Académique Documents
Professionnel Documents
Culture Documents
May 4, 2005
Book 2 of 2 Books
Pages 23305–23774
Part II
Department of
Health and Human
Services
Centers for Medicare & Medicaid Services
VerDate Aug 04 2004 15:14 May 03, 2005 Jkt 000000 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 D:\FEDREG\REG1.COV APPS10 PsN: DAVET
23306 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
DEPARTMENT OF HEALTH AND DATES: Comments will be considered if comment period, CMS posts all
HUMAN SERVICES received at the appropriate address, as electronic comments received before the
provided in the ADDRESSES section, no close of the comment period on its
Centers for Medicare & Medicaid later than 5 p.m. on June 24, 2005. public Web site. Written comments
Services ADDRESSES: In commenting, please refer received timely will be available for
to file code CMS–1500–P. Because of public inspection as they are received,
42 CFR Parts 405, 412, 413, 415, 419, staff and resource limitations, we cannot generally beginning approximately 4
422, and 485 accept comments by facsimile (FAX) weeks after publication of a document,
[CMS–1500–P] transmission. at the headquarters of the Centers for
You may submit comments in one of Medicare & Medicaid Services, 7500
RIN 0938–AN57 three ways (no duplicates, please): Security Boulevard, Baltimore, MD
21244, Monday through Friday of each
Medicare Program; Proposed Changes 1. Electronically week from 8:30 a.m. to 4 p.m. To
to the Hospital Inpatient Prospective You may submit electronic comments schedule an appointment to view public
Payment Systems and Fiscal Year 2006 to http://www.cms.hhs.gov/regulations/ comments, phone 1–800–743–3951.
Rates ecomments (attachments should be in For comments that relate to
AGENCY: Centers for Medicare and Microsoft Word, WordPerfect, or Excel; information collection requirements,
Medicaid Services (CMS), HHS. however, we prefer Microsoft Word). mail a copy of comments to the
ACTION: Proposed rule. following addresses:
2. By Mail
Centers for Medicare & Medicaid
SUMMARY: We are proposing to revise the You may mail written comments (one Services, Office of Strategic
Medicare hospital inpatient prospective original and two copies) to the following Operations and Regulatory Affairs,
payment systems (IPPS) for operating address only: Centers for Medicare & Security and Standards Group, Office
and capital-related costs to implement Medicaid Services, Department of of Regulations Development and
changes arising from our continuing Health and Human Services, Attention: Issuances, Room C4–24–02 7500
experience with these systems. In CMS–1500–P, P.O. Box 8011, Baltimore, Security Boulevard, Baltimore,
addition, in the Addendum to this MD 21244–1850. Maryland 21244–1850, Attn: James
proposed rule, we describe the proposed Please allow sufficient time for mailed Wickliffe, CMS–1500–P; and
changes to the amounts and factors used comments to be received before the Office of Information and Regulatory
to determine the rates for Medicare close of the comment period. Affairs, Office of Management and
hospital inpatient services for operating Budget, Room 3001, New Executive
3. By Hand or Courier
costs and capital-related costs. We also Office Building, Washington, DC
are setting forth proposed rate-of- If you prefer, you may deliver (by 20503, Attn: Christopher Martin, CMS
increase limits as well as proposed hand or courier) your written comments Desk Officer, CMS–1500–P,
policy changes for hospitals and (one original and two copies) before the Christopher_Martin@omb.eop.gov.
hospital units excluded from the IPPS close of the comment period to one of Fax (202) 395–6974.
that are paid in full or in part on a the following addresses. If you intend to FOR FURTHER INFORMATION CONTACT:
reasonable cost basis subject to these deliver your comments to the Baltimore Marc Harstein, (410) 786–4539,
limits. These proposed changes would address, please call telephone number Operating Prospective Payment,
be applicable to discharges occurring on (410) 786–7195 in advance to schedule Diagnosis-Related Groups (DRGs),
or after October 1, 2005, with one your arrival with one of our staff Wage Index, New Medical Services
exception: The proposed changes members. and Technology Add-On Payments,
relating to submittal of hospital wage Room 445–G, Hubert H. Humphrey Hospital Geographic Reclassifications,
data by a campus or campuses of a Building, 200 Independence Avenue, Postacute Care Transfers, and
multicampus hospital system (that is, SW., Washington, DC 20201, or 7500 Disproportionate Share Hospital
the proposed changes to § 412.230(d)(2) Security Boulevard, Baltimore, MD Issues.
of the regulations) would be effective 21244–1850. Tzvi Hefter, (410) 786–4487, Capital
upon publication of the final rule. (Because access to the interior of the Prospective Payment, Excluded
Among the policy changes that we are Hubert H. Humphrey Building is not Hospitals, Graduate Medical
proposing to make are changes relating readily available to persons without Education, Critical Access Hospitals,
to: the classification of cases to the Federal Government identification, and Long-Term Care (LTC)–DRGs, and
diagnosis-related groups (DRGs); the commenters are encouraged to leave Provider-Based Facilities Issues.
long-term care (LTC)–DRGs and relative their comments in the CMS drop slots Steve Heffler, (410) 786–1211, Hospital
weights; the wage data, including the located in the main lobby of the Market Basket Revision and Rebasing.
occupational mix data, used to compute building. A stamp-in clock is available Siddhartha Mazumdar, (410) 786–6673,
the wage index; rebasing and revision of for persons wishing to retain proof of Rural Hospital Community
the hospital market basket; applications filing by stamping in and retaining an Demonstration Project Issues.
for new technologies and medical extra copy of the comments being filed.) Mary Collins, (410) 786–3189, Critical
services add-on payments; policies Comments mailed to the addresses Access Hospitals (CAHs) Issues.
governing postacute care transfers, indicated as appropriate for hand or Dr. Mark Krushat, (410) 786–6809,
payments to hospitals for the direct and courier delivery may be delayed and Quality Data for Annual Payment
indirect costs of graduate medical received after the comment period. Update Issues.
education, submission of hospital Inspection of Public Comments: All Martha Kuespert, (410) 786–4605
quality data, payment adjustment for comments received before the close of Specialty Hospitals Definition Issues.
low-volume hospitals, changes in the the comment period are available for SUPPLEMENTARY INFORMATION:
requirements for provider-based viewing by the public, including any
facilities; and changes in the personally identifiable or confidential Electronic Access
requirements for critical access business information that is included in This Federal Register document is
hospitals (CAHs). a comment. After the close of the also available from the Federal Register
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23307
online database through GPO Access, a HHA Home health agency PRRB Provider Reimbursement Review
service of the U.S. Government Printing HHS Department of Health and Human Board
Office. Free public access is available on Services PS&R Provider Statistical and
HPSA Health Professions Shortage Area Reimbursement System
a Wide Area Information Server (WAIS) QIA Quality Improvement Organizations
HQA Hospital Quality Alliance
through the Internet and via ICD–9–CM International Classification of RHC Rural health clinic
asynchronous dial-in. Internet users can Diseases, Ninth Revision, Clinical RHQDAPU Reporting Hospital Quality Data
access the database by using the World Modification for Annual Payment Update
Wide Web; the Superintendent of ICD–10–PCS International Classification of RNHCI Religious nonmedical health care
Documents home page address is http:// Diseases, Tenth Edition, Procedure Coding institution
www.access.gpo.gov/nara_docs, by System RRC Rural referral center
using local WAIS client software, or by ICF/MRs Intermediate care facilities for the RUCAs Rural-Urban Commuting Area
mentally retarded Codes
telnet to swais.access.gpo.gov, then SCH Sole community hospital
ICU Intensive Care Unit
login as guest (no password required). IHS Indian Health Service SDP Single Drug Pricer
Dial-in users should use IME Indirect medical education SIC Standard Industrial Codes
communications software and modem IPPS Acute care hospital inpatient SNF Skilled nursing facility
to call (202) 512–1661; type swais, then prospective payment system SOCs Standard occupational classifications
login as guest (no password required). IPF Inpatient psychiatric facility SOM State Operations Manual
IRF Inpatient rehabilitation facility SSA Social Security Administration
Acronyms IRP Initial residency period SSI Supplemental Security Income
JCAHO Joint Commission on Accreditation TEFRA Tax Equity and Fiscal
AAOS American Association of Orthopedic
of Healthcare Organizations Responsibility Act of 1982, Pub. L. 97–248
Surgeons
LAMCs Large area metropolitan counties UHDDS Uniform Hospital Discharge Data
ACGME Accreditation Council on Graduate
LTC–DRG Long-term care diagnosis-related Set
Medical Education
AHIMA American Health Information group Table of Contents
Management Association LTCH Long-term care hospital
AHA American Hospital Association MCE Medicare Code Editor I. Background
AICD Automatic cardioverter defibrillator MCO Managed care organization A. Summary
AMI Acute myocardial infarction MDC Major diagnostic category 1. Acute Care Hospital Inpatient
AOA American Osteopathic Association MDH Medicare-dependent small rural Prospective Payment System (IPPS)
ASC Ambulatory Surgical Center hospital 2. Hospitals and Hospital Units Excluded
ASP Average sales price MedPAC Medicare Payment Advisory from the IPPS
AWP Average wholesale price Commission a. IRFs
BBA Balanced Budget Act of 1997, Pub. L. MedPAR Medicare Provider Analysis and b. LTCH
105–33 Review File c. IPFs
BES Business Expenses Survey MEI Medicare Economic Index 3. Critical Access Hospitals (CAHs)
BIPA Medicare, Medicaid, and SCHIP [State MGCRB Medicare Geographic Classification 4. Payments for Graduate Medical
Children’s Health Insurance Program] Review Board Education (GME)
Benefits Improvement and Protection Act MMA Medicare Prescription Drug, B. Major Contents of this Proposed Rule
of 2000, Pub. L. 106–554 Improvement, and Modernization Act of 1. Proposed Changes to the DRG
BLS Bureau of Labor Statistics 2003, Pub. L. 108–173 Reclassifications and Recalibrations of
CAH Critical access hospital MRHFP Medicare Rural Hospital Flexibility Relative Weights
CBSAs Core-Based Statistical Areas Program 2. Proposed Changes to the Hospital Wage
CC Complication or comorbidity MSA Metropolitan Statistical Area Index
CIPI Capital Input Price Index NAICS North American Industrial 3. Proposed Revision and Rebasing of the
CMS Centers for Medicare & Medicaid Classification System Hospital Market Basket
Services NCD National coverage determination 4. Other Decisions and Proposed Changes
CMSA Consolidated Metropolitan NCHS National Center for Health Statistics to the PPS for Inpatient Operating and
Statistical Area NCVHS National Committee on Vital and GME Costs
COBRA Consolidated Omnibus Health Statistics 5. PPS for Capital-Related Costs
Reconciliation Act of 1985, Pub. L. 99–272 6. Proposed Changes for Hospitals and
NECMA New England County Metropolitan
CoP Condition of Participation Hospital Units Excluded from the IPPS
Areas
CPI Consumer Price Index 7. Proposed Payment for Blood Clotting
NICU Neonatal intensive care unit
CRNA Certified registered nurse anesthetist Factors for Inpatients with Hemophilia
NQF National Quality Forum
CRT Cardiac Resynchronization Therapy 8. Determining Proposed Prospective
DRG Diagnosis-related group NTIS National Technical Information
Payment Operating and Capital Rates
DSH Disproportionate share hospital Service and Rate-of-Increase Limits
ECI Employment Cost Index NVHRI National Voluntary Hospital 9. Impact Analysis
FDA Food and Drug Administration Reporting Initiative 10. Recommendation of Update Factor for
FIPS Federal Information Processing OES Occupational Employment Statistics Hospital Inpatient Operating Costs
Standards OIG Office of the Inspector General 11. Discussion of Medicare Payment
FQHC Federally qualified health center OMB Executive Office of Management and Advisory Commission Recommendations
FTE Full-time equivalent Budget II. Proposed Changes to DRG Classifications
FY Federal fiscal year O.R. Operating room and Relative Weights
GAAP Generally accepted accounting OSCAR Online Survey Certification and A. Background
principles Reporting (System) B. DRG Reclassifications
GAF Geographic adjustment factor OSHA Occupational Safety and Health Act 1. General
HIC Health Insurance Card PRM Provider Reimbursement Manual 2. Pre-MDC: Intestinal Transplantation
HIS Health Information System PPI Producer Price Index 3. MDC 1 (Diseases and Disorders of the
GME Graduate medical education PMS Performance Measurement System Nervous System)
HCRIS Hospital Cost Report Information PMSAs Primary Metropolitan Statistical a. Strokes
System Areas b. Unruptured Cerebral Aneurysms
HIPC Health Information Policy Council PPS Prospective payment system 4. MDC 5 (Diseases and Disorders of the
HIPAA Health Insurance Portability and PRA Per resident amount Circulatory System)
Accountability Act of 1996, Pub. L. 104– ProPAC Prospective Payment Assessment a. Automatic Implantable Cardioverter/
191 Commission Defibrillator
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23308 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23309
VIII. Payment for Blood Clotting Factor 3. Proposed Budget Neutrality Adjustment Table 6E—Revised Diagnosis Code Titles
Administered to Hemophilia Inpatients Factor for Changes in DRG Table 6F—Revised Procedure Code Titles
IX. MedPAC Recommendations Classifications and Weights and the Table 6G—Additions to the CC Exclusions
A. Medicare Payment Policy Geographic Adjustment Factor List
B. Physician-Owned Specialty Hospitals 4. Proposed Exceptions Payment Table 6H—Deletions from the CC Exclusions
C. Other MedPAC Recommendations Adjustment Factor List
X. Other Required Information 5. Proposed Capital Standard Federal Rate Table 7A—Medicare Prospective Payment
A. Requests for Data from the Public for FY 2006 System Selected Percentile Lengths of
B. Collection of Information Requirements 6. Proposed Special Capital Rate for Puerto Stay: FY 2004 MedPAR Update
C. Public Comments Rico Hospitals December 2004 GROUPER V22.0
Regulation Text B. Calculation of Proposed Inpatient Table 7B—Medicare Prospective Payment
Capital-Related Prospective Payments for System Selected Percentile Lengths of
Addendum—Proposed Schedule of FY 2006 Stay: FY 2004 MedPAR Update
Standardized Amounts Effective with C. Capital Input Price Index December 2004 GROUPER V23.0
Discharges Occurring On or After 1. Background Table 8A—Statewide Average Operating
October 1, 2004 and Update Factors and 2. Forecast of the CIPI for FY 2006 Cost-to-Charge Ratios—March 2005
Rate-of-Increase Percentages Effective IV. Proposed Changes to Payment Rates for Table 8B—Statewide Average Capital Cost-to-
