 
which the hospital can use its beds to provide either acute or SNF 
care, as needed. For critical access hospitals (CAHs), Part A pays on a 
reasonable cost basis for SNF services furnished under a swing-bed 
agreement. However, in accordance with section 1888(e)(7) of the Act, 
these services are paid under the SNF PPS when furnished by non-CAH 
rural hospitals, effective with cost reporting periods beginning on or 
after July 1, 2002. A more detailed discussion of this provision 
appears in section VI. of this final rule.

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

    Section 1888(e)(4)(H) of the Act requires that we publish annually 
in the Federal Register:
    1. The unadjusted Federal per diem rates to be applied to days of 
covered SNF services furnished during the FY.
    2. The case-mix classification system to be applied with respect to 
these services during the FY.
    3. The factors to be applied in making the area wage adjustment 
with respect to these services.
    In the July 30, 1999 final rule (64 FR 41670), we indicated that we 
would announce any changes to the guidelines for Medicare level of care 
determinations related to modifications in the RUG-III classification 
structure (see section III.B.5 of this final rule for a discussion of 
the relationship between the case-mix classification system and SNF 
level of care determinations).
    Along with other revisions outlined later in this preamble, this 
final rule provides the annual updates to the Federal rates as mandated 
by the Act.

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

    There were several provisions in the BBRA that resulted in 
adjustments to the SNF PPS. We described these provisions in detail in 
the SNF PPS final rule for FY 2001 (65 FR 46770, July 31, 2001). In 
particular, section 101(a) of the BBRA provided for a temporary 20 
percent increase in the per diem adjusted payment rates for 15 
specified

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RUG-III groups. In accordance with section 101(c)(2) of the BBRA, this 
temporary payment adjustment expired on January 1, 2006, with the 
implementation of case-mix refinements (see section I.F.1. of this 
final rule). We included further information on BBRA provisions that 
affected the SNF PPS in Program Memorandums A-99-53 and A-99-61 
(December 1999).
    Also, section 103 of the BBRA designated certain additional 
services for exclusion from the consolidated billing requirement, as 
discussed in greater detail in section V. of this final rule. Further, 
for swing-bed hospitals with more than 49 (but less than 100) beds, 
section 408 of the BBRA provided for the repeal of certain statutory 
restrictions on length of stay and aggregate payment for patient days, 
effective with the end of the SNF PPS transition period described in 
section 1888(e)(2)(E) of the Act. In the SNF PPS final rule for FY 2002 
(66 FR 39562, July 31, 2001), we made conforming changes to the 
regulations at Sec.  413.114(d), effective for services furnished in 
cost reporting periods beginning on or after July 1, 2002, to reflect 
section 408 of the BBRA.

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

    The BIPA also included several provisions that resulted in 
adjustments to the SNF PPS. We described these provisions in detail in 
the SNF PPS final rule for FY 2002 (66 FR 39562, July 31, 2001). In 
particular:
     Section 203 of the BIPA exempted CAH swing-beds from the 
SNF PPS. We included further information on this provision in Program 
Memorandum A-01-09 (Change Request 1509), issued January 16, 
2001, which is available online at http://www.cms.hhs.gov/transmittals/downloads/a0109.pdf.
     Section 311 of the BIPA revised the statutory update 
formula for the SNF market basket, and also directed us to conduct a 
study of alternative case-mix classification systems for the SNF PPS. 
In 2006, we submitted a report to the Congress on this study, which is 
available online at http://www.cms.hhs.gov/SNFPPS/Downloads/RC_2006_PC-PPSSNF.pdf.
     Section 312 of the BIPA provided for a temporary increase 
of 16.66 percent in the nursing component of the case-mix adjusted 
Federal rate for services furnished on or after April 1, 2001, and 
before October 1, 2002; accordingly, this add-on is no longer in 
effect. This section also directed the Government Accountability Office 
(GAO) to conduct an audit of SNF nursing staff ratios and submit a 
report to the Congress on whether the temporary increase in the nursing 
component should be continued. The report (GAO-03-176), which GAO 
issued in November 2002, is available online at http://www.gao.gov/new.items/d03176.pdf.
     Section 313 of the BIPA repealed the consolidated billing 
requirement for services (other than physical, occupational, and 
speech-language therapy) furnished to SNF residents during noncovered 
stays, effective January 1, 2001. (A more detailed discussion of this 
provision appears in section V. of this final rule.)
     Section 314 of the BIPA corrected an anomaly involving 
three of the RUGs that the BBRA had designated to receive the temporary 
payment adjustment discussed above in section I.C. of this final rule. 
(As noted previously, in accordance with section 101(c)(2) of the BBRA, 
this temporary payment adjustment expired upon the implementation of 
case-mix refinements on January 1, 2006.)
     Section 315 of the BIPA authorized us to establish a 
geographic reclassification procedure that is specific to SNFs, but 
only after collecting the data necessary to establish a SNF wage index 
that is based on wage data from nursing homes. To date, this has proven 
to be infeasible due to the volatility of existing SNF wage data and 
the significant amount of resources that would be required to improve 
the quality of that data.
    We included further information on several of the BIPA provisions 
in Program Memorandum A-01-08 (Change Request 1510), issued 
January 16, 2001, which is available online at http://www.cms.hhs.gov/transmittals/downloads/a0108.pdf.

E. The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA)

    The MMA included a provision that resulted in further adjustment to 
the SNF PPS. Specifically, section 511 of the MMA amended section 
1888(e)(12) of the Act, to provide for a temporary increase of 128 
percent in the PPS per diem payment for any SNF resident with Acquired 
Immune Deficiency Syndrome (AIDS), effective with services furnished on 
or after October 1, 2004. This special AIDS add-on was to remain in 
effect until ``* * * such date as the Secretary certifies that there is 
an appropriate adjustment in the case mix * * *.'' The AIDS add-on is 
also discussed in Program Transmittal 160 (Change Request 
3291), issued on April 30, 2004, which is available online at 
http://www.cms.hhs.gov/transmittals/downloads/r160cp.pdf. As discussed 
in the SNF PPS final rule for FY 2006 (70 FR 45028, August 4, 2005), 
the implementation of the case-mix refinements did not address the 
certification regarding the AIDS add-on, allowing the temporary add-on 
payment created by section 511 of the MMA to continue in effect.
    For the limited number of SNF residents that qualify for the AIDS 
add-on, implementation of this provision results in a significant 
increase in payment. For example, using FY 2006 data, we identified 
less than 2,700 SNF residents with a diagnosis code of 042 (Human 
Immunodeficiency Virus (HIV) Infection). For FY 2009, an urban facility 
with a resident with AIDS in RUG group ``SSA'' would have a case-mix 
adjusted payment of $259.40 (see Table 4) before the application of the 
MMA adjustment. After an increase of 128 percent, this urban facility 
would receive a case-mix adjusted payment of $591.43.
    In addition, section 410 of the MMA contained a provision that 
excluded from consolidated billing certain practitioner and other 
services furnished to SNF residents by rural health clinics (RHCs) and 
Federally Qualified Health Centers (FQHCs). (Further information on 
this provision appears in section V. of this final rule.)

F. Skilled Nursing Facility Prospective Payment--General Overview

    We implemented the Medicare SNF PPS effective with cost reporting 
periods beginning on or after July 1, 1998. This PPS pays SNFs through 
prospective, case-mix adjusted per diem payment rates applicable to all 
covered SNF services. These payment rates cover all costs of furnishing 
covered skilled nursing services (routine, ancillary, and capital-
related costs) other than costs associated with approved educational 
activities. Covered SNF services include post-hospital services for 
which benefits are provided under Part A and all items and services 
that, before July 1, 1998, had been paid under Part B (other than 
physician and certain other services specifically excluded under the 
BBA) but furnished to Medicare beneficiaries in a SNF during a covered 
Part A stay. A comprehensive discussion of these provisions appears in 
the May 12, 1998 interim final rule (63 FR 26252).
1. Payment Provisions--Federal Rate
    The PPS uses per diem Federal payment rates based on mean SNF costs 
in a base year updated for inflation to the first effective period of 
the PPS. We

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developed the Federal payment rates using allowable costs from 
hospital-based and freestanding SNF cost reports for reporting periods 
beginning in FY 1995. The data used in developing the Federal rates 
also incorporated an estimate of the amounts that would be payable 
under Part B for covered SNF services furnished to individuals during 
the course of a covered Part A stay in a SNF.
    In developing the rates for the initial period, we updated costs to 
the first effective year of the PPS (the 15-month period beginning July 
1, 1998) using a SNF market basket index, and then standardized for the 
costs of facility differences in case-mix and for geographic variations 
in wages. In compiling the database used to compute the Federal payment 
rates, we excluded those providers that received new provider 
exemptions from the routine cost limits, as well as costs related to 
payments for exceptions to the routine cost limits. Using the formula 
that the BBA prescribed, we set the Federal rates at a level equal to 
the weighted mean of freestanding costs plus 50 percent of the 
difference between the freestanding mean and weighted mean of all SNF 
costs (hospital-based and freestanding) combined. We computed and 
applied separately the payment rates for facilities located in urban 
and rural areas. In addition, we adjusted the portion of the Federal 
rate attributable to wage-related costs by a wage index.
    The Federal rate also incorporates adjustments to account for 
facility case-mix, using a classification system that accounts for the 
relative resource utilization of different patient types. The RUG-III 
classification system uses beneficiary assessment data from the Minimum 
Data Set (MDS) completed by SNFs to assign beneficiaries to one of 53 
RUG-III groups. The original RUG-III case-mix classification system 
included 44 groups. However, under refinements that became effective on 
January 1, 2006, we added nine new groups--comprising a new 
Rehabilitation plus Extensive Services category--at the top of the RUG 
hierarchy. The May 12, 1998 interim final rule (63 FR 26252) included a 
detailed description of the original 44-group RUG-III case-mix 
classification system. A comprehensive description of the refined 53-
group RUG-III case-mix classification system (RUG-53) appeared in the 
proposed rule for FY 2006 (70 FR 29070, May 19, 2005) and in the final 
rule for FY 2006 (70 FR 45026, August 4, 2005).
    Further, in accordance with section 1888(e)(4)(E)(ii)(IV) of the 
Act, the Federal rates in this final rule reflect an update to the 
rates that we published in the final rule for FY 2008 (72 FR 43412, 
August 3, 2007) and the associated correction notices published on 
September 28, 2007 (72 FR 55085) and November 30, 2007 (72 FR 67652), 
equal to the full change in the SNF market basket index. A more 
detailed discussion of the SNF market basket index and related issues 
appears in sections I.F.2. and IV. of this final rule.
2. Rate Updates Using the Skilled Nursing Facility Market Basket Index
    Section 1888(e)(5) of the Act requires us to establish a SNF market 
basket index that reflects changes over time in the prices of an 
appropriate mix of goods and services included in covered SNF services. 
We use the SNF market basket index to update the Federal rates on an 
annual basis. In the FY 2008 SNF PPS final rule (72 FR 43425 through 
43430, August 3, 2007), we revised and rebased the market basket, which 
included updating the base year from FY 1997 to FY 2004. The proposed 
FY 2009 market basket increase was 3.1 percent. The final FY 2009 
market basket increase is 3.4 percent.
    In addition, as explained in the SNF PPS final rule for FY 2004 (66 
FR 46058, August 4, 2003) and in section IV.B. of this final rule, the 
annual update of the payment rates includes, as appropriate, an 
adjustment to account for market basket forecast error. As described in 
the SNF PPS final rule for FY 2008 (72 FR 43425, August 3, 2007), the 
threshold percentage that serves to trigger an adjustment to account 
for market basket forecast error is 0.5 percentage point effective for 
FY 2008 and subsequent years. This adjustment takes into account the 
forecast error from the most recently available FY for which there is 
final data, and applies whenever the difference between the forecasted 
and actual change in the market basket exceeds a 0.5 percentage point 
threshold. For FY 2007 (the most recently available FY for which there 
is final data), the estimated increase in the market basket index was 
3.1 percentage points, while the actual increase was 3.1 percentage 
points, resulting in no difference. Accordingly, as the difference 
between the estimated and actual amount of change does not exceed the 
0.5 percentage point threshold, the payment rates for FY 2009 do not 
include a forecast error adjustment. Table 1 below shows the forecasted 
and actual market basket amounts for FY 2007.

            Table 1--Difference Between the Forecasted and Actual Market Basket Increases for FY 2007
----------------------------------------------------------------------------------------------------------------
                                       Forecasted  FY 2007    Actual  FY 2007 increase
               Index                       increase *                    **              FY 2007  difference ***
----------------------------------------------------------------------------------------------------------------
SNF...............................                      3.1                       3.1                       0.0
----------------------------------------------------------------------------------------------------------------
* Published in Federal Register; based on second quarter 2006 Global Insight Inc. forecast (97 index).
** Based on the second quarter 2008 Global Insight forecast (97 index).
*** The FY 2007 forecast error correction will be applied to the FY 2009 PPS update recommendations. Any
  forecast error less than 0.5 percentage points will not be reflected in the update recommendation.

Requirements for Issuance of Regulations
    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final regulation. Section 
902 of the MMA also states that the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final regulation except under exceptional 
circumstances.
    This final rule finalizes provisions proposed in the May 7, 2008 
proposed rule. In addition, this final rule has been published within 
the 3-year time limit imposed by section 902 of the MMA. Therefore, we 
believe that the final rule is in accordance with the Congress' intent 
to ensure timely publication of final regulations.

II. Summary of the Provisions of the FY 2009 Proposed Rule

    In the FY 2009 proposed rule (73 FR 25918, May 7, 2008), we 
proposed to update the Federal payment rates used

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under the SNF PPS for FY 2009. We also proposed to recalibrate the 
case-mix indexes so that they would more accurately reflect parity in 
expenditures related to the implementation of case-mix refinements in 
January 2006. In addition, we discussed our ongoing analysis of nursing 
home staff time measurement data collected in the Staff Time and 
Resource Intensity Verification (STRIVE) project. We also proposed to 
make technical corrections in the regulations text with respect to 
Medicare bad debt payments to SNFs and the reference to the definition 
of urban and rural as applied to SNFs.

III. Analysis and Response to Public Comments on the FY 2009 Proposed 
Rule

    In response to the publication of the FY 2009 proposed rule, we 
received over 100 timely items of correspondence from the public. The 
comments originated primarily from various trade associations and major 
organizations, but also from individual providers, corporations, 
government agencies, and private citizens.
    Brief summaries of each proposed provision, a summary of the public 
comments that we received, and our responses to the comments appear 
below.

A. General Comments on the FY 2009 Proposed Rule

    In addition to the comments that we received on the proposed rule's 
discussion of specific aspects of the SNF PPS (which we address later 
in this final rule), commenters also submitted the following, more 
general observations on the payment system.
    Comment: We received comments similar to those discussed previously 
in the SNF PPS final rule for FY 2008 (72 FR 43415 through 43416, 
August 3, 2007) regarding the need to address certain perceived 
inadequacies in payment for non-therapy ancillary (NTA) services, 
including those services relating to the provision of ventilator care 
in SNFs. We also received comments recommending that we continue to 
monitor ongoing research, and that we consider alternative case-mix 
methodologies such as the recent MedPAC proposal that appears on the 
MedPAC Web site (see http://www.MedPAC.gov.)
    Response: As we noted in the August 3, 2007 FY 2008 final rule (72 
FR 43416), we anticipate that the findings from our current Staff Time 
and Resource Intensity Verification (STRIVE) project will assist us in 
reviewing and addressing these types of concerns. However, as noted in 
our December 2006 Report to Congress, our analysis of NTA utilization 
has been hindered by a lack of data. All Medicare institutional 
providers except SNFs are required to submit detailed line item billing 
that shows each ancillary service furnished during a Part A stay. SNFs 
currently submit summary data that shows total dollar amounts for each 
ancillary service category, such as radiology and pharmacy. As we 
examine the data collected through the STRIVE project, we will be 
evaluating whether our current data requirements are sufficient to move 
forward with additional program enhancements. We will also consider 
whether collecting more detailed claims information on a regular basis 
will allow us to establish more accurate payment rates for NTA 
services.
    We also believe it is important to monitor ongoing research 
activities, and work with all stakeholders, including MedPAC, to 
identify opportunities for future program enhancements. At the same 
time, we note that the SNF PPS reimbursement structure will be 
completely examined as part of the Post Acute Care Payment Reform 
Demonstration (PAC-PRD) project. Under this major CMS initiative, we 
intend to analyze the payment structure currently used for all post-
acute care providers, and establish an integrated payment model 
centered on beneficiary needs and service utilization (including the 
use of non-therapy ancillaries) across settings. In considering future 
changes to the SNF PPS, it will be important to evaluate how shorter 
term enhancements contribute to our integrated post acute care 
strategy.
    A discussion of the public comments that we received on the STRIVE 
project itself appears in section III.B.7.a of this final rule.

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

1. Federal Prospective Payment System
    This final rule sets forth a schedule of Federal prospective 
payment rates applicable to Medicare Part A SNF services beginning 
October 1, 2008. The schedule incorporates per diem Federal rates that 
provide Part A payment for all costs of services furnished to a 
beneficiary in a SNF during a Medicare-covered stay.
a. Costs and Services Covered by the Federal Rates
    In accordance with section 1888(e)(2)(B) of the Act, the Federal 
rates apply to all costs (routine, ancillary, and capital-related) of 
covered SNF services other than costs associated with approved 
educational activities as defined in Sec.  413.85. Under section 
1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital 
SNF services for which benefits are provided under Part A (the hospital 
insurance program), as well as all items and services (other than those 
services excluded by statute) that, before July 1, 1998, were paid 
under Part B (the supplementary medical insurance program) but 
furnished to Medicare beneficiaries in a SNF during a Part A covered 
stay. (These excluded service categories are discussed in greater 
detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR 
26295 through 26297).)
b. Methodology Used for the Calculation of the Federal Rates
    The FY 2009 rates reflect an update using the full amount of the 
latest market basket index. The FY 2009 market basket increase factor 
is 3.4 percent. A complete description of the multi-step process used 
to calculate Federal rates initially appeared in the May 12, 1998 
interim final rule (63 FR 26252), as further revised in subsequent 
rules. We note that in accordance with section 101(c)(2) of the BBRA, 
the previous temporary increases in the per diem adjusted payment rates 
for certain designated RUGs, as specified in section 101(a) of the BBRA 
and section 314 of the BIPA, are no longer in effect due to the 
implementation of case-mix refinements as of January 1, 2006. However, 
the temporary increase of 128 percent in the per diem adjusted payment 
rates for SNF residents with AIDS, enacted by section 511 of the MMA 
(and discussed previously in section I.E of this final rule), remains 
in effect.
    We used the SNF market basket to adjust each per diem component of 
the Federal rates forward to reflect cost increases occurring between 
the midpoint of the Federal FY beginning October 1, 2007, and ending 
September 30, 2008, and the midpoint of the Federal FY beginning 
October 1, 2008, and ending September 30, 2009, to which the payment 
rates apply. In accordance with section 1888(e)(4)(E)(ii)(IV) of the 
Act, we update the payment rates for FY 2009 by a factor equal to the 
full market basket index percentage increase. (We note, that the FY 
2009 President's Budget includes a provision that would establish a 
zero percent market basket update for FYs 2009 through 2011, contingent 
upon the enactment of legislation by the Congress to adopt that 
proposal.) We further adjust the rates by

[[Page 46421]]

a wage index budget neutrality factor, described later in this section. 
Tables 2 and 3 below reflect the updated components of the unadjusted 
Federal rates for FY 2009.

