[Federal Register Volume 81, Number 77 (Thursday, April 21, 2016)]
[Rules and Regulations]
[Pages 23428-23438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09219]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1664-IFC]
RIN 0938-AS88
Medicare Program; Temporary Exception for Certain Severe Wound
Discharges From Certain Long-Term Care Hospitals Required by the
Consolidated Appropriations Act, 2016; Modification of Limitations on
Redesignation by the Medicare Geographic Classification Review Board
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule with comment period (IFC) implements
section 231 of the Consolidated Appropriations Act of 2016 (CAA), which
provides for a temporary exception for certain wound care discharges
from the application of the site neutral payment rate under the Long-
Term Care Hospital (LTCH) Prospective Payment System (PPS) for certain
long-term care hospitals. This IFC also amends our current regulations
to allow hospitals nationwide to reclassify based on their acquired
rural status, effective with reclassifications beginning with fiscal
year (FY) 2018. Hospitals with an existing Medicare Geographic
Classification Review Board (MGCRB) reclassification would also have
the opportunity to seek rural reclassification for IPPS payment and
other purposes and keep their existing MGCRB reclassification. We would
also apply the policy in this IFC when deciding timely appeals before
the Administrator under our regulations for FY 2017 that were denied by
the MGCRB due to existing regulations, which do not permit simultaneous
rural reclassification for IPPS payment and other purposes and MGCRB
reclassification. These regulatory changes implement the decisions in
Geisinger Community Medical Center v. Secretary, United States
Department of Health and Human Services, 794 F.3d 383 (3d Cir. 2015)
and Lawrence + Memorial Hospital v. Burwell, No. 15-164, 2016 WL 423702
(2d Cir. Feb. 4, 2015) in a nationally consistent manner.
DATES: Effective date: These regulations are effective on April 21,
2016.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on June 17, 2016.
ADDRESSES: In commenting, please refer to file code CMS-1664-IFC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed)
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS--1664-IFC, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS--1664-IFC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
[[Page 23429]]
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Emily Lipkin, (410) 786-3633 for the
Temporary Exception to Site-Neutral Payments for Certain Long-Term Care
Hospital Discharges.
Tehila Lipschutz, (410) 786-1344 or Dan Schroder, (410) 786-7452
for the Modification of Limitations on Redesignation by the Medicare
Geographic Classification Review Board.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Long-Term Care Hospital Prospective Payment System
Section 123 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) as amended by section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554) provides for payment for both the operating
and capital related costs of hospital inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part A based on prospectively set
rates. The Medicare prospective payment system (PPS) for LTCHs applies
to hospitals that are described in section 1886(d)(1)(B)(iv) of the
Social Security Act (the Act), effective for cost reporting periods
beginning on or after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act defines an LTCH as a
hospital which has an average inpatient length of stay (as determined
by the Secretary) of greater than 25 days. Section
1886(d)(1)(B)(iv)(II) of the Act also provides an alternative
definition of LTCHs: specifically, a hospital that first received
payment under section 1886(d) of the Act in 1986 and has an average
inpatient length of stay (as determined by the Secretary of Health and
Human Services (the Secretary)) of greater than 20 days and has 80
percent or more of its annual Medicare inpatient discharges with a
principal diagnosis that reflects a finding of neoplastic disease in
the 12-month cost reporting period ending in FY 1997.
Section 123 of the BBRA requires the PPS for LTCHs to be a ``per
discharge'' system with a diagnosis related group (DRG) based patient
classification system that reflects the differences in patient
resources and costs in LTCHs.
Section 307(b)(1) of the BIPA, among other things, mandates that
the Secretary shall examine, and may provide for, adjustments to
payments under the LTCH PPS, including adjustments to DRG weights, area
wage adjustments, geographic reclassification, outliers, updates, and a
disproportionate share adjustment.
In the August 30, 2002 Federal Register (67 FR 55954), we issued
the Medicare Program; Prospective Payment System for Long-Term Care
Hospitals: Implementation and FY 2003 Rates final rule that implemented
the LTCH PPS authorized under the BBRA and BIPA. For the initial
implementation of the LTCH PPS (FYs 2003 through FY 2007), the system
used information from LTCH patient records to classify patients into
distinct long-term care diagnosis related groups (LTC-DRGs) based on
clinical characteristics and expected resource needs. Beginning in FY
2008, we adopted the Medicare severity long-term care diagnosis related
groups (MS-LTC-DRGs) as the patient classification system used under
the LTCH PPS. Payments are calculated for each MS-LTC-DRG and
provisions are made for appropriate payment adjustments. Payment rates
under the LTCH PPS are updated annually and published in the Federal
Register.
The LTCH PPS replaced the reasonable cost based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
(Pub. L. 97-248) for payments for inpatient services provided by an
LTCH with a cost reporting period beginning on or after October 1,
2002. (The regulations implementing the TEFRA reasonable cost based
payment provisions are located at 42 CFR part 413.) With the
implementation of the PPS for acute care hospitals authorized by the
Social Security Amendments of 1983 (Pub. L. 98-21), which added section
1886(d) to the Act, certain hospitals, including LTCHs, were excluded
from the PPS for acute care hospitals and were paid their reasonable
costs for inpatient services subject to a per discharge limitation or
target amount under the TEFRA system. For each cost-reporting period, a
hospital specific ceiling on payments was determined by multiplying the
hospital's updated target amount by the number of total current year
Medicare discharges. (Generally, in this interim final rule with
comment, when we refer to discharges, we describe Medicare discharges.)
The August 30, 2002 final rule further details the payment policy under
the TEFRA system (67 FR 55954).
In the August 30, 2002 final rule, we provided for a 5-year
transition period from payments under the TEFRA system to payments
under the LTCH PPS. During this 5-year transition period, an LTCH's
total payment under the PPS was based on an increasing percentage of
the federal rate with a corresponding decrease in the percentage of the
LTCH PPS payment that is based on reasonable cost concepts, unless an
LTCH made a one-time election to be paid based on 100 percent of the
federal rate. Beginning with LTCHs' cost reporting periods beginning on
or after October 1, 2006, total LTCH PPS payments are based on 100
percent of the federal rate.
In addition, in the August 30, 2002 final rule, we presented an in
depth discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of the BBRA. The
same final rule that established regulations for the LTCH PPS under 42
CFR part 412, subpart O, also contained LTCH provisions related to
covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements. We refer readers to the August 30, 2002 final rule for a
comprehensive discussion of the research and data that supported the
establishment of the LTCH PPS (67 FR 55954).
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51733 through 51743) for a chronological summary of the main
legislative and regulatory developments affecting the
[[Page 23430]]
LTCH PPS through the annual update cycles prior to the FY 2014
rulemaking cycle. In addition, the FY 2016 IPPS/LTCH PPS final rule, we
implemented the provisions of the Pathway for SGR Reform Act of 2013
(Pub. L. 113-67), which mandated the application of the ``site
neutral'' payment rate for discharges in cost reporting periods
beginning in FY 2016. Section 1886(m)(6)(A) of the Act provides that,
for cost reporting periods beginning on or after October 1, 2015,
discharges that do not meet certain statutory criteria are paid the
site neutral payment rate. Discharges which do meet the statutory
criteria continue to receive reimbursement at the LTCH PPS standard
federal payment rate. The application of the site neutral payment rate,
which resulted in a dual rate payment structure under the LTCH PPS, is
implemented in the regulations at Sec. 412.522. For more information
on the statutory requirements of the Pathway for SGR Reform Act of
2013, refer to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601
through 49623).