With Cost Reporting Periods Beginning Excluded Hospitals and Hospital Units: Charge Ratios—March 2005
On or After October 1, 2004 Rate-of-Increase Percentages Table 9A—Hospital Reclassifications and
I. Summary and Background A. Payments to Existing Excluded Redesignations by Individual Hospital—
II. Proposed Changes to Prospective Payment Hospitals and Units FY 2006
Rates for Hospital Inpatient Operating Table 9B—Hospital Reclassifications and
B. Updated Caps for New Excluded
Costs for FY 2006 Redesignation by Individual Hospital
Hospitals and Units
A. Calculation of the Adjusted
V. Payment for Blood Clotting Factor Under Section 508 of Pub. L. 108–173—
Standardized Amount
Administered to Hemophilia Inpatients FY 2005
1. Standardization of Base-Year Costs or
Table 9C—Hospitals Redesignated as Rural
Target Amounts Tables under Section 1886(d)(8)(E) of the Act—
2. Computing the Average Standardized
Table 1A—National Adjusted Operating FY 2006
Amount
Standardized Amounts, Labor/Nonlabor Table 10—Geometric Mean Plus the Lesser of
3. Updating the Average Standardized
(69.7 Percent Labor Share/30.3 Percent .75 of the National Adjusted Operating
Amount
Nonlabor Share If Wage Index Is Greater Standardized Payment Amount
4. Other Adjustments to the Average
Than 1) (Increased to Reflect the Difference
Standardized Amount
Table 1B—National Adjusted Operating Between Costs and Charges) or .75 of
a. Recalibration of DRG Weights and
Standardized Amounts, Labor/Nonlabor One Standard Deviation of Mean Charges
Updated Wage Index—Budget Neutrality
(62 Percent Labor Share/38 Percent by Diagnosis-Related Groups (DRGs)—
Adjustment
b. Reclassified Hospitals—Budget Nonlabor Share If Wage Index Is Less March 2005
Neutrality Adjustment Than or Equal to 1) Table 11—Proposed FY 2006 LTC–DRGs,
c. Outliers Table 1C—Adjusted Operating Standardized Relative Weights, Geometric Average
d. Rural Community Hospital Amounts for Puerto Rico, Labor/ Length of Stay, and 5/6ths of the
Demonstration Program Adjustment Nonlabor Geometric Average Length of Stay
(Section 410A of Pub. L. 108–173) Table 1D—Capital Standard Federal Payment Appendix A—Regulatory Impact Analysis
5. Proposed FY 2006 Standardized Amount Rate Appendix B—Recommendation of Update
B. Adjustments for Area Wage Levels and Table 2—Hospital Case-Mix Indexes for Factors for Operating Cost Rates of
Cost-of-Living Discharges Occurring in Federal Fiscal Payment for Inpatient Hospital Services
1. Adjustment for Area Wage Levels Year 2004; Hospital Average Hourly
Wage for Federal Fiscal Years 2004 (2000 I. Background
2. Adjustment for Cost-of-Living in Alaska
and Hawaii Wage Data), 2005 (2001 Wage Data), and A. Summary
C. DRG Relative Weights 2006 (2002 Wage Data) Wage Indexes
D. Calculation of Proposed Prospective and 3-Year Average of Hospital Average 1. Acute Care Hospital Inpatient
Payment Rates for FY 2006 Hourly Wages Prospective Payment System (IPPS)
1. Federal Rate Table 3A—FY 2006 and 3-Year Average
Hourly Wage for Urban Areas Section 1886(d) of the Social Security
2. Hospital-Specific Rate (Applicable Only
to SCHs and MDHs) Table 3B—FY 2006 and 3-Year Average Act (the Act) sets forth a system of
a. Calculation of Hospital-Specific Rate Hourly Wage for Rural Areas payment for the operating costs of acute
b. Updating the FY 1982, FY 1987, and FY Table 4A—Wage Index and Capital care hospital inpatient stays under
1996 Hospital-Specific Rates for FY 2006 Geographic Adjustment Factor (GAF) for Medicare Part A (Hospital Insurance)
3. General Formula for Calculation of Urban Areas based on prospectively set rates. Section
Proposed Prospective Payment Rates for Table 4B—Wage Index and Capital 1886(g) of the Act requires the Secretary
Hospitals Located in Puerto Rico Geographic Adjustment Factor (GAF) for to pay for the capital-related costs of
Beginning On or After October 1, 2005 Rural Areas
Table 4C—Wage Index and Capital
hospital inpatient stays under a
and Before October 1, 2006
Geographic Adjustment Factor (GAF) for prospective payment system (PPS).
a. Puerto Rico Rate
b. National Rate Hospitals That Are Reclassified Under these PPSs, Medicare payment
III. Proposed Changes to Payment Rates for Table 4F—Puerto Rico Wage Index and for hospital inpatient operating and
Acute Care Hospital Inpatient Capital- Capital Geographic Adjustment Factor capital-related costs is made at
Related Costs for FY 2006 (GAF) predetermined, specific rates for each
A. Determination of Proposed Federal Table 4J—Out-Migration Adjustment—FY hospital discharge. Discharges are
Hospital Inpatient Capital-Related 2006 classified according to a list of
Prospective Payment Rate Update Table 5—List of Diagnosis-Related Groups diagnosis-related groups (DRGs).
1. Proposed Capital Standard Federal Rate (DRGs), Relative Weighting Factors, and The base payment rate is comprised of
Update Geometric and Arithmetic Mean Length
a. Description of the Update Framework of Stay (LOS)
a standardized amount that is divided
b. Comparison of CMS and MedPAC Table 6A—New Diagnosis Codes into a labor-related share and a
Update Recommendation Table 6B—New Procedure Codes nonlabor-related share. The labor-
2. Proposed Outlier Payment Adjustment Table 6C—Invalid Diagnosis Codes related share is adjusted by the wage
Factor Table 6D—Invalid Procedure Codes index applicable to the area where the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23310 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
hospital is located; and if the hospital is only 50 percent of the difference hospital-specific annual limit under
located in Alaska or Hawaii, the between the IPPS rate and its hospital- section 1886(b) of the Act and the
nonlabor-related share is adjusted by a specific rates if the hospital-specific rate adjusted facility Federal prospective
cost-of-living adjustment factor. This is higher than the IPPS rate. In addition, payment rate for cost reporting periods
base payment rate is multiplied by the an MDH does not have the option of beginning January 1, 2002 through
DRG relative weight. using FY 1996 as the base year for its September 30, 2002, to payment at 100
If the hospital treats a high percentage hospital-specific rate.) percent of the Federal rate effective for
of low-income patients, it receives a Section 1886(g) of the Act requires the cost reporting periods beginning on or
percentage add-on payment applied to Secretary to pay for the capital-related after October 1, 2002 (66 FR 41316,
the DRG-adjusted base payment rate. costs of inpatient hospital services ‘‘in August 7, 2001; 67 FR 49982, August 1,
This add-on payment, known as the accordance with a prospective payment 2002; and 68 FR 45674, August 1, 2003).
disproportionate share hospital (DSH) system established by the Secretary.’’ The existing regulations governing
adjustment, provides for a percentage The basic methodology for determining payments under the IRF PPS are located
increase in Medicare payments to capital prospective payments is set forth in 42 CFR Part 412, Subpart P.
hospitals that qualify under either of in our regulations at 42 CFR 412.308
two statutory formulas designed to and 412.312. Under the capital PPS, b. LTCHs
identify hospitals that serve a payments are adjusted by the same DRG Under the authority of sections 123(a)
disproportionate share of low-income for the case as they are under the and (c) of Pub. L. 106–113 and section
patients. For qualifying hospitals, the operating IPPS. Similar adjustments are 307(b)(1) of Pub. L. 106–554, LTCHs are
amount of this adjustment may vary also made for IME and DSH as under the being transitioned from being paid for
based on the outcome of the statutory operating IPPS. In addition, hospitals inpatient hospital services based on a
calculations. may receive an outlier payment for blend of reasonable cost-based
If the hospital is an approved teaching those cases that have unusually high reimbursement under section 1886(b) of
hospital, it receives a percentage add-on costs. the Act to 100 percent of the Federal
payment for each case paid under the The existing regulations governing rate during a 5-year period, beginning
IPPS (known as the indirect medical payments to hospitals under the IPPS with cost reporting periods that start on
education (IME) adjustment). This are located in 42 CFR part 412, Subparts or after October 1, 2002. For cost
percentage varies, depending on the A through M. reporting periods beginning on or after
ratio of residents to beds. October 1, 2006, LTCHs will be paid 100
Additional payments may be made for 2. Hospitals and Hospital Units percent of the Federal rate (May 7, 2004
cases that involve new technologies or Excluded From the IPPS LTCH PPS final rule (69 FR 25674)).
medical services that have been Under section 1886(d)(1)(B) of the LTCHs may elect to be paid based on
approved for special add-on payments. Act, as amended, certain specialty 100 percent of the Federal rate instead
To qualify, a new technology or medical hospitals and hospital units are of a blended payment in any year during
service must demonstrate that it is a excluded from the IPPS. These hospitals the 5-year transition period. The
substantial clinical improvement over and units are: Psychiatric hospitals and existing regulations governing payment
technologies or services otherwise units; rehabilitation hospitals and units; under the LTCH PPS are located in 42
available, and that, absent an add-on long-term care hospitals (LTCHs); CFR Part 412, Subpart O.
payment, it would be inadequately paid children’s hospitals; and cancer
under the regular DRG payment. hospitals. Various sections of the c. IPFs
The costs incurred by the hospital for Balanced Budget Act of 1997 (Pub. L. Under the authority of sections 124(a)
a case are evaluated to determine 105–33), the Medicare, Medicaid and and (c) of Pub. L. 106–113, inpatient
whether the hospital is eligible for an SCHIP [State Children’s Health psychiatric facilities (IPFs) (formerly
additional payment as an outlier case. Insurance Program] Balanced Budget psychiatric hospitals and psychiatric
This additional payment is designed to Refinement Act of 1999 (Pub. L. 106– units of acute care hospitals) are paid
protect the hospital from large financial 113), and the Medicare, Medicaid, and under the new IPF PPS. Under the IPF
losses due to unusually expensive cases. SCHIP Benefits Improvement and PPS, some IPFs are transitioning from
Any outlier payment due is added to the Protection Act of 2000 (Pub. L. 106–554) being paid for inpatient hospital
DRG-adjusted base payment rate, plus provide for the implementation of PPSs services based on a blend of reasonable
any DSH, IME, and new technology or for rehabilitation hospitals and units cost-based payment and a Federal per
medical service add-on adjustments. (referred to as inpatient rehabilitation diem payment rate, effective for cost
Although payments to most hospitals facilities (IRFs)), psychiatric hospitals reporting periods beginning on or after
under the IPPS are made on the basis of and units (referred to as inpatient January 1, 2005 (November 15, 2004 IPF
the standardized amounts, some psychiatric facilities (IPFs)), and LTCHs, PPS final rule (69 FR 66921)). For cost
categories of hospitals are paid the as discussed below. Children’s hospitals reporting periods beginning on or after
higher of a hospital-specific rate based and cancer hospitals continue to be paid July 1, 2008, IPFs will be paid 100
on their costs in a base year (the higher under reasonable cost-based percent of the Federal per diem
of FY 1982, FY 1987, or FY 1996) or the reimbursement. payment amount. The existing
IPPS rate based on the standardized The existing regulations governing regulations governing payment under
amount. For example, sole community payments to excluded hospitals and the IPF PPS are located in 42 CFR part
hospitals (SCHs) are the sole source of hospital units are located in 42 CFR 412, subpart N.
care in their areas, and Medicare- Parts 412 and 413.
dependent, small rural hospitals 3. Critical Access Hospitals (CAHs)
(MDHs) are a major source of care for a. IRFs Under sections 1814, 1820, and
Medicare beneficiaries in their areas. Under section 1886(j) of the Act, as 1834(g) of the Act, payments are made
Both of these categories of hospitals are amended, rehabilitation hospitals and to critical access hospitals (CAHs) (that
afforded this special payment protection units (IRFs) have been transitioned from is, rural hospitals or facilities that meet
in order to maintain access to services payment based on a blend of reasonable certain statutory requirements) for
for beneficiaries. (An MDH receives cost reimbursement subject to a inpatient and outpatient services based
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23311
on 101 percent of reasonable cost. 1. Proposed Changes to the DRG group (LTC–DRG) classifications and
Reasonable cost is determined under the Reclassifications and Recalibrations of relative weights for use under the LTCH
provisions of section 1861(v)(1)(A) of Relative Weights PPS for FY 2006.
the Act and existing regulations under As required by section 1886(d)(4)(C) 2. Proposed Changes to the Hospital
42 CFR Parts 413 and 415. of the Act, in section II. of this proposed Wage Index
4. Payments for Graduate Medical rule, we are proposing annual
In section III. of this preamble, we are
Education (GME) adjustments to the DRG classifications
proposing revisions to the wage index
and relative weights. Based on analyses
and the annual update of the wage data.
Under section 1886(a)(4) of the Act, of Medicare claims data, we are
Specific issues addressed include the
costs of approved educational activities proposing to establish a number of new
following:
are excluded from the operating costs of DRGs and make changes to the • The FY 2006 wage index update,
inpatient hospital services. Hospitals designation of diagnosis and procedure using wage data from cost reporting
with approved graduate medical codes under other existing DRGs. periods that began during FY 2002.
education (GME) programs are paid for The major DRG classification changes • The proposed occupational mix
the direct costs of GME in accordance we are proposing include: adjustment to the wage index that we
with section 1886(h) of the Act; the • Reassigning procedure code 35.52 began to apply effective October 1, 2004.
(Repair of atrial septal defect with • The proposed revisions to the wage
amount of payment for direct GME costs
prosthesis, closed technique) from DRG index based on hospital redesignations
for a cost reporting period is based on
108 to DRG 518 (Percutaneous and reclassifications.
the hospital’s number of residents in Cardiovascular Procedure Without
that period and the hospital’s costs per • The proposed adjustment to the
Coronary Artery Stent or AMI); wage index for FY 2006 based on
resident in a base year. The existing • Reassigning procedure code 37.26
regulations governing payments to the commuting patterns of hospital
(Cardiac electrophysiologic stimulation employees who reside in a county and
various types of hospitals are located in and recording studies) from DRGs 535
42 CFR Part 413. work in a different area with a higher
and 536 to DRGs 515 (Cardiac wage index.