                            Table 2--FY 2009 Unadjusted Federal Rate Per Diem--Urban
----------------------------------------------------------------------------------------------------------------
                                               Nursing--case-   Therapy--case-   Therapy--non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per diem amount.............................         $151.74          $114.30           $15.05           $77.44
----------------------------------------------------------------------------------------------------------------


                            Table 3--FY 2009 Unadjusted Federal Rate Per Diem--Rural
----------------------------------------------------------------------------------------------------------------
                                               Nursing--case-   Therapy--case-   Therapy--non-
               Rate component                       mix              mix            case-mix       Non-case-mix
----------------------------------------------------------------------------------------------------------------
Per diem amount.............................         $144.97          $131.80           $16.08           $78.87
----------------------------------------------------------------------------------------------------------------

2. Case-Mix Adjustments
a. Background
    Section 1888(e)(4)(G)(i) of the Act requires the Secretary to make 
an adjustment to account for case-mix. The statute specifies that the 
adjustment is to reflect both a resident classification system that the 
Secretary establishes to account for the relative resource use of 
different patient types, as well as resident assessment and other data 
that the Secretary considers appropriate. In first implementing the SNF 
PPS (we refer readers to the May 12, 1998 interim final rule (63 FR 
26252)), we developed the Resource Utilization Groups, version III 
(RUG-III) case-mix classification system, which tied the amount of 
payment to resident resource use in combination with resident 
characteristic information. Staff time measurement (STM) studies 
conducted in 1990, 1995, and 1997 provided information on resource use 
(time spent by staff members on residents) and resident characteristics 
that enabled us not only to establish RUG-III, but also to create case-
mix indexes.
    Under the BBA, each update of the SNF PPS payment rates must 
include the case-mix classification methodology applicable for the 
coming Federal FY. As indicated previously in section I.F.1, the 
payment rates set forth in this final rule reflect the use of the 
refined RUG-53 system that we discussed in detail in the proposed and 
final rules for FY 2006.
    When we introduced a new refined RUG-53 classification model in 
January 2006, we used our authority for establishing an appropriate 
case-mix structure to construct a new case-mix index for use with the 
RUG-53 model. We calculated the new case-mix indexes using the STM 
study data that were collected during the 1990s and originally used in 
creating the SNF PPS case-mix classification system and case-mix 
indexes. As explained in greater detail below, we then performed a 
budget neutrality analysis, and increased the RUG-53 case-mix weights 
so that overall payments under the two models (the original 44-group 
model and the refined 53-group model) could be expected to be equal.
    In the following section of this final rule, we discuss the 
adjustments to the RUG-53 case-mix indexes structure that we proposed 
in our FY 2009 proposed rule.
b. Development of the Case-Mix Indexes
    In the August 4, 2005 SNF PPS final rule for FY 2006 (70 FR 45032), 
we introduced two refinements to the SNF PPS: (1) Nine new case-mix 
groups to account for the care needs of beneficiaries requiring both 
extensive medical and rehabilitation services; and (2) an adjustment to 
reflect the variability in the use of non-therapy ancillaries (NTAs). 
We made these refinements by using the resource minute data from the 
original 44-group model to create a new set of relative weights, or 
case-mix indexes (CMIs), for the refined 53-group model. We then 
compared the two models to ensure that estimated total payments under 
the 53-group model would not be greater or less than the aggregate 
payments that would have been made under the 44-group model.
    As explained in the FY 2009 proposed rule (73 FR 25923), in 
conducting this analysis for the FY 2006 final rule, we used FY 2001 
claims data (the most current data available at the time) to compare 
estimated aggregate payments under the 44-group and 53-group models. 
For each model, we multiplied the estimated case-mix adjusted base rate 
by the number of Medicare paid days attributable to each RUG group. For 
the 44-group RUG model, we used the actual 2001 paid claims data to 
determine the distribution of paid days. For the 53-group RUG model, we 
did not have any actual claims data, and had to estimate the number of 
days that would be distributed across the 53 groups. Using our 
estimated distribution, we found that payments under the new 53-group 
model would be lower than under the original 44-group model. As the 
purpose of the refinement was to better allocate payment and not to 
reduce overall expenditures, we adjusted the new CMIs upward by 
applying a parity adjustment factor. In this way, we attempted to 
ensure that the RUG-III model was expanded in a budget-neutral manner 
(that is, one that would not cause any change in the overall level of 
expenditures). We then applied a second adjustment to the CMIs to 
account for the variability in the use of NTA services. These two 
adjustments resulted in a combined 17.9 percent increase in the CMIs 
that went into effect on January 1, 2006, as part of the case-mix 
refinement implementation. A detailed description of the methods used 
to make these two adjustments to the CMIs appears in the SNF PPS 
proposed rule for FY 2006 (70 FR 29077 through 29078, May 19, 2005).
    While we took all reasonable precautions to establish an 
appropriate, budget neutral conversion from the 44-group to the 53-
group classification model, we recognized that the analyses we used to 
compute the budget neutrality adjustment were based solely on estimated 
data and that actual experience could be significantly different. For 
this reason, in the SNF PPS final rule for FY 2006 (70 FR 45031, August 
4, 2005), we committed to monitoring the accuracy and effectiveness of 
the CMIs used in the 53-group model.
    In monitoring recent claims data, we observed that actual 
expenditures were significantly higher than what we had projected using 
the 2001 data. In

[[Page 46422]]

particular, the proportion of dollars paid for patients who grouped in 
the highest paying RUG categories--combining high therapy with 
extensive services--greatly exceeded our projections. To determine why 
expenditures so greatly exceeded our projections, we repeated the 
budget neutrality analyses described earlier in this section (and as 
described in the FY 2006 SNF PPS proposed rule (70 FR 29077 through 
29078, May 19, 2005)), using actual 2006 claims data to determine the 
distribution of paid days across the 53-group RUG model. For this 
analysis, we compared simulated calendar year (CY) 2006 payments (the 
first time period for which RUG-53 paid days data were available) to 
payments that would have been made under the RUG-44 model. As the 
introduction of the 9 new groups had not required a change to the MDS 
used to classify beneficiaries, we also had all of the data necessary 
to calculate accurately the distribution of paid days under the RUG-44 
model. We found that estimated payments under the RUG-44 model were 
still higher than under the RUG-53 model, but that our original 
projections had overstated the difference. In addition, as the original 
budget neutrality adjustment was overestimated, the percentage 
adjustment made to the case-mix weights (after the budget neutrality 
adjustment was made) to account for NTA variability also needed to be 
recalibrated. Using the actual 2006 data, we found that the adjustment 
necessary to achieve budget neutrality was an increase of 9.68 percent 
rather than the 17.9 percent increase that had been in effect since 
January 2006. Thus, from January 2006 to the present, using the 17.9 
percent adjustment to the case-mix weights resulted in overpayments far 
exceeding our intention of paying in a budget neutral manner. For FY 
2009, we estimate the amount of overpayment at $780 million.
    Although the 2001 data were the best source available at the time 
the FY 2006 refinements were introduced, the distribution of paid days, 
a key component in adjusting the RUG-53 case-mix weights, was based 
solely on estimated utilization. The 2006 data provide a more recent 
and a more accurate source of RUG-53 utilization based on actual 
utilization, and are an appropriate source to use for case-mix 
adjustment.
    We received a number of comments questioning our legal authority to 
recalibrate the case-mix weights, as well as questions on the 
methodology used to make the case-mix weight adjustments. In the 
following discussion, we present the concerns that the commenters 
raised on this issue, and we also take the opportunity to address a 
number of misconceptions about the proposed recalibration that the 
comments reflected. However, in view of the potential ramifications of 
this proposal and the complexity of the issues involved, we believe 
that it would be prudent to take additional time to evaluate the 
proposal in order to further consider consequences that may result from 
it. Accordingly, we are not proceeding with the proposed recalibration 
at this time, pending further analysis. We note that as we continue to 
evaluate this issue, we fully expect to implement such an adjustment in 
the future. The comments that we received on this issue, and our 
responses, are as follows:
    Comment: Several commenters stated that the need for the 
recalibration arose because CMS initial projections of utilization 
under the refined case-mix system proved to be inaccurate once actual 
utilization data became available. They then asserted that in view of 
this, the proposed recalibration represents a ``forecast error 
adjustment'' that is not covered under the statutory authority to 
provide for an appropriate adjustment to account for case mix (section 
1888(e)(4)(G)(i) of the Act).
    Response: It would be incorrect to characterize the proposed 
recalibration as a ``forecast error adjustment,'' as that term refers 
solely to an adjustment that compensates for an inaccurate forecast of 
the annual inflation factor in the SNF market basket. By contrast, the 
proposed recalibration would serve to ensure that the 2006 case-mix 
refinements are implemented as intended. As such, it would be integral 
to the process of providing ``* * * for an appropriate adjustment to 
account for case mix'' that is based upon appropriate data in 
accordance with section 1888(e)(4)(G)(i) of the Act.
    Comment: A number of comments included references to the discussion 
of the 2006 case-mix refinements in the SNF PPS proposed rule for FY 
2006 (70 FR 29079, May 19, 2005), in which we explained that we were 
``* * * advancing these proposed changes under our authority in section 
101(a) of the BBRA to establish case-mix refinements, and that the 
changes we are hereby proposing will represent the final adjustments 
made under this authority'' (emphasis added). The commenters stated 
that this earlier description of the 2006 case-mix refinements as 
``final'' effectively precludes CMS from proceeding with a 
recalibration, which they characterized as representing a further 
refinement. Similarly, several commenters also questioned our authority 
to recalibrate the case-mix system prior to the completion of the 
STRIVE staff time measurement (STM) project. In addition, several 
commenters questioned whether CMS has the authority to impose a budget 
neutrality requirement on the introduction of a new classification 
model.
    Response: We wish to clarify that the actual ``refinement'' that we 
proposed and implemented in the FY 2006 rulemaking cycle consisted of 
our introduction of the 9 new Rehabilitation plus Extensive Services 
groups at the top of the previous, 44-group RUG hierarchy, along with 
the adjustment recognizing the variability of NTA use, which together 
fulfilled the provisions of section 101(a) of the BBRA. The 
accompanying adjustment to the case-mix indexes (CMIs) was merely a 
vehicle through which we implemented that refinement. Rather than 
representing a new or further ``refinement'' in itself, the proposed 
recalibration merely serves to ensure that we correctly accomplish a 
revision to the CMIs that accompanied the FY 2006 case-mix refinements.
    In the FY 2006 final rule (70 FR 45033, August 4, 2005), we 
addressed the introduction of the refinements within the broader 
context of ensuring payment accuracy and beneficiary access to care. We 
pointed out that

* * * this incremental change is part of this ongoing process that 
will also include update activities such as the upcoming STM study 
and investigation of potential alternatives to the RUG system 
itself. However, the commitment to long term analysis and refinement 
should not preclude the introduction of more immediate 
methodological and policy updates.

    Finally, the budget neutrality factor was applied to the unadjusted 
RUG 53 case-mix weights that were introduced in January 2006. As stated 
above, our initial analyses indicated that payments would be lower 
under the RUG-53 model. As the purpose of the refinement was to 
reallocate payments, and not to reduce expenditures, we believe that 
increasing the case-mix weights to equalize payments under the two 
models is an appropriate exercise of our broad authority to establish 
an appropriate case-mix system. We further note that the FY 2006 
refinement to the case-mix classification system using adjusted CMIs 
was implemented through the rulemaking process, and we received no 
comments on the use of a budget neutrality adjustment at that time.
    We also received a number of technical comments on the potential 
effects of implementing this

[[Page 46423]]

recalibration proposal on beneficiaries, providers, and the overall 
economy. These comments are summarized below.
    Comment: Some commenters opposed the recalibration of the budget 
neutrality adjustment, believing that the change to the case-mix 
weights would ``take back'' payments to providers that had increased 
due to changes in case mix between 2001 and 2006. Specifically, several 
commenters expressed the belief that by proposing to recalibrate the 
case-mix weights put into place for the RUG-53 system, we are 
incorrectly identifying increased payments related to treatment of 
higher case-mix patients with an overpayment related to the use of an 
incorrect budget neutrality adjustment factor applied in January 2006. 
Another commenter believed that the proposed recalibration could be 
more accurately calculated using either 2005 data or a combination of 
2005 and 2006 data.
    Response: We agree that, on average, the case-mix indexes for 
current SNF patients are higher than they were in 2001. However, we 
believe this concern erroneously equates the introduction of a new 
classification model with the regular SNF PPS annual update process. 
Normally, changes in case mix are accommodated as the classification 
model identifies changes in case mix and assigns the appropriate RUG 
group. Actual payments will typically vary from projections since case-
mix changes, which occur for a variety of reasons, cannot be 
anticipated in an impact analysis.
    However, in January 2006, we did more than just update the payment 
rates; we introduced a new classification model, the RUG-53 case-mix 
system. As discussed above, the purpose of this refined model was to 
redistribute payments across the 53 groups while maintaining the same 
total expenditure level that we would have incurred had we retained the 
original 44-group RUG model.
    In testing the two models, we used 2001 data because it was the 
best data we had available, and found that using the raw weights 
calculated for the RUG-53 model, we could expect aggregate payments to 
decrease as a result of introducing the refinement. To prevent this 
expected reduction in Medicare expenditures, we applied an adjustment 
to the RUG-53 case-mix weights as described in detail earlier in this 
section. Later analysis using actual 2006 data showed that, rather than 
achieving budget neutrality between the two models, expenditures were 
significantly higher than intended. For FY 2009, expenditures are 
estimated to be $780 million higher than intended.
    We do not agree that updating our analysis using CY 2006 data 
captured payments related to increased case mix rather than 
establishing budget neutrality between the two models. First, by using 
2006 data to estimate expenditures under both models, the same case-mix 
changes are incorporated into the estimated expenditure levels for RUG-
44 as well as for RUG-53. Second, we believe it is appropriate to 
standardize the new model for the time period in which it is being 
introduced. The only reason we used 2001 data in the original 
calculation is that it was the best data available at the time. The CY 
2006 data allowed us to calibrate the RUG-53 model more precisely for 
its first year of operation.
    One commenter recommended using alternative time periods in 
calculating the budget neutrality adjustment. However, while it might 
be possible to use CY 2005 rather than CY 2006 data, using CY 2005 data 
still requires us to use a projection of the distributional shift to 
the nine new groups in the RUG-53 group model. We also looked at a 
second recommended alternative, which involved comparing quarterly data 
periods directly before and after implementation of the RUG-53 model; 
that is, October through December 2005 for the RUG-44 model and January 
through March 2006 for the RUG-53 model. Our preliminary analyses 
confirmed that the proposed recalibration would serve to ensure that 
the 2006 case-mix refinements are implemented as actually intended. 
However, we believe that using actual utilization data for CY 2006 is 
more accurate, since actual case mix during the calibration year is the 
basis for computing the case-mix adjustment. We have determined that 
using the 2006 data instead of the suggested alternatives are the most 
appropriate to adopt.
    It is important to stress that this recalibration was not designed 
to adjust for aggregate payment differences that result from changes in 
the coding or classification of residents not reflective of real 
changes in case mix; that is, case-mix creep. Monitoring the changes in 
case mix under RUG-53 over the years since RUG-53 has been in place is 
part of a longer-term effort. If we find that a pattern of coding or 
the classification of residents does not reflect real changes in case 
mix over several years, we would propose a documentation and coding 
adjustment, pursuant to Sec.  1888(e)(4)(F) of the Act. By contrast, 
the original application of a budget neutrality factor and the 
recalibration of that factor discussed in this final rule represented 
the mechanism that we used to establish the appropriate baseline for 
expenditures under the refined classification model (that is, the 
change from RUG-44 to RUG-53).
    Comment: Some commenters argued against implementing the proposed 
recalibration, asserting that it is important to maintain Medicare SNF 
payments at their current levels in order to cross-subsidize what they 
characterized as inadequate payment rates for nursing facilities under 
the Medicaid program. Other commenters asserted that a shift in 
patients from Inpatient Rehabilitation Facilities (IRFs) to SNFs 
results in savings to the Medicare Trust Fund and that the current SNF 
spending levels are needed to treat the types of patients SNFs are now 
receiving.
    Response: Even though we are not moving forward at this time with 
the proposed recalibration, we wish to be clear that it is not the 
appropriate role of the Medicare SNF benefit to cross-subsidize nursing 
home payments made under the Medicaid program. We note that MedPAC 
stated it is inappropriate for the Medicare program's SNF payments to 
cross-subsidize Medicaid nursing facility rates. Specifically, on page 
152 of its March 2008 Report to the Congress on Medicare Payment Policy 
(which is available online at http://medpac.gov/documents/Mar08_EntireReport.pdf), MedPAC stated:

    There are several reasons why Medicare cross-subsidization is 
not advisable policy for the Medicare program. On average, Medicare 
payments accounted for 21 percent of revenues to freestanding SNFs 
in 2006. As a result, the policy would use a minority of Medicare 
payments to subsidize a majority of Medicaid payments. If Medicare 
were to pay still higher rates, facilities with high shares of 
Medicare payments--presumably the facilities that need revenues the 
least--would receive the most in subsidies from the higher Medicare 
payments. In other words, the subsidy would be poorly targeted. 
Given the variation among states in the level and method of nursing 
home payments, the impact of the subsidy would be highly variable; 
in states where Medicaid payments were adequate, it would have no 
positive impact. In addition, increasing Medicare's payment rates 
could encourage states to reduce Medicaid payments further and, in 
turn, result in pressure to again raise Medicare rates. It could 
also encourage providers to select patients based on payer source or 
to rehospitalize dual-eligible patients so that they qualified for a 
Medicare-covered, and higher payment, stay.

    We agree with MedPAC and, therefore, do not agree with the 
commenters that cited cross-subsidizing Medicaid as a justification for 
maintaining Medicare SNF payments at any specific level.

[[Page 46424]]

    Regarding the comments about a shift of patients from IRFs to SNFs 
producing savings to the Medicare Trust Fund, and the need to maintain 
current SNF spending levels to treat the types of patients SNFs are now 
receiving, we note that a basic principle of the SNF PPS is to pay 
appropriately for the services provided. CMS data are consistent with 
the commenters' assertions that many patients formerly being treated in 
IRFs are now being treated in SNFs or Home Health Agencies. In fact, 
the CY 2006 distribution used to recalibrate the case-mix adjustments 
indicates that there are more patients in the 9 new RUGs than we 
originally anticipated and patients shifting from IRFs could be a 
partial explanation.
    Patients who shifted to SNFs or other settings from IRFs due to 
``75 Percent Rule'' compliance percentage requirements represent a 
population that was not appropriate for IRF care, and CMS payments for 
those IRF stays would represent an overpayment to IRFs. For those 
former IRF patients who are appropriate for SNF care, we must pay the 
appropriate rate for the SNF services provided, and cannot use a 
reduction in IRF overpayments as a reason to increase payments under 
the SNF PPS. SNF patients with more intensive therapy and extensive 
service needs will be paid the higher amounts associated with the 9 new 
groups. While we are not moving forward with the proposed recalibration 
at this time, it is still important to understand that recalibrating 
CMIs would not change the relative nature of higher payments for 
patients using more staff resources and services.
    Comment: One commenter claimed that CMS did not make the data and 
analysis underlying the proposed recalibration of the budget neutrality 
adjustment publicly available.
    Response: We do not agree with the commenter's assertion. The 
methodology used to establish the case-mix adjustments is the same as 
that described in detail in the FY 2006 SNF PPS proposed rule (70 FR 
29077 through 29078, May 19, 2005). In addition, the data used to 
calculate the adjustments are publicly available on the CMS Web site. 
We used the CY 2006 days of service (available in the downloads section 
of our Web site at http://www.cms.hhs.gov/SNFPPS/02_Highlights.asp#TopOfPage) for both the RUG-44 and RUG-53 systems. We 
multiplied the CY 2006 days of service by the FY 2008 unadjusted 
Federal per diem payment rate components (72 FR 43416) multiplied by 
the unadjusted case-mix indexes (available in the Downloads section of 
our Web site at http://www.cms.hhs.gov/SNFPPS/09_RUGRefinement.asp#TopOfPage) to establish expenditures under the RUG-44 
and RUG-53 systems. The budget neutrality adjustment was determined as 
the percentage increase necessary for the nursing CMIs to generate 
estimated expenditure levels under the RUG-53 system that were equal to 
estimated expenditure levels under the RUG-44 system. We then 
calculated a second adjustment factor to increase the baseline by an 
amount that served to offset the variability in NTA utilization.
    As discussed above, we are confident that we employed the correct 
methodology to evaluate the accuracy with which we implemented the 2006 
refinements. However, in view of the widespread industry concern that a 
recalibration could potentially have adverse effects on beneficiaries 
and SNF clinical staff, and could negatively affect the quality of SNF 
care, we believe that the most prudent course is to continue to 
evaluate these issues carefully before proceeding. Thus, we will not 
proceed with the recalibration for FY 2009, but will instead continue 
to evaluate the data, and further consider consequences that may result 
from the recalibration. We note that as we continue to evaluate this 
issue, we fully expect to implement such an adjustment in the future. 
Therefore, for FY 2009, the case-mix indexes shown in Tables 4 and 5 
below remain the same as those adopted in FY 2006. As always, we list 
the case-mix adjusted payment rates separately for urban and rural 
SNFs, with the corresponding case-mix values. We note that these tables 
do not reflect the AIDS add-on enacted by section 511 of the MMA, which 
we apply only after making all other adjustments (wage and case-mix).

                                      Table 4--RUG-53 Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Nursing         Therapy      Non-case mix    Non-case mix
            RUG-III category               Nursing index   Therapy index     component       component     therapy comp      component      Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX.....................................            1.9             2.25          288.31          257.18  ..............           77.44          622.93
RUL.....................................            1.4             2.25          212.44          257.18  ..............           77.44          547.06
RVX.....................................            1.54            1.41          233.68          161.16  ..............           77.44          472.28
RVL.....................................            1.33            1.41          201.81          161.16  ..............           77.44          440.41
RHX.....................................            1.42            0.94          215.47          107.44  ..............           77.44          400.35
RHL.....................................            1.37            0.94          207.88          107.44  ..............           77.44          392.76
RMX.....................................            1.93            0.77          292.86           88.01  ..............           77.44          458.31
RML.....................................            1.68            0.77          254.92           88.01  ..............           77.44          420.37
RLX.....................................            1.31            0.43          198.78           49.15  ..............           77.44          325.37
RUC.....................................            1.28            2.25          194.23          257.18  ..............           77.44          528.85
RUB.....................................            0.99            2.25          150.22          257.18  ..............           77.44          484.84
RUA.....................................            0.84            2.25          127.46          257.18  ..............           77.44          462.08
RVC.....................................            1.23            1.41          186.64          161.16  ..............           77.44          425.24
RVB.....................................            1.09            1.41          165.40          161.16  ..............           77.44          404.00
RVA.....................................            0.82            1.41          124.43          161.16  ..............           77.44          363.03
RHC.....................................            1.22            0.94          185.12          107.44  ..............           77.44          370.00
RHB.....................................            1.11            0.94          168.43          107.44  ..............           77.44          353.31
RHA.....................................            0.94            0.94          142.64          107.44  ..............           77.44          327.52
RMC.....................................            1.15            0.77          174.50           88.01  ..............           77.44          339.95
RMB.....................................            1.09            0.77          165.40           88.01  ..............           77.44          330.85
RMA.....................................            1.04            0.77          157.81           88.01  ..............           77.44          323.26
RLB.....................................            1.14            0.43          172.98           49.15  ..............           77.44          299.57
RLA.....................................            0.85            0.43          128.98           49.15  ..............           77.44          255.57
SE3.....................................            1.86  ..............          282.24  ..............           15.05           77.44          374.73
SE2.....................................            1.49  ..............          226.09  ..............           15.05           77.44          318.58
SE1.....................................            1.26  ..............          191.19  ..............           15.05           77.44          283.68
SSC.....................................            1.23  ..............          186.64  ..............           15.05           77.44          279.13

[[Page 46425]]

