[Federal Register Volume 83, Number 81 (Thursday, April 26, 2018)]
[Notices]
[Pages 18301-18308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08704]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1677-N]
RIN 0938-ZB47
Medicare Program; Extension of the Payment Adjustment for Low-
Volume Hospitals and the Medicare-Dependent Hospital (MDH) Program
Under the Hospital Inpatient Prospective Payment Systems (IPPS) for
Acute Care Hospitals for Fiscal Year 2018
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Extension of a payment adjustment and a program.
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SUMMARY: This document announces changes to the payment adjustment for
low-volume hospitals and to the Medicare-dependent Hospital (MDH)
Program under the hospital inpatient prospective payment systems (IPPS)
for FY 2018 in accordance with sections 50204 and 50205, respectively,
of the Bipartisan Budget Act of 2018.
DATES:
Effective Date: The extensions are effective April 24, 2018.
Applicability Date: The provisions described in this document are
applicable for discharges on or after October 1, 2017 and on or before
September 30, 2018.
FOR FURTHER INFORMATION CONTACT:
Michele Hudson, (410) 786-5490.
Mark Luxton, (410) 786-4530.
Shevi Marciano, (410) 786-2874.
SUPPLEMENTARY INFORMATION:
I. Background
On February 9, 2018 the Bipartisan Budget Act of 2018 (Pub. L. 115-
123) was enacted. Section 50204 of the Bipartisan Budget Act of 2018
extends certain temporary changes to the payment adjustment for low-
volume hospitals for an additional year, through fiscal year (FY) 2018.
Section 50205 of the Bipartisan Budget Act of 2018 extends the
Medicare-dependent hospital (MDH) program through FY 2022 and revises
the definition of an MDH.
II. Provisions of the Document
A. Extension of the Payment Adjustment for Low-Volume Hospitals
1. Background
Section 1886(d)(12) of the Act provides for an additional payment
to each qualifying low-volume hospital under the IPPS beginning in FY
2005.
[[Page 18302]]
The additional payment adjustment to a low-volume hospital provided for
under section 1886(d)(12) of the Act is ``[i]n addition to any payment
calculated under this section.'' Therefore, the additional payment
adjustment is based on the per discharge amount paid to the qualifying
hospital under section 1886 of the Act. In other words, the low-volume
hospital payment adjustment is based on total per discharge payments
made under section 1886 of the Act, including capital, DSH, IME, and
outlier payments. For SCHs and MDHs, the low-volume hospital payment
adjustment is based in part on either the Federal rate or the hospital-
specific rate, whichever results in a greater operating IPPS payment.
The Affordable Care Act amended section 1886(d)(12) of the Act by
modifying the definition of a low-volume hospital and the methodology
for calculating the payment adjustment for low-volume hospitals,
effective only for discharges occurring during FYs 2011 and 2012 while
subsequent legislation extended these modifications through FY 2017.
(We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56941
through 59943) for a detailed summary of the applicable legislation.)
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub.
L. 115-123) on February 9, 2018, beginning with FY 2018, the low-volume
hospital qualifying criteria and payment adjustment methodology
returned to the statutory requirements that were in effect prior to FY
2011. However, section 50204 of the Bipartisan Budget Act of 2018
extended for an additional year, through FY 2018, the temporary changes
in the low-volume hospital definition and methodology for determining
the payment adjustment originally made by the Affordable Care Act for
FYs 2011 and 2012. (We note that section 50204 of the Bipartisan Budget
Act of 2018 also further modified the definition of a low-volume
hospital and the methodology for calculating the payment adjustment for
low volume hospitals for FYs 2019 through 2022, as addressed in
separate rulemaking.) For additional information on the expiration of
these provisions, we refer readers to the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38184 through 38188). The regulations describing the
payment adjustment for low-volume hospitals are at 42 CFR 412.101.
2. Low-Volume Hospital Payment Adjustment for FYs 2011 Through 2017
As discussed previously, for FYs 2011 through 2017, the Affordable
Care Act and subsequent legislation expanded the definition of low-
volume hospital and modified the methodology for determining the
payment adjustment for hospitals meeting that definition. Specifically,
those provisions amended the qualifying criteria for low-volume
hospitals under section 1886(d)(12)(C)(i) of the Act to specify that,
for FYs 2011 through 2017, a subsection (d) hospital qualifies as a
low-volume hospital if it is more than 15 road miles from another
subsection (d) hospital and has less than 1,600 discharges of
individuals entitled to, or enrolled for, benefits under Part A during
the fiscal year. In addition, these provisions amended section
1886(d)(12)(D) of the Act, to provide that for FYs 2011 through 2017,
the low-volume hospital payment adjustment (that is, the percentage
increase) is to be determined using a continuous linear sliding scale
ranging from 25 percent for low-volume hospitals with 200 or fewer
discharges of individuals entitled to, or enrolled for, benefits under
Part A in the fiscal year to zero percent for low-volume hospitals with
greater than 1,600 discharges of such individuals in the fiscal year.