On August 11, 2004, we published a Defibrillator Implant Without Cardiac • The timetable for reviewing and
final rule in the Federal Register (69 FR Catheterization); verifying the wage data that will be in
48916) that implemented changes to the • Splitting DRG 209 into two new effect for the proposed FY 2006 wage
Medicare hospital inpatient prospective DRGs based on the presence or absence index.
payment systems for both operating cost of the procedure codes for major joint
replacement or reattachment of lower 3. Proposed Revision and Rebasing of
and capital-related costs, as well as
extremity and revision of hip or knee the Hospital Market Baskets
changes addressing payments for
excluded hospitals and payments for replacement, DRG 545 (Revision of Hip In section IV. of this proposed rule,
GME costs. Generally these changes or Knee Replacement) and DRG 544 we are proposing rebasing and revising
(Major Joint Replacement or the hospital operating and capital
were effective for discharges occurring
Reattachment of Lower Extremity); market baskets to be used in developing
on or after October 1, 2004. On October
• Reassigning procedure code 26.12 the FY 2006 update factor for the
7, 2004, we published a document in (Open biopsy of salivary gland or duct)
the Federal Register (69 FR 60242) that operating prospective payment rates and
from DRG 468 to DRG 477 the excluded hospital market basket to
corrected technical errors made in the (Nonextensive O.R. Procedure Unrelated be used in developing the FY 2006
August 11, 2004 final rule. On To Principal Diagnosis); update factor for the excluded hospital
December 30, 2004, we published • Reassigning the principal diagnosis rate-of-increase limits. We are also
another document in the Federal codes for curvature of the spine or setting forth the data sources used to
Register (69 FR 78525) that further malignancy from DRGs 497 and 498 to determine the revised market basket
corrected the August 11, 2004 final rule proposed new DRG 546 (Spinal Fusion relative weights and choice of price
and the October 7, 2004 correction to Except Cervical with PDX of Curvature proxies.
that rule, effective January 1, 2005. of the Spine or Malignancy);
• Splitting DRGs 516 and 526 into 4. Other Decisions and Proposed
B. Major Contents of This Proposed Rule four new DRGs based on the presence or Changes to the PPS for Inpatient
absence of a CC; Operating and GME Costs
In this proposed rule, we are setting
forth proposed changes to the Medicare • Reassigning procedure code 39.65 In section V. of this proposed rule, we
IPPS for operating costs and for capital- (Extracorporeal membrane oxygenation discuss a number of provisions of the
related costs in FY 2006. We also are [ECMO]) from DRGs 104 and 105 to regulations in 42 CFR Parts 412 and 413
DRG 541 (ECMO or Tracheostomy with and set forth proposed changes
setting forth proposed changes relating
Mechanical Ventilation 96+ Hours or concerning the following:
to payments for GME costs, payments to
certain hospitals and units that continue
Principal Diagnosis Except Face, Mouth • Solicitation of public comments on
and Neck Diagnoses With Major two options for possible expansion of
to be excluded from the IPPS and paid Operating Room Procedure). the current postacute care transfer
on a reasonable cost basis, payments for We also are presenting our policy.
DSHs, and requirements and payments reevaluation of certain FY 2005 • The reporting of hospital quality
for CAHs. The changes being proposed applicants for add-on payments for data as a condition for receiving the full
would be effective for discharges high-cost new medical services and annual payment update increase.
occurring on or after October 1, 2005, technologies, and our analysis of FY • Proposed changes in the payment
unless otherwise noted. 2006 applicants (including public input, adjustment for low-volume hospitals.
The following is a summary of the as directed by Pub. L. 108–173, obtained • Proposed IME adjustment for
major changes that we are proposing to in a town hall meeting). TEFRA hospitals that are converting to
make: We are proposing the annual update IPPS hospitals, and IME FTE resident
of the long-term care diagnosis-related caps for urban hospitals that are granted
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23312 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
rural reclassification and then withdraw 8. Determining Prospective Payment addressed in section IX. of this
that rural classification. Operating and Capital Rates and Rate-of- preamble. For further information
• Proposed changes to implement Increase Limits relating specifically to the MedPAC
section 951 of Pub. L. 108–173 relating In the Addendum to this proposed March 2005 reports or to obtain a copy
to the provision of patient stay/SSI days rule, we set forth proposed changes to of the reports, contact MedPAC at (202)
data maintained by CMS to hospitals for the amounts and factors for determining 220–3700 or visit MedPAC’s Web site at:
the FY 2006 prospective payment rates http://www.medpac.gov.
the purpose of determining their DSH
percentage. for operating costs and capital-related II. Proposed Changes to DRG
costs. We also establish the proposed Classifications and Relative Weights
• Proposed changes relating to threshold amounts for outlier cases. In
hospitals’ geographic classifications, addition, we address the proposed A. Background
including multicampus hospitals and update factors for determining the rate- Section 1886(d) of the Act specifies
urban group hospital reclassifications. of-increase limits for cost reporting that the Secretary shall establish a
• Proposed changes and clarifications periods beginning in FY 2006 for classification system (referred to as
relating to GME, including GME initial hospitals and hospital units excluded DRGs) for inpatient discharges and
residency period limitation, new from the PPS. adjust payments under the IPPS based
teaching hospitals’ participation in 9. Impact Analysis on appropriate weighting factors
Medicare GME affiliated groups, and the assigned to each DRG. Therefore, under
GME FTE cap adjustment for rural In Appendix A of this proposed rule, the IPPS, we pay for inpatient hospital
hospitals; we set forth an analysis of the impact services on a rate per discharge basis
that the proposed changes would have that varies according to the DRG to
• Solicitation of public comments on on affected hospitals.
possible changes in requirements for which a beneficiary’s stay is assigned.
provider-based entities relating to 10. Recommendation of Update Factor The formula used to calculate payment
entities the location requirements for for Hospital Inpatient Operating Costs for a specific case multiplies an
In Appendix B of this proposed rule, individual hospital’s payment rate per
certain neonatal intensive care units as
as required by sections 1886(e)(4) and case by the weight of the DRG to which
off-campus facilities;
(e)(5) of the Act, we provided our the case is assigned. Each DRG weight
• Discussion of the second year of represents the average resources
recommendations of the appropriate
implementation of the Rural required to care for cases in that
percentage changes for FY 2006 for the
Community Hospital Demonstration following: particular DRG, relative to the average
Program; and • A single average standardized resources used to treat cases in all
• Clarification of the definition of a amount for all areas for hospital DRGs.
hospital as it relates to ‘‘specialty inpatient services paid under the IPPS Congress recognized that it would be
hospitals’’ participating in the Medicare for operating costs (and hospital-specific necessary to recalculate the DRG
program. rates applicable to SCHs and MDHs). relative weights periodically to account
• Target rate-of-increase limits to the for changes in resource consumption.
5. PPS for Capital-Related Costs allowable operating costs of hospital Accordingly, section 1886(d)(4)(C) of
inpatient services furnished by hospitals the Act requires that the Secretary
In section VI. of this proposed rule, adjust the DRG classifications and
and hospital units excluded from the
we are not proposing any policy IPPS. relative weights at least annually. These
changes to the capital-related adjustments are made to reflect changes
prospective payment system. For the 11. Discussion of Medicare Payment
in treatment patterns, technology, and
readers’ benefit, we discuss the payment Advisory Commission
any other factors that may change the
policy requirements for capital-related Recommendations
relative use of hospital resources. The
costs and capital payments to hospitals. Under section 1805(b) of the Act, the proposed changes to the DRG
Medicare Payment Advisory classification system and the
6. Proposed Changes for Hospitals and Commission (MedPAC) is required to
Hospital Units Excluded From the IPPS recalibration of the DRG weights for
submit a report to Congress, no later discharges occurring on or after October
In section VII. of this proposed rule, than March 1 of each year, in which 1, 2005, are discussed below.
we discuss the proposed revisions and MedPAC reviews and makes
recommendations on Medicare payment B. DRG Reclassifications
clarifications concerning excluded
hospitals and hospital units, proposed policies. MedPAC’s March 2005 (If you choose to comment on issues
policy changes relating to continued recommendation concerning hospital in this section, please include the
inpatient payment policies addressed caption ‘‘DRG Reclassifications’’ at the
participation by CAHs located in
only the update factor for inpatient beginning of your comment.)
counties redesignated under section
hospital operating costs and capital-
1886(d)(8)(B) of the Act (Lugar 1. General
related costs under the IPPS and for
counties), and proposed policy changes hospitals and distinct part hospital units Cases are classified into DRGs for
relating to designation of CAHs as excluded from the IPPS. This payment under the IPPS based on the
necessary providers. recommendation is addressed in principal diagnosis, up to eight
7. Proposed Changes in Payment for Appendix B of this proposed rule. additional diagnoses, and up to six
Blood Clotting Factor MedPAC issued a second Report to procedures performed during the stay.
Congress: Physician-Owned Specialty In a small number of DRGs,
In section VIII of this proposed rule, Hospitals, March 2005, which addressed classification is also based on the age,
we discuss the proposed change in other issues relating to Medicare sex, and discharge status of the patient.
payment for blood clotting factor payments to hospitals for inpatient The diagnosis and procedure
administered to inpatients with services. The recommendations on these information is reported by the hospital
hemophilia for FY 2006. issues from this second report are using codes from the International
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23313
Classification of Diseases, Ninth coherent. The diagnoses in each MDC This approach is used because clinical
Revision, Clinical Modification (ICD–9– correspond to a single organ system or care is generally organized in
CM). etiology and, in general, are associated accordance with the organ system
The process of forming the DRGs was with a particular medical specialty. affected. However, some MDCs are not
begun by dividing all possible principal Thus, in order to maintain the constructed on this basis because they
diagnoses into mutually exclusive requirement of clinical coherence, no involve multiple organ systems (for
principal diagnosis areas referred to as final DRG could contain patients in example, MDC 22 (Burns)). For FY 2005,
Major Diagnostic Categories (MDCs). different MDCs. Most MDCs are based cases are assigned to one of 519 DRGs
The MDCs were formed by physician on a particular organ system of the in 25 MDCs. The table below lists the 25
panels as the first step toward ensuring body. For example, MDC 6 is Diseases MDCs.
that the DRGs would be clinically and Disorders of the Digestive System.
In general, cases are assigned to an procedure codes. These DRGs are for tracheostomies. Cases are assigned to
MDC based on the patient’s principal heart transplant or implant of heart these DRGs before they are classified to
diagnosis before assignment to a DRG. assist systems, liver and/or intestinal an MDC. The table below lists the
However, for FY 2005, there are nine transplants, bone marrow, lung, current nine pre-MDCs.
DRGs to which cases are directly simultaneous pancreas/kidney, and
assigned on the basis of ICD–9–CM pancreas transplants and for
EP04MY05.000</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23314 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Once the MDCs were defined, each A substantial complication or cases. As we explain in more detail in
MDC was evaluated to identify those comorbidity was defined as a condition, section IX. of this preamble, MedPAC
additional patient characteristics that which because of its presence with a has made a number of recommendations
would have a consistent effect on the specific principal diagnosis, would regarding the DRG system. As part of
consumption of hospital resources. cause an increase in the length of stay our review and analysis of MedPAC’s
Since the presence of a surgical by at least one day in at least 75 percent recommendations, we will consider
procedure that required the use of the of the patients. Each medical and whether to establish guidelines for
operating room would have a significant surgical class within an MDC was tested making DRG reclassification decisions.
effect on the type of hospital resources to determine if the presence of any A patient’s diagnosis, procedure,
used by a patient, most MDCs were substantial comorbidities or discharge status, and demographic
initially divided into surgical DRGs and complications would consistently affect information is fed into the Medicare
medical DRGs. Surgical DRGs are based the consumption of hospital resources. claims processing systems and subjected
on a hierarchy that orders operating The actual process of forming the to a series of automated screens called
room (O.R.) procedures or groups of DRGs was, and continues to be, highly the Medicare Code Editor (MCE). The
O.R. procedures by resource intensity. iterative, involving a combination of MCE screens are designed to identify
Medical DRGs generally are statistical results from test data cases that require further review before
differentiated on the basis of diagnosis combined with clinical judgment. In classification into a DRG.
and age (less than or greater than 17 deciding whether to create a separate After patient information is screened
years of age). Some surgical and medical DRG, we consider whether the resource through the MCE and any further
DRGs are further differentiated based on consumption and clinical characteristics development of the claim is conducted,
the presence or absence of a of the patients with a given set of the cases are classified into the
complication or a comorbidity (CC). conditions are significantly different appropriate DRG by the Medicare
than the remaining patients in the DRG. GROUPER software program. The
Generally, nonsurgical procedures We evaluate patient care costs using GROUPER program was developed as a
and minor surgical procedures that are average charges and length of stay as means of classifying each case into a
not usually performed in an operating proxies for costs and rely on the DRG on the basis of the diagnosis and
room are not treated as O.R. procedures. judgment of our medical officers to procedure codes and, for a limited
However, there are a few non-O.R. decide whether patients are distinct or number of DRGs, demographic
procedures that do affect DRG clinically similar to other patients in the information (that is, sex, age, and
assignment for certain principal DRG. In evaluating resource costs, we discharge status).
diagnoses, for example, extracorporeal consider both the absolute and After cases are screened through the
shock wave lithotripsy for patients with percentage differences in average MCE and assigned to a DRG by the
a principal diagnosis of urinary stones. charges between the cases we are GROUPER, the PRICER software
Once the medical and surgical classes selecting for review and the remainder calculates a base DRG payment. The
for an MDC were formed, each class of of cases in the DRG. We also consider PRICER calculates the payments for
patients was evaluated to determine if variation in charges within these each case covered by the IPPS based on
complications, comorbidities, or the groups; that is, whether observed the DRG relative weight and additional
patient’s age would consistently affect average differences are consistent across factors associated with each hospital,
the consumption of hospital resources. patients or attributable to cases that are such as IME and DSH adjustments.