 
SSB.....................................            1.13  ..............          171.47  ..............           15.05           77.44          263.96
SSA.....................................            1.1   ..............          166.91  ..............           15.05           77.44          259.40
CC2.....................................            1.22  ..............          185.12  ..............           15.05           77.44          277.61
CC1.....................................            1.06  ..............          160.84  ..............           15.05           77.44          253.33
CB2.....................................            0.98  ..............          148.71  ..............           15.05           77.44          241.20
CB1.....................................            0.91  ..............          138.08  ..............           15.05           77.44          230.57
CA2.....................................            0.9   ..............          136.57  ..............           15.05           77.44          229.06
CA1.....................................            0.8   ..............          121.39  ..............           15.05           77.44          213.88
IB2.....................................            0.74  ..............          112.29  ..............           15.05           77.44          204.78
IB1.....................................            0.72  ..............          109.25  ..............           15.05           77.44          201.74
IA2.....................................            0.61  ..............           92.56  ..............           15.05           77.44          185.05
IA1.....................................            0.56  ..............           84.97  ..............           15.05           77.44          177.46
BB2.....................................            0.73  ..............          110.77  ..............           15.05           77.44          203.26
BB1.....................................            0.69  ..............          104.70  ..............           15.05           77.44          197.19
BA2.....................................            0.6   ..............           91.04  ..............           15.05           77.44          183.53
BA1.....................................            0.52  ..............           78.90  ..............           15.05           77.44          171.39
PE2.....................................            0.85  ..............          128.98  ..............           15.05           77.44          221.47
PE1.....................................            0.82  ..............          124.43  ..............           15.05           77.44          216.92
PD2.....................................            0.78  ..............          118.36  ..............           15.05           77.44          210.85
PD1.....................................            0.76  ..............          115.32  ..............           15.05           77.44          207.81
PC2.....................................            0.71  ..............          107.74  ..............           15.05           77.44          200.23
PC1.....................................            0.69  ..............          104.70  ..............           15.05           77.44          197.19
PB2.....................................            0.55  ..............           83.46  ..............           15.05           77.44          175.95
PB1.....................................            0.54  ..............           81.94  ..............           15.05           77.44          174.43
PA2.....................................            0.53  ..............           80.42  ..............           15.05           77.44          172.91
PA1.....................................            0.5   ..............           75.87  ..............           15.05           77.44          168.36
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                      Table 5--RUG-53 Case-Mix Adjusted Federal Rates and Associated Indexes--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Nursing         Therapy      Non-case mix    Non-case mix
            RUG-III category               Nursing index   Therapy index     component       component     therapy comp      component      Total rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
RUX.....................................            1.9             2.25          275.44          296.55  ..............           78.87          650.86
RUL.....................................            1.4             2.25          202.96          296.55  ..............           78.87          578.38
RVX.....................................            1.54            1.41          223.25          185.84  ..............           78.87          487.96
RVL.....................................            1.33            1.41          192.81          185.84  ..............           78.87          457.52
RHX.....................................            1.42            0.94          205.86          123.89  ..............           78.87          408.62
RHL.....................................            1.37            0.94          198.61          123.89  ..............           78.87          401.37
RMX.....................................            1.93            0.77          279.79          101.49  ..............           78.87          460.15
RML.....................................            1.68            0.77          243.55          101.49  ..............           78.87          423.91
RLX.....................................            1.31            0.43          189.91           56.67  ..............           78.87          325.45
RUC.....................................            1.28            2.25          185.56          296.55  ..............           78.87          560.98
RUB.....................................            0.99            2.25          143.52          296.55  ..............           78.87          518.94
RUA.....................................            0.84            2.25          121.77          296.55  ..............           78.87          497.19
RVC.....................................            1.23            1.41          178.31          185.84  ..............           78.87          443.02
RVB.....................................            1.09            1.41          158.02          185.84  ..............           78.87          422.73
RVA.....................................            0.82            1.41          118.88          185.84  ..............           78.87          383.59
RHC.....................................            1.22            0.94          176.86          123.89  ..............           78.87          379.62
RHB.....................................            1.11            0.94          160.92          123.89  ..............           78.87          363.68
RHA.....................................            0.94            0.94          136.27          123.89  ..............           78.87          339.03
RMC.....................................            1.15            0.77          166.72          101.49  ..............           78.87          347.08
RMB.....................................            1.09            0.77          158.02          101.49  ..............           78.87          338.38
RMA.....................................            1.04            0.77          150.77          101.49  ..............           78.87          331.13
RLB.....................................            1.14            0.43          165.27           56.67  ..............           78.87          300.81
RLA.....................................            0.85            0.43          123.22           56.67  ..............           78.87          258.76
SE3.....................................            1.86  ..............          269.64  ..............           16.08           78.87          364.59
SE2.....................................            1.49  ..............          216.01  ..............           16.08           78.87          310.96
SE1.....................................            1.26  ..............          182.66  ..............           16.08           78.87          277.61
SSC.....................................            1.23  ..............          178.31  ..............           16.08           78.87          273.26
SSB.....................................            1.13  ..............          163.82  ..............           16.08           78.87          258.77
SSA.....................................            1.1   ..............          159.47  ..............           16.08           78.87          254.42
CC2.....................................            1.22  ..............          176.86  ..............           16.08           78.87          271.81
CC1.....................................            1.06  ..............          153.67  ..............           16.08           78.87          248.62
CB2.....................................            0.98  ..............          142.07  ..............           16.08           78.87          237.02
CB1.....................................            0.91  ..............          131.92  ..............           16.08           78.87          226.87
CA2.....................................            0.9   ..............          130.47  ..............           16.08           78.87          225.42
CA1.....................................            0.8   ..............          115.98  ..............           16.08           78.87          210.93
IB2.....................................            0.74  ..............          107.28  ..............           16.08           78.87          202.23
IB1.....................................            0.72  ..............          104.38  ..............           16.08           78.87          199.33
IA2.....................................            0.61  ..............           88.43  ..............           16.08           78.87          183.38

[[Page 46426]]

 
IA1.....................................            0.56  ..............           81.18  ..............           16.08           78.87          176.13
BB2.....................................            0.73  ..............          105.83  ..............           16.08           78.87          200.78
BB1.....................................            0.69  ..............          100.03  ..............           16.08           78.87          194.98
BA2.....................................            0.6   ..............           86.98  ..............           16.08           78.87          181.93
BA1.....................................            0.52  ..............           75.38  ..............           16.08           78.87          170.33
PE2.....................................            0.85  ..............          123.22  ..............           16.08           78.87          218.17
PE1.....................................            0.82  ..............          118.88  ..............           16.08           78.87          213.83
PD2.....................................            0.78  ..............          113.08  ..............           16.08           78.87          208.03
PD1.....................................            0.76  ..............          110.18  ..............           16.08           78.87          205.13
PC2.....................................            0.71  ..............          102.93  ..............           16.08           78.87          197.88
PC1.....................................            0.69  ..............          100.03  ..............           16.08           78.87          194.98
PB2.....................................            0.55  ..............           79.73  ..............           16.08           78.87          174.68
PB1.....................................            0.54  ..............           78.28  ..............           16.08           78.87          173.23
PA2.....................................            0.53  ..............           76.83  ..............           16.08           78.87          171.78
PA1.....................................            0.5   ..............           72.49  ..............           16.08           78.87          167.44
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Wage Index Adjustment to Federal Rates
    Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the 
Federal rates to account for differences in area wage levels, using a 
wage index that we find appropriate. Since the inception of a PPS for 
SNFs, we have used hospital wage data in developing a wage index to be 
applied to SNFs. In the FY 2009 proposed rule, we proposed to continue 
that practice, as we continue to believe that in the absence of SNF-
specific wage data, using the hospital inpatient wage index is 
appropriate and reasonable for the SNF PPS. As explained in the SNF PPS 
update notice for FY 2005 (69 FR 45786, July 30, 2004), the SNF PPS 
does not use the hospital area wage index's occupational mix 
adjustment, as this adjustment serves specifically to define the 
occupational categories more clearly in a hospital setting; moreover, 
the collection of the occupational wage data also excludes any wage 
data related to SNFs. Therefore, we believe that using the updated wage 
data exclusive of the occupational mix adjustment continues to be 
appropriate for SNF payments.
    Since the implementation of the SNF PPS, as set forth in Sec.  
413.337(a)(1)(ii), a SNF's wage index is determined based on the 
location of the SNF in an urban or rural area as defined in Sec.  
413.333 and further defined in Sec.  412.62(f)(1)(ii) and Sec.  
412.62(f)(1)(iii) as urban and rural areas, respectively. In the SNF 
PPS final rule for FY 2006 (70 FR 45041, August 4, 2005), we adopted 
revised labor market area definitions based on Core-Based Statistical 
Area (CBSAs). At the time, we noted that these were the same labor 
market area definitions (based on OMB's new CBSA designations) 
implemented under the Hospital Inpatient Prospective Payment System 
(IPPS) at Sec.  412.64(b), which were effective for those hospitals 
beginning October 1, 2004, as discussed in the IPPS final rule for FY 
2005 (69 FR at 49026 through 49034, August 11, 2004). In the FY 2006 
SNF PPS final rule, we inadvertently omitted making a conforming 
regulation text change to Sec.  413.333. However, this did not alter 
our decision to follow the IPPS definitions of urban and rural. In the 
FY 2009 proposed rule, we proposed to make that conforming regulation 
text change to revise the definitions for rural and urban areas 
effective for services provided on or after October 1, 2005, to 
reference the regulations at Sec. Sec.  412.64(b)(1)(ii)(A) through 
(C), consistent with the revision under the IPPS.
    Comments on the wage index adjustment to the Federal rates, and our 
responses to those comments, are as follows:
    Comment: A few commenters recommended that CMS develop a SNF-
specific wage index. Other commenters asked CMS to consider adopting 
certain wage index policies in use under the acute IPPS, because SNFs 
compete in a similar labor pool as acute care hospitals. The commenters 
indicated that adoption of these measures under the SNF PPS would allow 
SNFs to benefit from the IPPS geographic reclassification and/or rural 
floor policies. (A discussion of the IPPS reclassification and floor 
policies appears on our Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp.)
    Response: The regulations that govern the SNF PPS currently do not 
provide a mechanism for allowing providers to seek geographic 
reclassification. Moreover, as we have explained in the past (most 
recently, in the SNF PPS final rule for FY 2008 (72 FR 43420, August 3, 
2007)), while section 315 of the Benefits Improvement and Protection 
Act of 2000 (BIPA, Pub. L. 106-554) does authorize us to establish such 
a reclassification methodology under the SNF PPS, it additionally 
stipulates that such reclassification cannot be implemented until we 
have collected the data necessary to establish a SNF-specific wage 
index. This, in turn, has proven to be infeasible due to ``* * * the 
volatility of existing SNF wage data and the significant amount of 
resources that would be required to improve the quality of that data'' 
(72 FR 43420, August 3, 2007). We continue to believe that these 
factors make it unlikely for such an approach to yield meaningful 
improvements in our ability to determine facility payments, or to 
justify the significant increase in administrative resources as well as 
burden on providers that this type of data collection would involve.
    In addition, we reviewed the Medicare Payment Advisory Commission's 
(MedPAC) wage index recommendations as discussed in MedPAC's June 2007 
report entitled, ``Report to Congress: Promoting Greater Efficiency in 
Medicare.'' Although some commenters recommend 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

[[Page 46427]]

lead to anomalies in the wage index. By adopting the IPPS 
reclassification and exceptions at this time, the SNF PPS wage index 
could become vulnerable to problems similar to those 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 alternative wage index methodology for the SNF PPS in future years.
    We also note that section 106(b)(2) of the Medicare Improvements 
and Extension Act (MIEA) of 2006 (which is Division B of the Tax Relief 
and Health Care Act (TRHCA) of 2006, Pub. L. 109-432, collectively 
referred to as ``MIEA-TRHCA'') required the Secretary of Health and 
Human Services, taking 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. To assist CMS in meeting the requirements of section 
106(b)(2) of MIEA-TRHCA, in February 2008, CMS awarded a Task Order 
under its Expedited Research and Demonstration Contract, to Acumen, 
LLC. A comparison of the current IPPS wage index and MedPAC's are 
presented in the FY 2009 IPPS final rule. We plan to continue 
monitoring wage index research efforts and the impact or influence they 
may have for the SNF PPS wage index. Moreover, in light of all of the 
pending research and review of wage index issues in general, we believe 
that it would be premature at this time to initiate review of a SNF-
specific wage index.
a. Clarification of New England Deemed Counties
    As we discussed in the SNF PPS proposed rule for FY 2009 (73 FR 
25926, May 7, 2008), two New England counties (Litchfield County, CT 
and Merrimack County, NH) are deemed to be urban areas under section 
601(g) of the Social Security Amendments of 1983, yet are considered 
rural by OMB definitions. We proposed to clarify the treatment of these 
two New England counties in accordance with the FY 2008 IPPS final rule 
with comment period (72 FR 47337 through 47338, August 22, 2007), which 
revised the regulations at Sec.  412.64(b)(1)(ii)(B) so that these 
counties are no longer considered urban, effective for discharges 
occurring on or after October 1, 2007. A more detailed discussion of 
this proposal appears in the SNF PPS proposed rule for FY 2009 (73 FR 
24926). We note that all post-acute care payment systems are clarifying 
this policy to create consistency among provider types.
    We received no comments on this aspect of the proposed rule, and we 
are proceeding with this technical clarification as proposed with no 
change. Therefore, we are treating these counties as rural for purposes 
of the SNF PPS.
b. Multi-Campus Hospital Wage Index Data
    When a multi-campus hospital has campuses located in different 
labor market areas, wages and hours are reported in a single labor 
market area (CBSA) even though the hospital's staff is working at 
campuses in more than one labor market area. Currently, the wage data 
are reported in the labor market area of the hospital campus associated 
with the provider number. In the SNF PPS proposed rule for FY 2009 (73 
FR 25926, May 7, 2008), we described a change in the way wage data for 
multi-campus hospitals located in different labor market areas (CBSAs) 
would be apportioned, consistent with a FY 2008 change in the IPPS 
rule. The IPPS wage data used to determine the FY 2009 SNF wage index 
apportion the wage data for multi-campus hospitals located in different 
labor market areas (CBSAs) to each CBSA where the campuses are located 
(72 FR 47317 through 47320, August 22, 2007). A more detailed 
discussion of this proposal appears in the SNF PPS proposed rule for FY 
2009 (73 FR 24926). Adopting the treatment of this data is consistent 
with our use of the pre-floor, pre-reclassified IPPS wage data.
    We received no comments on this aspect of the proposed rule and we 
are adopting this policy as proposed without change, consistent with 
our use of IPPS wage data. The wage index values for the FY 2009 SNF 
PPS are affected by this policy.
    We also proposed to continue using the same methodology discussed 
in the SNF PPS final rule for FY 2008 (72 FR 43423) to address those 
geographic areas in which there are no hospitals and, thus, no hospital 
wage index data on which to base the calculation of the FY 2009 SNF PPS 
wage index. For rural geographic areas that do not have hospitals and, 
therefore, lack hospital wage data on which to base an area wage 
adjustment, we would use the average wage index from all contiguous 
CBSAs as a reasonable proxy. This methodology is used to construct the 
wage index for rural Massachusetts. However, as discussed in the FY 
2008 SNF PPS proposed rule (72 FR 25539, May 4, 2007), we are not 
applying this methodology to rural Puerto Rico due to the distinct 
economic circumstances that exist there, but instead will continue 
using the most recent wage index previously available for that area. 
For urban areas without specific hospital wage index data, we will use 
the average wage indexes of all of the urban areas within the State to 
serve as a reasonable proxy for the wage index of that urban CBSA. The 
only urban area without wage index data available is CBSA (25980) 
Hinesville-Fort Stewart, GA. We received no comments on this issue and 
are finalizing our policy as proposed without change.
    In summary, in the FY 2009 proposed rule, we proposed to use the FY 
2009 wage index data (collected from cost reports submitted by 
hospitals for cost reporting periods beginning during FY 2005) to 
adjust SNF PPS payments beginning October 1, 2008. We also proposed to 
continue our policies for calculating wage indexes for areas without 
hospitals. We are finalizing the wage index and associated policies as 
proposed for the SNF PPS for FY 2009 without change. These data reflect 
the multi-campus and New England deemed counties policies discussed 
above.
    To calculate the SNF PPS wage index adjustment, we apply the wage 
index adjustment to the labor-related portion of the Federal rate, 
which is 69.783 percent of the total rate. This percentage reflects the 
labor-related relative importance for FY 2009, using the revised and 
rebased FY 2004-based market basket. The labor-related relative 
importance for FY 2008 was 70.249, as shown in Table 11. We calculate 
the labor-related relative importance from the SNF market basket, and 
it approximates the labor-related portion of the total costs after 
taking into account historical and projected price changes between the 
base year and FY 2009. The price proxies that move the different cost 
categories in the market basket do not necessarily change at the same 
rate, and the relative importance captures these changes. Accordingly, 
the relative importance figure more closely reflects the cost share 
weights for FY 2009 than the base year weights from the SNF market 
basket.
    We calculate the labor-related relative importance for FY 2009 in 
four steps. 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

[[Page 46428]]

category by multiplying this ratio by the base year (FY 2004) weight. 
Finally, we add the FY 2009 relative importance for each of the labor-
related cost categories (wages and salaries, employee benefits, non-
medical professional fees, labor-intensive services, and a portion of 
capital-related expenses) to produce the FY 2009 labor-related relative 
importance. Tables 6 and 7 below show the Federal rates by labor-
related and non-labor-related components.

         Table 6--RUG-53 Case-Mix Adjusted Federal Rates for Urban SNFs by Labor and Non-Labor Component
----------------------------------------------------------------------------------------------------------------
                                                                                                     Non-labor
                        RUG-III category                            Total rate     Labor portion      portion
----------------------------------------------------------------------------------------------------------------
RUX.............................................................          622.93          434.70          188.23
RUL.............................................................          547.06          381.75          165.31
RVX.............................................................          472.28          329.57          142.71
RVL.............................................................          440.41          307.33          133.08
RHX.............................................................          400.35          279.38          120.97
RHL.............................................................          392.76          274.08          118.68
RMX.............................................................          458.31          319.82          138.49
RML.............................................................          420.37          293.35          127.02
RLX.............................................................          325.37          227.05           98.32
RUC.............................................................          528.85          369.05          159.80
RUB.............................................................          484.84          338.34          146.50
RUA.............................................................          462.08          322.45          139.63
RVC.............................................................          425.24          296.75          128.49
RVB.............................................................          404.00          281.92          122.08
RVA.............................................................          363.03          253.33          109.70
RHC.............................................................          370.00          258.20          111.80
RHB.............................................................          353.31          246.55          106.76
RHA.............................................................          327.52          228.55           98.97
RMC.............................................................          339.95          237.23          102.72
RMB.............................................................          330.85          230.88           99.97
RMA.............................................................          323.26          225.58           97.68
RLB.............................................................          299.57          209.05           90.52
RLA.............................................................          255.57          178.34           77.23
SE3.............................................................          374.73          261.50          113.23
SE2.............................................................          318.58          222.31           96.27
SE1.............................................................          283.68          197.96           85.72
SSC.............................................................          279.13          194.79           84.34
SSB.............................................................          263.96          184.20           79.76
SSA.............................................................          259.40          181.02           78.38
CC2.............................................................          277.61          193.72           83.89
CC1.............................................................          253.33          176.78           76.55
CB2.............................................................          241.20          168.32           72.88
CB1.............................................................          230.57          160.90           69.67
CA2.............................................................          229.06          159.84           69.22
CA1.............................................................          213.88          149.25           64.63
IB2.............................................................          204.78          142.90           61.88
IB1.............................................................          201.74          140.78           60.96
IA2.............................................................          185.05          129.13           55.92
IA1.............................................................          177.46          123.84           53.62
BB2.............................................................          203.26          141.84           61.42
BB1.............................................................          197.19          137.61           59.58
BA2.............................................................          183.53          128.07           55.46
BA1.............................................................          171.39          119.60           51.79
PE2.............................................................          221.47          154.55           66.92
PE1.............................................................          216.92          151.37           65.55
PD2.............................................................          210.85          147.14           63.71
PD1.............................................................          207.81          145.02           62.79
PC2.............................................................          200.23          139.73           60.50
PC1.............................................................          197.19          137.61           59.58
PB2.............................................................          175.95          122.78           53.17
PB1.............................................................          174.43          121.72           52.71
PA2.............................................................          172.91          120.66           52.25
PA1.............................................................          168.36          117.49           50.87
----------------------------------------------------------------------------------------------------------------


 Table 7--RUG-53 Case-Mix Adjusted Federal Rates for Rural SNFs by Labor
                         and Non-Labor Component
------------------------------------------------------------------------
                                         Total      Labor     Non-labor
           RUG-III category               rate     portion     portion
------------------------------------------------------------------------
RUX..................................     650.86     454.19       196.67
RUL..................................     578.38     403.61       174.77
RVX..................................     487.96     340.51       147.45
RVL..................................     457.52     319.27       138.25
RHX..................................     408.62     285.15       123.47
RHL..................................     401.37     280.09       121.28

[[Page 46429]]

 
RMX..................................     460.15     321.11       139.04
RML..................................     423.91     295.82       128.09
RLX..................................     325.45     227.11        98.34
RUC..................................     560.98     391.47       169.51
RUB..................................     518.94     362.13       156.81
RUA..................................     497.19     346.95       150.24
RVC..................................     443.02     309.15       133.87
RVB..................................     422.73     294.99       127.74
RVA..................................     383.59     267.68       115.91
RHC..................................     379.62     264.91       114.71
RHB..................................     363.68     253.79       109.89
RHA..................................     339.03     236.59       102.44
RMC..................................     347.08     242.20       104.88
RMB..................................     338.38     236.13       102.25
RMA..................................     331.13     231.07       100.06
RLB..................................     300.81     209.91        90.90
RLA..................................     258.76     180.57        78.19
SE3..................................     364.59     254.42       110.17
SE2..................................     310.96     217.00        93.96
SE1..................................     277.61     193.72        83.89
SSC..................................     273.26     190.69        82.57
SSB..................................     258.77     180.58        78.19
SSA..................................     254.42     177.54        76.88
CC2..................................     271.81     189.68        82.13
CC1..................................     248.62     173.49        75.13
CB2..................................     237.02     165.40        71.62
CB1..................................     226.87     158.32        68.55
CA2..................................     225.42     157.30        68.12
CA1..................................     210.93     147.19        63.74
IB2..................................     202.23     141.12        61.11
IB1..................................     199.33     139.10        60.23
IA2..................................     183.38     127.97        55.41
IA1..................................     176.13     122.91        53.22
BB2..................................     200.78     140.11        60.67
BB1..................................     194.98     136.06        58.92
BA2..................................     181.93     126.96        54.97
BA1..................................     170.33     118.86        51.47
PE2..................................     218.17     152.25        65.92
PE1..................................     213.83     149.22        64.61
PD2..................................     208.03     145.17        62.86
PD1..................................     205.13     143.15        61.98
PC2..................................     197.88     138.09        59.79
PC1..................................     194.98     136.06        58.92
PB2..................................     174.68     121.90        52.78
PB1..................................     173.23     120.89        52.34
PA2..................................     171.78     119.87        51.91
PA1..................................     167.44     116.84        50.60
------------------------------------------------------------------------