B. Wage Index for Acute Care Hospitals Paid Under the Inpatient
Prospective Payment System (IPPS)
Under section 1886(d) of the Act hospitals are paid based on
prospectively set rates. To account for geographic area wage level
differences, section 1886(d)(3)(E) of the Act requires that the
Secretary adjust the standardized amounts by a factor (established by
the Secretary) reflecting the relative hospital wage level in the
geographic area of the hospital, as compared to the national average
hospital wage level. We currently define hospital labor market areas
based on the delineations of statistical areas established by the
Office of Management and Budget (OMB). The current statistical areas
(which were implemented beginning with FY 2015) are based on revised
OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13-
01. We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR
49951 through 49963) for a full discussion of our implementation of the
new OMB labor market area delineations beginning with the FY 2015 wage
index.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index of hospitals annually, and to base the update on a
survey of wages and wage-related costs of short-term, acute care
hospitals. Under section 1886(d)(8)(D) of the Act, the Secretary is
required to adjust the standardized amounts so as to ensure that
aggregate payments under the IPPS, after implementation of the
provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and 1886(d)(10) of
the Act, regarding geographic reclassification of hospitals, are equal
to the aggregate prospective payments that would have been made absent
these provisions.
Hospitals may seek to have their geographic designation
reclassified. Under section 1886(d)(8)(E) of the Act, a qualifying
prospective payment hospital located in an urban area may apply for
rural status. Specifically, section 1886(d)(8)(E) of the Act states
that ``[f]or purposes of this subsection, not later than 60 days after
the receipt of an application (in a form and manner determined by the
Secretary) from a subsection (d) hospital described in clause (ii), the
Secretary shall treat the hospital as being located in the rural area
(as defined in paragraph (2)(D)) of the state in which the hospital is
located.'' The regulations governing these geographic redesignations
are found in Sec. 412.103. We also refer readers to the final rule
published in the August 1, 2000 Federal Register entitled, ``Medicare
Program; Provisions of the Balanced Budget Refinement Act of 1999;
Hospital Inpatient Payments and Rates and Costs of Graduate Medical
Education'' (65 FR 47029 through 47031) for a discussion of the general
criteria for reclassifying from urban to rural under this statute. In
addition, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51596), we
discussed the effects on the wage index of an urban hospital
reclassifying to a rural area of its state, if the urban hospital meets
the requirements under Sec. 412.103. Hospitals that are located in
states without any geographically rural areas are ineligible to apply
for rural reclassification in accordance with the provisions of Sec.
412.103.
In addition, under section 1886(d)(10) of the Act, the Medicare
Geographic Classification Review Board (MGCRB) considers applications
by hospitals for geographic reclassification for purposes of payment
under the IPPS. Hospitals must apply to the MGCRB to reclassify not
later than 13 months prior to the start of the fiscal year for which
reclassification is sought (generally by September 1). Generally,
hospitals must be proximate to the labor market area to which they are
seeking reclassification and must demonstrate characteristics similar
to hospitals located in that area. The MGCRB issues its decisions by
the end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in Sec. Sec. 412.230
through 412.280. (We refer readers to a discussion in the FY 2002 IPPS
final rule (66 FR 39874 and 39875) regarding how the MGCRB defines
mileage for purposes of the proximity requirements.) The general
policies applicable to reclassifications under the MGCRB process are
discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012 final
wage index (76 FR 51595 and 51596).
II. Provisions of the Interim Final Rule With Comment Period
A. Long Term Care Hospital Prospective Payment System
1. Section 231 of the Consolidated Appropriations Act, 2016
Section 231 of the Consolidated Appropriations Act, 2016 (CAA)
(Pub. L. 114-113) amends section 1886(m)(6) of the Act by revising
subparagraph (A)(i) and adding new subparagraph (E), which establishes
a temporary exception for certain wound care discharges from the site
neutral payment rate for certain LTCHs. Specifically, under this
statutory provision, the exception applies for discharges occurring
prior to January 1, 2017 from LTCHs ``identified by the amendment made
by section 4417(a) of the Balanced Budget Act of 1997'' and ``located
in a rural area (as defined in subsection (d)(2)(D)) or treated as
being so located pursuant to subsection (d)(8)(E)'' when the individual
discharged ``has a severe wound''. In this interim final rule with
comment period (IFC), we are amending Sec. 412.522 to implement this
provision. Because the statute contained no effective date and required
rulemaking to implement, we determined that an IFC was the appropriate
mechanism to use to provide the longest period of relief under the
statute.
In implementing the provisions of section 231 of the CAA, we found
that, in light of the unique nature of LTCHs as a category of Medicare
provider, some of the terminology in the provision is internally
inconsistent. Therefore, we were required to interpret the provisions
in the way we believe reasonably reconciles seemingly inconsistent
provisions and that results in an application of the provisions that is
logical and workable. We discuss our interpretations in this section of
this IFC.
Section 1886(m)(6)(E)(i)(I)(aa) of the Act, as added by the CAA,
specifies that the temporary exclusion for certain discharges from the
site neutral payment rate is applicable to an LTCH that is ``identified
by the amendment made by section 4417(a) of the Balanced Budget Act of
1997.'' The phrase
[[Page 23431]]
``identified by the amendment made by section 4417(a) of the Balanced
Budget Act of 1997'' has been interpreted by CMS in previous
rulemaking. Section 114 of the Medicare, Medicaid, and SCHIP Extension
Act (MMSEA) (Pub. L. 110-173) used the phrase to delay the
implementation of the 25 percent policy at Sec. Sec. 412.534 and
412.536 for LTCHs ``identified by the amendment made by section 4417(a)
of the Balanced Budget Act of 1997'' which we interpreted in the May
22, 2008 interim final rule with comment period (IFC). In that IFC (73
FR 29703) (finalized in our FY 2010 IPPS/RY 2010 LTCH PPS final rule
(74 FR 43980)) we interpreted the phrase to mean hospitals which were
described in Sec. 412.23(e)(2)(i) that meet the criteria of Sec.
412.22(f). (We note that we received no comments in response to this
interpretation). Section 412.22(f) requires that, in order to maintain
grandfathered status, a hospital-within-hospital (HwH) must continue to
operate under the same terms and conditions including but not limited
to number of beds. In revising Sec. 412.22(f) in the FY 2004 IPPS
final rule (68 FR 45463), we created a ``hold harmless'' provision
which allowed a grandfathered HwH to increase beds or change terms and
maintain grandfathered status so long as beds were not increased on or
after October 1, 2003 (meaning that if a hospital increased beds
between October 1, 1995 and September 30, 2003 it would maintain its
grandfathered status). As we have already interpreted this exact phrase
in previous rulemaking, for purposes of implementing section 231 of the
CAA we are interpreting the phrase consistent with our implementation
of MMSEA, meaning that ``identified by the amendment made by section
4417(a) of the Balanced Budget Act of 1997'' requires that the LTCH
participated in Medicare as an LTCH and was co-located with another
hospital as of September 30, 1995, and must currently meet the
requirements of Sec. 412.22(f).
Section 4417(a) of the BBA of 1997 permanently exempted certain
LTCHs from our regulations governing separateness and control
requirements for HwHs (which we established in the FY 1995 IPPS final
rule (59 FR 45389)). We implemented section 4417(a) of the BBA in the
FY 1998 IPPS final rule (62 FR 46012). As finalized, our regulations
implementing section 4417(a) of the BBA exempted hospitals excluded
from the hospital inpatient prospective payment system on or before
September 30, 1995 from our separateness and control HwH requirements.