Physician panels classified each extreme in terms of charges or length of These additional factors increase the
diagnosis code based on whether the stay, or both. Further, we also consider payment amount to hospitals above the
diagnosis, when present as a secondary the number of patients who will have a base DRG payment.
condition, would be considered a given set of characteristics and generally The records for all Medicare hospital
substantial complication or prefer not to create a new DRG unless inpatient discharges are maintained in
EP04MY05.001</GPH>
comorbidity. it will include a substantial number of the Medicare Provider Analysis and
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23315
Review (MedPAR) file. The data in this (Transplant of intestine) out of DRG 148 patients who have blood clots in the
file are used to evaluate possible DRG (Major Small and Large Bowel brain, but not for patients who have a
classification changes and to recalibrate Procedures with CC) and DRG 149 bleeding or hemorrhagic stroke.
the DRG weights. However, in the July (Major Small and Large Bowel Thrombolytic therapy has been shown
30, 1999 IPPS final rule (64 FR 41500), Procedures Without CC) and into DRG to be most effective when used within
we discussed a process for considering 480 (Liver Transplant). We also changed the first 3 hours after the onset of a
non-MedPAR data in the recalibration the title for DRG 480 to ‘‘Liver stroke, and it is contraindicated in
process. In order for us to consider Transplant and/or Intestinal hemorrhagic stroke. The presence or
using particular non-MedPAR data, we Transplant.’’ We moved these cases out absence of code 99.10 does not currently
must have sufficient time to evaluate of DRGs 148 and 149 because our influence DRG assignment. Since code
and test the data. The time necessary to analysis demonstrated that the average 99.10 became effective, we have been
do so depends upon the nature and charges for intestinal transplants are monitoring the DRGs and cases in
quality of the non-MedPAR data significantly higher than the average which this code can be found,
submitted. Generally, however, a charges for other cases in these DRGs. particularly with respect to cardiac and
significant sample of the non-MedPAR We stated at that time that we would stroke DRGs.
data should be submitted by mid- continue to monitor these cases. Last year, we met with representatives
October for consideration in Based on our review of the FY 2004 from several hospital stroke centers who
conjunction with the next year’s MedPAR data, we found 959 cases recommended modification of the
proposed rule. This allows us time to assigned to DRG 480 with overall existing stroke DRGs 14 (Intracranial
test the data and make a preliminary average charges of approximately Hemorrhage or Cerebral Infarction) and
assessment as to the feasibility of using $165,622. There were only three cases 15 (Nonspecific CVA and Precerebral
the data. Subsequently, a complete involving an intestinal transplant alone Occlusion Without Infarction) by using
database should be submitted by early and one case in which both an intestinal the administration of tPA as a proxy to
December for consideration in transplant and a liver transplant were identify patients who have severe
conjunction with the next year’s performed. The average charges for the strokes. The representatives stated that
proposed rule. intestinal transplant cases ($138,922) using tPA as a proxy for the more
Many of the changes to the DRG were comparable to the average charges severely ill stroke patient would
classifications are the result of specific for the liver transplant cases ($165,314), recognize the higher charges these cases
issues brought to our attention by while the remaining combination of an generate because of their higher hospital
interested parties. We encourage intestinal transplant and a liver resource utilization.
individuals with concerns about DRG transplant case had much higher The stroke representatives made two
classifications to bring those concerns to charges ($539,841), and would be paid suggestions concerning DRGs 14 and 15.
our attention in a timely manner so they as an outlier case. Therefore, we are not First, they proposed modifying DRG 14
can be carefully considered for possible proposing any DRG modification for by renaming it ‘‘Ischemic Stroke
inclusion in the next proposed rule and intestinal transplantation cases at this Treatment with a Reperfusion Agent,’’
if included, may be subjected to public time. and including only those cases
review and comment. Therefore, similar We note that an institution that containing code 99.10. The remainder of
to the timetable for interested parties to performs intestinal transplantation, in stroke cases where the patient was not
submit non-MedPAR data for correspondence to us written following treated with a reperfusion agent would
consideration in the DRG recalibration the publication of the FY 2005 IPPS be included in DRG 15, which would be
process, concerns about DRG final rule, agreed with our decision to renamed ‘‘Hemorrhagic Stroke or
classification issues should be brought move cases assigned to code 46.97 to Ischemic Stroke without a Reperfusion
to our attention no later than early DRG 480. Agent.’’ Hemorrhagic stroke cases now
December in order to be considered and
3. MDC 1 (Diseases and Disorders of the found in DRG 14 that are not treated
possibly included in the next annual
Nervous System) with a reperfusion agent would migrate
proposed rule updating the IPPS.
The changes we are proposing to the to DRG 15.
a. Strokes The second suggestion was to leave
DRG classification system for FY 2006
for the FY 2006 GROUPER, version 23.0 In 1996, the Food and Drug DRGs 14 and 15 as they currently exist,
and to the methodology used to Administration (FDA) approved the use and create a new DRG, with a
recalibrate the DRG weights are set forth of tissue plasminogen activator (tPA), recommended title ‘‘Ischemic Stroke
below. Unless otherwise noted in this one type of thrombolytic agent that Treatment with a Reperfusion Agent.’’
proposed rule, our DRG analysis is dissolves blood clots. In 1998, the ICD– This suggested DRG would only include
based on data from the December 2004 9–CM Coordination and Maintenance strokes caused by clots, not by
update of the FY 2004 MedPAR file, Committee created code 99.10 (Injection hemorrhages, and would include the
which contains hospital bills received or infusion of thrombolytic agent) in administration of tPA, identified by
through December 31, 2004 for order to be able to uniquely identify the procedure code 99.10.
discharges in FY 2004. administration of thrombolytic agents. We have examined the MedPAR data
Studies have shown that tPA can be for the cases in DRGs 14 and 15, and
2. Pre-MDC: Intestinal Transplantation effective in reducing the amount of have divided the cases based on the
In the FY 2005 IPPS final rule (69 FR damage the brain sustains during an presence of a principal diagnosis of
48976), we moved intestinal ischemic stroke, which is caused by hemorrhage or occlusive ischemia, and
transplantation cases that were assigned blood clots that block blood flow to the the presence of procedure code 99.10.
to ICD–9–CM procedure code 46.97 brain. The use of tPA is approved for The following table displays the results:
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23316 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
The above table shows that the DRG for intracranial vascular 4. MDC 5 (Diseases and Disorders of the
average standardized charges for cases procedures for unruptured cerebral Circulatory System)
treated with a reperfusion agent are aneurysms. For the FY 2004 IPPS final a. Automatic Implantable Cardioverter/
more than $16,000 and $10,000 higher rule (68 FR 45353) and the FY 2005 Defibrillator
than all other cases in DRGs 14 and 15, IPPS final rule (69 FR 48957), we
respectively. While these data suggest evaluated the data for cases in the As part of our annual review of DRGs,
that patients treated with a reperfusion MedPAR file involving unruptured for FY 2006, we performed a review of
agent are more expensive than all other cerebral aneurysms assigned to DRG 1 cases in the FY 2004 MedPAR file
stroke patients, this conclusion is based (Craniotomy Age >17 With CC) and DRG involving the implantation of a
on a small number of cases. At this time, 2 (Craniotomy Age >17 Without CC) and defibrillator in the following DRGs:
we are not proposing a change to the concluded that the average charges were DRG 515 (Cardiac Defibrillator
Implant Without Cardiac
stroke DRGs because of this concern. consistent with those for other cases
Catheterization).
However, we believe it is possible that found in DRGs 1 and 2. Therefore, we
DRG 535 (Cardiac Defibrillator
more patients are being treated with a did not propose a change to the DRG Implant With Cardiac Catheterization
reperfusion agent than indicated by our assignment for unruptured cerebral With Acute Myocardial Infarction, Heart
data because the presence of code 99.10 aneurysms. Failure, or Shock).
does not affect DRG assignment and We have reviewed the latest data for DRG 536 (Cardiac Defibrillator
may be underreported. unruptured cerebral aneurysms cases. In Implant With Cardiac Catheterization
We invite public comment on the our analysis of the FY 2004 MedPAR Without Acute Myocardial Infarction,
changes to DRGs 14 and 15 suggested by data, we found 1,136 unruptured Heart Failure, or Shock).
the hospital representatives. In addition, cerebral aneurysm cases assigned to While conducting our review, we
we are interested in public comment on DRG 1 and 964 unruptured cerebral noted that there had been considerable
the number of patients currently being aneurysm cases assigned to DRG 2. comments from hospital coders on code
treated with a reperfusion agent as well Although the average charges for the 37.26 (Cardiac electrophysiologic
as the potential costs of these patients unruptured cerebral aneurysm cases in stimulation and recording studies
relative to others with strokes that are DRG 1 ($53,455) and DRG 2 ($34,028) (EPS)), which is included in these
also included in DRGs 14 and 15. were slightly higher than the average DRGs. These comments from hospital
charges for all cases in DRG 1 ($51,466) coders were directed at both CMS and
b. Unruptured Cerebral Aneurysms
and DRG 2 ($30,346), we do not believe the American Hospital Association. The
In the FY 2004 IPPS final rule (68 FR these differences are significant enough procedure codes for these three DRGs
45353), we created DRG 528 to warrant a change in these two DRGs describe the procedures that are
(Intracranial Vascular Procedures With a at this time. Therefore, we are not considered to be a cardiac
Principal Diagnosis of Hemorrhage) in proposing a change in the structure of catheterization. Code 37.26 is classified
MDC 1. We received a comment at that these DRGs relating to unruptured as a cardiac catheterization within these
EP04MY05.002</GPH>
time that suggested we create another cerebral aneurysm cases for FY 2006. DRGs. Therefore, the submission of code
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23317
37.26 affects the DRG assignment for the case is assigned to DRGs 535 or 536, chart shows the number of cases in each
defibrillator cases and leads to the depending on whether or not the patient DRG, along with their average length of
assignment of DRGs 535 or 536. When also had an acute myocardial infarction, stay and average charges, found in the
a cardiac catheterization is performed, heart failure, or shock. The following data:
We have received a number of defibrillator code 37.94 (Implantation or with an AICD insertion. A report of this
questions from hospital coders replacement of automatic cardioverter/ meeting can be found on the Web site:
regarding the correct use of code 37.26. defibrillator, total system [AICD]) which http://www.cms.hhs.gov/
There is considerable confusion about states that EPS is included in code paymentsystem/icd9.
whether or not code 37.26 should be 37.94. We discussed modifying this
We performed an analysis of cases
reported when the procedure is instruction at the October 7–8, 2004
within DRGs 535 and 536 with cardiac
performed as part of the defibrillator meeting of the ICD–9–CM Coordination
implantation. Currently, the ICD–9–CM and Maintenance Committee. We catheterization and with and without
instructs the coder not to report code received a number of comments code 37.26 and with code 37.26 only
37.26 when a defibrillator is inserted. opposing a modification to the use of reported without cardiac catheterization
There is an inclusion term under the code 37.26 to also allow it to be reported and found the following:
The data show that when code 37.26 be some coding problems in the use of cardiac catheterizations for DRGs 535
is the only procedure reported from the code 37.26, we believe it is appropriate and 536. If a defibrillator is implanted
list of cardiac catheterizations, the to propose a modification to these and an EPS is performed with no other
average charges and the average length DRGs. type of cardiac catheterization, the case
of stay are considerably lower. For Data reflected in the chart above show would be assigned to DRG 515.
example, the average standardized that the average standardized charges CMS issued a National Coverage
charges for a defibrillator implant with for DRG 515 were $83,659.76. These Determination for implantable
only an EPS are $85,390.88 in DRG 536, average charges are closer to those in cardioverter defibrillators, effective
while the average standardized charges DRG 536 with code 37.26 and without January 27, 2005, that expands coverage
for DRG 536 with a cardiac any other cardiac catheterization code and requires, in certain cases, that
catheterization, but not an EPS, are reported. While the cases in DRG 535 patient data be reported when the
$110,493.86. The average standardized with code 37.26 and without a cardiac defibrillator is implanted for the clinical
charges for all cases in DRG 536 are catheterization have higher average indication of primary prevention of
$94,453.62. The data show similar charges than the average charges for sudden cardiac death. The submission
EP04MY05.003</GPH> EP04MY05.004</GPH>
findings for DRG 535, with lower cases in DRG 515, these cases have of data on patients receiving an
lengths of stay and average charges much lower average charges than the implantable cardioverter defibrillator for
when the only code reported from the average charges for overall cases in DRG primary prevention to a data collection
cardiac catheterization list is an EPS. 535. For these reasons, we are proposing system is needed for the determination
When we also consider that there may to remove code 37.26 from the list of that the implantable cardioverter
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23318 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
defibrillator is reasonable and necessary stent DRGs. One of the restructuring of the coronary stent
and for quality improvement. These recommendations involved DRGs.
data will be made available in some restructuring these DRGs to create two We agree that the DRG classification
form to providers and practitioners to additional stent DRGs that are closely of cases involving coronary stents must
inform their decisions, monitor patterned after the existing pairs, and be clinically coherent and provide for
performance quality, and benchmark would reflect insertion of multiple adequate reimbursement, including
and identify best practices. We made a stents with and without AMI. The those cases requiring multiple stents.
temporary registry available for use commenters recommended For this reason, we created four new
when the policy became effective and incorporating either stenting code 36.06 ICD–9–CM codes identifying multiple
used the Quality Net Exchange for data (Insertion of nondrug-eluting coronary stent insertion (codes 00.45, 00.46,
submission because Medicare- artery stent(s)) or code 36.07 (Insertion 00.47, and 00.48) and four new codes
participating hospitals already use the of drug-eluting coronary artery stent(s)) identifying multiple vessel treatment
Exchange to report data. when they are reported along with code (codes 00.40, 00.41, 00.42, and 00.43) at
We intend to transition from the the October 7, 2004 ICD–9–CM
36.05 (Multiple vessel percutaneous
temporary registry using the Quality Net Coordination and Maintenance
transluminal coronary angioplasty
Exchange to a more sophisticated Committee Meeting. These eight new
[PTCA] or coronary atherectomy
follow-on registry that will have the codes can be found in Table 6B of this
performed during the same operation, proposed rule. We have worked closely
ability to collect longitudinal data.