    Section 1888(e)(4)(G)(ii) of the Act also requires that we apply 
this wage index in a manner that does not result in aggregate payments 
that are greater or less than would otherwise be made in the absence of 
the wage adjustment. For FY 2009 (Federal rates effective October 1, 
2008), we apply an adjustment to fulfill the budget neutrality 
requirement. We meet this requirement by multiplying each of the 
components of the unadjusted Federal rates by a budget neutrality 
factor equal to the ratio of the weighted average wage adjustment 
factor for FY 2008 to the weighted average wage adjustment factor for 
FY 2009. For this calculation, we use the same 2006 claims utilization 
data for both the numerator and denominator of this ratio. We define 
the wage adjustment factor used in this calculation as the labor share 
of the rate component multiplied by the wage index plus the non-labor 
share of the rate component. The final budget neutrality factor for 
this year is 1.0009. The wage index applicable to FY 2009 appears in 
Tables 8 and 9, which are included in the Addendum of this final rule.
    In the FY 2006 SNF PPS final rule (70 FR 45026, August 4, 2005), we 
adopted the changes discussed in the Office of Management and Budget 
(OMB) Bulletin No. 03-04 (June 6, 2003), available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html, which announced revised 
definitions for Metropolitan Statistical Areas (MSAs), and the creation 
of Micropolitan Statistical Areas and Combined Statistical Areas. In 
addition, OMB published subsequent bulletins regarding CBSA changes, 
including changes in CBSA numbers and titles. As indicated in the FY 
2008 SNF PPS final rule (72 FR 43423, August 3, 2007), this and all 
subsequent SNF PPS rules and notices are considered to incorporate the 
CBSA changes published in the most recent OMB bulletin that applies to 
the hospital wage data used to determine the current SNF PPS wage 
index. The OMB bulletins may be

[[Page 46430]]

accessed online at http://www.whitehouse.gov/omb/bulletins/index.html.
    In adopting the OMB CBSA geographic designations, we provided for a 
1-year transition with a blended wage index for all providers. For FY 
2006, the wage index for each provider consisted of a blend of 50 
percent of the FY 2006 MSA-based wage index and 50 percent of the FY 
2006 CBSA-based wage index (both using FY 2002 hospital data). We 
referred to the blended wage index as the FY 2006 SNF PPS transition 
wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR 
45041), subsequent to the expiration of this 1-year transition on 
September 30, 2006, we used the full CBSA-based wage index values, as 
now presented in Tables 8 and 9 in the Addendum to this final rule.
4. Updates to the Federal Rates
    In accordance with section 1888(e)(4)(E) of the Act, as amended by 
section 311 of the BIPA, the payment rates in this final rule reflect 
an update equal to the full SNF market basket, estimated at 3.4 
percentage points. We continue to disseminate the rates, wage index, 
and case-mix classification methodology through the Federal Register 
before the August 1 that precedes the start of each succeeding FY.
5. Relationship of RUG-III Classification System to Existing Skilled 
Nursing Facility Level-of-Care Criteria
    As discussed in Sec.  413.345, we include in each update of the 
Federal payment rates in the Federal Register the designation of those 
specific RUGs under the classification system that represent the 
required SNF level of care, as provided in Sec.  409.30. This 
designation reflects an administrative presumption under the refined 
RUG-53 classification system that beneficiaries who are correctly 
assigned to one of the upper 35 of the RUG-53 groups on the initial 5-
day, Medicare-required assessment are automatically classified as 
meeting the SNF level of care definition up to and including the 
assessment reference date on that assessment.
    A beneficiary assigned to any of the lower 18 groups is not 
automatically classified as either meeting or not meeting the 
definition, but instead receives an individual level of care 
determination using the existing administrative criteria. This 
presumption recognizes the strong likelihood that beneficiaries 
assigned to one of the upper 35 groups during the immediate post-
hospital period require a covered level of care, which would be 
significantly less likely for those beneficiaries assigned to one of 
the lower 18 groups.
    In this final rule, we are continuing the designation of the upper 
35 groups for purposes of this administrative presumption, consisting 
of the following RUG-53 classifications: All groups within the 
Rehabilitation plus Extensive Services category; all groups within the 
Ultra High Rehabilitation category; all groups within the Very High 
Rehabilitation category; all groups within the High Rehabilitation 
category; all groups within the Medium Rehabilitation category; all 
groups within the Low Rehabilitation category; all groups within the 
Extensive Services category; all groups within the Special Care 
category; and, all groups within the Clinically Complex category.
6. Example of Computation of Adjusted PPS Rates and SNF Payment
    Using the hypothetical SNF XYZ described in Table 10 below, the 
following shows the adjustments made to the Federal per diem rate to 
compute the provider's actual per diem PPS payment. SNF XYZ's 12-month 
cost reporting period begins October 1, 2008. SNF XYZ's total PPS 
payment would equal $30,968. The Labor and Non-labor columns are 
derived from Table 6.

                               Table 10--RUG-53 SNF XYZ: Located in Cedar Rapids, IA (Urban CBSA 16300) Wage Index: 0.8924
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Percent    Medicare
                       RUG group                           Labor    Wage index  Adj. labor   Non-labor   Adj. rate      adj        days        Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
RVX...................................................     $329.57      0.8919     $293.94     $142.71     $436.65     $436.65          14     $6,113.00
RLX...................................................      227.05      0.8919      202.51       98.32      300.83      300.83          30      9,025.00
RHA...................................................      228.55      0.8919      203.84       98.97      302.81      302.81          16      4,845.00
CC2...................................................      193.72      0.8919      172.78       83.89      256.67    * 585.21          10      5,852.00
IA2...................................................      129.13      0.8919      115.17       55.92      171.09      171.09          30      5,133.00
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
                                                        ..........  ..........  ..........  ..........  ..........  ..........         100     30,968.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reflects a 128 percent adjustment from section 511 of the MMA.

7. Other Issues
    In the SNF PPS proposed rule for FY 2009 (73 FR 25930, May 7, 
2008), we discussed several issues that relate to the SNF PPS for which 
we made no specific proposals, but solicited comments. These issues are 
noted below.
a. Staff Time and Resource Intensity Verification (STRIVE) Project
    The SNF PPS proposed rule for FY 2009 (73 FR 25930, May 7, 2008) 
included a more detailed discussion of the current status of the STRIVE 
project. Specific comments on this issue, and our responses to those 
comments, are as follows:
    Comment: Specifically referencing the STRIVE Technical Expert Panel 
(TEP) described in the proposed rule, one commenter expressed concern 
about whether registered nurses (RNs) have been adequately represented 
in the STRIVE process.
    Response: We understand that nurses have been well represented as 
the STRIVE contractor has sought input from a variety of individual 
stakeholders. Two RNs directly representing nursing associations have 
attended STRIVE TEPs as observers, who not only observe the 
proceedings, but can also offer comments and ask questions of the 
STRIVE team. Other people with backgrounds as RNs constitute a 
significant percentage of TEP attendees overall. In fact, the STRIVE 
contractor has received insights from RNs attending not only as 
observers, but as participants, who directly interact with the STRIVE 
team during TEP presentations.
    Comment: One commenter voiced concerns regarding whether STRIVE 
collected the RN staff time associated with residents separately from 
that of other personnel; for example, LPNs and nursing aides.
    Response: STRIVE collected all nursing staff time over 2 days using 
personal digital assistants (PDAs). In each PDA, the name of each 
nursing staff member was linked to his or her

[[Page 46431]]

individual job title (including RN, LPN, and CNA). STRIVE does not 
represent the first instance in which CMS (or, rather, its predecessor, 
HCFA) has separately tracked different nursing staff positions as it 
collected time data. In the FY 2006 refinements that added nine new RUG 
categories, CMS calculated case-mix indexes based on nursing staff time 
collected in the prior time studies. That data accounted for three 
different disciplines: RNs, LPNs, and Aides. In fact, CMS published on 
its Web site a spreadsheet containing population-weighted time for each 
of those three positions. These data appear on the RUG refinement page 
of the SNF PPS Web site: http://www.cms.hhs.gov/SNFPPS/09_RUGRefinement.asp#TopOfPage. Under ``Downloads'' near the bottom of the 
page, that data can be unzipped after linking to Unadjusted nursing 
weights [Zip, 15kb].
b. Minimum Data Set (MDS) 3.0
    The SNF PPS proposed rule for FY 2009 (73 FR 25931, May 7, 2008) 
included a more detailed discussion of the new version (3.0) of the MDS 
that is currently under development. Specific comments, and our 
responses to those comments, are as follows:
    Comment: One commenter was concerned that because CMS does not 
currently require a resident assessment instrument to be completed at 
admission and at discharge, the changes in a patient's condition cannot 
be accurately measured and outcomes assessed, making it more difficult 
to tie Medicare's payments to patient outcomes.
    Response: We note that the current SNF PPS is based upon the amount 
of resources used by a particular patient due to their unique clinical 
needs, and that it is not an outcome-based system. However, as noted in 
section III.B.7.c. of this final rule, we are currently evaluating the 
appropriateness of introducing certain pay for performance initiatives 
in the SNF setting. In the interim, although the current SNF PPS design 
does not provide for the completion of an assessment at admission and 
then again at discharge, the current Post Acute Care Payment Reform 
Demonstration (PAC-PRD) does provide for this. It is our intention to 
monitor this particular aspect of the PAC-PRD to determine both its 
administrative and financial impact, in order to understand the effect 
it could have on SNFs should it be adopted under the SNF PPS.
    Comment: A commenter recommended revising the MDS to gather 
information solely about services furnished during the SNF stay, so 
that payments to SNFs are not based on services provided during the 
preceding hospital stay. Another stated that the draft MDS 3.0 
represents an excellent modification of the current MDS, and applauded 
CMS for retaining the critically necessary look-back periods that, in 
their view, help clinicians more thoroughly evaluate and follow-up on 
conditions and treatments related to the hospital stay.
    Response: The development of the MDS 3.0 has been and will continue 
to be a collaborative effort designed to maximize the quality of care 
provided to Medicare beneficiaries and to ensure proper payment under 
the SNF PPS. Under the STRIVE project, we are currently assessing each 
of the data elements used in the payment methodology, as well as other 
items that may affect resource utilization. We appreciate the 
commenter's concern and also recognize the role of clinicians in 
ensuring proper care, and will take these comments into consideration 
as we finalize the design of the MDS 3.0.
    Comment: One commenter recommended that CMS change the look back 
period for therapies in section O on the MDS 3.0 from 5 days to 7 days, 
as it is currently on the MDS 2.0. The same commenter suggested that we 
continue to collect minutes for respiratory therapy on the MDS 3.0.
    Response: We note that, contrary to the commenter's impression, CMS 
did not change the look back for therapy services on the MDS 3.0 to 5 
days. In fact, the instructions for Section O4--Therapies states 
``Record the number of days each of the following therapies was 
administered for at least 15 minutes a day in the last 7 Days'' 
(emphasis added). The January draft version of the MDS 3.0 appears at 
the following link: http://www.cms.hhs.gov/NursingHomeQualityInits/Downloads/MDS30DraftVersion.pdf. We will post the CMS Draft MDS 2.0/3.0 
Crosswalk on the CMS web site. This draft version contains all of the 
items that potentially may appear in the final version of the MDS 3.0. 
We have added an item to collect the minutes of respiratory therapy 
services, as well as other items. The CMS Draft MDS 2.0/3.0 Crosswalk 
(July 2008) will be available on the MDS 3.0 Web site, which appears at 
the following link: http://www.cms.hhs.gov/NursingHomeQualityInits/25_NHQIMDS30.asp.
c. Integrated Post Acute Care Payment
    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 more detailed 
discussion of this issue as it pertains to the SNF setting, we refer 
readers to the SNF PPS proposed rule for FY 2009 (73 FR 25932, May 7, 
2008).
    The comments that we received, and our responses to those comments, 
are as follows:
    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 all available findings from any 
research that is currently underway. We note that our own activities in 
this regard primarily involve applied research through our 
demonstration projects and internal

[[Page 46432]]

analysis of changes in program policy. However, we also encourage 
interested parties to engage in external research projects on PAC 
payment reform.
    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 
recommended that CMS conduct a thorough evaluation of the HAC policy's 
implementation under the IPPS to determine its actual impact and 
efficacy before considering whether to adopt this type of approach in 
other care settings. Some commenters also questioned the legal 
authority under existing Medicare law to expand the HAC payment 
provision beyond the IPPS hospital setting. Other commenters raised 
concerns about the specific implications of applying this type of 
policy to the SNF setting. They cited hospital-acquired infections, 
dementia, and falls as examples of things that might be less 
appropriately characterized as ``never events'' in long-term care 
settings than in the acute setting. These commenters also observed that 
it would be unfair to penalize a SNF financially for a condition that 
actually developed during the preceding hospital stay but was not 
detected until after transfer to the SNF.
    One commenter specifically noted that a SNF should not be expected 
to assume the financial liability for the care of a resident's 
decubitus ulcer if it was acquired during the preceding hospital stay. 
In addition, the commenters indicated that it may be difficult to 
differentiate a preventable healthcare-acquired complication from a 
normal, unavoidable aspect of a terminal illness, and also asserted 
that it is difficult to define the extent to which an adverse event is 
``reasonably preventable.''
    Response: We appreciate the commenters' thoughtful input about 
application of the principal embodied in the IPPS HAC payment provision 
to the SNF setting. While we acknowledge that infections, dementia, and 
falls are among the selected HACs in the IPPS acute care setting that 
potentially have relevance for the SNF setting as well, we agree that 
these and other conditions may have different implications in the SNF 
setting. We agree with the commenters that it would be unfair to 
penalize a SNF 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 those 
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 SNF setting should such an approach be adopted there. 
Regarding the commenters' concerns about the difficulty of determining 
which adverse events are ``reasonably preventable,'' we would expect to 
work closely with stakeholders to determine which conditions could 
reasonably be prevented through the application of evidence-based 
guidelines. 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 VBP for 
all Medicare payment systems proceeds. 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. 
Finally, we note that in addition to the comments on those aspects of 
PAC payment reform and VBP that we discussed in the proposed rule, we 
also received some comments on the current Nursing Home VBP 
Demonstration (referenced previously in the SNF PPS update notice for 
FY 2007 (71 FR 43172, July 31, 2006); however, those comments, which 
offered specific suggestions about the design and conduct of the 
demonstration, are beyond the scope of this rulemaking.
8. Miscellaneous Technical Corrections and Clarifications
    In the FY 2009 proposed rule, we set forth certain technical 
corrections and clarifications, as discussed below.
a. Bad Debt Payments
    In the SNF PPS proposed rule for FY 2009 (73 FR 25932, May 7, 
2008), we proposed to make a technical revision in the regulations text 
at Sec.  413.335(b), in order to reflect our longstanding policy 
regarding Medicare bad debt payments to SNFs.
    We received no comments on this aspect of the proposed rule. We are 
proceeding with this technical correction as proposed with no change.
b. Additional Clarifications
    In the FY 2009 proposed rule (73 FR 25932 through 25933, May 7, 
2008), we also discussed the following clarifications in two other 
areas:
     The circumstances under which a SNF is paid at the 
``default rate,'' a reduced payment made in lieu of the full SNF PPS 
rate that would have been payable had the SNF's resident been assessed 
in a timely manner; and
     The role of rehabilitation services evaluations in SNFs.
The comments that we received, and our responses, are as follows:
    Comment: One commenter asserted that in some of the circumstances 
that we specified as triggering payment of the default rate (for 
example, when the SNF does not receive timely notification of a 
Medicare Secondary Payer denial, or of the revocation of a payment 
ban), the SNF is not at fault and, accordingly, should be permitted to 
complete an assessment retroactively.
    Response: We note that SNFs are not permitted to backdate any 
portion of the medical record, including the resident assessment. It is 
for precisely this reason that we strongly encourage SNFs to follow the 
Medicare-required assessment schedule in any instance where there is 
even a possibility of Medicare payment; otherwise, the SNF risks being 
paid at the default rate. We also note that if a SNF has performed an 
``OBRA'' assessment (that is, one conducted to meet the basic 
assessment schedule prescribed in the nursing home reform provisions of 
OBRA 1987 rather than the supplemental SNF PPS schedule for Medicare-
required assessments) during this period which also happens to fall 
within the window for a Medicare-required assessment, the OBRA 
assessment can be used for Medicare payment purposes as well.
    Comment: One commenter was concerned that CMS did not allow the 
billing of the default code when a SNF PPS assessment is inadvertently 
omitted, referring to an instruction in the Resident Assessment 
Instrument (RAI) regarding the use of the default code when an 
assessment was not completed. The commenter also asked whether there is 
a time limit on the filing of a late assessment.
    Response: To bill for Part A services provided under the SNF PPS, 
the SNF is required to submit a HIPPS rate code and the assessment 
reference date (ARD) associated with the applicable RAI on the claim, 
except as provided in the five specific circumstances described in the 
FY 2009 proposed rule (73 FR 25933), under which payment is available 
at the default rate. In order to obtain the HIPPS code, the SNF is 
required to submit the RAI to the State RAI database, and to receive a 
Final Validation Report prior to filing the claim in order to establish 
the correct RUG code for billing purposes. For these reasons, the SNF 
cannot simply bill the default code if it misses a Medicare-required 
assessment. Instead, we have always provided for payment at the

[[Page 46433]]

default rate for what is referred to as a ``late assessment.'' A late 
assessment occurs when the ARD for the Medicare-required assessment is 
set outside of the prescribed assessment window. In order to bill the 
default code, the SNF must prepare a late assessment that is completed 
prior to the date of discharge from Medicare Part A. If no assessment 
is completed prior to discharge from Medicare Part A, no payment is 
made. The statement in the RAI that the commenter cited is more fully 
described in the situations set forth in Chapter 2, Section 2.9 of the 
RAI. We are currently in the process of revising the RAI instructions 
to ensure greater clarity.
    Comment: One commenter expressed the belief that CMS was further 
penalizing SNFs for not completing Medicare-required assessments by 
having the SNF absorb all of the liability for SNF-level care provided 
to their beneficiaries, by limiting the use of the default code 
(outside of a late assessment) to the following situations:
     When the stay is less than 8 days within a spell of 
illness (that is, benefit period);
     The SNF is notified on an untimely basis or is unaware of 
a Medicare Secondary Payer denial;
     The SNF is notified on an untimely basis of the revocation 
of a payment ban;
     The beneficiary requests a demand bill; or,
     The SNF is notified on an untimely basis or is unaware of 
a beneficiary's disenrollment from a Medicare Advantage program.
    Response: As we stated in the FY 2009 proposed rule (73 FR 25933), 
program instructions have been issued through the Provider 
Reimbursement Manual and the Medicare Claims Processing Manual since 
the inception of the SNF PPS to allow for the use of the default code 
in the first four situations described above. The proposed rule simply 
reiterated these policies in order to remind providers of the 
procedures on the use of the default code in circumstances other than 
that of a late assessment. We also took this opportunity to clarify 
that in those situations where a beneficiary was enrolled in a Medicare 
Advantage (MA) plan and the SNF was subsequently unaware or notified 
untimely of a beneficiary's disenrollment from an MA plan, the SNF 
could use the default code to receive payment for services provided.
    Comment: One commenter asked that CMS explain why the default code 
is allowed to be billed when the stay is less than 8 days within a 
spell of illness (that is, benefit period) when the beneficiary dies or 
is discharged.
    Response: In those situations where the beneficiary dies or is 
discharged before day 8 of the covered stay upon initial admission to 
the SNF following the qualifying three-day hospital stay, CMS has 
instructed SNFs either to complete an assessment to the best of their 
ability or to submit a claim using the default rate without the 
necessity of completing an assessment. The decision to allow for 
payment at the default rate without the completion of an assessment in 
this case is predicated on the administrative presumption that the 
beneficiary meets the SNF level of care requirements through the ARD on 
the Medicare-required 5-day assessment completed upon initial admission 
following the qualifying three-day hospital stay. The ARD on a 
Medicare-required 5-day assessment must be set no later than the eighth 
day of the covered stay.
    Comment: A commenter asked that CMS explain why the default code is 
allowed to be billed when a beneficiary requests that the SNF submit a 
demand bill.
    Response: As stated above, a HIPPS rate code must be present on the 
claim in order to receive payment under the SNF PPS. However, a SNF is 
not required to assess a beneficiary to classify that beneficiary into 
a RUG using the RAI when the SNF determines that the care is 
noncovered, or where the beneficiary has not met the technical 
requirements for a SNF stay. Therefore, a SNF may submit a claim using 
the default code in order to ensure payment in the event that the SNF's 
determination of noncoverage is subsequently reversed.
    Comment: A commenter requested clarification of the term ``most 
recent clinical assessment,'' in the context of current program 
instructions that provide for payment at other than the default rate 
when the SNF is notified untimely or is unaware of a Medicare secondary 
payer (MSP) denial or the revocation of a payment ban. The commenter 
also requested guidance on how to handle an untimely notification of a 
beneficiary's disenrollment from a Medicare Advantage program. The 
commenter additionally requested clear instructions on the proper way 
to use clinical assessments in place of Medicare PPS assessments when 
the ``most recent clinical assessment'' does not accurately represent 
the level of resources currently being utilized by the beneficiary 
(including the number of days that can be billed using the ``most 
recent clinical assessment'').
    Response: A SNF that finds itself in these circumstances had no 
reason to expect payment under the SNF PPS and is generally not 
required to perform Medicare-required assessments; as a result, the SNF 
is left without a HIPPS code that would be required to bill for payment 
under the SNF PPS. Instructions relating to MSP denials in the Provider 
Reimbursement Manual and revocation of payment bans in the Medicare 
Claims Processing Manual have allowed SNFs to use the most recent 
assessment that was completed in accordance with the schedule outlined 
in 42 CFR 483.20(b)(4) in order to receive payment under the Medicare 
program. However, the commenter makes a valid point in asking whether 
it is proper to submit an MDS that does not reflect the level of 
resources currently being utilized by beneficiaries.
    After careful consideration of this question, we are revising our 
policy to allow the 14-day assessment required under 42 CFR 
483.20(b)(4) to be used to bill for all days of covered care associated 
with a Medicare-required 5-day and 14-day assessment. This is the case 
even if the beneficiary is no longer receiving therapy services that 
were identified under the most recent clinical assessment. For covered 
days associated with the Medicare-required 30-, 60-, or 90-day 
assessment, the SNF must have an assessment that falls within the 
window of the Medicare-required assessment in order to receive full 
payment at the RUG level in which the resident grouped. If no 
assessment was completed, the SNF may submit a claim requesting payment 
at the default rate.
    This revision recognizes that the level of resources used by a 
resident changes throughout the stay, and that the 14-day assessment 
required under Sec.  483.20(b)(4) is less likely to represent the 
beneficiary's clinical status later in the stay.
    We will also apply this policy to situations where the SNF is 
notified on an untimely basis or is unaware of a beneficiary's 
disenrollment from a Medicare Advantage program.
    Comment: A commenter asked if guidance involving the ``special 
payment modifiers'' was forthcoming, noting that it was overdue.
    Response: Instructions are currently being revised to provide for 
the proper use of the ``special payment modifiers.''
    Comment: One commenter wanted to know, if a SNF can demonstrate 
that an ARD was determined on a document other than the MDS, whether 
the SNF could use such documentation to ``set'' the ARD in order to 
avoid payment at the default rate.