(We note that under Sec. 412.101(b)(2)(ii), for FYs 2011 through 2017,
a hospital's Medicare discharges from the most recently available
MedPAR data, as determined by CMS, are used to determine if the
hospital meets the discharge criterion to receive the low-volume
hospital payment adjustment in the applicable year.)
3. Implementation of the Extension of the Temporary Changes to the Low-
Volume Hospital Definition and Payment Adjustment Methodology for FY
2018
Section 50204 of the Bipartisan Budget Act of 2018 extended, for FY
2018, the temporary changes in the low-volume hospital payment policy
originally provided for in the Affordable Care Act. As noted
previously, prior to the enactment of section 50204 of the Bipartisan
Budget Act of 2018, beginning with FY 2018, the low-volume hospital
definition and payment adjustment methodology returned to the policy
established under statutory requirements that were in effect prior to
the amendments made by the Affordable Care Act. Specifically, section
50204 of the Bipartisan Budget Act of 2018 amended section
1886(d)(12)(C) of the Act to extend the changes to the qualification
criteria to FY 2018 (as reflected by new clause (i)(II)) and amended
section 1886(d)(12)(D) of the Act to extend the applicable percentage
increase to FY 2018 (as reflected by new clause (i)), and made other
conforming changes to section 1886(d)(12)(C) and (D) of the Act.
Prior to the enactment of the Bipartisan Budget Act of 2018, in the
FY 2018 IPPS/LTCH PPS final rule (82 FR 38184 through 38188), we
discussed the low-volume hospital payment adjustment for FY 2018 and
subsequent fiscal years. Specifically, we discussed that in accordance
with section 1886(d)(12) of the Act, beginning with FY 2018, the low-
volume hospital definition and payment adjustment methodology reverted
back to the statutory requirements that were in effect prior to the
amendments made by the Affordable Care Act. Therefore, we explained, as
specified under the existing regulations at Sec. 412.101, effective
for FY 2018 and subsequent years, in order to qualify as a low-volume
hospital, a subsection (d) hospital must be more than 25 road miles
from another subsection (d) hospital and have less than 200 discharges
(that is, less than 200 total discharges, including both Medicare and
non-Medicare discharges) during the fiscal year. We also discussed the
procedure for hospitals to request low-volume hospital status for FY
2018 (which was consistent with our previously established procedures
for FYs 2011 through 2017).
To implement the extension of the temporary changes in the low-
volume hospital payment policy for FY 2018 provided for by the
Bipartisan Budget Act of 2018, in accordance with the existing
regulations at Sec. 412.101(b)(2)(ii) and consistent with our
implementation of the changes in FYs 2011 through 2017, we are updating
the discharge data source used to identify qualifying low-volume
hospitals and calculate the payment adjustment (percentage increase)
for FY 2018. As noted previously, under Sec. 412.101(b)(2)(ii), for
FYs 2011 through 2017, a hospital's Medicare discharges from the most
recently available MedPAR data, as determined by CMS, are used to
determine if the hospital meets the discharge criterion to receive the
low-volume payment adjustment in the current year. The applicable low-
volume percentage increase provided for by the provisions of the
Affordable Care Act and subsequent legislation is determined using a
continuous linear sliding scale equation that results in a low-volume
adjustment ranging from an additional 25 percent for hospitals with 200
or fewer Medicare discharges to a zero percent additional payment
adjustment for hospitals with 1,600 or more Medicare discharges.
For FY 2018, consistent with our historical policy, qualifying low-
volume
[[Page 18303]]
hospitals and their payment adjustment will be determined using
Medicare discharge data from the March 2017 update of the FY 2016
MedPAR file, as these data were the most recent data available at the
time of the development of the FY 2018 payment rates and factors
established in the FY 2018 IPPS/LTCH PPS final rule. Table 1 of this
document (which is available only through the internet on the CMS
website at hhtp://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp)
lists the ''subsection (d)'' hospitals with fewer than 1,600 Medicare
discharges based on the March 2017 update of the FY 2016 MedPAR files
and their FY 2018 low-volume payment adjustment (if eligible).
Eligibility for the low-volume hospital payment adjustment for FY 2018
is also dependent upon meeting (in the case of a hospital that did not
qualify for the low-volume hospital payment adjustment in FY 2017) or
continuing to meet (in the case of a hospital that did qualify for the
low-volume hospital payment adjustment in FY 2017) the mileage
criterion specified at Sec. 412.101(b)(2)(ii). We note that the list
of hospitals with fewer than 1,600 Medicare discharges in Table 1 does
not reflect whether or not the hospital meets the mileage criterion,
and a hospital also must be located more than 15 road miles from any
other IPPS hospital in order to qualify for a low-volume hospital
payment adjustment in FY 2018.
In order to receive a low-volume hospital payment adjustment under
Sec. 412.101, in accordance with our previously established procedure,
a hospital must notify and provide documentation to its Medicare
Administrative Contractor (MAC) that it meets the mileage criterion.