with or without mention of with the coronary stent industry and the
Some providers have suggested that
thrombolytic agent). The commenter’s clinical community to identify the most
CMS increase reimbursement for
first concern was that hospitals may be logical code structure to identify new
implantable cardioverter defibrillators
steering patients toward coronary artery codes for both multiple vessel and
to compensate the provider for reporting
bypass graft surgery in place of stenting multiple stent use. Effective October 1,
data. ICD data reporting includes
elements of patient demographics, in order to avoid significant financial 2005, code 36.05 will be deleted and the
clinical characteristics and indications, losses due to what it considered the eight new codes will be used in its
medications, provider information, and inadequate reimbursement for inserting place. Coders are encouraged to use as
complications. Since these data multiple stents. many codes as necessary to describe
elements are commonly found in patient In our response to comments in the each case, using one code to describe
medical records, it is CMS’ expectation FY 2005 IPPS final rule, we indicated the angioplasty or atherectomy, and one
that these data are readily available to that it was premature to act on this code each for the number of vessels
the individuals abstracting and recommendation because the current treated and the number of stents
reporting data. Therefore, we believe coding structure for coronary artery inserted. Coders are encouraged to
that increased reimbursement is not stents cannot distinguish cases in which record codes accurately, as these data
needed at this time. multiple stents are inserted from those will potentially be the basis for future
in which only a single stent is inserted. DRG restructuring. While we agree that
b. Coronary Artery Stents use of multiple vessel and stent codes
Current codes are able to identify
In the FY 2005 IPPS final rule (69 FR performance of PTCA in more than one will provide useful information in the
48971 through 48974), we addressed vessel by use of code 36.05. However, future on hospital costs associated with
two comments from industry while this code indicates that PTCA was percutaneous coronary procedures, we
representatives about the DRG performed in more than one vessel, its believe it remains premature to proceed
assignments for coronary artery stents. use does not reflect the exact number of with a restructuring of the current
These commenters had expressed procedures performed or the exact coronary stent DRGs on the basis of the
concern about whether the number of vessels treated. Similarly, number of vessels treated or the number
reimbursement for stents is adequate, of stents inserted, or both, in the
when codes 36.06 and 36.07 are used,
especially for insertion of multiple absence of data reflecting use of this
they document the insertion of at least
stents. They also expressed concern new coding structure.
one stent. However, these stenting codes The commenter’s second
about whether the current DRG do not identify how many stents were
structure represents the most clinically recommendation was that we
inserted in a procedure, nor distinguish distinguish ‘‘complex’’ from
coherent classification of stent cases. insertion of a single stent from insertion
The current DRG structure ‘‘noncomplex’’ cases in the stent DRGs
of multiple stents. Even the use of one by expanding the higher weighted DRGs
incorporates stent cases into the of the stenting codes in conjunction
following two pairs of DRGs, depending (516 and 526) to include conditions
with multiple-PTCA code 36.05 does other than AMI. The commenter
on whether bare metal or drug-eluting not distinguish insertion of a single
stents are used and whether acute recommended recognizing certain
stent from multiple stents. The use of comorbid and complicating conditions,
myocardial infarction (AMI) is present:
code 36.05 in conjunction with code including hypertensive renal failure,
• DRG 516 (Percutaneous
Cardiovascular Procedures with AMI). 36.06 or code 36.07 indicates only congestive heart failure, diabetes,
• DRG 517 (Percutaneous performance of PTCA in more than one arteriosclerotic cardiovascular disease,
Cardiovascular Procedures with vessel, along with insertion of at least cerebrovascular disease, and certain
Nondrug-Eluting Stent without AMI). one stent. The precise numbers of procedures such as multiple vessel
• DRG 526 (Percutaneous PTCA-treated vessels, the number of angioplasty or atherectomy (as
Cardiovascular Procedures with Drug- vessels into which stents were inserted, evidenced by the presence of procedure
Eluting Stent with AMI). and the total number of stents inserted code 36.05), as indicators of complex
• DRG 527 (Percutaneous in all treated vessels cannot be cases for this purpose. Specifically, the
Cardiovascular Procedures with Drug- determined. Therefore, the capabilities commenters recommended replacing
Eluting Stent without AMI). of the current coding structure do not the current structure with the following
The commenters presented two permit the distinction between single four DRGs:
recommendations for refinement and and multiple vessel stenting that would • Recommended restructured DRG
restructuring of the current coronary be required under the recommended 516 (Complex percutaneous
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23319
cardiovascular procedures with non- with heart failure), 402.91 (Hypertensive (Acute myocardial infarction of
drug-eluting stents). heart disease, unspecified, with heart unspecified site, initial episode of
• Recommended restructured DRG failure), 404.01 (Hypertensive heart and care)).
517 (Noncomplex percutaneous renal disease, malignant, with heart • Renal failure (represented by codes
cardiovascular procedures with non- failure), 404.03 (Hypertensive heart and 403.01 (Hypertensive renal disease,
drug-eluting stents). renal disease, malignant, with heart malignant, with renal failure), 403.11
• Recommended restructured DRG failure and renal failure), 404.11 (Hypertensive renal disease, benign,
526 (Complex percutaneous (Hypertensive heart and renal disease, with renal failure), 403.91 (Hypertensive
cardiovascular procedures with drug- benign, with heart failure), 404.13 renal disease, unspecified, with renal
eluting stents). (Hypertensive heart and renal disease, failure), 585.0 (Chronic renal failure),
• Recommended restructured DRG benign, with heart failure and renal V42.0 (Organ or tissue replaced by
527 (Noncomplex percutaneous failure), 404.91 (Hypertensive heart and transplant, kidney), V45.1 (Renal
cardiovascular procedures with drug- renal disease, unspecified, with heart dialysis status), V56.0 (Extracorporeal
eluting stents). failure), 404.93 (Hypertensive heart and dialysis), V56.1 (Fitting and adjustment
The commenter argued that this renal disease, unspecified, with heart of extracorporeal dialysis catheter),
structure would provide an failure and renal failure), 428.0 V56.2 (Fitting and adjustment of
improvement in both clinical and (Congestive heart failure, unspecified), peritoneal dialysis catheter)). Any renal
resource coherence over the current and 428.1 (Left heart failure)). failure with congestive heart failure will
structure that classifies cases according • Arteriosclerotic cardiovascular be captured in the 404.xx codes listed
to the type of stent inserted and the disease (represented by code 429.2 above.
presence or absence of AMI alone, (Cardiovascular disease, unspecified)). We reviewed the cases in the four
without considering other complicating • Cerebrovascular disease coronary stent DRGs and found that
conditions. The commenter also (represented by codes 430.0 most of the additional or ‘‘complicated’’
presented an analysis, based on (Subarachnoid hemorrhage), 431.0 cases did, in fact, have higher average
previous MedPAR data, that evaluated (Intracerebral hemorrhage), 432.0 charges in most instances. However,
charges and lengths of stay for cases (Nontraumatic extradural hemorrhage), these results could potentially be
with expected high resource use and 432.1, Subdural hemorrhage, 432.9, duplicated for many DRGs, or sets of
reclassified cases into its recommended (Unspecified intracranial hemorrhage), DRGs, within the PPS structure. That is,
new structure of paired ‘‘complex’’ and 433.01 (Occlusion and stenosis of cases with selected complicating factors
‘‘noncomplex’’ DRGs. The commenter’s basilar artery, with cerebral infarction), will tend to have higher average lengths
analysis showed some evidence of 433.11 (Occlusion and stenosis of of stay and average charges than cases
clinical and resource coherence in the carotid artery, with cerebral infarction), without those complicating factors.
recommended DRG structure. However, 433.21 (Occlusion and stenosis of Since cases with the selected
we did not adopt the proposal in the FY vertebral artery, with cerebral complicating factors necessarily contain
2005 IPPS final rule. First, the data infarction), 433.31 (Occlusion and sicker patients, longer lengths of stay
presented by the commenter still stenosis of multiple and bilateral and higher average charges are to be
represented preliminary experience precerebral arteries, with cerebral expected. For example, cases in which
under a relatively new DRG structure. infarction), 433.81 (Occlusion and patients with a cardiac condition also
Second, the analysis did not reveal stenosis of other specified precerebral have renal failure are quite likely to
significant gains in resource coherence artery, with cerebral infarction), 434.01 consume higher resources than patients
compared to existing DRGs for stenting (Cerebral thrombosis with cerebral only with a cardiac condition. In
cases. Therefore, we were reluctant to infarction), 434.11 (Cerebral embolism addition, selectively recognizing the
adopt this approach because of with cerebral infarction), 434.91 recommended secondary diagnoses or
comments and concern about whether (Cerebral artery occlusion with cerebral complicating conditions raises some
the overall level of payment in the infarction, unspecified), 436.0 (Acute, issues related to the logic and structural
coronary stent DRGs was adequate. but ill-defined, cerebrovascular integrity of the DRG system. Generally,
However, we indicated that this issue disease)). we have taken into account the higher
deserved further study and • Secondary diagnosis of acute costs of cases with complications by
consideration, and that we would myocardial infarction (represented by maintaining a general list of
conduct an analysis of this codes 410.01 (Acute myocardial comorbidities and complications (the
recommendation and other approaches infarction of anterolateral wall, initial CC) list), and, where appropriate,
to restructuring these DRGs with episode of care), 410.11 (Acute distinguishing pairs of DRGs by ‘‘with
updated data in the FY 2006 proposed myocardial infarction of other anterior and without CCs.’’ (This system also
rule. wall, initial episode of care), 410.21 specifies exclusions from each pair, to
This year, we have analyzed the (Acute myocardial infarction of account for cases where a condition on
MedPAR data to determine the impact inferolateral wall, initial episode of the CC list is an expected and normal
of certain secondary diagnoses or care), 410.31 (Acute myocardial constituent of the diagnoses reflected in
complicating conditions on the four infarction of inferoposterior wall, initial the paired DRGs.) In order to maintain
DRGs cited above. Specifically, we episode of care), 410.41 (Acute the basic DRG body-system structure,
examined the data in DRGs 516, 517, myocardial infarction of other inferior we have not employed special lists of
526, and 527, based on the presence of wall, initial episode of care), 410.51 procedures and diagnoses from one
coronary stents (codes 36.06 and 36.07) (Acute myocardial infarction of other MDC to make determinations about the
and the following additional diagnoses: lateral wall, initial episode of care), structure of DRGs in another MDC. The
• Congestive heart failure 410.61 (True posterior wall infarction, recommended restructuring of the
(represented by codes 398.91 initial episode of care), 410.71 coronary stent DRGs is inconsistent
(Rheumatic heart failure (congestive)), (Subendocardial infarction, initial with this principle and may create a
402.01 (Hypertensive heart disease, episode of care), 410.81 (Acute new precedent of selecting specific
malignant, with heart failure), 402.11, myocardial infarction of other specified comorbidities and complications to
(Hypertensive heart disease, benign, sites, initial episode of care), 410.91 restructure DRGs. For example, the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23320 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
presence of code 403.11 (Hypertensive Therefore, restructuring these DRGs on when reported as the principal
renal disease, malignant, with renal this basis would result in a logical diagnosis. Codes V56.1 and V56.2
failure) may distinguish cases with arrangement of cases with regard to both describe conditions relating to dialysis
higher average charges, but the same clinical coherence and resource for renal failure. Therefore, we believe
argument could be raised for many other consumption. We have compared the that our proposal to utilize the existing
procedures across other MDCs. existing CC list with the list of the codes CC list would encompass most of the
Rather than establishing such a recommended by the commenter as cases on the recommended list, as well
precedent, we are proposing to secondary diagnoses. All of the as other cases with additional CCs
restructure the coronary stent DRGs on recommended codes already appear on requiring additional resources. We have
the basis of the standard CC list to the CC list except for codes 429.2, 432.9, examined the MedPAR data for the
differentiate cases that require greater V56.1, and V56.2. Code 429.2 represents
cases in the coronary stent DRGs,
resources. We believe this list to be a very vague diagnosis (arteriosclerotic
distinguishing cases that include CCs
more inclusive of true comorbid or cardiovascular disease (ASCVD)). Code
complicating conditions than selection 432.9 represents a nonspecific principal and those that do not. The following
of specific secondary diagnosis codes. diagnosis that is rejected by the MCE table displays the results:
The data show a clear differentiation 527 based on the presence or absence of will continue to consider whether the
in average charges between the cases in a CC. Therefore, we are proposing to structure of these DRGs ought to reflect
DRG 516 and 526 ‘‘with CC’’ and those retain these two DRGs in their current differences in the number of vessels
‘‘without CC.’’ Therefore, the data forms. We believe this revised structure treated or the number of stents inserted,
suggest that a ‘‘with and without CC’’ will result in a more inclusive and or both. As we discussed above, a new
split in DRG 516 and 526 is warranted. comprehensive array of cases within coding structure capable of identifying
At the same time, the data do not show MDC 5 without selectively recognizing multiple vessel treatment and the
such a clear differentiation, in either certain secondary diagnoses as insertion of multiple stents will go into
average charges or lengths of stay, ‘‘complex.’’ effect on October 1, 2005. It remains
among the cases in DRGs 517 and 527. While we are proposing some
premature to restructure the coronary
Therefore, we are proposing to delete restructuring of the coronary stent DRGs
DRGs 516 and 526, and to substitute for FY 2006, it is important to note that stent DRGs on the basis of the number
four new DRGs in their place. These we will continue to monitor and analyze of vessels treated or the number of
new DRGs would be patterned after clinical and resource trends in this area. stents inserted, or both, until data
existing DRGs 516 and 526, except that For example, we have found indications reflecting the use of these new codes
they would be split based on the in the current data that treatment may become available. However, we will
presence or absence of a secondary be moving toward use of drug-eluting analyze those data when they become
diagnosis on the existing CC list. stents, and away from use of bare metal available in order to determine whether
Specifically, we are proposing to create stents. Specifically, cases in DRGs 516 a restructuring based on multiple vessel
DRG 547 (Percutaneous Cardiovascular and 517, which utilize bare metal stents, treatment or insertion of multiple stents,
Procedure with AMI with CC), DRG 548 comprise only 44.4 percent, or less than or both, is warranted. Our proposal to
(Percutaneous Cardiovascular Procedure half, of the cases in the four coronary restructure two of the current coronary
with AMI without CC), DRG 549 stent DRGs in the MedPAR data we stent DRGs into paired ‘‘with and
(Percutaneous Cardiovascular Procedure analyzed. As use of drug-eluting stents without CC’’ DRGs for FY 2006 does not
with Drug-Eluting Stent with AMI with becomes the standard of treatment, we preclude proposals in subsequent years
CC), and DRG 550 (Percutaneous may consider over time whether to to restructure the coronary stent DRGs
Cardiovascular Procedure with Drug- dispense with the distinction between in one or both of these ways.