An HwH is defined in our regulations at Sec. 412.22(e) as a hospital
which occupies space in a building also used by another hospital or on
the campus of another hospital. The provisions governing HwH exemption
from the separateness and control requirements remained unchanged until
the FY 2003 rulemaking cycle in which we proposed and finalized
revisions to Sec. 412.22(f) to specify that, effective with cost
reporting periods beginning on or after October 1, 2003, a hospital
operating as an HwH on or before September 30, 1995, would only be
exempt from the criteria in Sec. Sec. 412.22(e)(1) through (5) if the
hospital-within-a-hospital continued to operate under the same terms
and conditions that were in effect as of September 30, 1995 (68 FR
45463). The intent of this modification to the grandfathering provision
was to limit the separateness and control exemption to those HwHs that
continued to operate as they had when the Congress provided for an
exemption from the requirements. Those HwHs that met this requirement
would continue to be shielded as the Congress had intended. But, in
recognition of the need not to allow these facilities undue advantage
over facilities not benefiting from the exemption, and in recognition
that some grandfathered HwHs no longer resembled the entities they had
been in 1995 (for example, by changing the nature of their operations
such as by adding more beds), we proposed to limit grandfathering to
those HwHs that continued to operate under the same terms and
conditions that were in effect as of September 30, 1995, the date
identified in the BBA.
Several commenters disagreed with our proposal to limit
grandfathering to HwH that continue to operate under the same terms and
conditions that were in place on September 30, 1995. These commenters
believed that the adoption of this proposal could result in a
decertification of a number of LTCHs, thus depriving Medicare
beneficiaries of specialized services and unique programs. They
asserted that CMS was requiring grandfathered HwHs that had changed the
terms and conditions under which they operated to either reverse their
previously approved changes or lose their certification, which would
retroactively reverse prior governmental approvals of LTCH changes. The
commenters further asserted that there was no good reason to treat
these hospitals any differently from other providers participating in
the Medicare program, a practice that the commenters believed would
result in inequitable treatment of patients as well as employees.
Furthermore, the commenters expressed concern that the proposed
effective date timeframe for implementation (which was 60 days from the
publication of the final rule) was too short because it would not allow
adequate time for providers to undo previous changes to the terms and
conditions under which they operated.
In response to these comments, in the FY 2003 LTCH PPS final rule,
we reiterated that, in establishing grandfathering regulations, the
intent had been to protect existing hospitals from the potentially
adverse impact of subsequent, specific regulations that they could not
have foreseen, and, using their existing operational structures, could
not have abided by. If those entities later proved able to change their
operational structures, we saw no policy basis for not applying the
separateness and control provisions that had since proven essential to
the goals of the Medicare program--after all, the entity benefiting
from the grandfathering would no longer resemble the entity the
Congress had grandfathered in statute. That said, we understood
commenters' concerns about after-the-fact changes, and so we finalized
a policy that grandfathered any facility that continued to operate as
it had as of September 30, 1995 (our original proposal), or that
operated under the terms and conditions that had been put into effect
no later than October 1, 2003, and codified these provisions in a
revised Sec. 412.22(f). An LTCH that met these revised grandfathering
requirements would still need to comply with the general HwH
requirements set forth in Sec. 412.22(e) (see 68 FR 45463).
Later, in recognition of requests for modification relating to the
need to update a hospital's medical equipment, in the FY 2007 IPPS
proposed rule, we proposed further revisions to the requirements of
Sec. 412.22(f) to allow grandfathered hospitals to increase square
footage or decrease the number of beds for cost reporting periods
beginning on or after October 1, 2006 without a loss of grandfathered
status. These proposals generated comments requesting further
amendments to allow a grandfathered hospital to increase beds without
loss of grandfathered status. As we explained in response to those
comments in the FY 2007 IPPS final rule (71 FR 48106), grandfathered
hospitals are generally organized and operated in ways that do not meet
the separateness and control requirements applicable to non-
grandfathered facilities, so that they effectively function as units of
their host facilities, an arrangement prohibited by the Act.
[[Page 23432]]
Therefore, although we finalized regulations that allowed grandfathered
HwHs (and satellite facilities) the ability to increase their square
footage and retain grandfathered status to allow the hospitals to be
able to provide care using the most appropriate medical equipment and
techniques (which may require more space than was required in 1995 and
2003), we did not allow grandfathered hospitals an increase in the
number of beds (71 FR 48111).
As discussed previously, there are several reasons for which an
LTCH described in Sec. 412.23(e)(2)(i) may not meet the criteria in
Sec. 412.22(f). For example, the LTCH may have more than one location,
meaning that each co-located location would be a satellite, not an HwH,
or the hospital may have increased beds after September 30, 2003 (we
note that the preceding provides only examples and is not an exhaustive
list of the reasons an LTCH may not meet the criteria in Sec.
412.22(f)). Also as previously explained, the requirement that
grandfathered HwHs meet the criteria in Sec. 412.22(f) was established
through previous notice-and-comment rulemaking. Therefore, in order to
identify which LTCHs are grandfathered HwHs, Medicare Administrative
Contractors (MACs) will be verifying which LTCHs described in Sec.
412.23(e)(2)(i) meet the criteria in Sec. 412.22(f). Section
1886(m)(6)(E)(i)(I)(bb) of the Act, as added by the CAA, further limits
the temporary statutory exclusion for certain discharges from the site
neutral payment rate to LTCHs that are ``located in a rural area (as
defined in subsection (d)(2)(D)) or treated as being so located
pursuant to subsection (d)(8)(E)''. In general, section 1886(d)(2)(D)
of the Act defines the term ``rural area'' as any area outside an urban
area, which is an area within a Metropolitan Statistical Area (MSA) (as
defined by the OMB). This definition of rural area is consistent with
the existing definition of rural area under the LTCH PPS set forth at
Sec. 412.503. Therefore, in this IFC, we are establishing that
``located in a rural area'' in section 1886(m)(6)(E)(i)(I)(bb) refers
to LTCHs which are currently located in a rural area as defined under
Sec. 412.503. (For information on the current labor market area
geographic classifications used under the LTCH PPS, refer to the FY
2015 IPPS/LTCH PPS final rule (79 FR 50180 through 50185).)
The phrase ``treated as being so located pursuant to subsection
(d)(8)(E)'' is internally inconsistent given the unique nature of LTCHs
as a category of Medicare provider. There is currently no mechanism
which an LTCH may use to be treated as rural pursuant to section
1886(d)(8)(E) of the Act because that section only applies to
subsection (d) hospitals, and LTCHs, by definition at section
1886(b)(1) of the Act are not subsection (d) hospitals.