[[Page 46434]]

    Response: It is not acceptable to backdate an MDS or to use any 
documentation other than the MDS itself to establish the ARD.
    Comment: In a situation where the SNF receives no payment under 
Part A because it fails to do Medicare-required assessment before the 
date of discharge from Medicare Part A, a commenter questioned whether 
the SNF could bill Medicare Part B for services rendered, as the SNF 
would receive no Part A reimbursement.
    Response: In situations where the SNF fails to assess the 
beneficiary and fails to issue the proper Notification of Non-Coverage, 
the SNF is liable for all services normally covered under the Medicare 
Part A benefit. Since the beneficiary is receiving benefits, the days 
will be considered Part A days and charged against the beneficiary's 
benefit period. The SNF may collect any applicable copayment amounts. 
Services that would have been payable to the SNF as Part A benefits 
cannot be billed to either the FI or the carrier as Part B services.
    Comment: A commenter questioned why CMS was issuing a technical 
clarification regarding the requirement for a therapy evaluation before 
therapy minutes can be counted in Section P and Section T of the MDS. 
The commenter was concerned that while the proposed change appears to 
be consistent with the practices of its therapy members, questions have 
been raised as to whether in making this clarification, CMS 
inadvertently may be changing the instructions for Subpart T as they 
relate to projected therapy services.
    Response: Due to several recent inquiries on the need for therapy 
evaluations, we sought to ensure that SNFs and other non-therapy 
ancillary providers are clear as to the requirement for a therapy 
evaluation for each discipline before minutes can be included on the 
MDS on Section P and Section T. Moreover, in the case of Section T, the 
projection must be based upon the evaluation performed for each 
discipline that reflects the needs of the patient.

IV. The Skilled Nursing Facility Market Basket Index

    Section 1888(e)(5)(A) of the Act requires us to establish a SNF 
market basket index (input price index) that reflects changes over time 
in the prices of an appropriate mix of goods and services included in 
the SNF PPS. In the FY 2009 proposed rule, we stated that the proposed 
rule incorporated the latest available projections of the SNF market 
basket index. In this final rule, we are updating projections based on 
the latest available projections at the time of publication. 
Accordingly, we have developed a SNF market basket index that 
encompasses the most commonly used cost categories for SNF routine 
services, ancillary services, and capital-related expenses.
    Each year, we calculate a revised labor-related share based on the 
relative importance of labor-related cost categories in the input price 
index. Table 11 below summarizes the final updated labor-related share 
for FY 2009.

                        Table 11--Labor-Related Relative Importance, FY 2008 and FY 2009
----------------------------------------------------------------------------------------------------------------
                                                                  Relative importance,     Relative importance,
                                                                labor-related,  FY 2008  labor-related,  FY 2009
                                                                    (04 index)  07:2         (04 index)  08:2
                                                                        forecast                 forecast
----------------------------------------------------------------------------------------------------------------
Wages and salaries............................................                   51.218                   51.003
Employee benefits.............................................                   11.720                   11.547
Nonmedical professional fees..................................                    1.333                    1.331
Labor-intensive services......................................                    3.456                    3.434
Capital-related (.391)........................................                    2.522                    2.468
                                                               -------------------------------------------------
    Total.....................................................                   70.249                   69.783
----------------------------------------------------------------------------------------------------------------
Source: Global Insight, Inc., formerly DRI-WEFA.

A. Use of the Skilled Nursing Facility Market Basket Percentage

    Section 1888(e)(5)(B) of the Act defines the SNF market basket 
percentage as the percentage change in the SNF market basket index from 
the average of the previous FY to the average of the current FY. For 
the Federal rates established in this final rule, we use the percentage 
increase in the SNF market basket index to compute the update factor 
for FY 2009. We use the Global Insight, Inc. (GII, formerly DRI-WEFA), 
2nd quarter 2008 (2008q2) forecasted percentage increase in the FY 
2004-based SNF market basket index for routine, ancillary, and capital-
related expenses, described in the previous section, to compute the 
update factor. Finally, as discussed previously in section I.A. of this 
final rule, we no longer compute update factors to adjust a facility-
specific portion of the SNF PPS rates because the initial three-phase 
transition period from facility-specific to full Federal rates that 
started with cost reporting periods beginning in July 1998 has expired.

B. Market Basket Forecast Error Adjustment

    As discussed in the FY 2004 supplemental proposed rule (68 FR 
34768, June 10, 2003) and finalized in the FY 2004 final rule (68 FR 
46067, August 4, 2003), regulations at Sec.  413.337(d)(2) provide for 
an adjustment to account for market basket forecast error. The initial 
adjustment applied to the update of the FY 2003 rate for FY 2004, and 
took into account the cumulative forecast error for the period from FY 
2000 through FY 2002. Subsequent adjustments in succeeding FYs take 
into account the forecast error from the most recently available FY for 
which there is final data, and apply whenever the difference between 
the forecasted and actual change in the market basket exceeds a 
specified threshold. We originally used a 0.25 percentage point 
threshold for this purpose; however, for the reasons specified in the 
FY 2008 SNF PPS final rule (72 FR 43425, August 3, 2007), we adopted a 
0.5 percentage point threshold effective with FY 2008. As discussed 
previously in section I.F.2. of this final rule, as the difference 
between the estimated and actual amounts of increase in the market 
basket index for FY 2007 (the most recently available FY for which 
there is final data) does not exceed the 0.5 percentage point 
threshold, the payment rates for FY 2009 do not include a forecast 
error adjustment.
    The following is a specific comment that we received on the market 
basket forecast error adjustment, and our response:

[[Page 46435]]

    Comment: A few commenters suggested that CMS apply a cumulative 
forecast error to account for all of the variations in the market 
basket forecasts since FY 2004 (that is, as of when CMS implemented the 
market basket forecast error correction policy.)
    Response: For FY 2004, CMS applied a one-time, cumulative forecast 
error correction of 3.26 percent (68 FR 46036). Since that time, the 
forecast errors have been relatively small and clustered near zero. We 
believe the forecast error correction should be applied only when the 
forecast error in any given year reflects a percentage such that the 
SNF PPS base payment rate does not adequately reflect the historical 
price changes faced by SNFs. We continue to believe that the forecast 
error adjustment mechanism should appropriately be reserved for the 
type of major, unexpected change that initially gave rise to this 
policy, rather than the minor variances that are a routine and inherent 
aspect of this type of statistical measurement.

C. Federal Rate Update Factor

    Section 1888(e)(4)(E)(ii)(IV) of the Act requires that the update 
factor used to establish the FY 2009 Federal rates be at a level equal 
to the full market basket percentage change. Accordingly, to establish 
the update factor, we determined the total growth from the average 
market basket level for the period of October 1, 2007 through September 
30, 2008 to the average market basket level for the period of October 
1, 2008 through September 30, 2009. Using this process, the market 
basket update factor for FY 2009 SNF Federal rates is 3.4 percent. We 
used this update factor to compute the Federal portion of the SNF PPS 
rate shown in Tables 2 and 3.
    We received one comment expressing support for our proposed full 
market basket increase for FY 2009. We thank the commenter and again 
note that the final update factor for FY 2009 is 3.4 percent.

V. Consolidated Billing

    Section 4432(b) of the BBA established a consolidated billing 
requirement that places with the SNF itself the Medicare billing 
responsibility for virtually all of the services that the SNF's 
residents receive, except for a small number of services that the 
statute specifically identifies as being excluded from this provision. 
Section 103 of the BBRA amended this provision by further excluding a 
number of individual ``high-cost, low-probability'' services, 
identified by the Healthcare Common Procedure Coding System (HCPCS) 
codes, within several broader categories (chemotherapy and its 
administration, radioisotope services, and customized prosthetic 
devices) that otherwise remained subject to the provision. We discuss 
this BBRA amendment in greater detail in the FY 2001 SNF PPS proposed 
rule (65 FR 19231 through 19232, April 10, 2000), and the FY 2001 SNF 
PPS final rule (65 FR 46790 through 46795, July 31, 2000), as well as 
in Program Memorandum AB-00-18 (Change Request 1070), issued 
March 2000, which is available online at http://www.cms.hhs.gov/transmittals/downloads/ab001860.pdf.
    Section 313 of the BIPA further amended this provision by repealing 
its Part B aspect; that is, its applicability to services furnished to 
a resident during a SNF stay that Medicare does not cover. (However, 
physical, occupational, and speech-language therapy remain subject to 
consolidated billing, regardless of whether the resident who receives 
these services is in a covered Part A stay.) We discuss this BIPA 
amendment in greater detail in the FY 2002 SNF PPS proposed rule (66 FR 
24020 through 24021, May 10, 2001), and the FY 2002 SNF PPS final rule 
(66 FR 39587 through 39588, July 31, 2001).
    In addition, section 410 of the MMA amended this provision by 
excluding certain practitioner and other services furnished to SNF 
residents by RHCs and FQHCs. We discuss this MMA amendment in greater 
detail in the SNF PPS update notice for FY 2005 (69 FR 45818 through 
45819, July 30, 2004), as well as in Program Transmittal 390 
(Change Request 3575), issued December 10, 2004, which is 
available online at http://www.cms.hhs.gov/transmittals/downloads/r390cp.pdf.
    To date, the Congress has enacted no further legislation affecting 
the consolidated billing provision. However, as noted above and 
explained in the FY 2001 SNF PPS proposed rule (65 FR 19232, April 10, 
2000), the amendments enacted in section 103 of the BBRA not only 
identified for exclusion from this provision a number of particular 
service codes within four specified categories (that is, chemotherapy 
items, chemotherapy administration services, radioisotope services, and 
customized prosthetic devices), but also gave the Secretary ``* * * the 
authority to designate additional, individual services for exclusion 
within each of the specified service categories.'' In the FY 2001 SNF 
PPS proposed rule, we also noted that the BBRA Conference report (H.R. 
Rep. No. 106-479 at 854 (1999) (Conf. Rep.)) characterizes the 
individual services that this legislation targets for exclusion as, ``* 
* * high-cost, low probability events that could have devastating 
financial impacts because their costs far exceed the payment [SNFs] 
receive under the prospective payment system* * *.'' According to the 
conferees, section 103(a) ``* * * is an attempt to exclude from the PPS 
certain services and costly items that are provided infrequently in 
SNFs * * * For example, * * * chemotherapy drugs [that] are not 
typically administered in a SNF, or are exceptionally expensive, or are 
given as infusions, thus requiring special staff expertise to 
administer.'' By contrast, we noted that the Congress declined to 
designate for exclusion any of the remaining services within those four 
categories (thus leaving all of those services subject to SNF 
consolidated billing), because they ``* * * are relatively inexpensive 
and are administered routinely in SNFs''.
    As we further explained in the FY 2001 SNF PPS final rule (65 FR 
46790, July 31, 2000), any additional service codes that we might 
designate for exclusion under our discretionary authority must meet the 
same criteria that the Congress used in identifying the original codes 
excluded from consolidated billing under section 103(a) of the BBRA: 
Our longstanding policy is that they must fall within one of the four 
service categories specified in the BBRA, and they also must meet the 
same standards of high cost and low probability in the SNF setting. 
Accordingly, we characterized this statutory authority to identify 
additional service codes for exclusion `` * * * as essentially 
affording the flexibility to revise the list of excluded codes in 
response to changes of major significance that may occur over time (for 
example, the development of new medical technologies or other advances 
in the state of medical practice)'' (65 FR 46791). In the FY 2009 
proposed rule (73 FR 25934, May 7, 2008), we specifically invited 
public comments identifying codes in any of these four service 
categories (chemotherapy items, chemotherapy administration services, 
radioisotope services, and customized prosthetic devices) representing 
recent medical advances that might meet our criteria for exclusion from 
SNF consolidated billing.
    Specific comments on this issue and our responses to those comments 
are as follows:
    Comment: Several commenters submitted additional chemotherapy codes 
that they recommended for exclusion from consolidated billing.

[[Page 46436]]

    Response: We note that the law (at section 1888(e)(2)(A)(iii)(II) 
of the Act) describes the chemotherapy code ranges that the BBRA 
identified for exclusion in terms of the version of the HCPCS codes 
that was in existence ``as of July 1, 1999.'' In the SNF PPS final rule 
for FY 2006 (70 FR 45048, August 4, 2005), we reiterated our belief 
that the authority granted by the BBRA to identify additional codes for 
exclusion within this category was ``* * * essentially affording the 
flexibility to revise the list of excluded codes in response to changes 
of major significance that may occur over time (for example, the 
development of new medical technologies or other advances in the state 
of medical practice)'' (emphasis added). Accordingly, we view this 
discretionary authority as applying only to codes that were created 
subsequent to that point, and not to those codes that were in existence 
as of July 1, 1999.
    A review of the particular chemotherapy codes that commenters 
submitted in response to the proposed rule's solicitation for comment 
revealed that many of them were codes that had already been submitted 
for consideration in previous years, and that we had previously decided 
not to exclude. Other codes that commenters submitted were themselves 
already in existence as of July 1, 1999, but did not fall within the 
specific code ranges statutorily designated for exclusion in the BBRA. 
As the statute does not specifically exclude these already-existing 
codes, we are not adding them to the exclusion list. Most of the other 
codes submitted represent services that, for various reasons, do not 
meet the statutory criteria for exclusion. For example, some represent 
oral medications that can be administered routinely in SNFs and are not 
reasonably characterized as ``requiring special staff expertise to 
administer.'' Others represent drugs that are administered in 
conjunction with chemotherapy to address side effects such as nausea; 
however, as such drugs are not in themselves inherently 
chemotherapeutic in nature, they do not fall within the excluded 
chemotherapy category designated in the BBRA. Finally, some other codes 
that were submitted represent services that, in fact, are already 
excluded from consolidated billing under existing instructions.
    Comment: Although the FY 2008 SNF PPS proposed rule specifically 
invited comments on possible exclusions within the particular service 
categories identified in the BBRA legislation, a number of commenters 
took this opportunity to reiterate concerns about other aspects of 
consolidated billing. For example, some commenters reiterated past 
suggestions that CMS unbundle additional service categories such as 
specialized wound care procedures (including hyperbaric oxygen therapy) 
and ambulance services. Another commenter advocated the exclusion of 
custom fabricated orthotics, stating that in the absence of such an 
exclusion SNFs might deny access to needed orthotic treatments during 
the Medicare-covered portion of the stay.
    Response: As we have consistently stated (most recently, in the SNF 
PPS final rule for FY 2008 (72 FR 43431, August 3, 2007)), the BBRA 
authorizes us to identify additional services for exclusion only within 
those particular service categories--chemotherapy and its 
administration; radioisotope services; and, customized prosthetic 
devices (a term which does not encompass orthotics)--that it has 
designated for this purpose, and does not give us the authority to 
create additional categories of excluded services beyond those 
specified in the law. Accordingly, as the particular services that 
these commenters recommended for exclusion do not fall within one of 
the specific service categories designated for this purpose in the 
statute itself, these services remain subject to consolidated billing. 
Regarding the concern about the possibility of a SNF withholding access 
to a needed item or service during the covered portion of a stay 
because it is bundled, we note that the requirements for program 
participation at Sec.  483.25 require participating SNFs to provide the 
necessary care and services to attain or maintain each resident's ``* * 
* highest practicable state of physical, mental, and psychosocial well-
being * * *.'' Thus, a SNF which delays or denies access to needed care 
could jeopardize its Medicare program certification.
    Comment: One commenter stated that the existing exclusion of 
certain customized prosthetic devices should be expanded to encompass 
all prosthetics that are designated by an L code.
    Response: When the Congress enacted the selective consolidated 
billing exclusion (by HCPCS code) of certain customized prosthetic 
devices in section 103 of the BBRA, it specifically identified certain 
designated L codes for exclusion, while omitting others from the 
exclusion list. Accordingly, we believe it is clear that the assignment 
of an L code to a particular prosthetic does not, in itself, 
automatically serve to qualify that item for exclusion from 
consolidated billing.
    Comment: Several commenters took this opportunity to revisit the 
existing set of administrative exclusions for certain high-intensity 
outpatient hospital services under the regulations in 42 CFR Sec.  
411.15(p)(3)(iii), and expressed the view that these exclusions should 
not be limited to only those services that actually occur in the 
hospital setting, but rather, should also encompass services performed 
in other, non-hospital settings as well. As examples, they cited 
services such as magnetic resonance imaging (MRIs) and computerized 
axial tomography (CT) scans furnished in freestanding imaging centers, 
and radiation therapy furnished in physicians' clinics or ambulatory 
care centers, all of which may be less expensive and more accessible in 
certain particular localities (such as rural areas) than those 
furnished by hospitals.
    Response: We believe the comments that reflect previous suggestions 
for expanding this administrative exclusion to encompass services 
furnished in non-hospital settings indicate a continued 
misunderstanding of the underlying purpose of this provision. As we 
have consistently noted in response to comments on this issue in 
previous years (most recently, in the SNF PPS final rule for FY 2008 
(72 FR 43431, August 3, 2007), and as also explained in Medicare 
Learning Network (MLN) Matters article SE0432 (available online at 
http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0432.pdf), the 
rationale for establishing this exclusion was to address those types of 
services that are so far beyond the normal scope of SNF care that they 
require the intensity of the hospital setting in order to be furnished 
safely and effectively.
    Moreover, we note that when the Congress enacted the consolidated 
billing exclusion for certain RHC and FQHC services in section 410 of 
the MMA, the accompanying legislative history's description of present 
law acknowledged that the existing exclusions for exceptionally 
intensive outpatient services are specifically limited to ``* * * 
certain outpatient services from a Medicare-participating hospital or 
critical access hospital * * *'' (emphasis added). (See the House Ways 
and Means Committee Report (H. Rep. No. 108-178, Part 2 at 209), and 
the Conference Report (H. Conf. Rep. No. 108-391 at 641).) Therefore, 
these services are excluded from SNF consolidated billing only when 
furnished in the outpatient hospital or CAH setting, and not when 
furnished in other, freestanding (non-hospital or non-CAH) settings.

[[Page 46437]]

Accordingly, establishing a categorical exclusion for these services 
that would apply irrespective of the setting in which they are 
furnished would require the enactment of legislation by the Congress to 
amend the law itself.
    Comment: Other commenters reiterated previous suggestions on 
expanding the existing chemotherapy exclusion to encompass related 
drugs that are commonly administered in conjunction with chemotherapy 
in order to treat the side effects of the chemotherapy drugs. The 
commenters cited examples such as anti-emetics (anti-nausea drugs), 
erythropoietin (EPO), and Reclast, an osteoporosis drug administered 
via a once-yearly infusion.
    Response: As we have noted previously in this final rule and in 
response to comments on this issue in the past (most recently, in the 
SNF PPS final rule for FY 2008 (72 FR 43432, August 3, 2007), the BBRA 
authorizes us to identify additional services for exclusion only within 
those particular service categories--chemotherapy and its 
administration; radioisotope services; and, customized prosthetic 
devices--that it has designated for this purpose, and does not give us 
the authority to exclude other services which, though they may be 
related, fall outside of the specified service categories themselves. 
Thus, while anti-emetics, for example, are commonly administered in 
conjunction with chemotherapy, they are not themselves inherently 
chemotherapeutic in nature and, consequently, do not fall within the 
excluded chemotherapy category designated in the BBRA. In the case of 
Reclast, in the FY 2008 SNF PPS final rule (72 FR 43432, August 3, 
2007), we discussed the specific rationale for our decision not to 
exclude this particular drug, explaining that such an exclusion could 
not be accomplished administratively under our existing authority. We 
also explained in the FY 2008 final rule that the existing statutory 
exclusion from consolidated billing for EPO is effectively defined by 
the scope of coverage under the Part B EPO benefit at section 
1861(s)(2)(O) of the Act; that benefit, in turn, specifically limits 
EPO coverage to dialysis patients, and does not provide for such 
coverage in any other, non-dialysis situations such as chemotherapy (72 
FR 43432).

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

    In accordance with section 1888(e)(7) of the Act, as amended by 
section 203 of the BIPA, Part A pays CAHs on a reasonable cost basis 
for SNF services furnished under a swing-bed agreement. However, 
effective with cost reporting periods beginning on or after July 1, 
2002, the swing-bed services of non-CAH rural hospitals are paid under 
the SNF PPS. As explained in the FY 2002 SNF PPS final rule (66 FR 
39562, July 31, 2001), we selected this effective date consistent with 
the statutory provision to integrate swing-bed rural hospitals into the 
SNF PPS by the end of the SNF transition period, June 30, 2002.
    Accordingly, all non-CAH swing-bed rural hospitals have come under 
the SNF PPS as of June 30, 2003. Therefore, all rates and wage indexes 
outlined in earlier sections of this final rule, also apply to all non-
CAH swing-bed rural hospitals. A complete discussion of assessment 
schedules, the MDS and the transmission software (RAVEN-SB for Swing 
Beds) appears in the final rule for FY 2002 (66 FR 39562, July 31, 
2001). The latest changes in the MDS for swing-bed rural hospitals 
appear on our SNF PPS Web site, http://www.cms.hhs.gov/snfpps.
    We received no comments on this aspect of the proposed rule and are 
making no changes in this final rule.

VII. Provisions of the Final Rule

    In this final rule, in addition to accomplishing the required 
annual update of the SNF PPS payment rates, we are making the following 
revisions in the regulations text:
     Revise the existing SNF PPS definitions of ``urban'' and 
``rural'' areas that appear in Sec.  413.333 to include updated cross-
references to the corresponding IPPS definitions in Part 412, subpart 
D.
     Make a technical revision at Sec.  413.335(b) to reflect 
Medicare bad debt payments to SNFs.