Eluting Stent with AMI without CC). As these stents and the older bare metal
we noted above, the MedPAR data do stent technology in the structure of the
EP04MY05.005</GPH>
not support restructuring DRGs 517 and coronary stent DRGs. In addition, we
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23321
c. Insertion of Left Atrial Appendage catheter procedure under fluoroscopy a comment from a manufacturer who
Device through the femoral vein. Implantation suggested that placement of the code in
Atrial fibrillation is a common heart is performed in a hospital DRG 108 (Other Cardiothoracic
rhythm disorder that can lead to a catheterization laboratory using Procedures) was more representative of
cardiovascular blood clot formation standard transseptal technique, with the the complexity of the procedure than
leading to increased risk of stroke. patient generally under local anesthesia. placement in DRG 518. The
According to product literature, nearly The procedure takes approximately 1 manufacturer indicated that the
all strokes are from embolic clots arising hour, and most patients stay overnight suggested placement of procedure code
in the left atrial appendage of the heart: in the hospital. 37.90 in DRG 108 was justified because
an appendage for which there is no In the FY 2005 IPPS final rule (69 FR another percutaneous procedure,
useful function. Standard therapy uses 48978, August 11, 2004), we discussed described by ICD–9-CM procedure code
anticoagulation drugs. However, these the DRG assignment of new ICD–9–CM 35.52 (Repair of atrial septal defect with
drugs may be contraindicated in certain procedure code 37.90 (Insertion of left prosthesis, closed technique), was
patients and may cause complications atrial appendage device) for clinical assigned to DRG 108. As we indicated
such as bleeding. The underlying trials, effective for discharges occurring in the FY 2005 final rule (69 FR 48978),
concept behind the left atrial appendage on or after October 1, 2004, to DRG 518 this comment prompted us to examine
device is to block off the left atrial (Percutaneous Cardiovascular Procedure data in the FY 2003 MedPAR file for
appendage, so that the blood clots without Coronary Artery Stent or Acute cases of code 35.52 assigned to DRG 108
formed therein cannot travel to other Myocardial Infarction)). In that final and DRG 518 in comparison to all cases
sites in the vascular system. The device rule, we addressed the DRG assignment assigned to DRG 108. We found the
is implanted using a percutaneous of procedure code 37.90 in response to following:
Therefore, we concluded that cases for both clinical coherence and We have now examined data from the
procedure code 35.52 showed a decided charge data as part of the IPPS FY 2006 FY 2004 MedPAR file and found results
similarity to the cases found in DRG process of identifying the most for cases assigned to DRG 108 and DRG
518, not DRG 108. At that time, we appropriate DRG assignment for 518 that are similar to last year’s
determined that we would analyze the procedure code 35.52. findings as indicated in the chart below:
From this comparison, we found that of stay for cases in DRG 108 with coherent group of cases in DRG 518 that
when an atrial septal defect is procedure code 35.52 reported. In reflect all percutaneous procedures.
percutaneously repaired, and procedure comparison, the total cases in DRG 518 d. External Heart Assist System Implant
code 35.52 is the only code reported in have average charges of only $1,988
DRG 108, there is a significant lower than the cases in DRG 108 with In the August 1, 2002, final rule (67
discrepancy in both the average charges only procedure code 35.52 reported. In FR 49989), we attempted to clinically
and the average length of stay between addition, the length of stay in total cases and financially align ventricular assist
the cases with procedure code 35.52 in DRG 518 is more closely related to device (VAD) procedures by creating
reported in DRG 108 and the total cases cases in DRG 108 with only procedure DRG 525 (Heart Assist System Implant).
in DRG 108. The total cases in DRG 108 code 35.52 reported. We also noted that cases in which a
have average charges of $51,744 greater heart transplant also occurred during
EP04MY05.006</GPH> EP04MY05.007</GPH>
than the 872 cases in DRG 108 reporting Based on our analysis of these data, the same hospitalization episode would
procedure code 35.52 as the only we are proposing to move procedure continue to be assigned to DRG 103
procedure. The total cases in DRG 108 code 35.52 out of DRG 108 and place it (Heart Transplant).
also have an average length of stay of in DRG 518. We believe that this After further data review during the
7.39 days greater than the average length proposal would result in a more next 2 years, we decided to realign the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23322 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
DRGs containing VAD codes for FY • 37.54, Replacement or repair of transplant, a mechanical pump is
2005. In the August 11, 2004 final rule other implantable component of total needed for patient survival. The surgical
(69 FR 48927), we announced changes replacement heart system *. procedures for implantation of both an
to DRG 103, DRG 104 (Cardiac Valve • 37.62, Insertion of non-implantable internal VAD and an external VAD are
and Other Major Cardiothoracic heart assist system. very similar. However, the external
Procedure with Cardiac • 37.63, Repair of heart assist system. heart assist system (code 37.65) is a less
Catheterization), DRG 105 (Cardiac • 37.65, Implant of external heart expensive device than the implantable
Valve and Other Major Cardiothoracic assist system. heart assist system (code 37.66). The
Procedures Without Cardiac * These codes represent noncovered manufacturer suggested that the
Catheterization), and DRG 525. services for Medicare beneficiaries. However, payment differential between DRGs 103
In summary, these changes it is our longstanding practice to assign every and 525 is an incentive to choose the
code in the ICD–9–CM classification to a higher paying device, and asserted that
included—
DRG. Therefore, they have been assigned to only a subset of patients receiving an
• Moving code 37.66 (Insertion of DRG 525. implantable heart assist system are best
implantable heart assist system) out of served by this device. The manufacturer
Since that decision, we have been
DRG 525 and into DRG 103. also suggested that the initial use of the
encouraged by a manufacturer to
• Renaming DRG 525 as ‘‘Other Heart reevaluate DRG 525 for FY 2006. The least expensive therapeutically
Assist System Implant.’’ manufacturer requested that we again appropriate device yields both the best
• Moving code 37.62 (Insertion of review the data surrounding cases clinical outcomes and the lowest total
non-implantable heart assist system) out reporting code 37.65 and has suggested system costs.
of DRGs 104 and 105 and back into DRG moving these cases into DRG 103. The We note that, under the DRG system,
525. manufacturer pointed out the following: our intent is to create payments that are
DRG 525 currently consists of any Code 37.65 describes the implantation reflective of the average resources
principal diagnosis in MDC 5, plus the of an external heart assist system and is required to treat a particular case. Our
following surgical procedure codes: currently approved by the FDA as a goal is that physicians and hospitals
bridge-to-recovery device. From the should make treatment decisions based
• 37.52, Implantation of total standpoint of clinical status, the on the clinical needs of the patient and
replacement heart system *. patients in DRG 103 and receiving an not financial incentives.
• 37.53, Replacement or repair of external heart assist system are similar When we reviewed the FY 2004
thoracic unit of total replacement heart because their native hearts cannot MedPAR data, we were able to
system *. support circulation, and absent a heart demonstrate the following comparisons:
The above table shows that the 37.8 was 9.26 days compared to 37.5 days for would be inconsistent with our goal of
percent of cases in DRG 525 that the 633 cases in DRG 103. coherent reimbursement structure
reported code 37.65 have average We note that the analysis above within the DRGs. In addition, the
charges that are nearly $33,000 higher presents the difference in average relative weight of DRG 103 would
than the average charges for all cases in charges, not costs. Because hospitals’ decrease by moving the less resource-
the DRG. However, the average charges charges are higher than costs, the intensive external heart procedures into
for the subset of cases with code 37.65 difference in hospital costs will be less the same DRG with the more expensive
in DRG 525 ($206,497) are more than than the figures shown here. Moving heart transplant cases. The net effect
$107,086 lower than the average charges cases containing code 37.65 from DRG would be an underpayment for heart
for all cases in DRG 103 ($313,583). 525 to DRG 103 would have two transplant cases. Alternatively, we also
Furthermore, the average length of stay consequences. The cases in DRG 103 reconsidered our position on moving
for the subset of patients in DRG 525 reporting code 37.65 would be the insertion of an implantable heart
EP04MY05.008</GPH>
receiving an external heart assist system appreciably overreimbursed, which assist system (code 37.66) back into
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23323
DRG 525. However, as shown in the FY Exemption (IDE) clinical trials. PTA of Procedure code 00.61 was assigned to
2005 IPPS final rule (69 FR 48929), the the carotid artery, when provided solely four MDCs and seven DRGs. The most
resource costs associated with caring for for the purpose of carotid artery dilation likely scenario is that in which cases are
a patient receiving an implantable heart concurrent with carotid stent assigned to MDC 1 (Diseases and
assist system are far more similar to placement, is considered to be a Disorders of the Nervous System in
those cases receiving a heart transplant reasonable and necessary service only DRGs 533 (Extracranial Procedures with
in DRG 103 than they are to cases in when provided in the context of such CC) and 534 (Extracranial Procedures
DRG 525. For these reasons, we are not clinical trials and, therefore, is without CC). Cases may also be assigned
proposing to make any changes to the considered a covered service for the to MDC 5 (Diseases and Disorders of the
structure of either DRG 103 or DRG 525 purposes of these trials. Performance of Circulatory System), MDC 21 (Injuries,
in this proposed rule. PTA in the carotid artery when used to Poisoning, and Toxic Effects of Drugs),
treat obstructive lesions outside of and MDC 24 (Multiple Significant
e. Carotid Artery Stent
approved protocols governing Category Trauma). Other less likely DRG
Stroke is the third leading cause of B IDE clinical trials remains a assignments can be found in Table 6B
death in the United States and the noncovered service. in the Addendum to the FY 2005 IPPS
leading cause of serious, long-term At the April 1, 2004 ICD–9–CM final rule (69 FR 49624).
disability. Approximately 70 percent of Coordination and Maintenance In the FY 2005 final rule, we
all strokes occur in people age 65 and Committee meeting, we discussed indicated that we would continue to
older. The carotid artery, located in the creation of a new code or codes to monitor DRGs 533 and 534 and
neck, is the principal artery supplying identify carotid artery stenting, along procedure code 00.61 in combination
the head and neck with blood. with a concomitant percutaneous with procedure code 00.63 in upcoming
Accumulation of plaque in the carotid angioplasty or atherectomy (PTA) code annual DRG reviews. For this proposed
artery can lead to stroke either by for delivery of the stent(s). This subject rule, we are using proxy codes to
decreasing the blood flow to the brain was addressed in response to the need evaluate the costs and DRG assignments
or by having plaque break free and lodge to identify carotid artery stenting for use for carotid artery stenting because codes
in the brain or in other arteries to the in clinical trials in the upcoming fiscal 00.61 and 00.63 were only approved for
head. The percutaneous transluminal year. Public comment confirmed the use beginning October 1, 2004, and
angioplasty (PTA) procedure involves need for specific codes for this because MedPAR data for this period
inflating a balloon-like device in the procedure. We established codes for are not yet available. We used procedure
narrowed section of the carotid artery to carotid artery stenting procedures code 39.50 (Angioplasty or atherectomy
reopen the vessel. A carotid stent is then effective October 1, 2004, for patients of other noncoronary vessel(s)) in
deployed in the artery to prevent the who are enrolled in an FDA-approved combination with procedure code 39.90
vessel from closing or restenosing. A clinical trial and are using on-label FDA (Insertion of nondrug-eluting peripheral
distal filter device (embolic protection approved stents and embolic protection vessel stent(s)) in DRGs 533 and 534 as
device) may also be present, which is devices. the proxy codes for coronary artery
intended to prevent pieces of plaque New procedure codes 00.61 stenting. For this evaluation, we used
from entering the bloodstream. (Percutaneous angioplasty or principal diagnosis code 433.10
Effective July 1, 2001, Medicare atherectomy of precerebral (extracranial (Occlusion and stenosis of carotid
covers PTA of the carotid artery vessel(s)) and 00.63 (Percutaneous artery, without mention of cerebral
concurrent with carotid stent placement insertion of carotid artery stent(s)) were infarction) because this diagnosis most
when furnished in accordance with the published in Table 6B, New Procedure closely reflects the clinical trial criteria.
FDA-approved protocols governing Codes in the FY 2005 IPPS final rule (69 The following chart shows our
Category B Investigational Device FR 49624). findings:
The patients receiving a carotid stent artery stent were higher than for other insertion, and no data utilizing
(codes 39.50 and 39.90) represented 3.5 patients in DRG 534, in our view, the procedure codes 00.61 and 00.63 in a
percent of all cases in DRG 534. On small number of cases and the clinical trial setting, we believe it is
average, patients receiving a carotid magnitude of the difference in average premature to revise the DRG structure at
stent had slightly shorter average charges are not sufficient to justify a this time. We expect to revisit this
lengths of stay than other patients in change in the DRGs. analysis once data become available on
DRGs 533 and 534. While the average Because we have a paucity of data for the new codes for carotid artery stents.
charges for patients receiving a carotid the carotid stent device and its
EP04MY05.009</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23324 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
f. Extracorporeal Membrane assignment in the newborn, pediatric, Ventilation 96+ Hours or Principal
Oxygenation (ECMO) and adult population. According to Diagnosis Except Face, Mouth, and
these letters, patients receiving ECMO Neck Diagnoses With Major O.R.).