For urban subsection (d) hospitals, we implemented the rural
reclassification provision in the regulations at Sec. 412.103. In
general, the provisions of Sec. 412.103 provides that a hospital that
is located in an urban area may be reclassified as a rural hospital if
it submits an application in accordance with our established criteria
and meets certain conditions, which include the hospital being located
in a rural census tract of a MSA as determined under the most recent
version of the Goldsmith Modification, the Rural-Urban Commuting Area
(RUCA) codes, as determined by the Office of Rural Health Policy (ORHP)
of the Health Resources and Services Administration (HRSA), or that the
hospital is located in an area designated by any law or regulation of
the state in which it is located as a rural area, or the hospital is
designated as a rural hospital by state law or regulation. Paragraph
(b) of Sec. 412.103 sets forth application requirements for a hospital
seeking reclassification as rural under that section, which includes a
written application mailed to the Center for Medicare and Medicaid
Services (CMS) regional office (RO) that contains an explanation of how
the hospital meets the condition that constitutes the request for
reclassification, including data and documentation necessary to support
the request. As provided in paragraphs (c) and (d) of Sec. 412.103,
the RO reviews the application and notifies the hospital of its
approval or disapproval of the request within 60 days of the filing
date (that is, the date the CMS RO receives the application), and a
hospital (that satisfies any of the criteria set forth Sec. 412.103(a)
is considered as being located in the rural area of the state in which
the hospital is located as of that filing date (meaning that the
hospital would be treated as rural for the purposes of exclusion from
the site neutral payment rate for severe wound discharges as of the
filing date). For additional information on our policies for hospitals
located in urban areas and that apply for reclassification as rural
under Sec. 412.103, refer to the FY 2001 IPPS/LTCH PPS final rule (65
FR 47029).
For the purposes of implementing subparagraph (E) of section
1886(m)(6) of the Act as provided by the CAA, we are revising our
regulations to--
``Borrow'' the existing rural reclassification process for
urban subsection (d) hospitals under Sec. 412.103; and
Allow grandfathered LTCH HwHs (previously defined in this
IFC) to apply to their RO for treatment as being located in a rural
area for the sole purpose of qualifying for this temporary exclusion
from the application of the site neutral payment rate.
We note that this policy would only allow grandfathered LTCH HwHs
to apply for this reclassification. The rural treatment would only
extend to this temporary exception for certain wound care discharges
from the site neutral payment rate (meaning a grandfathered HwH LTCH
will not be treated as rural for any other reason including, but not
limited to, the 25 percent policy and wage index). We also note that
the any rural treatment under Sec. 412.103 for a grandfathered HwH
LTCH will expire at the same time as this temporary provision (that is,
December 31, 2016).
Section 1886(m)(6)(E)(i)(II) of the Act, as added by the CAA,
provides that the temporary exclusion for certain discharges from the
site neutral payment rate for certain LTCHs is applicable when ``the
individual discharged has a severe wound.'' The use of the present
tense in ``has'' a severe wound is also internally inconsistent. A
strictly literal read of the statute would require exception from the
site neutral payment rate only for an individual who, presently, ``has
severe a wound'' at the time of their discharge from the LTCH, and thus
payments for patients whose wounds were either healed or no longer
severe at the time of their discharge would be made under our existing
regulations (that is, they would receive payment at the site neutral
payment rate unless they met the existing exclusion criteria). We do
not believe that the Congress meant to exclude only discharges where
the patient, at the time of discharge, still ``has'' a severe wound
from the site neutral payment rate while making site neutral payment
rate payments for discharges of patients whose wounds healed during the
course of their treatment in the LTCH (that is, a patient who ``had'' a
severe wound as opposed to ``has'' one). Therefore, in order to resolve
this inconsistency, and in accordance with our interpretation of other
provisions of the statute, we are implementing this provision of the
statute so that discharges for patients who received treatment for a
``severe wound'' at the LTCH (as discussed later in this section will
meet the criteria for exclusion from the site neutral payment rate
under section 1886(m)(6)(E)(i)(II) of the Act regardless of whether the
wound
[[Page 23433]]
was still present and severe at the time of discharge.
Section 1886(m)(6)(E)(ii) of the Act, as added by the CAA, defines
a ``severe wound'' as ``a stage 3 wound, stage 4 wound, unstageable
wound, non-healing surgical wound, infected wound, fistula,
osteomyelitis or wound with morbid obesity as identified in the claim
from the long-term care hospital.'' To implement this statutory
definition, in consultation with our medical officers we are defining a
wound as: ``an injury, usually involving division of tissue or rupture
of the integument or mucous membrane with exposure to the external
environment''. In this IFC, we are also establishing that ``as
identified in the claim'' means ``identified based on the ICD-10
diagnosis codes on the claim where--
The ICD-10 diagnosis codes contain sufficient specificity
for this purpose; or
Through the use of a payer-specific condition code where
the ICD-10 diagnosis codes lack sufficient specificity for this
purpose''.
For six of the eight statutory categories included in the
definition of ``severe wound'' (stage 3 wound, stage 4 wound,
unstageable wound, non-healing surgical wound, fistula, and
osteomyelitis), we believe severe wounds can be identified through the
use of specific ICD-10 codes which are reported in the LTCH claim. The
list of ICD-10 diagnosis codes that we will to use to identify severe
wounds for this group of the six statutory categories can be found in
the table ``Severe Wound Diagnosis Codes by Category for Implementation
of Section 231 of Public Law 114-113'' posted on the CMS Web site at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the regulation ``CMS-1664-
IFC''. Our medical officers compiled this list of codes by reviewing
ICD-10 diagnosis codes for the statutorily enumerated categories of
severe wounds and selected those codes for diagnoses which met our
definition of ``wound'' (previously stated in this IFC). We note that
under our definition of wound, the ICD-10 diagnosis codes used to
identify severe wounds in the osteomyelitis category are also part of
the ICD-10 diagnosis codes used to identify severe wounds in the
fistula category so no separate identification of ICD-10 codes for
osteomyelitis is necessary.
The remaining two statutory categories included in the definition
of ``severe wound'' (infected wound and wound with morbid obesity) lack
ICD-10 diagnosis codes with sufficient specificity to identify the
presence of a ``severe wound''. This is because the number of codes
which are used to identify wounds and infections are too numerous to
identify in an exhaustive list. Furthermore, the presence of codes for
infection (or morbid obesity) and wound on the claim do not in and of
themselves demonstrate that the discharge was for a ``severe wound.''
In other words, the ICD-10 diagnosis codes for infection (or morbid
obesity) and wound do provide any information on the severity of such
diagnosis, that is, ICD-10 diagnosis codes do not differentiate between
such diagnoses that are ``severe'' or ``non-severe'' wounds. Because we
cannot specify ICD-10 diagnosis codes to identify wounds in these
categories, for the purposes of this provision we are defining a
``wound with morbid obesity'' as ``a wound in those with morbid obesity
that require complex, continuing care including local wound care
occurring multiple times a day'' and we are defining an ``infected
wound'' as ``a wound with infection requiring complex, continuing care
including local wound care occurring multiple times a day.''
In order to operationalize these definitions in the absence of ICD-
10 diagnosis codes, we will utilize ``payer-only'' condition codes.
These payer-only condition codes are a type of condition code (which
are currently reported on claims) issued by the National Uniform
Billing Committee (NUBC), which is the governing body for forms and
codes used in medical claims billing for hospitals and other
institutional providers. In this IFC, we are establishing that if an
LTCH has a discharge meeting our definition of ``wound with morbid
obesity'' or ``infected wound'' the LTCH would inform its MAC, and the
MAC will then place the designated payer-only condition code on the
claim for processing. The presence of the designated payer-only
condition code on the claim for qualifying grandfathered HwH LTCHs will
generate a standard federal payment rate payment for the claim (that
is, exclusion from the site neutral payment rate) consistent with this
statutory provision. We intend to issue additional operational
instructions regarding the use of the designated payer-only condition
code. We note that while the use of this payer-only condition code is
the most expedient operational method we have of implementing the
statutory definition in the time frame allowed, the continued use of a
payer-only condition code may not be feasible if the scope of this
provision is expanded. Given the current limitations on the number of
LTCHs which can qualify for this provision under the statutory criteria
(that is, grandfathered HwHs that are located in a rural area or
reclassify as rural, as previously described in this IFC), the ability
to identify the other statutory categories of severe wounds, and the
limited timeframe of the exception, we expect the number of claims
necessitating the use of this payer-only condition code will be
minimal.