The use of a Web-based mapping tool as part of documenting that the
hospital meets the mileage criterion for low-volume hospitals, is
acceptable. The MAC will determine if the information submitted by the
hospital, such as the name and street address of the nearest hospitals,
location on a map, and distance (in road miles, as defined in the
regulations at Sec. 412.101(a)) from the hospital requesting low-
volume hospital status, is sufficient to document that it meets the
mileage criterion. The MAC may follow up with the hospital to obtain
additional necessary information to determine whether or not the
hospital meets the low-volume mileage criterion. In addition, the MAC
will refer to the hospital's Medicare discharge data determined by CMS
to determine whether or not the hospital meets the discharge criterion,
and the amount of the FY 2018 payment adjustment, once it is determined
that the mileage criterion has been met. The Medicare discharge data
shown in Table 1, as well as the Medicare discharge data for all
''subsection (d)'' hospitals with claims in the March 2017 update of
the FY 2016 MedPAR file, is also available on the CMS website for
hospitals to view their Medicare discharges to help hospitals to decide
whether or not to apply for low-volume hospital status for FY 2018.
Consistent with our previously established procedure, we are
applying the following procedure for a hospital to request low-volume
hospital status for FY 2018. In order for the applicable low-volume
percentage increase to be applied to payments for its discharges
beginning on or after October 1, 2017 (that is, the beginning of FY
2018), a hospital must send a written request for low-volume hospital
status that is received by its MAC no later than May 29, 2018. A
hospital that qualified for the low-volume payment adjustment in FY
2017 may continue to receive a low-volume payment adjustment in FY 2018
without reapplying, if it continues to meet the Medicare discharge
criterion, based on the March 2017 update of the FY 2016 MedPAR data
(shown in Table 1), and the distance criterion; however, the hospital
must send written verification that is received by its MAC no later
than May 29, 2018, that it continues to be more than 15 miles from any
other ''subsection (d)'' hospital. In this case, the written
verification could be a brief letter to the MAC stating that the
hospital continues to meet the low-volume hospital distance criterion
as documented in a prior low-volume hospital status request. For
hospitals that newly qualify for the low-volume adjustment (that is,
hospitals that did not receive the low-volume adjustment in FY 2017),
the written request for low-volume hospital status should include the
documentation described above. Furthermore, for written requests or
written verification for low-volume hospital status for FY 2018
received after May 29, 2018, if the hospital meets the criteria to
qualify as a low-volume hospital, the MAC will apply the applicable
low-volume hospital adjustment in determining payments for the
hospital's FY 2018 discharges prospectively effective within 30 days of
the date of the MAC's low-volume hospital status determination. (As
noted previously, this procedure is similar to our previously
established procedure for requesting low volume hospital status, as
well as the procedures we used to implement prior extensions of the
Affordable Care Act amendments to the low-volume hospital payment
policy.)
Program guidance on the systems implementation of these provisions,
including changes to PRICER software used to make payments, will be
announced in an upcoming transmittal. We intend to make conforming
changes to the regulations text at 42 CFR 412.101 to reflect the
changes to the qualifying criteria and the payment adjustment for low-
volume hospitals according to the amendments made by section 50204 of
the Bipartisan Budget Act of 2018, including the implementation of the
provisions specifying the low-volume hospital discharge criterion and
payment adjustment methodology for FYs 2019 through 2022, in future
rulemaking.
B. Extension of the Medicare-Dependent, Small Rural Hospital (MDH)
Program
Section 1886(d)(5)(G) of the Act provides special payment
protections, under the IPPS, to a MDH. (For additional information on
the MDH program and the payment methodology, we refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR 51683 through 51684).) Prior to
the Bipartisan Budget Act of 2018, the MDH program had been extended by
the Affordable Care Act and subsequent legislation though FY 2017 (that
is, for discharges occurring before October 1, 2017).
Section 50205 of the Bipartisan Budget Act of 2018 provides for an
extension of the MDH program for discharges occurring on or after
October 1, 2017, through FY 2022 (that is, for discharges occurring on
or before September 30, 2022). Specifically, section 50205 of the
Bipartisan Budget Act of 2018 amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act by striking ``October 1, 2017'' and
inserting ``October 1, 2022''. It also amended the definition of an MDH
at section 1886(d)(5)(G)(iv) by striking subclause (I) and inserting a
new subclause that reads, ``(I) that is located in--(aa) a rural area;
or (bb) a State with no rural area (as defined in paragraph (2)(D)) and
satisfies any of the criteria in subclause (I), (II), or (III) of
paragraph (8)(E)(ii).'' It also amended section 1886(d)(5)(G)(iv) by
inserting a provision after subclause (IV) to specify that new
subclause (I)(bb) applies for purposes of MDH payment under section
1886(d)(5)(G)(ii) of the Act (that is, 75 percent of the amount by
which the Federal rate is exceeded by the updated hospital-specific
rate from certain specified base years) only for discharges of a
hospital occurring on or after the effective date of a
[[Page 18304]]
determination of MDH status made with respect to the hospital after the
date of the enactment of this provision. Furthermore, this same new
provision also states ``For purposes of applying subclause (II) of
paragraph (8)(E)(ii) under subclause (I)(bb), such subclause (II) shall
be applied by inserting `as of January 1, 2018,' after `such State'
each place it appears.'' That is, this provision specifies that for a
hospital in a State with no rural area, the criteria in paragraph
(8)(E)(ii)(II) must have been satisfied as of January 1, 2018. Section
50205 of the Bipartisan Budget Act also made conforming amendments to
sections 1886(b)(3)(D) of the Act (in the language proceeding clause
(i)) and 1886(b)(3)(D)(iv) of the Act).