VIII. Collection of Information Requirements

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

IX. Regulatory Impact Analysis

A. Overall Impact

    We have examined the impacts of this final rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (September 19, 1980, RFA, Pub. L. 96-
354), section 1102(b) of the Social Security Act (the Act), the 
Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4), 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 1 year). 
This final rule is a major rule, as defined in Title 5, United States 
Code, section 804(2), because we estimate the FY 2009 impact of the 
standard update will be to increase payments to SNFS by approximately 
$780 million dollars. We are also considering this an economically 
significant rule under Executive Order 12866.
    The update set forth in this final rule would apply to payments in 
FY 2009. Accordingly, the analysis that follows only describes the 
impact of this single year. In accordance with the requirements of the 
Act, we will publish a notice for each subsequent FY that will provide 
for an update to the payment rates and include an associated impact 
analysis.
    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 government 
jurisdictions. Most SNFs and most other providers and suppliers are 
small entities, either by their nonprofit status or by having revenues 
of $11.5 million or less in any 1 year. For purposes of the RFA, 
approximately 53 percent of SNFs are considered small businesses 
according to the Small Business Administration's latest size standards, 
with total revenues of $11.5 million or less in any 1 year (for further 
information, see 65 FR 69432, November 17, 2000). Individuals and 
States are not included in the definition of a small entity. In 
addition, approximately 29 percent of SNFs are nonprofit organizations.
    This final rule updates the SNF PPS rates published in the FY 2008 
SNF PPS final rule (72 FR 43412, August 3, 2007) and the associated 
correction notices published on September 28, 2007 (72 FR 55085) and on 
November 30, 2007 (72 FR 67652), resulting in a net change in payments 
of an estimated $780 million for FY 2009. As indicated in Table 12, the 
effect on facilities will be a net positive impact of 3.4 percent. We 
note that while all providers will experience

[[Page 46438]]

an overall net increase in payments, some providers may experience 
larger increases than others due to the distributional impact of the FY 
2009 wage indexes and the degree of Medicare utilization.
    The Department of Health and Human Services generally uses a 
revenue impact of 3 to 5 percent as a significance threshold under the 
RFA. While this final rule is considered major, its relative impact on 
SNFs overall is positive due to the application of the 3.4 percent 
market basket adjustment. Thus, while the overall impact is positive on 
the industry as a whole, and on small entities specifically, it is 
highly variable, with the majority of SNFs having significantly lower 
Medicare utilization. Therefore, for most facilities, the impact on 
total facility revenues, considering all payers, should be 
substantially less than those shown in Table 12. However, in view of 
the potential economic impact on small entities, we have considered 
regulatory alternatives.
    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. This final rule affects 
small rural hospitals that furnish SNF services under a swing-bed 
agreement, or that have a hospital-based SNF. We anticipate that the 
impact on small rural hospitals will be similar to the impact on SNF 
providers overall.
    Section 202 of the UMRA also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose mandates 
require spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. In 2008, that threshold is approximately $130 
million. This final rule will not have a substantial effect on State, 
local, or tribal governments, or on private sector costs.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates regulations that impose 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has Federalism implications. As stated 
above, this final rule will have no substantial effect on State and 
local governments.

B. Anticipated Effects

    This final rule sets forth updates of the SNF PPS rates contained 
in the FY 2008 final rule (72 FR 43412, August 3, 2007) and the 
associated correction notices published on September 28, 2007 (72 FR 
55085) and on November 30, 2008 (72 FR 67652). Based on the above, we 
estimate the FY 2009 impact would be a net increase of $780 million in 
payments to SNFs. The impact analysis of this final rule represents the 
projected effects of the changes in the SNF PPS from FY 2008 to FY 
2009. We estimate the effects by estimating payments while holding all 
other payment variables constant. We use the best data available, but 
we do not attempt to predict behavioral responses to these changes, and 
we do not make adjustments for future changes in such variables as days 
or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because an analysis is future-oriented 
and, thus, very susceptible to changes in provider behavior related to 
such events as newly-legislated general Medicare program funding 
changes by the Congress. Although these changes may not be specific to 
the SNF PPS, the nature of the Medicare program is that the changes may 
interact, and the complexity of the interaction of these changes could 
make it difficult to predict accurately the full scope of the impact 
upon SNFs.
    In accordance with section 1888(e)(4)(E) of the Act, we update the 
payment rates for FY 2008 by a factor equal to the full market basket 
index percentage increase plus the FY 2007 forecast error adjustment to 
determine the payment rates for FY 2009. The special AIDS add-on 
established by section 511 of the MMA remains in effect until ``* * * 
such date as the Secretary certifies that there is an appropriate 
adjustment in the case mix * * *.'' We have not provided a separate 
impact analysis for this MMA provision. Our latest estimates indicate 
that there are less than 2,700 beneficiaries who qualify for the AIDS 
add-on payment. The impact on Medicare is included in the ``total'' 
column of Table 12. In updating the rates for FY 2009, we made a number 
of standard annual revisions and clarifications mentioned elsewhere in 
this final rule (for example, the update to the wage and market basket 
indexes used for adjusting the Federal rates). These revisions would 
increase payments to SNFs by approximately $780 million for FY 2009.
    The impacts are shown in Table 12. The breakdown of the various 
categories of data in the table follows.
    The first column shows the breakdown of all SNFs by urban or rural 
status, hospital-based or freestanding status, and census region.
    The first row of figures in the first column describes the 
estimated effects of the various changes on all facilities. The next 
six rows show the effects on facilities split by hospital-based, 
freestanding, urban, and rural categories. The urban and rural 
designations are based on the location of the facility under the CBSA 
designation. The next twenty-two rows show the effects on urban versus 
rural status by census region.
    The second column in the table shows the number of facilities in 
the impact database.
    The third column of the table shows the effect of the annual update 
to the wage index. This represents the effect of using the most recent 
wage data available. The total impact of this change is zero percent; 
however, there are distributional effects of the change.
    The fourth column shows the effect of all of the changes on the FY 
2009 payments. The market basket increase of 3.4 percentage points is 
constant for all providers and, though not shown individually, is 
included in the total column. It is projected that aggregate payments 
will increase by 3.4 percent, assuming facilities do not change their 
care delivery and billing practices in response.
    As can be seen from this table, the effects of the changes vary by 
specific types of providers and by location. For example, all 
facilities experience payment increases, however, some providers (for 
example, those in the urban Pacific region) show a greater increase. In 
fact, payment increases for facilities in the urban and rural Pacific 
areas of the country are the highest for any of the provider categories 
at 4.9 percent and 4.5 percent, respectively.

[[Page 46439]]



          Table 12--Projected Impact to the SNF PPS for FY 2009
------------------------------------------------------------------------
                                                               Total FY
                                    Number of     Updated        2009
                                    facilities   wage data      change
                                                 (percent)    (percent)
------------------------------------------------------------------------
Total............................       15,373          0.0          3.4
    Urban........................       10,497          0.0          3.4
    Rural........................        4,876          0.0          3.4
Hospital based urban.............        1,528         -0.1          3.3
Freestanding urban...............        8,969          0.0          3.4
Hospital based rural.............        1,154          0.0          3.4
Freestanding rural...............        3,722          0.0          3.4
Urban by region:
    New England..................          840          0.2          3.6
    Middle Atlantic..............        1,490         -0.5          2.9
    South Atlantic...............        1,734         -0.3          3.1
    East North Central...........        2,010         -0.5          2.9
    East South Central...........          530          0.0          3.4
    West North Central...........          827          0.6          4.0
    West South Central...........        1,166          0.2          3.6
    Mountain.....................          472          0.0          3.4
    Pacific......................        1,420          1.5          4.9
    Outlying.....................            8          0.6          4.0
Rural by region:
    New England..................          150         -1.8          1.6
    Middle Atlantic..............          257         -0.2          3.2
    South Atlantic...............          603          0.0          3.4
    East North Central...........          940         -0.6          2.8
    East South Central...........          552          0.3          3.7
    West North Central...........        1,144          0.5          4.0
    West South Central...........          821          0.5          3.9
    Mountain.....................          259         -0.1          3.3
    Pacific......................          148          1.1          4.5
    Outlying.....................            2          0.4          3.9
Ownership:
    Government...................          665         -0.1          3.3
    Proprietary..................       11,286          0.0          3.4
    Voluntary....................        3,422         -0.1          3.3
------------------------------------------------------------------------

    We received one comment on the regulatory impact section. The 
comment and our response to the comment is as follows:
    Comment: One commenter asserted that the regulatory impact analysis 
understates the effects of the policy changes associated with the 
proposed recalibration of the case-mix weights (as discussed in the FY 
2009 SNF PPS proposed rule) on state and local governments, as well as 
small entities. The commenter stated that the loss of tax revenues for 
State and local governments will be substantial.
    Response: As we have decided not to pursue the recalibration of the 
case-mix weights at this time, SNFs will see an increase of 
approximately 3.4 percent in their payments. However, should we decide 
to recalibrate the case-mix weights in the future, we wish to make 
clear that the law and regulations that govern SNF payment rate updates 
do not provide for considering indirect effects, induced effects, or 
ripple effects on economic activity. Moreover, as such secondary 
effects, if any, would occur within the context of a dynamic, market-
based economy, we expect that the market would properly adjust its 
economic resources in reaction to the appropriately recalibrated SNF 
PPS payments. For these reasons, we believe that the regulatory impact 
analysis adequately estimates the proposed rule's economic impact.

C. Alternatives Considered

    Section 1888(e) of the Act establishes the SNF PPS for the payment 
of Medicare SNF services for cost reporting periods beginning on or 
after July 1, 1998. This section of the statute prescribes a detailed 
formula for calculating payment rates under the SNF PPS, and does not 
provide for the use of any alternative methodology. It specifies that 
the base year cost data to be used for computing the SNF PPS payment 
rates must be from FY 1995 (October 1, 1994, through September 30, 
1995). In accordance with the statute, we also incorporated a number of 
elements into the SNF PPS (for example, case-mix classification 
methodology, the MDS assessment schedule, a market basket index, a wage 
index, and the urban and rural distinction used in the development or 
adjustment of the Federal rates). Further, section 1888(e)(4)(H) of the 
Act specifically requires us to disseminate the payment rates for each 
new FY through the Federal Register, and to do so before the August 1 
that precedes the start of the new FY. Accordingly, we are not pursuing 
alternatives with respect to the payment methodology as discussed 
above.
    In finalizing our decision on the proposed FY 2009 recalibration of 
the case-mix adjustment, we reviewed the options considered in the 
proposed rule and took into consideration comments received during the 
public comment period as discussed in the preamble.
    Although the 2001 data were the best source available at the time 
the FY 2006 refinements were introduced, the distribution of paid days, 
a key component in adjusting the RUG-53 case-mix weights, was based 
solely on estimated utilization. The 2006 data provide a more recent 
and a more accurate source of RUG-53 utilization based on actual 
utilization, and are an appropriate source to use for case-mix 
adjustment. However, in light of the potential ramifications of this 
proposal

[[Page 46440]]

and the complexity of the issues involved, we believe that it would be 
prudent to take additional time to evaluate the proposal in order to 
further consider consequences that may result from it. Accordingly, we 
are not proceeding with the proposed recalibration at this time, 
pending further analysis. We note that as we continue to evaluate this 
issue, we fully expect to implement such an adjustment in the future.

D. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 13 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of this final rule. This 
table provides our best estimate of the change in Medicare payments 
under the SNF PPS as a result of the policies in this final rule based 
on the data for 15,373 SNFs in our database. All expenditures are 
classified as transfers to Medicare providers (that is, SNFs).

       Table 13--Accounting Statement: Classification of Estimated
   Expenditures, From the 2008 SNF PPS Fiscal Year to the 2009 SNF PPS
                               Fiscal Year
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $780 million.
From Whom to Whom?                          Federal Government to SNF
                                             Medicare Providers.
------------------------------------------------------------------------

E. Conclusion

    Overall estimated payments for SNFs in FY 2009 are projected to 
increase by $780 million dollars compared with those in FY 2008. We 
estimate that SNFs in urban areas will experience a positive change of 
3.4 percent in estimated payments compared with FY 2008. We estimate 
that SNFs in rural areas will experience a 3.4 percent increase in 
estimated payments compared with FY 2008. Providers in the urban 
Pacific region and the rural Pacific region show the greatest increases 
in payments of 4.9 percent and 4.5 percent, respectively.
    Finally, 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 413

    Health facilities, Kidney diseases, Medicare, 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 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT 
RATES FOR SKILLED NURSING FACILITIES

0
1. The authority citation for part 413 continues to read as follows:

    Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and 
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act 
(42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of 
Public Law 106-133 (113 Stat. 1501A-332).

Subpart J--Prospective Payment for Skilled Nursing Facilities

0
2. In Sec.  413.333, the definitions of the terms ``rural area'' and 
``urban area'' are revised to read as follows:


Sec.  413.333  Definitions.

* * * * *
    Rural area means, for services provided on or after July 1, 1998, 
but before October 1, 2005, an area as defined in Sec.  
412.62(f)(1)(iii) of this chapter. For services provided on or after 
October 1, 2005, rural area means an area as defined in Sec.  
412.64(b)(1)(ii)(C) of this chapter.
    Urban area means, for services provided on or after July 1, 1998, 
but before October 1, 2005, an area as defined in Sec.  
412.62(f)(1)(ii) of this chapter. For services provided on or after 
October 1, 2005, urban area means an area as defined in Sec.  
412.64(b)(1)(ii)(A) and Sec.  412.64(b)(1)(ii)(B) of this chapter.


Sec.  413.335  [Amended]

0
3. Section 413.335 is amended by revising paragraph (b) to read as 
follows:


Sec.  413.335  Basis of payment.

* * * * *
    (b) Payment in full. (1) The payment rates represent payment in 
full (subject to applicable coinsurance as described in subpart G of 
part 409 of this chapter) for all costs (routine, ancillary, and 
capital-related) associated with furnishing inpatient SNF services to 
Medicare beneficiaries other than costs associated with approved 
educational activities as described in Sec.  413.85.
    (2) In addition to the Federal per diem payment amounts, SNFs 
receive payment for bad debts of Medicare beneficiaries, as specified 
in Sec.  413.89 of this part.

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

    Dated: July 18, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 31, 2008.
Michael O. Leavitt,
Secretary.
    [Note: The following Addendum will not appear in the Code of 
Federal Regulations]

Addendum--FY 2009 CBSA Wage Index Tables

    In this addendum, we provide the wage index tables referred to 
in the preamble to this final rule. Tables 8 and 9 display the CBSA-
based wage index values for urban and rural providers.

 Table 8--FY 2009 Wage Index for Urban Areas Based on CBSA Labor Market
                                  Areas
------------------------------------------------------------------------
                                Urban area (constituent
        CBSA code                      counties)              Wage index
------------------------------------------------------------------------
10180....................  Abilene, TX.....................       0.8097
                             Callahan County, TX
                             Jones County, TX
                             Taylor County, TX
10380....................  Aguadilla-Isabela-San                  0.3399
                            Sebasti[aacute]n, PR.
                             Aguada Municipio, PR
                             Aguadilla Municipio, PR
                             A[ntilde]asco Municipio, PR
                             Isabela Municipio, PR
                             Lares Municipio, PR

[[Page 46441]]

 
                             Moca Municipio, PR
                             Rinc[oacute]n Municipio, PR
                             San Sebasti[aacute]n
                           Municipio, PR
10420....................  Akron, OH.......................       0.8917
                             Portage County, OH
                             Summit County, OH
10500....................  Albany, GA......................       0.8703
                             Baker County, GA
                             Dougherty County, GA
                             Lee County, GA
                             Terrell County, GA
                             Worth County, GA
10580....................  Albany-Schenectady-Troy, NY.....       0.8707
                             Albany County, NY
                             Rensselaer County, NY
                             Saratoga County, NY
                             Schenectady County, NY
                             Schoharie County, NY
10740....................  Albuquerque, NM.................       0.9210
                             Bernalillo County, NM
                             Sandoval County, NM
                             Torrance County, NM
                             Valencia County, NM
10780....................  Alexandria, LA..................       0.8130
                             Grant Parish, LA
                             Rapides Parish, LA
10900....................  Allentown-Bethlehem-Easton, PA-        0.9499
                            NJ.
                             Warren County, NJ
                             Carbon County, PA
                             Lehigh County, PA
                             Northampton County, PA
11020....................  Altoona, PA.....................       0.8521
                             Blair County, PA
11100....................  Amarillo, TX....................       0.8927
                             Armstrong County, TX
                             Carson County, TX
                             Potter County, TX
                             Randall County, TX
11180....................  Ames, IA........................       0.9487
                             Story County, IA
11260....................  Anchorage, AK...................       1.1931
                             Anchorage Municipality, AK
                             Matanuska-Susitna Borough, AK
11300....................  Anderson, IN....................       0.8760
                             Madison County, IN
11340....................  Anderson, SC....................       0.9570
                             Anderson County, SC
11460....................  Ann Arbor, MI...................       1.0445
                             Washtenaw County, MI
11500....................  Anniston-Oxford, AL.............       0.7927
                             Calhoun County, AL
11540....................  Appleton, WI....................       0.9440
                             Calumet County, WI
                             Outagamie County, WI
11700....................  Asheville, NC...................       0.9142
                             Buncombe County, NC
                             Haywood County, NC
                             Henderson County, NC
                             Madison County, NC
12020....................  Athens-Clarke County, GA........       0.9591
                             Clarke County, GA
                             Madison County, GA
                             Oconee County, GA
                             Oglethorpe County, GA
12060....................  Atlanta-Sandy Springs-Marietta,        0.9754
                            GA.
                             Barrow County, GA
                             Bartow County, GA
                             Butts County, GA
                             Carroll County, GA
                             Cherokee County, GA
                             Clayton County, GA
                             Cobb County, GA

[[Page 46442]]

 
                             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-Hammonton, NJ.....       1.1973
                             Atlantic County, NJ
12220....................  Auburn-Opelika, AL..............       0.7544
                             Lee County, AL
12260....................  Augusta-Richmond County, GA-SC..       0.9615
                             Burke County, GA
                             Columbia County, GA
                             McDuffie County, GA
                             Richmond County, GA
                             Aiken County, SC
                             Edgefield County, SC
12420....................  Austin-Round Rock, TX...........       0.9536
                             Bastrop County, TX
                             Caldwell County, TX
                             Hays County, TX
                             Travis County, TX
                             Williamson County, TX
12540....................  Bakersfield, CA.................       1.1189
                             Kern County, CA
12580....................  Baltimore-Towson, MD............       1.0055
                             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......................       1.0174
                             Penobscot County, ME
12700....................  Barnstable Town, MA.............       1.2643
                             Barnstable County, MA
12940....................  Baton Rouge, LA.................       0.8163
                             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................       1.0120
                             Calhoun County, MI
13020....................  Bay City, MI....................       0.9248
                             Bay County, MI
13140....................  Beaumont-Port Arthur, TX........       0.8479
                             Hardin County, TX
                             Jefferson County, TX
                             Orange County, TX
13380....................  Bellingham, WA..................       1.1640
                             Whatcom County, WA

[[Page 46443]]

 
13460....................  Bend, OR........................       1.1375
                             Deschutes County, OR
13644....................  Bethesda-Frederick-Gaithersburg,       1.0548
                            MD.
                             Frederick County, MD
                             Montgomery County, MD
13740....................  Billings, MT....................       0.8805
                             Carbon County, MT
                             Yellowstone County, MT
13780....................  Binghamton, NY..................       0.8574
                             Broome County, NY
                             Tioga County, NY
13820....................  Birmingham-Hoover, AL...........       0.8792
                             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....................       0.7148
                             Burleigh County, ND
                             Morton County, ND
13980....................  Blacksburg-Christiansburg-             0.8155
                            Radford, VA.
                             Giles County, VA
                             Montgomery County, VA
                             Pulaski County, VA
                             Radford City, VA
14020....................  Bloomington, IN.................       0.8979
                             Greene County, IN
                             Monroe County, IN
                             Owen County, IN
14060....................  Bloomington-Normal, IL..........       0.9323
                             McLean County, IL
14260....................  Boise City-Nampa, ID............       0.9268
                             Ada County, ID
                             Boise County, ID
                             Canyon County, ID
                             Gem County, ID
                             Owyhee County, ID
14484....................  Boston-Quincy, MA...............       1.1897
                             Norfolk County, MA
                             Plymouth County, MA
                             Suffolk County, MA
14500....................  Boulder, CO.....................       1.0302
                             Boulder County, CO
14540....................  Bowling Green, KY...............       0.8388
                             Edmonson County, KY
                             Warren County, KY
14600....................  Bradenton-Sarasota-Venice, FL...       0.9900
                             Manatee County, FL
                             Sarasota County, FL
14740....................  Bremerton-Silverdale, WA........       1.0770
                             Kitsap County, WA
14860....................  Bridgeport-Stamford-Norwalk, CT.       1.2868
                             Fairfield County, CT
15180....................  Brownsville-Harlingen, TX.......       0.8916
                             Cameron County, TX
15260....................  Brunswick, GA...................       0.9567
                             Brantley County, GA
                             Glynn County, GA
                             McIntosh County, GA
15380....................  Buffalo-Niagara Falls, NY.......       0.9537
                             Erie County, NY
                             Niagara County, NY
15500....................  Burlington, NC..................       0.8736
                             Alamance County, NC
15540....................  Burlington-South Burlington, VT.       0.9254
                             Chittenden County, VT
                             Franklin County, VT
                             Grand Isle County, VT
15764....................  Cambridge-Newton-Framingham, MA.       1.1086
                             Middlesex County, MA

[[Page 46444]]