B. Wage Index for Acute Care Hospitals Paid Under the Inpatient
Prospective Payment System (IPPS): Criteria for an Individual Hospital
Seeking Redesignation to Another Area (Sec. 412.103)
Our current policy limits certain redesignations in order to
preclude hospitals from obtaining urban to rural reclassification under
Sec. 412.103, and then using that obtained rural status to receive an
additional reclassification through the MGCRB. We refer readers to
Sec. 412.230(a)(5)(iii), which states that an urban hospital that has
been granted redesignation as rural under Sec. 412.103 cannot receive
an additional reclassification by the MGCRB based on this acquired
rural status for a year in which such redesignation is in effect. In
other words, Sec. 412.230(a)(5)(iii) prohibits a hospital from
simultaneously receiving an urban to rural reclassification under Sec.
412.103 and a reclassification under the MGCRB.
On July 23, 2015 the Court of Appeals for the Third Circuit issued
a decision in Geisinger Community Medical Center v. Secretary, United
States Department of Health and Human Services, 794 F.3d 383 (3d Cir.
2015). Geisinger Community Medical Center (``Geisinger''), a hospital
located in a geographically urban Core-Based Statistical Area (CBSA),
obtained rural status under Sec. 412.103, but was unable to receive
additional reclassification through the MGCRB while still maintaining
its rural status under Sec. 412.230(a)(5)(iii). To receive
reclassification through the MGCRB under existing regulations,
Geisinger would have had to first cancel its Sec. 412.103 urban-to-
rural reclassification and use the proximity requirements for an urban
hospital rather than take advantage of the broader proximity
requirements for reclassification granted to rural hospitals. (We refer
readers to Sec. 412.230(b)(1), which states that a hospital
demonstrates a close proximity with the area to which it seeks
redesignation if the distance from the hospital to the area is no more
than 15 miles for an urban hospital and no more than 35 miles for a
rural hospital.)
[[Page 23434]]
Geisinger challenged as unlawful the regulation at Sec.
412.230(a)(5)(iii) requiring cancelation of its rural reclassification
prior to applying for reclassification through the MGCRB. In Geisinger
Community Medical Center v. Burwell, 73 F. Supp.3d 507 (M.D. Pa. 2014),
the United States District Court for the Middle District of
Pennsylvania upheld the regulation at Sec. 412.230(a)(5)(iii) and
granted summary judgment in favor of CMS. The Court of Appeals for the
Third Circuit reversed the decision of the District Court, holding that
the language of section 1886(d)(8)(E)(i) of the Act is unambiguous in
its plain intent that ``the Secretary shall treat the hospital as being
located in the rural area,'' inclusive of MGCRB reclassification
purposes, thus invalidating the regulation at Sec. 412.230(a)(5)(iii).
On February 4, 2016, the Court of Appeals for the Second Circuit issued
its decision in Lawrence + Memorial Hospital v. Burwell, No. 15-164,
2016 WL 423702 (2d Cir. February 4, 2016), essentially following the
reasoning of the Third Circuit Geisinger decision.
While these decisions currently apply only to hospitals located
within the jurisdictions of the Second and Third Circuits, we believe
that maintaining the regulations at Sec. 412.230(a)(5)(iii) in other
places nationally would constitute inconsistent application of
reclassification policy based on jurisdictional regions. In the
interest of creating a uniform national reclassification policy, we are
removing the regulation text at Sec. 412.230(a)(5)(iii). We are also
revising the regulation text at Sec. 412.230(a)(5)(ii) to allow more
than one reclassification for those hospitals redesignated as rural
under Sec. 412.103 and--simultaneously seeking reclassification
through the MGCRB. Specifically, we are revising Sec.
412.230(a)(5)(ii) to state that a hospital may not be redesignated to
more than one area, except for an urban hospital that has been granted
redesignation as rural under Sec. 412.103 and receives an additional
reclassification by the MGCRB. Therefore, effective for
reclassification applications due to the MGCRB on September 1, 2016,
for reclassification first effective for FY 2018, a hospital could
apply for a reclassification under the MGCRB while still being
reclassified from urban to rural under Sec. 412.103. Such hospitals
would be eligible to use distance and average hourly wage criteria
designated for rural hospitals at Sec. 412.230(b)(1) and (d)(1). In
addition, effective with the display date of this IFC, a hospital that
has an active MGCRB reclassification and is then approved for
reclassification under Sec. 412.103 would not lose its MGCRB
reclassification; that is, a hospital with an active MGCRB
reclassification can simultaneously maintain rural status under Sec.
412.103, and receive a reclassified urban wage index during the years
of its active MGCRB reclassification and would still be considered
rural under section 1886(d) of the Act and for other purposes. We would
also apply the policy in this IFC when deciding timely appeals before
the Administrator under Sec. 412.278 for FY 2017 that were denied by
the MGCRB due to existing Sec. 412.230(a)(5)(ii) and (iii), which do
not permit simultaneous Sec. 412.103 and MGCRB reclassifications.
Apart from the direct impact on reclassifying hospitals previously
discussed in this section, we also considered how to treat the wage
data of hospitals that maintain simultaneous reclassifications under
both the Sec. 412.103 and MGCRB processes. Under current wage index
calculation procedures, the wage data for a hospital geographically
located in an urban area with a Sec. 412.103 reclassification is
included in the wage index for its home geographic area. It is also
included in its state rural wage index, if including wage data for
hospitals with rural reclassification raises the state's rural floor.
In addition, the wage data for a hospital located in an urban area, and
that is approved by the MGCRB to reclassify to another urban area (or
another state's rural area), would be included in its home area wage
index calculation, and in the calculation for the reclassified
``attaching'' area. We refer readers to the FY 2012 IPPS final rule (76
FR 59595 through 59596) for a full discussion of the effect of
reclassification on wage index calculations. Furthermore, as discussed
in the FY 2007 IPPS final rule (71 FR 48020 through 48022), hospitals
currently cannot simultaneously maintain more than one wage index
status (for example, a hospital cannot simultaneously maintain a Sec.
412.103 rural reclassification and an MGCRB reclassification, nor can a
hospital receive an outmigration adjustment while also maintaining
MGCRB or Lugar status). However, as a consequence of the court
decisions previously discussed, we are revising our current regulations
and creating a rule that would apply to all hospitals nationally,
regarding the treatment of the wage data of hospitals that have both a
Sec. 412.103 reclassification and an MGCRB reclassification. Under
this IFC, if a hospital with a Sec. 412.103 reclassification is
approved for an additional reclassification through the MGCRB process,
and the hospital accepts its MGCRB reclassification, the CBSA to which
the hospital is reclassified under the MGCRB prescribes the area wage
index that the hospital would receive; the hospital would not receive
the wage index associated with the rural area to which the hospital is
reclassified under Sec. 412.103. That is, for wage index calculation
and payment purposes, when there is both a Sec. 412.103
reclassification and an MGCRB reclassification, the MGCRB
reclassification would control for wage index calculation and payment
purposes. Therefore, although we are amending our policy with this IFC
so that a hospital can simultaneously have a reclassification under the
MGCRB and an urban to rural reclassification under Sec. 412.103, we
are separately clarifying that we will exclude hospitals with Sec.