a. Extension of the MDH Program
Generally, as a result of the section 50205 of the Bipartisan
Budget Act of 2018 extension, a provider that was classified as an MDH
prior to the September 30, 2017 expiration of the MDH program will be
reinstated as an MDH effective October 1, 2017, with no need to reapply
for MDH classification.
Prior to the enactment of section 50205 of the Bipartisan Budget
Act of 2018, under section 205 of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA), the MDH program authorized by
section 1886(d)(5)(G) of the Act was set to expire at the end of FY
2017.
In the FY 2016 interim final rule with comment period (80 FR 49596
through 49597), we amended the regulations at Sec. 412.108(a)(1) and
(c)(2)(iii) to reflect the MACRA extension of the MDH program through
FY 2017. We intend to amend the regulations at Sec. 412.108(a)(1) and
(c)(2)(iii) to reflect the statutory extension of the MDH program
through FY 2022 provided for by the provisions of the Bipartisan Budget
Act of 2018 in future rulemaking.
Since MDH status is now extended by statute through the end of FY
2022, generally, hospitals that previously qualified for MDH status
will be reinstated as an MDH retroactively to October 1, 2017. However,
in the following two situations, the effective date of MDH status may
not be retroactive to October 1, 2017.
1. MDHs That Classified as Sole Community Hospitals (SCHs) on or After
October 1, 2017
Under the regulations at Sec. 412.92(b)(2)(v), an MDH could apply
for reclassification as a sole community hospital (SCH) by August 31,
2017, in anticipation of the September 30, 2017 expiration of the MDH
provision, and have such status be effective on October 1, 2017.
Hospitals that applied by the August 31, 2017 deadline and were
approved for SCH classification received SCH status effective October
1, 2017. Additionally, some hospitals that had MDH status as of the
September 30, 2017 expiration of the MDH program may have missed the
August 31, 2017 application deadline. These hospitals applied for SCH
status in the usual manner instead and were approved for SCH status
effective 30 days from the date of approval, resulting in an effective
date later than October 1, 2017. These hospitals must reapply for MDH
status under Sec. 412.108(b).
2. MDHs That Requested a Cancellation of Their Rural Classification
Under Sec. 412.103(b)
One of the criteria to be classified as an MDH is that the hospital
is located in a rural area. To qualify for MDH status, some MDHs
reclassified from an urban to a rural hospital designation, under the
regulations at Sec. 412.103(b). With the expiration of the MDH
provision, some of these providers may have requested a cancellation of
their rural classification. Therefore, in order to qualify for MDH
status, these hospitals must request to be reclassified as rural under
Sec. 412.103(b) and must reapply for MDH status under Sec.
412.108(b).
Any provider that falls within either of the two exceptions listed
above may not have its MDH status automatically reinstated effective
October 1, 2017. That is, if a provider reclassified to SCH status or
cancelled its rural status effective October 1, 2017, its MDH status
will not be retroactive to October 1, 2017, but will instead be applied
prospectively based on the date the hospital is notified that it again
meets the requirements for MDH status in accordance with Sec.
412.108(b)(4) after reapplying for MDH status. However, if a provider
reclassified to SCH status or cancelled its rural status effective on a
date later than October 1, 2017, MDH status will be reinstated
effective from October 1, 2017 but will end on the date on which the
provider changed its status to an SCH or cancelled its rural status.
Those hospitals may also reapply for MDH status to be effective again
30 days from the date the hospital is notified of the determination, in
accordance with Sec. 412.108(b)(4). Providers that fall within either
of the two exceptions will have to reapply for MDH status according to
the classification procedures in 42 CFR 412.108(b). Specifically, the
regulations at Sec. 412.108(b) require the following:
The hospital submit a written request along with
qualifying documentation to its contractor to be considered for MDH
status.
The contractor make its determination and notify the
hospital within 90 days from the date that it receives the request for
MDH classification and all required documentation.
The determination of MDH status be effective 30 days after
the date of the contractor's written notification to the hospital.
The following are examples of various scenarios that illustrate how
and when MDH status will be determined for hospitals that were MDHs as
of the September 30, 2017 expiration of the MDH program:
Example 1: Hospital A was classified as an MDH prior to the
September 30, 2017 expiration of the MDH program. Hospital A retained
its rural classification and did not reclassify as an SCH. Hospital A's
MDH status will be automatically reinstated to October 1, 2017.