 
15804....................  Camden, NJ......................       1.0346
                             Burlington County, NJ
                             Camden County, NJ
                             Gloucester County, NJ
15940....................  Canton-Massillon, OH............       0.8841
                             Carroll County, OH
                             Stark County, OH
15980....................  Cape Coral-Fort Myers, FL.......       0.9396
                             Lee County, FL
16180....................  Carson City, NV.................       1.0128
                             Carson City, NV
16220....................  Casper, WY......................       0.9579
                             Natrona County, WY
16300....................  Cedar Rapids, IA................       0.8919
                             Benton County, IA
                             Jones County, IA
                             Linn County, IA
16580....................  Champaign-Urbana, IL............       0.9461
                             Champaign County, IL
                             Ford County, IL
                             Piatt County, IL
16620....................  Charleston, WV..................       0.8275
                             Boone County, WV
                             Clay County, WV
                             Kanawha County, WV
                             Lincoln County, WV
                             Putnam County, WV
16700....................  Charleston-North Charleston-           0.9209
                            Summerville, SC.
                             Berkeley County, SC
                             Charleston County, SC
                             Dorchester County, SC
16740....................  Charlotte-Gastonia-Concord, NC-        0.9595
                            SC.
                             Anson County, NC
                             Cabarrus County, NC
                             Gaston County, NC
                             Mecklenburg County, NC
                             Union County, NC
                             York County, SC
16820....................  Charlottesville, VA.............       0.9816
                             Albemarle County, VA
                             Fluvanna County, VA
                             Greene County, VA
                             Nelson County, VA
                             Charlottesville City, VA
16860....................  Chattanooga, TN-GA..............       0.8878
                             Catoosa County, GA
                             Dade County, GA
                             Walker County, GA
                             Hamilton County, TN
                             Marion County, TN
                             Sequatchie County, TN
16940....................  Cheyenne, WY....................       0.9276
                             Laramie County, WY
16974....................  Chicago-Naperville-Joliet, IL...       1.0399
                             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.......................       1.0897
                             Butte County, CA
17140....................  Cincinnati-Middletown, OH-KY-IN.       0.9687
                             Dearborn County, IN
                             Franklin County, IN
                             Ohio County, IN
                             Boone County, KY
                             Bracken County, KY
                             Campbell County, KY
                             Gallatin County, KY

[[Page 46445]]

 
                             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..............       0.8298
                             Christian County, KY
                             Trigg County, KY
                             Montgomery County, TN
                             Stewart County, TN
17420....................  Cleveland, TN...................       0.8010
                             Bradley County, TN
                             Polk County, TN
17460....................  Cleveland-Elyria-Mentor, OH.....       0.9241
                             Cuyahoga County, OH
                             Geauga County, OH
                             Lake County, OH
                             Lorain County, OH
                             Medina County, OH
17660....................  Coeur d'Alene, ID...............       0.9322
                             Kootenai County, ID
17780....................  College Station-Bryan, TX.......       0.9346
                             Brazos County, TX
                             Burleson County, TX
                             Robertson County, TX
17820....................  Colorado Springs, CO............       0.9977
                             El Paso County, CO
                             Teller County, CO
17860....................  Columbia, MO....................       0.8540
                             Boone County, MO
                             Howard County, MO
17900....................  Columbia, SC....................       0.8933
                             Calhoun County, SC
                             Fairfield County, SC
                             Kershaw County, SC
                             Lexington County, SC
                             Richland County, SC
                             Saluda County, SC
17980....................  Columbus, GA-AL.................       0.8739
                             Russell County, AL
                             Chattahoochee County, GA
                             Harris County, GA
                             Marion County, GA
                             Muscogee County, GA
18020....................  Columbus, IN....................       0.9739
                             Bartholomew County, IN
18140....................  Columbus, OH....................       0.9943
                             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..............       0.8598
                             Aransas County, TX
                             Nueces County, TX
                             San Patricio County, TX
18700....................  Corvallis, OR...................       1.1304
                             Benton County, OR
19060....................  Cumberland, MD-WV...............       0.7816
                             Allegany County, MD
                             Mineral County, WV
19124....................  Dallas-Plano-Irving, TX.........       0.9945
                             Collin County, TX
                             Dallas County, TX
                             Delta County, TX
                             Denton County, TX

[[Page 46446]]

 
                             Ellis County, TX
                             Hunt County, TX
                             Kaufman County, TX
                             Rockwall County, TX
19140....................  Dalton, GA......................       0.8705
                             Murray County, GA
                             Whitfield County, GA
19180....................  Danville, IL....................       0.9374
                             Vermilion County, IL
19260....................  Danville, VA....................       0.8395
                             Pittsylvania County, VA
                             Danville City, VA
19340....................  Davenport-Moline-Rock Island, IA-      0.8435
                            IL.
                             Henry County, IL
                             Mercer County, IL
                             Rock Island County, IL
                             Scott County, IA
19380....................  Dayton, OH......................       0.9203
                             Greene County, OH
                             Miami County, OH
                             Montgomery County, OH
                             Preble County, OH
19460....................  Decatur, AL.....................       0.7803
                             Lawrence County, AL
                             Morgan County, AL
19500....................  Decatur, IL.....................       0.8145
                             Macon County, IL
19660....................  Deltona-Daytona Beach-Ormond           0.8890
                            Beach, FL.
                             Volusia County, FL
19740....................  Denver-Aurora, CO...............       1.0818
                             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..       0.9535
                             Dallas County, IA
                             Guthrie County, IA
                             Madison County, IA
                             Polk County, IA
                             Warren County, IA
19804....................  Detroit-Livonia-Dearborn, MI....       0.9958
                             Wayne County, MI
20020....................  Dothan, AL......................       0.7613
                             Geneva County, AL
                             Henry County, AL
                             Houston County, AL
20100....................  Dover, DE.......................       1.0325
                             Kent County, DE
20220....................  Dubuque, IA.....................       0.8380
                             Dubuque County, IA
20260....................  Duluth, MN-WI...................       1.0363
                             Carlton County, MN
                             St. Louis County, MN
                             Douglas County, WI
20500....................  Durham, NC......................       0.9732
                             Chatham County, NC
                             Durham County, NC
                             Orange County, NC
                             Person County, NC
20740....................  Eau Claire, WI..................       0.9668
                             Chippewa County, WI
                             Eau Claire County, WI
20764....................  Edison-New Brunswick, NJ........       1.1283
                             Middlesex County, NJ
                             Monmouth County, NJ
                             Ocean County, NJ

[[Page 46447]]

 
                             Somerset County, NJ
20940....................  El Centro, CA...................       0.8746
                             Imperial County, CA
21060....................  Elizabethtown, KY...............       0.8525
                             Hardin County, KY
                             Larue County, KY
21140....................  Elkhart-Goshen, IN..............       0.9568
                             Elkhart County, IN
21300....................  Elmira, NY......................       0.8247
                             Chemung County, NY
21340....................  El Paso, TX.....................       0.8694
                             El Paso County, TX
21500....................  Erie, PA........................       0.8713
                             Erie County, PA
21660....................  Eugene-Springfield, OR..........       1.1061
                             Lane County, OR
21780....................  Evansville, IN-KY...............       0.8690
                             Gibson County, IN
                             Posey County, IN
                             Vanderburgh County, IN
                             Warrick County, IN
                             Henderson County, KY
                             Webster County, KY
21820....................  Fairbanks, AK...................       1.1297
                             Fairbanks North Star Borough,
                           AK
21940....................  Fajardo, PR.....................       0.4061
                             Ceiba Municipio, PR
                             Fajardo Municipio, PR
                             Luquillo Municipio, PR
22020....................  Fargo, ND-MN....................       0.8166
                             Cass County, ND
                             Clay County, MN
22140....................  Farmington, NM..................       0.8051
                             San Juan County, NM
22180....................  Fayetteville, NC................       0.9340
                             Cumberland County, NC
                             Hoke County, NC
22220....................  Fayetteville-Springdale-Rogers,        0.8970
                            AR-MO.
                             Benton County, AR
                             Madison County, AR
                             Washington County, AR
                             McDonald County, MO
22380....................  Flagstaff, AZ...................       1.1743
                             Coconino County, AZ
22420....................  Flint, MI.......................       1.1425
                             Genesee County, MI
22500....................  Florence, SC....................       0.8130
                             Darlington County, SC
                             Florence County, SC
22520....................  Florence-Muscle Shoals, AL......       0.7871
                             Colbert County, AL
                             Lauderdale County, AL
22540....................  Fond du Lac, WI.................       0.9293
                             Fond du Lac County, WI
22660....................  Fort Collins-Loveland, CO.......       0.9867
                             Larimer County, CO
22744....................  Fort Lauderdale-Pompano Beach-         0.9946
                            Deerfield Beach, FL.
                             Broward County, FL
22900....................  Fort Smith, AR-OK...............       0.7697
                             Crawford County, AR
                             Franklin County, AR
                             Sebastian County, AR
                             Le Flore County, OK
                             Sequoyah County, OK
23020....................  Fort Walton Beach-Crestview-           0.8769
                            Destin, FL.
                             Okaloosa County, FL
23060....................  Fort Wayne, IN..................       0.9176
                             Allen County, IN
                             Wells County, IN
                             Whitley County, IN
23104....................  Fort Worth-Arlington, TX........       0.9709
                             Johnson County, TX

[[Page 46448]]

 
                             Parker County, TX
                             Tarrant County, TX
                             Wise County, TX
23420....................  Fresno, CA......................       1.1009
                             Fresno County, CA
23460....................  Gadsden, AL.....................       0.7983
                             Etowah County, AL
23540....................  Gainesville, FL.................       0.9312
                             Alachua County, FL
                             Gilchrist County, FL
23580....................  Gainesville, GA.................       0.9109
                             Hall County, GA
23844....................  Gary, IN........................       0.9250
                             Jasper County, IN
                             Lake County, IN
                             Newton County, IN
                             Porter County, IN
24020....................  Glens Falls, NY.................       0.8473
                             Warren County, NY
                             Washington County, NY
24140....................  Goldsboro, NC...................       0.9143
                             Wayne County, NC
24220....................  Grand Forks, ND-MN..............       0.7565
                             Polk County, MN
                             Grand Forks County, ND
24300....................  Grand Junction, CO..............       0.9812
                             Mesa County, CO
24340....................  Grand Rapids-Wyoming, MI........       0.9184
                             Barry County, MI
                             Ionia County, MI
                             Kent County, MI
                             Newaygo County, MI
24500....................  Great Falls, MT.................       0.8784
                             Cascade County, MT
24540....................  Greeley, CO.....................       0.9684
                             Weld County, CO
24580....................  Green Bay, WI...................       0.9709
                             Brown County, WI
                             Kewaunee County, WI
                             Oconto County, WI
24660....................  Greensboro-High Point, NC.......       0.9011
                             Guilford County, NC
                             Randolph County, NC
                             Rockingham County, NC
24780....................  Greenville, NC..................       0.9448
                             Greene County, NC
                             Pitt County, NC
24860....................  Greenville-Mauldin-Easley, SC...       0.9961
                             Greenville County, SC
                             Laurens County, SC
                             Pickens County, SC
25020....................  Guayama, PR.....................       0.3249
                             Arroyo Municipio, PR
                             Guayama Municipio, PR
                             Patillas Municipio, PR
25060....................  Gulfport-Biloxi, MS.............       0.9029
                             Hancock County, MS
                             Harrison County, MS
                             Stone County, MS
25180....................  Hagerstown-Martinsburg, MD-WV...       0.8997
                             Washington County, MD
                             Berkeley County, WV
                             Morgan County, WV
25260....................  Hanford-Corcoran, CA............       1.0870
                             Kings County, CA
25420....................  Harrisburg-Carlisle, PA.........       0.9153
                             Cumberland County, PA
                             Dauphin County, PA
                             Perry County, PA
25500....................  Harrisonburg, VA................       0.8894
                             Rockingham County, VA
                             Harrisonburg City, VA

[[Page 46449]]

 
25540....................  Hartford-West Hartford-East            1.1069
                            Hartford, CT.
                             Hartford County, CT
                             Middlesex County, CT
                             Tolland County, CT
25620....................  Hattiesburg, MS.................       0.7337
                             Forrest County, MS
                             Lamar County, MS
                             Perry County, MS
25860....................  Hickory-Lenoir-Morganton, NC....       0.8976
                             Alexander County, NC
                             Burke County, NC
                             Caldwell County, NC
                             Catawba County, NC
25980....................  Hinesville-Fort Stewart, GA \1\.       0.9110
                             Liberty County, GA
                             Long County, GA
26100....................  Holland-Grand Haven, MI.........       0.9008
                             Ottawa County, MI
26180....................  Honolulu, HI....................       1.1811
                             Honolulu County, HI
26300....................  Hot Springs, AR.................       0.9113
                             Garland County, AR
26380....................  Houma-Bayou Cane-Thibodaux, LA..       0.7758
                             Lafourche Parish, LA
                             Terrebonne Parish, LA
26420....................  Houston-Sugar Land-Baytown, TX..       0.9838
                             Austin County, TX
                             Brazoria County, TX
                             Chambers County, TX
                             Fort Bend County, TX
                             Galveston County, TX
                             Harris County, TX
                             Liberty County, TX
                             Montgomery County, TX
                             San Jacinto County, TX
                             Waller County, TX
26580....................  Huntington-Ashland, WV-KY-OH....       0.9254
                             Boyd County, KY
                             Greenup County, KY
                             Lawrence County, OH
                             Cabell County, WV
                             Wayne County, WV
26620....................  Huntsville, AL..................       0.9082
                             Limestone County, AL
                             Madison County, AL
26820....................  Idaho Falls, ID.................       0.9080
                             Bonneville County, ID
                             Jefferson County, ID
26900....................  Indianapolis-Carmel, IN.........       0.9908
                             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...................       0.9483
                             Johnson County, IA
                             Washington County, IA
27060....................  Ithaca, NY......................       0.9614
                             Tompkins County, NY
27100....................  Jackson, MI.....................       0.9309
                             Jackson County, MI
27140....................  Jackson, MS.....................       0.8067
                             Copiah County, MS
                             Hinds County, MS
                             Madison County, MS
                             Rankin County, MS
                             Simpson County, MS

[[Page 46450]]

 
27180....................  Jackson, TN.....................       0.8523
                             Chester County, TN
                             Madison County, TN
27260....................  Jacksonville, FL................       0.8999
                             Baker County, FL
                             Clay County, FL
                             Duval County, FL
                             Nassau County, FL
                             St. Johns County, FL
27340....................  Jacksonville, NC................       0.8177
                             Onslow County, NC
27500....................  Janesville, WI..................       0.9662
                             Rock County, WI
27620....................  Jefferson City, MO..............       0.8775
                             Callaway County, MO
                             Cole County, MO
                             Moniteau County, MO
                             Osage County, MO
27740....................  Johnson City, TN................       0.7971
                             Carter County, TN
                             Unicoi County, TN
                             Washington County, TN
27780....................  Johnstown, PA...................       0.7920
                             Cambria County, PA
27860....................  Jonesboro, AR...................       0.7916
                             Craighead County, AR
                             Poinsett County, AR
27900....................  Joplin, MO......................       0.9406
                             Jasper County, MO
                             Newton County, MO
28020....................  Kalamazoo-Portage, MI...........       1.0801
                             Kalamazoo County, MI
                             Van Buren County, MI
28100....................  Kankakee-Bradley, IL............       1.0485
                             Kankakee County, IL
28140....................  Kansas City, MO-KS..............       0.9610
                             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-Pasco-Richland, WA....       0.9911
                             Benton County, WA
                             Franklin County, WA
28660....................  Killeen-Temple-Fort Hood, TX....       0.8765
                             Bell County, TX
                             Coryell County, TX
                             Lampasas County, TX
28700....................  Kingsport-Bristol-Bristol, TN-VA       0.7743
                             Hawkins County, TN
                             Sullivan County, TN
                             Bristol City, VA
                             Scott County, VA
                             Washington County, VA
28740....................  Kingston, NY....................       0.9375
                             Ulster County, NY
28940....................  Knoxville, TN...................       0.7881
                             Anderson County, TN
                             Blount County, TN
                             Knox County, TN
                             Loudon County, TN
                             Union County, TN

[[Page 46451]]

 
29020....................  Kokomo, IN......................       0.9349
                             Howard County, IN
                             Tipton County, IN
29100....................  La Crosse, WI-MN................       0.9758
                             Houston County, MN
                             La Crosse County, WI
29140....................  Lafayette, IN...................       0.9221
                             Benton County, IN
                             Carroll County, IN
                             Tippecanoe County, IN
29180....................  Lafayette, LA...................       0.8374
                             Lafayette Parish, LA
                             St. Martin Parish, LA
29340....................  Lake Charles, LA................       0.7556
                             Calcasieu Parish, LA
                             Cameron Parish, LA
29404....................  Lake County-Kenosha County, IL-        1.0389
                            WI.
                             Lake County, IL
                             Kenosha County, WI
29420....................  Lake Havasu City-Kingman, AZ....       0.9797
                             Mohave County, AZ
29460....................  Lakeland-Winter Haven, FL.......       0.8530
                             Polk County, FL
29540....................  Lancaster, PA...................       0.9363
                             Lancaster County, PA
29620....................  Lansing-East Lansing, MI........       0.9931
                             Clinton County, MI
                             Eaton County, MI
                             Ingham County, MI
29700....................  Laredo, TX......................       0.8366
                             Webb County, TX
29740....................  Las Cruces, NM..................       0.8929
                             Dona Ana County, NM
29820....................  Las Vegas-Paradise, NV..........       1.1971
                             Clark County, NV
29940....................  Lawrence, KS....................       0.8343
                             Douglas County, KS
30020....................  Lawton, OK......................       0.8211
                             Comanche County, OK
30140....................  Lebanon, PA.....................       0.8954
                             Lebanon County, PA
30300....................  Lewiston, ID-WA.................       0.9465
                             Nez Perce County, ID
                             Asotin County, WA
30340....................  Lewiston-Auburn, ME.............       0.9200
                             Androscoggin County, ME
30460....................  Lexington-Fayette, KY...........       0.9110
                             Bourbon County, KY
                             Clark County, KY
                             Fayette County, KY
                             Jessamine County, KY
                             Scott County, KY
                             Woodford County, KY
30620....................  Lima, OH........................       0.9427
                             Allen County, OH
30700....................  Lincoln, NE.....................       0.9759
                             Lancaster County, NE
                             Seward County, NE
30780....................  Little Rock-North Little Rock-         0.8672
                            Conway, AR.
                             Faulkner County, AR
                             Grant County, AR
                             Lonoke County, AR
                             Perry County, AR
                             Pulaski County, AR
                             Saline County, AR
30860....................  Logan, UT-ID....................       0.8765
                             Franklin County, ID
                             Cache County, UT
30980....................  Longview, TX....................       0.8370
                             Gregg County, TX
                             Rusk County, TX
                             Upshur County, TX

[[Page 46452]]

 
31020....................  Longview, WA....................       1.1207
                             Cowlitz County, WA
31084....................  Los Angeles-Long Beach-Santa           1.2208
                            Ana, CA.
                             Los Angeles County, CA
31140....................  Louisville-Jefferson County, KY-       0.9249
                            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.....................       0.8731
                             Crosby County, TX
                             Lubbock County, TX
31340....................  Lynchburg, VA...................       0.8774
                             Amherst County, VA
                             Appomattox County, VA
                             Bedford County, VA
                             Campbell County, VA
                             Bedford City, VA
                             Lynchburg City, VA
31420....................  Macon, GA.......................       0.9570
                             Bibb County, GA
                             Crawford County, GA
                             Jones County, GA
                             Monroe County, GA
                             Twiggs County, GA
31460....................  Madera, CA......................       0.7939
                             Madera County, CA
31540....................  Madison, WI.....................       1.0967
                             Columbia County, WI
                             Dane County, WI
                             Iowa County, WI
31700....................  Manchester-Nashua, NH...........       1.0359
                             Hillsborough County, NH
31900....................  Mansfield, OH...................       0.9330
                             Richland County, OH
32420....................  Mayag[uuml]ez, PR...............       0.3940
                             Hormigueros Municipio, PR
                             Mayag[uuml]ez Municipio, PR
32580....................  McAllen-Edinburg-Mission, TX....       0.9009
                             Hidalgo County, TX
32780....................  Medford, OR.....................       1.0244
                             Jackson County, OR
32820....................  Memphis, TN-MS-AR...............       0.9232
                             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......................       1.2243
                             Merced County, CA
33124....................  Miami-Miami Beach-Kendall, FL...       0.9830
                             Miami-Dade County, FL
33140....................  Michigan City-La Porte, IN......       0.9159
                             LaPorte County, IN
33260....................  Midland, TX.....................       0.9827
                             Midland County, TX
33340....................  Milwaukee-Waukesha-West Allis,         1.0080
                            WI.
                             Milwaukee County, WI
                             Ozaukee County, WI
                             Washington County, WI
                             Waukesha County, WI

[[Page 46453]]

 
33460....................  Minneapolis-St. Paul--                 1.1150
                            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....................       0.8973
                             Missoula County, MT
33660....................  Mobile, AL......................       0.7908
                             Mobile County, AL
33700....................  Modesto, CA.....................       1.2194
                             Stanislaus County, CA
33740....................  Monroe, LA......................       0.7900
                             Ouachita Parish, LA
                             Union Parish, LA
33780....................  Monroe, MI......................       0.8941
                             Monroe County, MI
33860....................  Montgomery, AL..................       0.8283
                             Autauga County, AL
                             Elmore County, AL
                             Lowndes County, AL
                             Montgomery County, AL
34060....................  Morgantown, WV..................       0.8528
                             Monongalia County, WV
                             Preston County, WV
34100....................  Morristown, TN..................       0.7254
                             Grainger County, TN
                             Hamblen County, TN
                             Jefferson County, TN
34580....................  Mount Vernon-Anacortes, WA......       1.0292
                             Skagit County, WA
34620....................  Muncie, IN......................       0.8489
                             Delaware County, IN
34740....................  Muskegon-Norton Shores, MI......       1.0055
                             Muskegon County, MI
34820....................  Myrtle Beach-North Myrtle Beach-       0.8652
                            Conway, SC.
                             Horry County, SC
34900....................  Napa, CA........................       1.4520
                             Napa County, CA
34940....................  Naples-Marco Island, FL.........       0.9672
                             Collier County, FL
34980....................  Nashville-Davidson-Murfreesboro-       0.9504
                            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..............       1.2453
                             Nassau County, NY
                             Suffolk County, NY
35084....................  Newark-Union, NJ-PA.............       1.1731
                             Essex County, NJ
                             Hunterdon County, NJ
                             Morris County, NJ
                             Sussex County, NJ
                             Union County, NJ

[[Page 46454]]