412.103 reclassifications from the calculation of the reclassified
rural wage index if they also have an active MGCRB reclassification to
another area. In these circumstances, we believe it is appropriate to
rely on the urban MGCRB reclassification to include the hospital's wage
data in the calculation of the urban CBSA wage index. Further, we
believe it is appropriate to rely on the urban MGCRB reclassification
to ensure that the hospital be paid based on its urban MGCRB wage
index. While rural reclassification confers other rural benefits
besides the wage index under section 1886(d) of the Act, a hospital
that chooses to pursue reclassification under the MGCRB (while also
maintaining a rural reclassification under Sec. 412.103) would do so
solely for wage index payment purposes.
As previously stated, for wage index calculation and payment
purposes, when there is both a Sec. 412.103 reclassification and an
MGCRB reclassification, the MGCRB reclassification would control for
wage index calculation and payment purposes. That is, if an application
for urban reclassification through the MGCRB is approved, and is not
withdrawn or terminated by the hospital within the established
timelines, we would consider, as is current practice, the hospital's
geographic CBSA and the urban CBSA to which the hospital is
reclassified under the MGCRB for the wage index calculation. The
hospital's geographic CBSA and reclassified CBSA would be reflected
accordingly in Tables 2 and 3 of the annual IPPS/LTCH PPS proposed and
final rules. (We note that these tables are referenced in the
[[Page 23435]]
IPPS/LTCH proposed and final rules and are available only through the
Internet on the CMS Web site.) However, in the absence of an active
MGCRB reclassification, if the hospital has an active Sec. 412.103
reclassification, CMS would treat the hospital as rural under Sec.
412.103 reclassification for IPPS payment and other purposes, including
purposes of calculating the wage indices reflected in Tables 2 and 3 of
the annual IPPS/LTCH PPS proposed and final rules.
In summary, for reclassifications effective beginning FY 2018, a
hospital could acquire rural status under Sec. 412.103 and
subsequently apply for a reclassification under the MGCRB using
distance and average hourly wage criteria designated for rural
hospitals. Additionally, effective with the display date of this IFC, a
hospital with an active MGCRB reclassification could also acquire rural
status under Sec. 412.103 for IPPS payment and other purposes. We
would also apply the policy in this IFC when deciding timely appeals
before the Administrator under Sec. 412.278 for FY 2017 that were
denied by the MGCRB due to existing Sec. 412.230(a)(5)(ii) and (iii),
which do not permit simultaneous Sec. 412.103 and MGCRB
reclassifications. When there is both an MGCRB reclassification and a
Sec. 412.103 reclassification, the MGCRB reclassification would
control for wage index calculation and payment purposes. For a
discussion regarding budget neutrality adjustments for FY 2017 and
subsequent years for hospitals that have a reclassification under Sec.
412.103 and an MGCRB reclassification, we refer readers to the FY 2017
IPPS/LTCH proposed rule. Also, we intend to issue instructions to
explain the revisions of the regulation text at Sec. 412.230(a)(5)(ii)
and the removal of the regulation text at Sec. 412.230(a)(5)(iii) to
ensure that MACs properly update the Provider Specific File (PSF) in
the instance where a hospital would have a simultaneous
reclassification to an urban area under the MGCRB and to a rural area
under Sec. 412.103.
III. Waiver of Proposed Rulemaking and Delay in Effective Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and
substances of the proposed rule or a description of the subjects and
issues involved. In addition, in accordance with section 553(d) of the
APA and section 1871(e)(1)(B)(i) of the Act, we ordinarily provide a
delay in the effective date of a substantive rule. For substantive
rules that constitute major rules, in accordance with 5 U.S.C. 801, we
ordinarily provide a 60-day delay in the effective date. None of the
processes or effective date requirements apply, however, when the rule
in question is interpretive, a general statement of policy, or a rule
of agency organization, procedure, or practice. They also do not apply
when the statute establishes rules to be applied, leaving no discretion
or gaps for an agency to fill in through rulemaking. Furthermore, an
agency may waive notice-and-comment rulemaking, as well as any delay in
effective date, when the agency finds good cause that a notice and
public comment on the rule as well the effective date delay are
impracticable, unnecessary, or contrary to the public interest and
incorporates a statement of the finding and its reasons in the rule
issued.
For the LTCH wound care exception, we find notice-and-comment
rulemaking and a delay in the effective date to be both unnecessary as
well as impracticable and contrary to public interest. Section 231 of
CAA requires the implementation of the LTCH wound care exception,
limiting any discretion we might otherwise have, thereby making
procedure unnecessary. In addition, given the statutory expiration of
the provisions of section 231 of CAA on January 1, 2017 due to a
congressionally imposed deadline, notice-and-comment and the resulting
delay would significantly limit the set of discharges to which the
statute would apply. By implementing the statute through an IFC rather
than through the normal notice-and-comment rulemaking cycle and waiving
the 60-day delay of effective date, we are ensuring the period of
relief granted is consistent with our interpretation of the statute. We
find, on these bases, that there is good cause to waive notice and
comment and the delay in effective date that would otherwise be
required by the provisions previously cited in this section.
In the case of the portion of this IFC regarding the wage index for
acute care hospitals paid under the IPPS, we find good cause for
waiving notice-and-comment rulemaking and a delay in effective date
given the decisions of the courts of appeals and the public interest in
consistent application of a Federal policy nationwide. Revising the
regulation text at Sec. 412.230(a)(5)(ii) and removing the regulation
text at Sec. 412.230(a)(5)(iii) through an IFC rather than through the
normal notice-and-comment rulemaking cycle and waiving the 60-day delay
of effective date will ensure a uniform national reclassification
policy, since this policy has already been effective as of July 23,
2015 in the Third Circuit and February 4, 2016 in the Second Circuit.
Absent such a policy, the wage index for acute care hospitals paid
under the IPPS will remain confusingly inconsistent across
jurisdictions. Therefore, we find good cause to waive the notice of
proposed rulemaking as well as the 60-day delay of effective date and
to issue this final rule on an interim basis. Even though we are
waiving notice of proposed rulemaking requirements and are issuing
these provisions on an interim basis, we are providing a 60-day public
comment period.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (the PRA), federal
agencies are required to publish notice in the Federal Register
concerning each proposed collection of information. Interested persons
are invited to send comments regarding our burden estimates or any
other aspect of this collection of information, including any of the
following subjects: (1) The necessity and utility of the proposed
information collection for the proper performance of the agency's
functions; (2) the accuracy of the estimated burden; (3) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (4) the use of automated collection techniques or other
forms of information technology to minimize the information collection
burden.
However, we are requesting an emergency review of the information
collection referenced later in this section. In compliance with the
requirement of section 3506(c)(2)(A) of the PRA, we have submitted the
following for emergency review to the Office of Management and Budget
(OMB). We are requesting an emergency review and approval under 5 CFR
1320.13(a)(2)(i) of the implementing regulations of the PRA in order to
implement Section 231 of the CAA as expeditiously as possible. Public
harm is reasonably likely to ensue if the normal clearance procedures
are followed since the approval of this information collection is
essential to ensuring that otherwise qualifying grandfathered urban
HWHs are not unduly delayed in attempting to obtain the temporary
exception by applying to be treated as rural before the temporary
exception expires on December 31, 2016.