Example 2: Hospital B was classified as an MDH prior to the
September 30, 2017 expiration of the MDH program. Per the regulations
at Sec. 412.92(b)(2)(v) and in anticipation of the expiration of the
MDH program, Hospital B applied for reclassification as an SCH by
August 31, 2017, and was approved for SCH status effective on October
1, 2017. Hospital B's MDH status will not be automatically reinstated.
In order to reclassify as an MDH, Hospital B must cancel its SCH
status, in accordance with Sec. 412.92(b)(4), and reapply for MDH
status under the regulations at Sec. 412.108(b).
Example 3: Hospital C was classified as an MDH prior to the
September 30, 2017 expiration of the MDH program. Hospital C missed the
application deadline of August 31, 2017 for reclassification as an SCH
under the regulations at Sec. 412.92(b)(2)(v) and was not eligible for
its SCH status to be effective as of October 1, 2017. Hospitals C's
Medicare contractor approved its request for SCH status effective
November 16, 2017. Hospital C's MDH status will be reinstated effective
October 1, 2017 through November 15, 2017 and will subsequently be
cancelled effective November 16, 2017. In order to reclassify as an
MDH, Hospital C must cancel its SCH status, in accordance Sec.
412.92(b)(4), and reapply for MDH status under the regulations at Sec.
412.108(b).
Example 4: Hospital D was classified as an MDH prior to the
September 30, 2017 expiration of the MDH program. In anticipation of
the expiration of the MDH program, Hospital D requested that its rural
classification be cancelled
[[Page 18305]]
per the regulations at Sec. 412.103(g). Hospital D's rural
classification was cancelled effective October 1, 2017. Hospital D's
MDH status will not be automatically reinstated. In order to reclassify
as an MDH, Hospital D must request to be reclassified as rural under
Sec. 412.103(b) and must reapply for MDH status under Sec.
412.108(b).
Example 5: Hospital E was classified as an MDH prior to the
September 30, 2017 expiration of the MDH program. In anticipation of
the expiration of the MDH program, Hospital E requested that its rural
classification be cancelled per the regulations at Sec. 412.103(g).
Hospital E's rural classification was cancelled effective January 1,
2018. Hospital E's MDH status will be reinstated but only for the
period of time during which it met the criteria for MDH status. Since
Hospital E cancelled its rural status and was classified as urban
effective January 1, 2018, MDH status will only be reinstated effective
October 1, 2017 through December 31, 2017 and will be cancelled
effective January 1, 2018. In order to reclassify as an MDH, Hospital E
must request to be reclassified as rural under Sec. 412.103(b) and
must reapply for MDH status under Sec. 412.108(b).
We note that hospitals that were MDHs as of the September 30, 2017
expiration of the MDH program that have returned to urban status will
first need to apply for rural status under Sec. 412.103(b), and
hospitals that became SCHs will first need to request cancellation of
SCH status under Sec. 412.92(b)(4).
Finally, we note that hospitals continue to be bound by Sec.
412.108(b)(4)(i) through (iii) to report a change in the circumstances
under which the status was approved. Thus, if a hospital's MDH status
has been extended and it no longer meets the requirements for MDH
status, it is required under Sec. 412.108(b)(4)(i) through (iii) to
make such a report to its MAC. Additionally, under the regulations at
Sec. 412.108(b)(5), Medicare contractors are required to evaluate on
an ongoing basis whether or not a hospital continues to qualify for MDH
status.
A provider affected by the MDH program extension will receive a
notice from its Medicare contractor detailing its status in light of
the MDH program extension.
Program guidance on the systems implementation of these provisions,
including changes to PRICER software used to make payments, will be
announced in an upcoming transmittal. As noted previously, we intend to
make the conforming changes to the regulations text at 42 CFR 412.108
to reflect the changes made by section 50205 of the Bipartisan Budget
Act of 2018 in future rulemaking.
b. Additional Provisions to the MDH Program
In addition to extending the MDH program, section 50205 of the
Bipartisan Budget Act also provides for a hospital that is located in a
state without a rural area to be eligible to qualify for MDH status if
it otherwise satisfies any of the statutory criteria to be reclassified
as rural under sections 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act
while further specifying that the criteria at sections
1886(d)(8)(E)(ii)(II) of the Act must have been satisfied as of January
1, 2018.
Section 1886(d)(8)(E) of the Act provides for an IPPS hospital that
is located in an urban area to be reclassified as a rural hospital if
it submits an application in accordance with CMS' established process
and meets certain criteria at sections 1886(d)(8)(E)(ii)(I), (II), or
(III) of the Act (these statutory criteria are implemented in the
regulations at Sec. Sec. 412.103(a)(1) through (3)). A subsection (d)
hospital that is located in an urban area and meets one of the three
criteria under Sec. 412.103(a) can reclassify as rural and is treated
as being located in the rural area of the State in which it is located.