 
                             Pike County, PA
35300....................  New Haven-Milford, CT...........       1.1742
                             New Haven County, CT
35380....................  New Orleans-Metairie-Kenner, LA.       0.9103
                             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-       1.2885
                            NJ.
                             Bergen County, NJ
                             Hudson County, NJ
                             Passaic County, NJ
                             Bronx County, NY
                             Kings County, NY
                             New York County, NY
                             Putnam County, NY
                             Queens County, NY
                             Richmond County, NY
                             Rockland County, NY
                             Westchester County, NY
35660....................  Niles-Benton Harbor, MI.........       0.9066
                             Berrien County, MI
35980....................  Norwich-New London, CT..........       1.1398
                             New London County, CT
36084....................  Oakland-Fremont-Hayward, CA.....       1.6092
                             Alameda County, CA
                             Contra Costa County, CA
36100....................  Ocala, FL.......................       0.8512
                             Marion County, FL
36140....................  Ocean City, NJ..................       1.1496
                             Cape May County, NJ
36220....................  Odessa, TX......................       0.9475
                             Ector County, TX
36260....................  Ogden-Clearfield, UT............       0.9153
                             Davis County, UT
                             Morgan County, UT
                             Weber County, UT
36420....................  Oklahoma City, OK...............       0.8724
                             Canadian County, OK
                             Cleveland County, OK
                             Grady County, OK
                             Lincoln County, OK
                             Logan County, OK
                             McClain County, OK
                             Oklahoma County, OK
36500....................  Olympia, WA.....................       1.1537
                             Thurston County, WA
36540....................  Omaha-Council Bluffs, NE-IA.....       0.9441
                             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...........       0.9111
                             Lake County, FL
                             Orange County, FL
                             Osceola County, FL
                             Seminole County, FL
36780....................  Oshkosh-Neenah, WI..............       0.9474
                             Winnebago County, WI
36980....................  Owensboro, KY...................       0.8685
                             Daviess County, KY
                             Hancock County, KY
                             McLean County, KY
37100....................  Oxnard-Thousand Oaks-Ventura, CA       1.1951
                             Ventura County, CA

[[Page 46455]]

 
37340....................  Palm Bay-Melbourne-Titusville,         0.9332
                            FL.
                             Brevard County, FL
37380....................  Palm Coast, FL..................       0.8963
                             Flagler County, FL
37460....................  Panama City-Lynn Haven, FL......       0.8360
                             Bay County, FL
37620....................  Parkersburg-Marietta-Vienna, WV-       0.7867
                            OH.
                             Washington County, OH
                             Pleasants County, WV
                             Wirt County, WV
                             Wood County, WV
37700....................  Pascagoula, MS..................       0.8102
                             George County, MS
                             Jackson County, MS
37764....................  Peabody, MA.....................       1.0747
                             Essex County, MA
37860....................  Pensacola-Ferry Pass-Brent, FL..       0.8242
                             Escambia County, FL
                             Santa Rosa County, FL
37900....................  Peoria, IL......................       0.9038
                             Marshall County, IL
                             Peoria County, IL
                             Stark County, IL
                             Tazewell County, IL
                             Woodford County, IL
37964....................  Philadelphia, PA................       1.0979
                             Bucks County, PA
                             Chester County, PA
                             Delaware County, PA
                             Montgomery County, PA
                             Philadelphia County, PA
38060....................  Phoenix-Mesa-Scottsdale, AZ.....       1.0379
                             Maricopa County, AZ
                             Pinal County, AZ
38220....................  Pine Bluff, AR..................       0.7926
                             Cleveland County, AR
                             Jefferson County, AR
                             Lincoln County, AR
38300....................  Pittsburgh, PA..................       0.8678
                             Allegheny County, PA
                             Armstrong County, PA
                             Beaver County, PA
                             Butler County, PA
                             Fayette County, PA
                             Washington County, PA
                             Westmoreland County, PA
38340....................  Pittsfield, MA..................       1.0445
                             Berkshire County, MA
38540....................  Pocatello, ID...................       0.9343
                             Bannock County, ID
                             Power County, ID
38660....................  Ponce, PR.......................       0.4289
                             Juana D[iacute]az Municipio,
                           PR
                             Ponce Municipio, PR
                             Villalba Municipio, PR
38860....................  Portland-South Portland-               0.9942
                            Biddeford, ME.
                             Cumberland County, ME
                             Sagadahoc County, ME
                             York County, ME
38900....................  Portland-Vancouver-Beaverton, OR-      1.1456
                            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..............       0.9870
                             Martin County, FL
                             St. Lucie County, FL
39100....................  Poughkeepsie-Newburgh-                 1.0920
                            Middletown, NY.
                             Dutchess County, NY

[[Page 46456]]

 
                             Orange County, NY
39140....................  Prescott, AZ....................       1.0221
                             Yavapai County, AZ
39300....................  Providence-New Bedford-Fall            1.0696
                            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..................       0.9381
                             Juab County, UT
                             Utah County, UT
39380....................  Pueblo, CO......................       0.8713
                             Pueblo County, CO
39460....................  Punta Gorda, FL.................       0.8976
                             Charlotte County, FL
39540....................  Racine, WI......................       0.9054
                             Racine County, WI
39580....................  Raleigh-Cary, NC................       0.9817
                             Franklin County, NC
                             Johnston County, NC
                             Wake County, NC
39660....................  Rapid City, SD..................       0.9598
                             Meade County, SD
                             Pennington County, SD
39740....................  Reading, PA.....................       0.9242
                             Berks County, PA
39820....................  Redding, CA.....................       1.3731
                             Shasta County, CA
39900....................  Reno-Sparks, NV.................       1.0317
                             Storey County, NV
                             Washoe County, NV
40060....................  Richmond, VA....................       0.9363
                             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-              1.1468
                            Ontario, CA.
                             Riverside County, CA
                             San Bernardino County, CA
40220....................  Roanoke, VA.....................       0.8660
                             Botetourt County, VA
                             Craig County, VA
                             Franklin County, VA
                             Roanoke County, VA
                             Roanoke City, VA
                             Salem City, VA
40340....................  Rochester, MN...................       1.1214
                             Dodge County, MN
                             Olmsted County, MN
                             Wabasha County, MN
40380....................  Rochester, NY...................       0.8811
                             Livingston County, NY
                             Monroe County, NY
                             Ontario County, NY

[[Page 46457]]

 
                             Orleans County, NY
                             Wayne County, NY
40420....................  Rockford, IL....................       0.9835
                             Boone County, IL
                             Winnebago County, IL
40484....................  Rockingham County, NH...........       0.9926
                             Strafford County, NH
40580....................  Rocky Mount, NC.................       0.9031
                             Edgecombe County, NC
                             Nash County, NC
40660....................  Rome, GA........................       0.9134
                             Floyd County, GA
40900....................  Sacramento--Arden-Arcade--             1.3572
                            Roseville, CA.
                             El Dorado County, CA
                             Placer County, CA
                             Sacramento County, CA
                             Yolo County, CA
40980....................  Saginaw-Saginaw Township North,        0.8702
                            MI.
                             Saginaw County, MI
41060....................  St. Cloud, MN...................       1.0976
                             Benton County, MN
                             Stearns County, MN
41100....................  St. George, UT..................       0.9021
                             Washington County, UT
41140....................  St. Joseph, MO-KS...............       1.0380
                             Doniphan County, KS
                             Andrew County, MO
                             Buchanan County, MO
                             DeKalb County, MO
41180....................  St. Louis, MO-IL................       0.9006
                             Bond County, IL
                             Calhoun County, IL
                             Clinton County, IL
                             Jersey County, IL
                             Macoupin County, IL
                             Madison County, IL
                             Monroe County, IL
                             St. Clair County, IL
                             Crawford County, MO
                             Franklin County, MO
                             Jefferson County, MO
                             Lincoln County, MO
                             St. Charles County, MO
                             St. Louis County, MO
                             Warren County, MO
                             Washington County, MO
                             St. Louis City, MO
41420....................  Salem, OR.......................       1.0884
                             Marion County, OR
                             Polk County, OR
41500....................  Salinas, CA.....................       1.4987
                             Monterey County, CA
41540....................  Salisbury, MD...................       0.9246
                             Somerset County, MD
                             Wicomico County, MD
41620....................  Salt Lake City, UT..............       0.9158
                             Salt Lake County, UT
                             Summit County, UT
                             Tooele County, UT
41660....................  San Angelo, TX..................       0.8424
                             Irion County, TX
                             Tom Green County, TX
41700....................  San Antonio, TX.................       0.8856
                             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,         1.1538
                            CA.

[[Page 46458]]

 
                             San Diego County, CA
41780....................  Sandusky, OH....................       0.8870
                             Erie County, OH
41884....................  San Francisco-San Mateo-Redwood        1.5529
                            City, CA.
                             Marin County, CA
                             San Francisco County, CA
                             San Mateo County, CA
41900....................  San Germ[aacute]n-Cabo Rojo, PR.       0.4756
                             Cabo Rojo Municipio, PR
                             Lajas Municipio, PR
                             Sabana Grande Municipio, PR
                             San Germ[aacute]n Municipio,
                           PR
41940....................  San Jose-Sunnyvale-Santa Clara,        1.6141
                            CA.
                             San Benito County, CA
                             Santa Clara County, CA
41980....................  San Juan-Caguas-Guaynabo, PR....       0.4393
                             Aguas Buenas Municipio, PR
                             Aibonito Municipio, PR
                             Arecibo Municipio, PR
                             Barceloneta Municipio, PR
                             Barranquitas Municipio, PR
                             Bayam[oacute]n Municipio, PR
                             Caguas Municipio, PR
                             Camuy Municipio, PR
                             Can[oacute]vanas Municipio, PR
                             Carolina Municipio, PR
                             Cata[ntilde]o Municipio, PR
                             Cayey Municipio, PR
                             Ciales Municipio, PR
                             Cidra Municipio, PR
                             Comer[iacute]o Municipio, PR
                             Corozal Municipio, PR
                             Dorado Municipio, PR
                             Florida Municipio, PR
                             Guaynabo Municipio, PR
                             Gurabo Municipio, PR
                             Hatillo Municipio, PR
                             Humacao Municipio, PR
                             Juncos Municipio, PR
                             Las Piedras Municipio, PR
                             Lo[iacute]za Municipio, PR
                             Manat[iacute] Municipio, PR
                             Maunabo Municipio, PR
                             Morovis Municipio, PR
                             Naguabo Municipio, PR
                             Naranjito Municipio, PR
                             Orocovis Municipio, PR
                             Quebradillas Municipio, PR
                             R[iacute]o Grande Municipio,
                           PR
                             San Juan Municipio, PR
                             San Lorenzo Municipio, PR
                             Toa Alta Municipio, PR
                             Toa Baja Municipio, PR
                             Trujillo Alto Municipio, PR
                             Vega Alta Municipio, PR
                             Vega Baja Municipio, PR
                             Yabucoa Municipio, PR
42020....................  San Luis Obispo-Paso Robles, CA.       1.2441
                             San Luis Obispo County, CA
42044....................  Santa Ana-Anaheim-Irvine, CA....       1.1993
                             Orange County, CA
42060....................  Santa Barbara-Santa Maria-             1.1909
                            Goleta, CA.
                             Santa Barbara County, CA
42100....................  Santa Cruz-Watsonville, CA......       1.6429
                             Santa Cruz County, CA
42140....................  Santa Fe, NM....................       1.0610
                             Santa Fe County, NM
42220....................  Santa Rosa-Petaluma, CA.........       1.5528
                             Sonoma County, CA
42340....................  Savannah, GA....................       0.9152
                             Bryan County, GA
                             Chatham County, GA

[[Page 46459]]

 
                             Effingham County, GA
42540....................  Scranton--Wilkes-Barre, PA......       0.8333
                             Lackawanna County, PA
                             Luzerne County, PA
                             Wyoming County, PA
42644....................  Seattle-Bellevue-Everett, WA....       1.1755
                             King County, WA
                             Snohomish County, WA
42680....................  Sebastian-Vero Beach, FL........       0.9217
                             Indian River County, FL
43100....................  Sheboygan, WI...................       0.8920
                             Sheboygan County, WI
43300....................  Sherman-Denison, TX.............       0.9024
                             Grayson County, TX
43340....................  Shreveport-Bossier City, LA.....       0.8442
                             Bossier Parish, LA
                             Caddo Parish, LA
                             De Soto Parish, LA
43580....................  Sioux City, IA-NE-SD............       0.8915
                             Woodbury County, IA
                             Dakota County, NE
                             Dixon County, NE
                             Union County, SD
43620....................  Sioux Falls, SD.................       0.9354
                             Lincoln County, SD
                             McCook County, SD
                             Minnehaha County, SD
                             Turner County, SD
43780....................  South Bend-Mishawaka, IN-MI.....       0.9761
                             St. Joseph County, IN
                             Cass County, MI
43900....................  Spartanburg, SC.................       0.9025
                             Spartanburg County, SC
44060....................  Spokane, WA.....................       1.0559
                             Spokane County, WA
44100....................  Springfield, IL.................       0.9102
                             Menard County, IL
                             Sangamon County, IL
44140....................  Springfield, MA.................       1.0405
                             Franklin County, MA
                             Hampden County, MA
                             Hampshire County, MA
44180....................  Springfield, MO.................       0.8424
                             Christian County, MO
                             Dallas County, MO
                             Greene County, MO
                             Polk County, MO
                             Webster County, MO
44220....................  Springfield, OH.................       0.8876
                             Clark County, OH
44300....................  State College, PA...............       0.8937
                             Centre County, PA
44700....................  Stockton, CA....................       1.2015
                             San Joaquin County, CA
44940....................  Sumter, SC......................       0.8257
                             Sumter County, SC
45060....................  Syracuse, NY....................       0.9787
                             Madison County, NY
                             Onondaga County, NY
                             Oswego County, NY
45104....................  Tacoma, WA......................       1.1241
                             Pierce County, WA
45220....................  Tallahassee, FL.................       0.8964
                             Gadsden County, FL
                             Jefferson County, FL
                             Leon County, FL
                             Wakulla County, FL
45300....................  Tampa-St. Petersburg-Clearwater,       0.8852
                            FL.
                             Hernando County, FL
                             Hillsborough County, FL
                             Pasco County, FL
                             Pinellas County, FL

[[Page 46460]]

 
45460....................  Terre Haute, IN.................       0.9085
                             Clay County, IN
                             Sullivan County, IN
                             Vermillion County, IN
                             Vigo County, IN
45500....................  Texarkana, TX-Texarkana, AR.....       0.8144
                             Miller County, AR
                             Bowie County, TX
45780....................  Toledo, OH......................       0.9407
                             Fulton County, OH
                             Lucas County, OH
                             Ottawa County, OH
                             Wood County, OH
45820....................  Topeka, KS......................       0.8756
                             Jackson County, KS
                             Jefferson County, KS
                             Osage County, KS
                             Shawnee County, KS
                             Wabaunsee County, KS
45940....................  Trenton-Ewing, NJ...............       1.0604
                             Mercer County, NJ
46060....................  Tucson, AZ......................       0.9229
                             Pima County, AZ
46140....................  Tulsa, OK.......................       0.8445
                             Creek County, OK
                             Okmulgee County, OK
                             Osage County, OK
                             Pawnee County, OK
                             Rogers County, OK
                             Tulsa County, OK
                             Wagoner County, OK
46220....................  Tuscaloosa, AL..................       0.8496
                             Greene County, AL
                             Hale County, AL
                             Tuscaloosa County, AL
46340....................  Tyler, TX.......................       0.8804
                             Smith County, TX
46540....................  Utica-Rome, NY..................       0.8404
                             Herkimer County, NY
                             Oneida County, NY
46660....................  Valdosta, GA....................       0.8027
                             Brooks County, GA
                             Echols County, GA
                             Lanier County, GA
                             Lowndes County, GA
46700....................  Vallejo-Fairfield, CA...........       1.4359
                             Solano County, CA
47020....................  Victoria, TX....................       0.8124
                             Calhoun County, TX
                             Goliad County, TX
                             Victoria County, TX
47220....................  Vineland-Millville-Bridgeton, NJ       1.0366
                             Cumberland County, NJ
47260....................  Virginia Beach-Norfolk-Newport         0.8884
                            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.........       1.0144
                             Tulare County, CA

[[Page 46461]]

 
47380....................  Waco, TX........................       0.8596
                             McLennan County, TX
47580....................  Warner Robins, GA...............       0.8989
                             Houston County, GA
47644....................  Warren-Troy-Farmington Hills, MI       0.9904
                             Lapeer County, MI
                             Livingston County, MI
                             Macomb County, MI
                             Oakland County, MI
                             St. Clair County, MI
47894....................  Washington-Arlington-Alexandria,       1.0827
                            DC-VA-MD-WV.
                             District of Columbia, DC
                             Calvert County, MD
                             Charles County, MD
                             Prince George's County, MD
                             Arlington County, VA
                             Clarke County, VA
                             Fairfax County, VA
                             Fauquier County, VA
                             Loudoun County, VA
                             Prince William County, VA
                             Spotsylvania County, VA
                             Stafford County, VA
                             Warren County, VA
                             Alexandria City, VA
                             Fairfax City, VA
                             Falls Church City, VA
                             Fredericksburg City, VA
                             Manassas City, VA
                             Manassas Park City, VA
                             Jefferson County, WV
47940....................  Waterloo-Cedar Falls, IA........       0.8490
                             Black Hawk County, IA
                             Bremer County, IA
                             Grundy County, IA
48140....................  Wausau, WI......................       0.9615
                             Marathon County, WI
48260....................  Weirton-Steubenville, WV-OH.....       0.8079
                             Jefferson County, OH
                             Brooke County, WV
                             Hancock County, WV
48300....................  Wenatchee, WA...................       0.9544
                             Chelan County, WA
                             Douglas County, WA
48424....................  West Palm Beach-Boca Raton-            0.9757
                            Boynton Beach, FL.
                             Palm Beach County, FL
48540....................  Wheeling, WV-OH.................       0.6955
                             Belmont County, OH
                             Marshall County, WV
                             Ohio County, WV
48620....................  Wichita, KS.....................       0.9069
                             Butler County, KS
                             Harvey County, KS
                             Sedgwick County, KS
                             Sumner County, KS
48660....................  Wichita Falls, TX...............       0.8832
                             Archer County, TX
                             Clay County, TX
                             Wichita County, TX
48700....................  Williamsport, PA................       0.8096
                             Lycoming County, PA
48864....................  Wilmington, DE-MD-NJ............       1.0696
                             New Castle County, DE
                             Cecil County, MD
                             Salem County, NJ
48900....................  Wilmington, NC..................       0.9089
                             Brunswick County, NC
                             New Hanover County, NC
                             Pender County, NC
49020....................  Winchester, VA-WV...............       0.9801
                             Frederick County, VA
                             Winchester City, VA

[[Page 46462]]

 
                             Hampshire County, WV
49180....................  Winston-Salem, NC...............       0.9016
                             Davie County, NC
                             Forsyth County, NC
                             Stokes County, NC
                             Yadkin County, NC
49340....................  Worcester, MA...................       1.0836
                             Worcester County, MA
49420....................  Yakima, WA......................       0.9948
                             Yakima County, WA
49500....................  Yauco, PR.......................       0.3432
                             Gu[aacute]nica Municipio, PR
                             Guayanilla Municipio, PR
                             Pe[ntilde]uelas Municipio, PR
                             Yauco Municipio, PR
49620....................  York-Hanover, PA................       0.9518
                             York County, PA
49660....................  Youngstown-Warren-Boardman, OH-        0.8915
                            PA.
                             Mahoning County, OH
                             Trumbull County, OH
                             Mercer County, PA
49700....................  Yuba City, CA...................       1.1137
                             Sutter County, CA
                             Yuba County, CA
49740....................  Yuma, AZ........................       0.9281
                             Yuma County, AZ
------------------------------------------------------------------------
\1\ At this time, there are no hospitals located in this urban area on
  which to base a wage index. We use the average wage index of all of
  the urban areas within the State to serve as a reasonable proxy.


 Table 9--Fy 2009 Wage Index Based on CBSA Labor Market Areas for Rural
                                  Areas
------------------------------------------------------------------------
                                                                  Wage
        State code                    Nonurban area              index
------------------------------------------------------------------------
1.........................  Alabama..........................     0.7587
2.........................  Alaska...........................     1.1898
3.........................  Arizona..........................     0.8453
4.........................  Arkansas.........................     0.7473
5.........................  California.......................     1.2275
6.........................  Colorado.........................     0.9570
7.........................  Connecticut......................     1.1016
8.........................  Delaware.........................     0.9962
10........................  Florida..........................     0.8504
11........................  Georgia..........................     0.7612
12........................  Hawaii...........................     1.0999
13........................  Idaho............................     0.7651
14........................  Illinois.........................     0.8386
15........................  Indiana..........................     0.8473
16........................  Iowa.............................     0.8804
17........................  Kansas...........................     0.8052
18........................  Kentucky.........................     0.7803
19........................  Louisiana........................     0.7447
20........................  Maine............................     0.8644
21........................  Maryland.........................     0.8883
22........................  Massachusetts \1\................     1.1670
23........................  Michigan.........................     0.8887
24........................  Minnesota........................     0.9059
25........................  Mississippi......................     0.7584
26........................  Missouri.........................     0.7982
27........................  Montana..........................     0.8658
28........................  Nebraska.........................     0.8730
29........................  Nevada...........................     0.9382
30........................  New Hampshire....................     1.0182
31........................  New Jersey \1\...................  .........
32........................  New Mexico.......................     0.8812
33........................  New York.........................     0.8145
34........................  North Carolina...................     0.8576
35........................  North Dakota.....................     0.7205
36........................  Ohio.............................     0.8588
37........................  Oklahoma.........................     0.7732
38........................  Oregon...........................     1.0218
39........................  Pennsylvania.....................     0.8365
40........................  Puerto Rico \1\..................     0.4047
41........................  Rhode Island \1\.................  .........
42........................  South Carolina...................     0.8538
43........................  South Dakota.....................     0.8603
44........................  Tennessee........................     0.7789
45........................  Texas............................     0.7894
46........................  Utah.............................     0.8267
47........................  Vermont..........................     1.0079
48........................  Virgin Islands...................     0.6971
49........................  Virginia.........................     0.7861
50........................  Washington.......................     1.0181
51........................  West Virginia....................     0.7503
52........................  Wisconsin........................     0.9373
53........................  Wyoming..........................     0.9315
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. E8-17948 Filed 7-31-08; 4:15 pm]
BILLING CODE 4120-01-P