Extracorporeal membrane are highly resource intensive and
oxygenation (ECMO) is a procedure to We note that the primary focus of
should have a unique DRG that reflects updates to the Medicare DRG
create a closed chest, heart-lung bypass the costs of these resources. The
system by insertion of vascular classification system is changes relating
commenters recommended the creation to the Medicare patient population, not
catheters. Patients receiving this of a new DRG for ECMO with a DRG
procedure require mechanical the pediatric patient population.
weight equal to or greater than the DRG
ventilation. ECMO is performed for a Because ECMO is primarily a pediatric
weight for tracheostomy.
small number of severely ill patients procedure and rarely performed in an
ECMO is assigned to procedure code
who are at high risk of dying without 39.65 (Extracorporeal membrane adult population, we have few cases in
this procedure. Most often it is done for oxygenation). This code is classified as our data to use to evaluate resource
neonates with persistent pulmonary an O.R. procedure and is assigned to costs. We are aware that other insurers
hypertension and respiratory failure for DRG 104 (Cardiac Valve and Other sometimes use Medicare’s rates to make
whom other treatments have failed, Major Cardiothoracic Procedure With payments. We advise private insurers to
certain severely ill neonates receiving Cardiac Catheterization) and DRG 105 make appropriate modifications to our
major cardiac procedures or (Cardiac Valve and Other Major payment system when it is being used
diaphragmatic hernia repair, and certain Cardiothoracic Procedure Without for children or other patients who are
older children and adults, most of Cardiac Catheterization). When ECMO not generally found in the Medicare
whom are receiving major cardiac is performed with other O.R. population.
procedures. procedures, the case is assigned to the To evaluate the appropriateness of
We received several letters from higher weighted DRG. For example, payment under the current DRG
institutions that perform ECMO. The when ECMO and a tracheostomy are assignment, we have reviewed the FY
commenters stated that, in the CMS performed during the same admission, 2004 MedPAR data and found 78 ECMO
GROUPER logic, this procedure has the case would be assigned to DRG 541 cases in 13 DRGs. The following table
little or no impact on the DRG (Tracheostomy with Mechanical illustrates the results of our findings:
The average charges for all ECMO to: ‘‘ECMO or Tracheostomy With System), DRGs 157 and 158 (Anal and
cases were approximately $258,821, and Mechanical Ventilation 96+ Hours or Stomal Procedures With and Without
the average length of stay was Principal Diagnosis Except Face, Mouth CC, respectively); MDC 9 (Diseases and
approximately 20.7 days. The average and Neck Diagnoses With Major O.R.’’ Disorders of the Skin, Subcutaneous
charges for the ECMO cases are closer to Tissue and Breast), DRG 267 (Perianal
5. MDC 6 (Diseases and Disorders of the
the average charges for DRG 541 and Pilonidal Procedures); MDC 21
($273,656) than to the average charges of Digestive System): Artificial Anal
(Injuries, Poisonings, and Toxic Effects
DRG 104 ($147,766) and DRG 105 Sphincter
of Drugs), DRGs 442 and 443 (Other O.R.
($131,700). Of the 78 ECMO cases, 14 In the FY 2003 IPPS final rule (67 FR Procedures for Injuries With and
cases are already assigned to DRG 541. 50242), we created two new codes for without CC, respectively); and MDC 24
We believe that the data indicate that procedures involving an artificial anal (Multiple Significant Trauma), DRG 486
DRG 541 would be a more appropriate sphincter, effective for discharges (Other O.R. Procedures for Multiple
DRG assignment for cases where ECMO occurring on or after October 1, 2002: Significant Trauma).
is performed. We further note that under code 49.75 (Implantation or revision of In the FY 2004 IPPS final rule (68 FR
the All Payer DRG System used in New artificial anal sphincter) is used to 45372), we discussed the assignment of
York State, cases involving ECMO are identify cases involving implantation or these codes in response to a request we
assigned to the tracheostomy DRG. revision of an artificial anal sphincter had received to consider reassignment
Thus, the assignment of ECMO cases to and code 49.76 (Removal of artificial of these two codes to different MDCs
the tracheostomy DRG for Medicare anal sphincter) is used to identify cases and DRGs. The requester believed that
would be similar to how these cases are involving the removal of the device. In the average charges ($44,000) for these
grouped in another DRG system. For Table 6B of that final rule, we assigned codes warranted reassignment. In the
these reasons, we are proposing to both codes to one of four MDCs, based FY 2004 IPPS final rule, we stated that
reassign ECMO cases reporting code on principal diagnosis, and one of six we did not have sufficient MedPAR data
39.65 to DRG 541. We are also DRGs within those MDCs: MDC 6 available on the reporting of codes 49.75
EP04MY05.010</GPH>
proposing to change the title of DRG 541 (Diseases and Disorders of the Digestive and 49.76 to make a determination on
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23325
DRG reassignment of these codes. We 6. MDC 8 (Diseases and Disorders of the of either metal, ceramic, or high-density
agreed that, if warranted, we would give Musculoskeletal System and Connective polyethylene (the ‘‘socket’’).
further consideration to the DRG Tissue) The AAOS surgeons stated that in a
assignments of these codes because it is normal knee, four ligaments help hold
a. Hip and Knee Replacements
our customary practice to review DRG the bones in place so that the joint
assignment(s) for newly created codes to Orthopedic surgeons representing the works properly. When a knee becomes
determine clinical coherence and American Association of Orthopaedic arthritic, these ligaments can become
similar resource consumption after we Surgeons (AAOS) requested that we scarred or damaged. During knee
subdivide DRG 209 (Major Joint and replacement surgery, some of these
have had the opportunity to collect
Limb Reattachment Procedures of Lower ligaments, as well as the joint surfaces,
MedPAR data on utilization, average
Extremity) in MDC 8 by creating a new are substituted or replaced by the new
lengths of stay, average charges, and artificial prostheses. Two types of
DRG for revision of lower joint
distribution throughout the system. In fixation are used to hold the prostheses
procedures. The AAOS made a
the FY 2005 IPPS final rule, we in place. Cemented designs use
presentation at the October 7–8, 2004
reviewed the FY 2003 MedPAR data for meeting of the ICD–9–CM Coordination polymethyl methacrylate to hold the
the presence of codes 49.75 and 49.76 and Maintenance Committee meeting. A prostheses in place. Cementless designs
and determined that these procedures summary report of this meeting can be rely on bone growing into the surface of
were not a clinical match with the other found at the CMS Web site: http:// the implant for fixation.
procedures in DRGs 157 and 158. www.cms.hhs.gov/paymentsystems/ The surgeons stated that all hip and
Therefore, for FY 2005, we moved icd9/. We also received written knee replacements have an articular
procedure codes 49.75 and 49.76 out of comments on this request. bearing surface that is subject to wear
DRGs 157 and 158 and into DRGs 146 The AAOS surgeons stated that cases (the acetabular bearing surface in the
and 147 (Rectal Resection With and involving patients who require a hip and the tibial bearing surface in the
Without CC, respectively). This change revision of a prior replacement of a knee knee). Traditionally, these bearing
had the effect of doubling the payment surfaces have been made of metal-on-
or hip require significantly more
for the cases with procedure codes 49.75 metal or metal-on-polyethylene,
resources than cases in which patients
and 49.76 assigned to DRGs 146 and 147 although newer materials (both metals
receive an initial joint replacement.
based on increases in the relative and ceramics) have been used more
They pointed out that total joint
recently. Earlier hip and knee implant
weights. One commenter had suggested replacement is one of the most
designs had nonmodular bearing
that we create a new DRG for ‘‘Complex commonly performed and successful
surfaces, but later designs included
Anal/Rectal Procedure with Implant.’’ operations in orthopedic surgery. The
modular articular bearing surfaces to
However, we noted that the DRG surgeons mentioned that, in 2002, over
reduce inventory and potentially
structure is a system of averages and is 300,000 hip replacement and 350,000
simplify revision surgery. Wear of the
based on groups of patients with similar knee replacement procedures were articular bearing surface occurs over
characteristics. At that time, we performed in the United States. They time and has been found to be related
indicated that we would continue to also pointed out that these procedures to many factors, including the age and
monitor procedure codes 49.75 and are a frequent reason for Medicare activity level of the patient. In some
49.76 and the DRGs to which they are hospitalization. The surgeons stated that cases, wear of the articular bearing
assigned. total joint replacements have been surface can produce significant debris
shown to be highly cost-effective particles that can cause peri-prosthetic
For this FY 2006 proposed rule, we procedures, resulting in dramatic
reviewed the FY 2004 MedPAR data for bone resorption (also known and
improvements in quality of life for osteolysis) and mechanical loosening of
the presence of codes 49.75 and 49.76. patients suffering from disabling the prosthesis. Wear of the bearing
We found that these two procedures are arthritic conditions involving the hip or surface can also lead to instability or
still of low incidence. Among the six knee. In addition, they reported that the prosthetic dislocation, or both, and is a
possible DRG assignments, we found a medical literature indicates success common cause of revision hip or knee
total of 18 cases reported with codes rates of greater than 90 percent for replacement surgery.
49.75 and 49.76 for the implant, implant survivorship, reduction in pain, Depending on the cause of failure of
revision, or removal of the artificial anal and improvement in function at a 10- the hip replacement, the type of
sphincter. We found 13 of these cases in year to 15-year followup. However, implants used in the previous surgery,
DRGs 146 and 147 (compared to 12,558 despite these excellent results with the amount and quality of the patient’s
total cases in these DRGs), and the primary total joint replacement, factors remaining bone stock, and factors
remaining 5 cases in DRGs 442 and 443 related to implant longevity and related to the patient’s overall health
(compared to 19,701 total cases in these evolving patient demographics have led and anatomy, revision hip replacement
DRGs). to an increase in the volume of revision surgery can be relatively straightforward
total joint procedures performed in the or extremely complex. Revision hip
We believe the number of cases with United States over the past decade.
codes 49.75 and 49.76 in these DRGs is replacement can involve replacing any
Total hip replacement is an operation part or all of the implant, including the
too low to provide meaningful data of that is intended to reduce pain and femoral or acetabular components, and
statistical significance. Therefore, we restore function in the hip joint by the bearing surface (the femoral head
are not proposing any further changes to replacing the arthritic hip joint with a and acetabular liner), and may involve
the DRGs for these procedures at this prosthetic ball and socket joint. The major reconstruction of the bones and
time. Neither are we proposing to prosthetic hip joint consists of a metal soft tissues around the hip. All of these
change the structure of DRGs 146 or 147 alloy femoral component with a procedures differ significantly in their
at this time. modular femoral head made of either clinical indications, outcomes, and
metal or ceramic (the ‘‘ball’’) that resource intensity.
articulates with a metal acetabular The AAOS surgeons provided the
component with a modular liner made following summary of the types of
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23326 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
revision knee replacement procedures: implant designs had a metal backing capture the complex nature of revisions
Among revision knee replacement covered by high-density polyethylene; of hip and knee replacements.
procedures, patients who underwent these implants were associated with a Currently, code 81.53 (Revision of hip
complete revision of all components high rate of failure due to fracture of the replacement) captures all ‘‘partial’’ and
had longer operative times, higher relatively thin polyethylene bearing ‘‘total’’ revision hip replacement
complication rates, longer lengths of surface. Other common reasons for procedures. Code 81.55 (Revision of
stay, and significantly higher resource isolated patellar component revision knee replacement) captures all revision
utilization, according to studies include poor tracking of the patella in knee replacement procedures. These
conducted by the AAOS. Revision of the the femoral groove leading to wear and two codes currently capture a wide
isolated modular tibial insert breakage of the implant, fracture of the variety of procedures that differ in their
component was the next most resource- patella with or without loosening of the clinical indications, resource intensity,
intensive procedure, and primary total patellar implant, rupture of the and clinical outcomes.
knee replacement was the least quadriceps or patellar tendon, and An AAOS representative made a
resource-intensive of all the procedures infection. presentation at the October 7–8, 2004
studied. • Revision of All Components (Tibial, ICD–9–CM Coordination and
• Isolated Modular Tibial Insert Femoral, and Patellar). The most Maintenance Committee. Based on the
Exchange. Isolated removal and common type of revision knee comments received at the October 7–8,
exchange of the modular tibial bearing replacement procedure is a complete 2004 meeting and subsequent written
surface involves replacing the modular total knee revision. A complete revision comments, new ICD–9–CM procedure
polyethylene bearing surface without of all implants is more common in knee codes were developed to better capture
removing the femoral, tibial, or patellar replacements than hip replacements the variety of ways that revision of hip
components of the prosthetic joint. because the components of an artificial and knee replacements can be
Common indications for this procedure knee are not compatible across vendors performed: codes 00.70 through 00.73
include wear of the polyethylene or types of prostheses. Therefore, even and code 81.53 for revisions of hip
bearing surface or instability (for if only one of the implants is loose or replacements and codes 00.80 through
example, looseness) of the prosthetic broken, a complete revision of all 00.84 and code 81.55 for revisions of
knee joint. Patient recovery times are components is often required in order to knee replacements. These new and
much shorter with this procedure than ensure that the implants are compatible. revised procedure codes, which will be
with removal and exchange of either the Complete total knee revision often effective on October 1, 2005, can be
tibial, femoral, or patellar components. involves extensive surgical approaches, found in Table 6B and Table 6F of this
• Revision of the Tibial Component. including osteotomizing (for example, proposed rule. The commenters stated
Revision of the tibial component cutting) the tibia bone in order to that claims data using these new and
involves removal and exchange of the adequately expose the knee joint and specific codes should provide improved
entire tibial component, including both gain access to the implants. These data on these procedures for future DRG
the metal base plate and the modular procedures often involve extensive bone modifications.
polyethylene bearing surface. Common loss, requiring reconstruction with However, the commenters requested
indications for tibial component specialized implants with long stems that CMS consider DRG modifications
revision are wear of the modular bearing and metal augments or bone graft to fill based on current data using the existing
surface, aseptic loosening (often bony defects. Depending on the status of revision codes. The commenters
associated with osteolysis), or infection. the ligaments in the knee, complete total reported on a recently completed study
Depending on the amount of associated knee revision at times requires comparing detailed hospital resource
bone loss and the integrity of the implantation of a highly constrained or utilization and clinical characteristics in
ligaments around the knee, tibial ‘‘hinged’’ knee replacement in order to over 10,000 primary and revision hip
component revision may require the use ensure stability of the knee joint. and knee replacement procedures at 3
of specialized implants with stems that • Reimplantation from previous high volume institutions: The
extend into the tibial canal and/or the resection or cement spacer. In cases of Massachusetts General Hospital, the
use of metal augments or bone graft to deep infection of a prosthetic knee, Mayo Clinic, and the University of
fill bony defects. removal of the implants with California at San Francisco. The
• Revision of the Femoral implantation of an antibiotic- purpose of this study was to evaluate
Component. Revision of the femoral impregnated cement spacer, followed by differences in clinical outcomes and
component involves removal and 6 weeks of intravenous antibiotics is resource utilization among patients who
exchange of the metal implant that often required in order to clear the underwent different types of primary
covers the end of the thigh-bone (the infection. Revision knee replacement and revision hip or knee replacement
distal femur). Common indications for from an antibiotic impregnated cement procedures. The study found significant
femoral component revision are aseptic spacer often involves complex bony differences in operative time,
loosening with or without associated reconstruction due to extensive bone complication rates, hospital length of
osteolysis/bone loss, or infection. loss that occurs as a result of the stay, discharge disposition, and resource
Similar to tibial revision, femoral infection and removal of the often well- utilization among patients who
component revision that is associated fixed implants. As noted above, the underwent different types of revision
with extensive bone loss often involves clinical outcomes following revision hip or knee replacement procedures.
the use of specialized implants with from a spacer are often poor due to Among revision hip replacement
stems that extend into the femoral canal limited functional capacity while the procedures, patients who underwent
and/or the use of metal augments or spacer is in place, prolonged periods of both femoral and acetabular component
bone graft to fill bony defects. protected weight bearing (following revision had longer operative times,
• Revision of the Patellar Component. reconstruction of extensive bony higher complication rates, longer
Complications related to the patella- defects), and the possibility of chronic lengths of stay, significantly higher
femoral joint are one of the most infection. resource utilization, and were more
common indications for revision knee The surgeons stated that the current likely to be discharged to a subacute
replacement surgery. Early patellar ICD–9–CM codes did not adequately care facility. Isolated femoral
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23327
component revision was the next most In addition, the commenters indicated and 81.55) in DRG 209. We found that
resource-intensive procedure, followed that the data showed that extensive revisions were significantly more
by isolated acetabular revision. Primary bone loss around the implants and the resource intensive than the original hip
hip replacement was the least resource presence of a peri-prosthetic fracture and knee replacements. We found
intensive of all the procedures studied. were the most significant predictors of average charges for revisions of hip and
Similarly, among revision knee higher resource utilization among all knee replacements were approximately
replacement procedures, patients who revision hip and knee replacement $7,000 higher than average charges for
underwent complete revision of all procedures, even when controlling for the original joint replacements, as
components had longer operative times, other significant patient and procedural shown in the following charts. The
higher complication rates, longer characteristics. average charges for revisions of hip
lengths of stay, and significantly higher For this proposed rule, we examined replacements were 21 percent higher
resource utilization. Revision of one data in the FY 2004 MedPAR file on the than the average charges for initial hip
component was the next most resource- current hip replacement procedures replacements. The average charges for
intensive procedure. Primary total knee (codes 81.51, 81.52, 81.53) as well as the revisions of knee replacements were 25
replacement was the least resource replacements and revisions of knee percent higher than for initial knee
intensive of all the procedures studied. replacement procedures (codes 81.54 replacements.