However, a hospital that is located in an all-urban State is ineligible
to reclassify as rural in accordance with the provisions of Sec.
412.103 because its State does not have a rural area into which it can
reclassify. Prior to the amendments made by the Bipartisan Budget Act,
a hospital could only qualify for MDH status if it was either
geographically located in a rural area or if it reclassified as rural
under the regulations at Sec. 412.103. This precluded hospitals in
all-urban states from being classified as MDHs. The newly added
provision in the Bipartisan Budget Act of 2018 allows a hospital in an
all-urban state to be eligible for MDH classification if, in addition
to meeting the other criteria for MDH eligibility, it satisfies one of
the criteria for rural reclassification under section
1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (as of January 1, 2018
where applicable) notwithstanding its location in an all-urban state.
Under this provision of the Bipartisan Budget Act, a hospital in an
all-urban State can apply and be approved for MDH classification if it
can demonstrate that: (1) It meets the criteria at Sec. 412.103(a)(1)
or (3) or the criteria at Sec. 412.103(a)(2) as of January 1, 2018 for
the sole purposes of qualifying for MDH classification and; (2) it
meets the MDH classification criteria at Sec. Sec. 412.108(a)(1)(i)
through (iii). We note the following:
For a hospital in an all-urban State to demonstrate that
it would have qualified for rural reclassification notwithstanding its
location in an all-urban state (as of January 1, 2018 where
applicable), it must follow the applicable procedures for rural
reclassification and MDH classification at Sec. 412.103(b) and Sec.
412.108(b), respectively.
As noted previously, under existing regulations at Sec.
412.108(b)(4), the determination of MDH status is effective 30 days
after the date the MAC provides written notification to the hospital.
A hospital in an all-urban state that qualifies as an MDH
under the newly-added statutory provision will not be considered as
having reclassified as rural but only as having satisfied one of the
criteria at section 1886(d)(8)(E)(ii)(I), (II), or (III) (as of January
1, 2018 as applicable) for purposes of MDH classification, in
accordance with amended section 1886(d)(5)(G)(iv) of the Act.
III. 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. 35).
IV. Regulatory Impact Analysis
A. Statement of Need
This document is necessary to update the IPPS final FY 2018 payment
policies to reflect changes required by the implementation of two
provisions of the Bipartisan Budget Act of 2018. Section 50204 of the
Bipartisan Budget Act of 2018 extends certain temporary changes to the
payment adjustment for low-volume hospitals through FY 2018. Section
50205 of the Bipartisan Budget Act of 2018 extends the MDH program
through FY 2022. As noted previously, program guidance on the systems
implementation of these provisions, including changes to PRICER
software used to make payments, will be announced in an upcoming
transmittal.
B. Overall Impact
We have examined the impacts of this document 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
[[Page 18306]]
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), the Congressional Review
Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation
and Controlling Regulatory Costs (January 30, 2017).
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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for regulatory
actions with economically significant effects ($100 million or more in
any 1 year). Although we do not consider this document to constitute a
substantive rule or regulatory action, the changes announced in this
document are ``economically'' significant, under section 3(f)(1) of
Executive Order 12866, and therefore we have prepared a RIA, that to
the best of our ability, presents the costs and benefits of the
provisions announced in this document.
The FY 2018 IPPS/LTCH PPS final rule in conjunction with the FY
2018 IPPS/LTCH PPS correcting document included an impact analysis for
the changes to the IPPS included in that final rule. This document
updates those impacts to the IPPS to reflect the changes made by
sections 50204 and 50205 of the Bipartisan Budget Act of 2018. Since
these sections were not budget neutral, the overall estimates for
hospitals have changed from our estimates that were published in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38585) in conjunction with the FY
2018 IPPS/LTCH PPS correcting document (82 FR 46163). We estimate that
the changes in the FY 2018 IPPS/LTCH PPS final rule, in conjunction
with the changes included in this document, will result in an
approximate $2.97 billion increase in total payments to IPPS hospitals
in FY 2018 relative to FY 2017, as described later in this section. In
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38585) in conjunction with
the FY 2018 IPPS/LTCH PPS correcting document (82 FR 46163), we had
projected that total payments to IPPS hospitals would increase by $2.5
billion relative to FY 2017. However, since the changes in this
document are expected to increase payments by approximately $470
million ($349 million for the extension of certain temporary changes to
the low-volume hospital adjustment policy and $119 million for the
extension of the MDH program) relative to what was projected in the FY
2018 IPPS/LTCH PPS final rule in conjunction with the FY 2018 IPPS/LTCH
PPS correcting document, these changes will result in a net increase of
$2.97 billion ($2.5 billion currently, plus the additional estimated
increase of approximately $0.35 billion for the extension of certain
temporary changes to the low-volume hospital adjustment policy and
approximately $0.12 billion for the extension of the MDH program) in
total payments to IPPS hospitals relative to FY 2017.