[[Page 23436]]
For the purposes of implementing subparagraph (E) of section
1886(m)(6) of the Act as provided by the CAA, we are revising our
regulations at Sec. 412.522(b)(2)(ii)(B)(2) to utilize the same
administrative mechanisms used in the existing rural reclassification
process for urban subsection (d) hospitals under Sec. 412.103,
described later in this section. We also will allow grandfathered LTCH
HwHs (previously defined in this IFC) to apply to their RO for
treatment as being located in a rural area for the sole purpose of
qualifying for this temporary exclusion from the application of the
site neutral payment rate.
For urban subsection (d) hospitals, and now temporarily LTCHs, we
implemented the rural reclassification provision in the regulations at
Sec. 412.103. In general, the provisions of Sec. 412.103 provides
that a hospital that is located in an urban area may be reclassified as
a rural hospital if it submits an application in accordance with our
established criteria. It must also meet certain conditions which
include the hospital being located in a rural census tract of a MSA or
that the hospital is located in an area designated by any law or
regulation of the state as a rural area or the hospital is designated
as a rural hospital by state law or regulation. Paragraph (b) of Sec.
412.103 sets forth application requirements for a hospital seeking
reclassification as rural under that section, which includes a written
application mailed to the CMS regional office (RO) that contains an
explanation of how the hospital meets the condition that constitutes
the request for reclassification, including data and documentation
necessary to support the request. As provided in paragraphs (c) and (d)
of Sec. 412.103, the RO reviews the application and notifies the
hospital of its approval or disapproval of the request within 60 days
of the filing date, and a hospital that satisfies any of the criteria
set forth Sec. 412.103(a) is considered as being located in the rural
area of the state in which the hospital is located as of that filing
date.
We note that this policy would only allow grandfathered LTCH HwHs
to apply for this reclassification, and the rural treatment would only
extend to this temporary exception for certain wound care discharges
from the site neutral payment rate (meaning a grandfathered HwH LTCH
will not be treated as rural for any other reason including, but not
limited to, the 25 percent policy and wage index). We also note that
the any rural treatment under Sec. 412.103 for a grandfathered HwH
LTCH will expire at the same time as this temporary provision (that is,
December 31, 2016).
We estimate that each application will require 2.5 hours of work
from each LTCH (0.5 hours to fill out the application and 2 hours of
recordkeeping). Based on the current information we have received from
the MACs, out of the approximately 120 current LTCHs that existed in
1995, which is a necessary but not sufficient condition to be a
grandfathered HWH, there are approximately 5 hospitals that currently
meet the criteria of being a grandfathered HWH and would not be
precluded from submitting an application. We note that as the MACs
continue to update the list of grandfathered HWH that the number of
potential applicants could increase. Since it is possible that the
number of applicants could rise to 10 or more, in an abundance of
caution, we treating this information collection as being subject to
the PRA. Therefore, we estimate that the aggregate number of hours
associated with this request across all currently estimated eligible
hospitals will be 12.5 (2.5 hours per hospital for 5 hospitals). We
estimate a current, average salary of $29 per hour (based on the ``2015
Median usual weekly earnings (second quartile), Employed full time,
Wage and salary workers, Management, professional, and related
occupations'' from the Current Population Survey, available here http://www.bls.gov/webapps/legacy/cpswktab4.htm) plus 100 percent for fringe
benefits ($58 per hour). Therefore, we estimate the total one-time
costs associated with this request will be $725 (12.5 hours x $58 per
hour).
Written comments and recommendations from the public will be
considered for this emergency information collection request if
received by April 28, 2016. We are requesting OMB review and approval
of this information collection request by May 5, 2016, with a 180-day
approval period.
To obtain copies of a supporting statement and any related forms
for the proposed collection(s) summarized in this notice, you may make
your request using one of following:
1. Access CMS' Web site address at http://www.cms.hhs.gov/PaperworkReductionActof1995.
2. Email your request, including your address, phone number, OMB
number, and CMS document identifier, to [email protected].
3. Call the Reports Clearance Office at (410) 786-1326.
If you comment on these information collection and recordkeeping
requirements, please submit your comments electronically as specified
in the ADDRESSES section of this interim final rule with comment
period.
V. Regulatory Impact Analysis
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995, Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct 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). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any 1 year). We project that two rural LTCHs would qualify for the
temporary exception to the site neutral payment rate for certain LTCHs
for certain discharges provided by section 231 of the CAA, based on the
best data available at this time. We are not able to determine which,
if any, LTCHs may be treated as rural in the future by applying and
being approved for a reclassification as rural under the provisions of
Sec. 412.103. Given that LTCHs are generally concentrated in more
densely populated areas, we do not expect any LTCHs to qualify under
Sec. 412.103. As such, at this time, our projections related to the
temporary exception to the site neutral payment rate for certain LTCHs
for certain discharges provided by section 231 of the CAA, are limited
to LTCHs that are geographically located in a rural area. As such, at
this time, our projections related to the temporary exception to the
site neutral payment rate for certain LTCHs for certain discharges
provided by section 231 of the CAA, are limited to LTCHs that are
geographically located in a rural area. Based on the most recent data
for these two LTCHs, including the identification of FY 2014 LTCH
discharges with a ``severe wound'' we
[[Page 23437]]
estimate the monetary impact of this IFC with respect to that LTCH PPS
provision is approximately a $5 million increase in aggregate LTCH PPS
payments had this statutory provision not been enacted. This does not
reach the economic threshold and this provision does not cause this IFC
to be considered a major rule.
For the IPPS wage index portion of this IFC, we did not conduct an
in-depth impact analysis because our revision to the regulatory text is
a consequence of court decisions. The Geisinger decision invalidated
the regulation at Sec. 412.230(a)(5)(iii) effective July 23, 2015 for
hospitals in states within the Third Circuit's jurisdiction, and the
Lawrence + Memorial decision invalidated the regulation at Sec.
412.230(a)(5)(iii) effective February 4, 2016 for hospitals in states
within the Second Circuit's jurisdiction. That is, we did not have a
choice to maintain the previously uniform regulations at Sec.
412.230(a)(5)(iii) for hospitals in states within the Second and Third
Circuits.
Furthermore, we do not believe we could necessarily estimate the
national impact of removing the regulation at Sec. 412.230(a)(5)(iii).
We note that already in the FY 2017 IPPS/LTCH proposed rule, of the
3,586 IPPS hospitals listed on wage index Table 2, 867 hospitals have
an MGCRB reclassification, and 57 hospitals have a reclassification to
a rural area under Sec. 412.103. (This table is discussed in the FY
2017 IPPS/LTCH proposed rule and is available on the CMS Web site at
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the
screen titled, ``FY 2017 IPPS Proposed Rule Home Page.) We cannot
estimate how many additional hospitals will elect to apply to the MGCRB
by September 1, 2016 for reclassification beginning FY 2018, and we
cannot predict how many hospitals may elect to retain or acquire Sec.
412.103 urban-to-rural reclassification over and above the hospitals
that have already reclassified.
We also note that under Sec. 412.64(e)(1)(ii), (e)(2), and (e)(4),
increases in the wage index due to reclassification are implemented in
a budget neutral manner (that is, wage index adjustments are made in a
manner that ensures that aggregate payments to hospitals are unaffected
through the application of a wage index budget neutrality adjustment
described more fully in the FY 2017 IPPS/LTCH proposed rule).