C. Anticipated Effects
1. Effects on IPPS Hospitals
The RFA requires agencies to analyze options for regulatory relief
of small businesses, 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
government 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 to $34.5 million in any 1 year).
(For details on the latest standard for health care providers, we refer
readers to page 33 of the Table of Small Business Size Standards for
NAIC 622 at the Small Business Administration's website 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
changes announced in this document will have a significant impact on
small entities. Because we acknowledge that many of the affected
entities are small entities, the analysis discussed in this section
would fulfill any requirement for a final 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 now define a small rural
hospital as a hospital that is located outside of an urban 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, we continue to classify these hospitals as urban hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104-4) 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 2017, that threshold is approximately $148 million. This
document will not mandate any requirements for State, local, or tribal
governments, nor will it affect private sector costs.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This document will not have a substantial effect on State
and local governments.
Although this document merely reflects the implementation of two
provisions of the Bipartisan Budget Act of 2018 and does not constitute
a substantive rule, we nevertheless prepared this impact analysis in
the interest of ensuring that the impacts of these changes are fully
understood. The following analysis, in conjunction with the remainder
of this document,
[[Page 18307]]
demonstrates that this document is consistent with the regulatory
philosophy and principles identified in Executive Order 12866 and
13563, the RFA, and section 1102(b) of the Act. The changes announced
in this document will positively affect payments to a substantial
number of small rural hospitals and providers, as well as other classes
of hospitals and providers, and the effects on some hospitals and
providers may be significant. The impact analysis, which discusses the
effect on total payments to IPPS hospitals, is presented in this
section.
The impact analysis reflects the change in estimated payments to
IPPS hospitals in FY 2018 due to sections 50204 and 50205 of the
Bipartisan Budget Act of 2018 relative to estimated FY 2018 payments to
IPPS hospitals published in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38585) and in conjunction with the FY 2018 IPPS/LTCH PPS correction
notice (82 FR 46163). As described later in this section in the
regulatory impact analysis, FY 2018 IPPS payments to hospitals affected
by sections 50204 and 50205 of the Bipartisan Budget Act of 2018 are
projected to increase by $468 million ($349 million for the extension
of certain temporary changes to the low-volume hospital adjustment
policy and $119 million for the extension of the MDH program) (relative
to the FY 2018 payments estimated for these hospitals for the FY 2018
IPPS/LTCH PPS final rule and in conjunction with the FY 2018 IPPS/LTCH
PPS correcting document). Furthermore, we project that, on the average,
overall IPPS payments in FY 2018 for all hospitals will increase by 0.4
percent due to these provisions in the Bipartisan Budget Act of 2018
compared to the previous estimate of FY 2018 payments to all IPPS
hospitals published in the FY 2018 IPPS/LTCH PPS final rule in
conjunction with the FY 2018 IPPS/LTCH PPS correcting document.
2. Effects of the Extension of the Temporary Changes to the Payment
Adjustment for Low-Volume Hospitals
The extension, for FY 2018, of the temporary changes to the payment
adjustment for low-volume hospitals (originally provided for by the
Affordable Care Act for FYs 2011 and 2012 and extended by subsequent
legislation) as provided for under Section 50204 of the Bipartisan
Budget Act of 2018 is a non-budget neutral payment provision. The
provisions of the Affordable Care Act and subsequent legislation
expanded the definition of low-volume hospital and modified the
methodology for determining the payment adjustment for hospitals
meeting that definition for FYs 2011 through 2017. Prior to the
enactment of the Bipartisan Budget Act of 2018, beginning with FY 2018,
the low-volume hospital definition and payment adjustment methodology
was to return to the statutory requirements that were in effect prior
to the amendments made by the Affordable Care Act. With the extension
for FY 2018 provided for by the Bipartisan Budget Act of 2018, based on
FY 2016 claims data (March 2017 update of the MedPAR file), we estimate
that approximately 600 hospitals will now qualify as a low-volume
hospital for FY 2018. We project that these hospitals will experience
an increase in payments of approximately $349 million as compared to
our previous estimates of payments to these hospitals for FY 2018
published in the FY 2018 IPPS/LTCH PPS final rule in conjunction with
the FY 2018 IPPS/LTCH PPS correcting document.
3. Effects of the Extension of the MDH Program
The extension of the MDH program in FY 2018 as provided for under
section 50205 of the Bipartisan Budget Act of 2018 is a non-budget
neutral payment provision. Hospitals that qualify to be MDHs receive
the higher of operating IPPS payments made under the Federal
standardized amount or the payments made under the Federal standardized
amount plus 75 percent of the difference between the Federal
standardized amount and the hospital-specific rate (a hospital-specific
cost-based rate). Because this provision is not budget neutral, we
estimate that the extension of this payment provision will result in a
0.2 percent increase in payments overall. Prior to the extension of the
MDH program, there were 159 MDHs, of which 96 were estimated to be paid
under the blended payment of the Federal standardized amount and
hospital-specific rate in FY 2017. Because those 96 MDHs will now
receive the blended payment (that is, the Federal standardized amount
plus 75 percent of the difference between the Federal standardized
amount and the hospital-specific rate) in FY 2018, we estimate that
those hospitals will experience an overall increase in payments of
approximately $119 million as compared to our previous estimates of
payments to these hospitals for FY 2018 published in the FY 2018 IPPS/
LTCH PPS final rule in conjunction with the FY 2018 IPPS/LTCH PPS
correcting document.