Therefore, as a result of the Third Circuit's decision in Geisinger,
even though an urban hospital that may or may not already have a
reclassification to another urban area under the MGCRB may be able to
qualify for a reclassification to a more distant urban area with an
even higher wage index, this would not increase aggregate IPPS payments
(although the wage index budget neutrality factor applied to IPPS
hospitals could be larger as a result of additional reclassifications
occurring to higher wage index areas).
However, there are other Medicare payment provisions potentially
impacted by rural status, such as payments to disproportionate share
hospitals (DSHs), and non-Medicare payment provisions, such as the 340B
Drug Pricing Program administered by HRSA, under which payments are not
made in a budget neutral manner. Additional hospitals acquiring rural
status under Sec. 412.103 could, therefore, potentially increase
Federal expenditures. Nevertheless, taking all of these factors into
account, we cannot accurately determine an impact analysis as a result
of the Third Circuit's decision in Geisinger and the Second Circuit's
decision in Lawrence + Memorial.
The RFA also requires agencies to analyze options for regulatory
relief of small entities if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. We estimate that most hospitals and most
other providers and suppliers are small entities as that term is used
in the RFA. The great majority of hospitals and most other health care
providers and suppliers are small entities, either by being nonprofit
organizations or by meeting the SBA definition of a small business
(having revenues of less than $7.5 million to $38.5 million in any 1
year). (For details on the latest standards for health care providers,
we refer readers to page 36 of the Table of Small Business Size
Standards for NAIC 622 found on the SBA Web site at: https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.)
For purposes of the RFA, all hospitals and other providers and
suppliers are considered to be small entities. Individuals and states
are not included in the definition of a small entity. We believe that
the provisions of this IFC may have an impact on some small entities,
but for the reasons previously discussed in this IFC, we cannot
conclusively determine the number of such entities impacted. Because we
lack data on individual hospital receipts, we cannot determine the
number of small proprietary LTCHs. Therefore, we are assuming that all
LTCHs are considered small entities for the purpose of the RFA. MACs
are not considered to be small entities. Because we acknowledge that
many of the potentially affected entities are small entities, the
discussion in this section regarding potentially impacted hospitals
constitutes our regulatory flexibility analysis.
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. With
the exception of hospitals located in certain New England counties, for
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside a metropolitan
statistical area and has fewer than 100 beds. Section 601(g) of the
Social Security Amendments of 1983 (Pub. L. 98-21) designated hospitals
in certain New England counties as belonging to the adjacent urban
area. Thus, for purposes of the IPPS and the LTCH PPS, we continue to
classify these hospitals as urban hospitals. For the IPPS portion of
this IFC, no geographically rural hospitals are directly affected since
only urban hospitals can reclassify to a rural area under Sec.
412.103. However, we note that with regard to the wage index budget
neutrality adjustments applied under Sec. 412.64(e)(1)(ii), (e)(2),
and (e)(4), rural IPPS hospitals would be affected to the extent that
the reclassification budget neutrality adjustment increases, but this
impact is no different than on urban IPPS hospitals, as the same budget
neutrality factor is applied to all IPPS hospitals.
The provisions of section 231 of the CAA, which we are implementing
in this IFC, by definition affect rural LTCHs that qualify, and will
result in an increase in payment for those qualifying LTCHs' discharges
that meet the definition of a severe wound. However, as previously
discussed in this section, based on the data currently available, we
estimate there are only two LTCHs that currently meet the criteria.
Therefore, we do not believe the provision of section 231 of the CAA
will have a significant impact on the operations of a substantial
number of small rural LTCHs.
Section 202 of the Unfunded Mandates Reform Act of 1995 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 2016, that
threshold is approximately $146 million. This IFC will have no
consequential effect on state, local, or
[[Page 23438]]
tribal governments, nor will it affect private sector costs.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has Federalism implications. Since
this rule does not impose any costs on state or local governments, the
requirements of Executive Order 13132 are not applicable.
In accordance with the provisions of Executive Order 12866, this
IFC was reviewed by the Office of Management and Budget.
VI. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as follows:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority for part 412 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), sec. 124 of Pub. L. 106-113 (113 Stat.
1501A-332), sec. 1206 of Pub. L. 113-67, and sec. 112 of Pub. L.
113-93.
0
2. Section 412.230 is amended by--
0
a. Revising paragraph (a)(5)(ii).
0
b. Removing paragraph (a)(5)(iii).
0
c. Redesignating paragraph (a)(5)(iv) as paragraph (a)(5)(iii).
The revision reads as follows:
Sec. 412.230 Criteria for an individual hospital seeking
redesignation to another rural area or an urban area.
(a) * * *
(5) * * *
(ii) A hospital may not be redesignated to more than one area,
except for an urban hospital that has been granted redesignation as
rural under Sec. 412.103 and receives an additional reclassification
by the MGCRB.
* * * * *
0
3. Section 412.522 is amended by--
0
a. Redesignating paragraphs (b)(1) introductory text, (b)(1)(i) and
(ii), and (b)(2) and (3) as paragraphs (b)(1)(i) introductory text,
(b)(1)(i)(A) and (B), and (b)(1)(ii) and (iii), respectively.
0
b. Adding a paragraph heading for paragraph (b)(1).
0
c. Revising the paragraph heading for newly redesignated paragraph
(b)(1)(i) introductory text.
0
d. In newly redesignated paragraph (b)(1)(i)(B), by removing the
reference ``paragraph (b)(2)'' and adding the reference ``paragraph
(b)(1)(ii)'' in its place and by removing the reference ``paragraph
(b)(3)'' and adding the reference ``paragraph (b)(1)(iii)'' in its
place.
0
d. In newly redesignated paragraph (b)(1)(ii), by removing the
reference ``paragraph (b)(1)'' and adding the reference ``paragraph
(b)(1)(i)'' in its place.
0
e. In newly redesignated paragraph (b)(1)(iii), by removing the
reference ``paragraph (b)(1)'' and adding the reference ``paragraph
(b)(1)(i)'' in its place.
0
f. Adding paragraph (b)(2).
The revision and additions read as follows:
Sec. 412.522 Application of site neutral payment rate.
(b) * * *
(1) General criteria--(i) Basis and scope. * * *
* * * * *
(2) Special criteria--(i) Definitions. For purposes of this
paragraph (b)(2) the following definitions are applicable:
Severe wound means a wound which is a stage 3 wound, stage 4 wound,
unstageable wound, non-healing surgical wound, infected wound, fistula,
osteomyelitis or wound with morbid obesity as identified by the
applicable code on the claim from the long-term care hospital.
Wound means an injury, usually involving division of tissue or
rupture of the integument or mucous membrane with exposure to the
external environment.
(ii) Discharges for severe wounds. A discharge that occurs on or
after April 21, 2016 and before January 1, 2017 for a patient that was
treated for a severe wound that meets the all of following criteria is
excluded from the site neutral payment rate specified under this
section:
(A) The severe wound meets the definition specified in paragraph
(b)(2)(i) of this section.
(B) The discharge is from a long term care hospital that is--
(1) Described in Sec. 412.23(e)(2)(i) and meets the criteria of
Sec. 412.22(f); and
(2) Located in a rural area (as defined at Sec. 412.503) or
reclassified as rural by meeting the requirements set forth in Sec.
412.103.
* * * * *
Dated: April 7, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: April 14, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-09219 Filed 4-18-16; 4:15 pm]
BILLING CODE 4120-01-P