D. Alternatives Considered
This document provides descriptions of the statutory provisions
that are addressed and identifies policies for implementing these
provisions. Due to the prescriptive nature of the statutory provisions,
no alternatives were considered.
E. Accounting Statement and Table
As required by OMB Circular A-4 (available at http://www.whitehousegov/omb/circulars/a004/a-4.pdf), in Table I, we have
prepared an accounting statement showing the classification of
expenditures associated with the provisions of this notice as they
relate to acute care hospitals. This table provides our best estimate
of the change in Medicare payments to providers as a result of the
changes to the IPPS presented in this document. All expenditures are
classified as transfers from the Federal government to Medicare
providers. As previously discussed, relative to what was projected in
the FY 2018 IPPS/LTCH PPS final rule in conjunction with the FY 2018
IPPS/LTCH PPS correcting document, the changes made by sections 50204
and 50205 of the Bipartisan Budget Act of 2018 presented in this
document are projected to increase FY 2018 payments to IPPS hospitals
by $468 million.
Table I--Accounting Statement: Classification of Estimated Expenditures
Under the IPPS From Published FY 2018 to Revised FY 2018
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $468 million.
From Whom to Whom......................... Federal Government to IPPS
Medicare Providers.
-----------------------------
Total................................. $468 million.
------------------------------------------------------------------------
F. Regulatory Reform Analysis Under E.O. 13771
Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017, and
requires that the costs associated with significant new regulations
``shall, to the extent permitted by law, be offset by the elimination
of existing costs associated with at least two prior regulations.'' It
has been determined that the provisions of this document are actions
that primarily result in transfers and do not impose more than de
minimis cost as described previously. Thus, this
[[Page 18308]]
document is not a regulatory or deregulatory action for the purposes of
Executive Order 13771.
G. Conclusion
Overall, IPPS hospitals are projected to experience an increase in
estimated payments of $468 million as a result of the changes made by
sections 50204 and 50205 of the Bipartisan Budget Act of 2018 presented
in this document. The analysis above, together with the preamble,
provides a Regulatory Flexibility Analysis. Furthermore, the previous
analysis, together with the preamble, provides a Regulatory Impact
Analysis. In accordance with the provisions of Executive Order 12866,
this document was reviewed by the Office of Management and Budget.
V. Waiver of Proposed Rulemaking and Delay of Effective Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment prior to a rule taking
effect in accordance with section 553(b) of the Administrative
Procedure Act (APA) and section 1871 of the Act. 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 30 day delay to a substantive
rule's effective date. 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 that are to
be applied, leaving no discretion or gaps for an agency to fill in
through rulemaking.
In addition, an agency may waive notice and comment rulemaking, as
well as any delay in effective date, when the agency for good cause
finds that notice and public comment on the rule as well the effective
date delay are impracticable, unnecessary, or contrary to the public
interest. In cases where an agency finds good cause, the agency must
incorporate a statement of this finding and its reasons in the rule
issued.
The policies being publicized in this document do not constitute
agency rulemaking. Rather, the statute, as amended by the Bipartisan
Budget Act of 2018, has already required that the agency make these
changes, and we are simply notifying the public of the extension of
certain temporary changes to the payment adjustment for low-volume
hospitals and the MDH program for FY 2018, that is effective October 1,
2017. As this document merely informs the public of these extensions,
it is not a rule and does not require any notice and comment
rulemaking. To the extent any of the policies articulated in this
document constitute interpretations of the statute's requirements or
procedures that will be used to implement the statute's directive; they
are interpretive rules, general statements of policy, and rules of
agency procedure or practice, which are not subject to notice and
comment rulemaking or a delayed effective date.
However, to the extent that notice and comment rulemaking or a
delay in effective date or both would otherwise apply, we find good
cause to waive such requirements. Specifically, we find it unnecessary
to undertake notice and comment rulemaking in this instance as this
document does not propose to make any substantive changes to the
policies or methodologies already in effect as a matter of law, but
simply applies payment adjustments under the Bipartisan Budget Act of
2018 to these existing policies and methodologies. As the changes
outlined in this document have already taken effect, it would also be
impracticable to undertake notice and comment rulemaking. For these
reasons, we also find that a waiver of any delay in effective date, if
it were otherwise applicable, is necessary to comply with the
requirements of the Bipartisan Budget Act of 2018. Therefore, we find
good cause to waive notice and comment procedures as well as any delay
in effective date, if such procedures or delays are required at all.
Dated: March 29, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2018-08704 Filed 4-24-18; 4:15 pm]
BILLING CODE 4120-01-P