We note that there were no cases in • 00.73, Revision of hip replacement, needed. This effort may include
DRG 209 for reattachment of the foot, acetabular liner and/or femoral head assigning some of the revision codes,
lower leg, or thigh (codes 84.29, 84.27, only. such as 00.83 and 00.84 to a separate
and 84.28). • 00.80, Revision of knee DRG. As stated earlier, the AAOS has
To address the higher resource costs replacement, total (all components). found that some of the procedures may
associated with hip and knee revisions • 00.81, Revision of knee not be as resource intensive. Therefore,
relative to the initial joint replacement replacement, tibial component. the AAOS has requested that CMS
procedure, we are proposing to delete • 00.82, Revision of knee closely examine data from the use of the
DRG 209, create a proposed new DRG replacement, femoral component. new codes and consider future
544 (Major Joint Replacement or • 00.83, Revision of knee revisions.
Reattachment of Lower Extremity), and replacement, patellar component.
• 00.84, Revision of knee b. Kyphoplasty
create a proposed new DRG 545
(Revision of Hip or Knee Replacement). replacement, tibial insert (liner). In the FY 2005 IPPS final rule (69 FR
We are proposing to assign the • 81.53, Revision of hip replacement, 48938), we discussed the creation of
following codes to the new proposed not otherwise specified. new codes for vertebroplasty (81.65) and
DRG 544: • 81.55, Revision of knee kyphoplasty (81.66), which went into
• 81.51, Total hip replacement. replacement, not otherwise specified. effect on October 1, 2004. Prior to
• 81.52, Partial hip replacement. We agree with the commenters and October 1, 2004, both of these surgical
• 81.54, Total knee replacement. the AAOS that the creation of a new procedures were assigned to code 78.49
• 81.56, Total ankle replacement. DRG for revisions of hip and knee (Other repair or plastic operation on
• 84.26, Foot reattachment. replacements should resolve payment bone). For FY 2005, we assigned these
• 84.27, Lower leg/ankle reattach. issues for hospitals that perform the codes to DRGs 233 and 234 (Other
• 84.28, Thigh reattachment. more difficult revisions of joint Musculoskeletal System and Connective
We are proposing to assign the replacements. In addition, as stated Tissue O.R. Procedure With and
following codes to the proposed new earlier, we have worked with the Without CC, respectively) in MDC 8
DRG 545: orthopedic community to develop new (Table 6B of the FY 2005 final rule). (In
• 00.70, Revision of hip replacement, procedure codes that better capture data the FY 2005 IPPS final rule (69 FR
both acetabular and femoral on the types of revisions of hip and knee 48938), we indicated that new codes
components. replacements. These new codes will be 81.65 and 81.66 were assigned to DRGs
• 00.71, Revision of hip replacement, implemented on October 1, 2005. Once 223 and 234. We made a typographical
acetabular component. we receive claims data using these new error when indicating that these codes
• 00.72, Revision of hip replacement, codes, we will review data to determine were assigned to DRG 223. Codes 81.65
EP04MY05.011</GPH>
femoral component. if additional DRG modifications are and 81.66 have been assigned to DRGs
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23328 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
233 and 234.) Last year, we received vertebroplasty. The commenters further 78.49, which was assigned to DRGs 233
comments opposing the assignment of stated that, while kyphoplasty involves and 234 in MDC 8. We stated that we
code 81.66 to DRGs 233 and 234. The internal fixation of the spinal fracture would continue to review this area as
commenters supported the creation of and restoration of vertebral heights, part of our annual review of MedPAR
the codes for kyphoplasty and vertebroplasty involves only fixation. data. While we do not have separate
vertebroplasty but recommended that The commenters indicated that hospital data for kyphoplasty because code 81.66
code 81.66 be assigned to DRGs 497 and costs for kyphoplasty procedures are was not established until October 1,
498 (Spinal Fusion Except Cervical more similar to resources used in a 2004, for this proposed rule, we did
With and Without CC, respectively). spinal fusion. examine data on code 78.49, which
We stated in the FY 2005 IPPS final
The commenters stated that kyphoplasty includes both kyphoplasty and
rule that we did not have data in the
requires special inflatable bone tamps MedPAR file on kyphoplasty and vertebroplasty procedures reported in
and bone cement and is a significantly vertebroplasty. Prior to October 1, 2004, DRGs 233 and 234. The following chart
more resource intensive procedure than both procedures were assigned in code illustrates our findings:
We do not believe these data findings separate DRGs based on the number of • 81.65 Vertebroplasty.
support moving cases represented by vertebrae fused. We also stated that • 81.66 Kyphoplasty.
code 78.49 out of DRGs 233 and 234. spinal fusion surgery was an area We do not yet have data in the
While we cannot distinguish cases that undergoing rapid changes. MedPAR file on these new types of
are kyphoplasty from cases that are Effective October 1, 2004, we created procedures. Therefore, we cannot yet
vertebroplasty, cases represented by a series of codes that describe a new determine what effect these new types
code 78.49 have lower charges than do type of spinal surgery, spinal disc of procedures will have on the
other cases within DRGs 233 and 234. replacement. Our medical advisors frequency of spinal fusion procedures.
Therefore, we are not proposing to describe these procedures as a more However, we do have data in the
change the DRG assignment of code conservative approach for back pain MedPAR file on multiple level spinal
81.66 to DRGs 233 and 234 at this time. than the spinal fusion surgical procedures for analysis for this year’s
However, once specific charge data are procedure. These codes are as follows: proposed rule. We examined data in the
available, we will consider whether • 84.60, Insertion of spinal disc FY 2004 MedPAR file on spinal fusion
further changes are warranted. prosthesis, not otherwise specified. cases in the following DRGs:
• 84.61, Insertion of partial spinal • DRG 496 (Combined Anterior/
c. Multiple Level Spinal Fusion disc prosthesis, cervical. Posterior Spinal Fusion).
On October 1, 2003, the following • 84.62, Insertion of total spinal disc • DRG 497 (Spinal Fusion Except
ICD–9–CM codes were created to prosthesis, cervical. Cervical With CC).
identify the number of levels of vertebra • 84.63, Insertion of spinal disc • DRG 498 (Spinal Fusion Except
fused during a spinal fusion procedure: prosthesis, thoracic. Cervical Without CC).
• 84.64, Insertion of partial spinal
• 81.62, Fusion or refusion of 2–3 • DRG 519 (Cervical Spinal Fusion
disc prosthesis, lumbosacral.
vertebrae. With CC).
• 84.65, Insertion of total spinal disc
• 81.63, Fusion or refusion of 4–8 • DRG 520 (Cervical Spinal Fusion
prosthesis, lumbosacral.
vertebrae. • 84.66, Revision or replacement of Without CC).
• 81.64, Fusion or refusion of 9 or artificial spinal disc prosthesis, cervical. Multiple level spinal fusion is
more vertebrae. • 84.67, Revision or replacement of captured by code 81.63 (Fusion or
Prior to the creation of these codes, artificial spinal disc prosthesis, thoracic. refusion of 4–8 vertebrae) and code
we received a comment recommending • 84.68, Revision or replacement of 81.64 (Fusion or refusion of 9 or more
the establishment of new DRGs that artificial spinal disc prosthesis, vertebrae). Code 81.62 includes the
would be differentiated based on the lumbosacral. fusion of 2–3 vertebrae and is not
number of vertebrae fused. In the FY • 84.69, Revision or replacement of considered a multiple level spinal
2005 IPPS final rule (69 FR 48936), we artificial spinal disc prosthesis, not fusion. Orthopedic surgeons stated at
stated that we did not yet have any otherwise specified. the October 7–8, 2004 ICD–9–CM
reported cases utilizing these multiple We also created the following two Coordination and Maintenance
level spinal fusion codes. We stated that codes effective October 1, 2004, for Committee meeting that the most simple
we would wait until sufficient data were these new types of spinal surgery that and common type of spinal fusion
available prior to making a final are also a more conservative approach to involves fusing either 2 or 3 vertebrae.
EP04MY05.012</GPH>
determination on whether to create back pain than is spinal fusion: These surgeons stated that there was not
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23329
Thus, these diagnoses result in a 737.0, 737.10, 737.11, 737.12, 737.19, clinical recommendations concerning
significant increase in resource use. 737.20, 737.21, 737.22, 737.29, 737.30, our proposed changes and potential
While the fusing of 4 or more vertebrae 737.31, 737.32, 737.33, 737.34, 737.39, additional modifications to the spinal
resulted in average charges of $77,352, 737.40, 737.41, 737.42, 737.43, 737.8, fusion DRGs. We are also soliciting
the impact of a principal diagnosis of 737.9, 754.2, and 756.51. The proposed comments from the public on our
curvature of the spine or bone DRG 546 would not include cases proposed changes and how to
malignancy was substantially greater currently assigned to DRGs 496, 519, or incorporate new types of spinal
with average charges of $95,315. 520 that have a principal diagnosis of procedures such as kyphoplasty and
Based on this analysis, we are curvature of the spine or malignancy. spinal disc prostheses into the spinal
proposing to create a new DRG for The structure of DRGs 496, 519, and 520 fusion DRGs.
noncervical spinal fusions with a would remain the same.
principal diagnosis of curvature of the As part of our meeting with the AAOS 7. MDC 18 (Infectious and Parasitic
spine and malignancies. The proposed on DRG 209 in February 2005 Diseases (Systemic or Unspecified
new DRG would be: proposed new DRG (discussed under section II.B.6.a. of this Sites)): Severe Sepsis
546 (Spinal Fusions Except Cervical preamble), the AAOS offered to work As we did for FY 2005, we received
With Principal Diagnosis of Curvature of with CMS to analyze clinical issues and a request to consider the creation of a
the Spine or Malignancy). Cases make revisions to the spinal fusion separate DRG for the diagnosis of severe
included in this proposed new DRG DRGs (DRGs 496 through 498 and 519 sepsis for FY 2006. Severe sepsis is
would include all noncervical spinal and 520). At this time, we are limiting described by ICD–9–CM code 995.92
fusions previously assigned to DRGs 497 our proposed changes to the spinal (Systemic inflammatory response
and 498 that have a principal diagnosis fusion DRGs for FY 2006 to the creation syndrome due to infection with organ
of curvature of the spine or malignancy of the proposed DRG 546 discussed dysfunction). Patients admitted with
and would include the following codes above. However, we look forward to sepsis currently are assigned to DRG 416
EP04MY05.013</GPH>
listed above: 170.2, 198.5, 732.0, 733.13, working with the AAOS to obtain its (Septicemia Age > 17) and DRG 417
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23330 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
(Septicemia Age 0–17) in MDC 18 organization representing hospital one commenter stated, these cases
(Infectious and Parasitic Diseases, coders that disagreed with our decision would be assigned to DRGs 449 through
Systemic or Unspecified Sites). The to keep code 292.82 in DRGs 521 451. We encouraged hospitals to
commenter requested that all cases in through 523. The commenter stated that examine the coding for these types of
which severe sepsis is present on DRGs 521 through 523 are described as cases to determine if there were any
admission, as well as those cases in alcohol/drug abuse and dependence coding or sequencing errors. As
which it develops after admission DRGs, and that drug-induced dementia suggested by the commenter, if code
(which are currently classified can be caused by an adverse effect of a 292.82 were reported as a secondary
elsewhere), be included in this new prescribed medication or a poisoning. diagnosis and not a principal diagnosis
DRG. We addressed this issue in the FY The commenter did not believe that in cases of poisoning or adverse drug
2005 IPPS final rule (69 FR 48975). As assignment to DRGs 521 through 523 reactions, the number of cases on DRGs
indicated last year, we do not feel the was appropriate if the drug-induced 521 through 523 would decline.
current clinical definition of severe dementia is due to one of these events In the FY 2005 IPPS final rule, we
sepsis is specific enough to identify a and the patient is not alcohol or drug agreed to analyze this area for FY 2006
meaningful cohort of patients in terms dependent. The commenter and to look at the alternative DRG
of clinical coherence and resource recommended that admissions for drug- assignments suggested by the
utilization to warrant a separate DRG. induced dementia be classified to DRGs commenters. For this proposed rule, we
Sepsis is found across hundreds of 521 through 523 only if there is a examined data from the FY 2004
medical and surgical DRGs, and the secondary diagnosis indicating alcohol/ MedPAR file on cases in DRGs 521
term ‘‘organ dysfunction’’ implicates drug abuse or dependence. through 523 with a principal diagnosis
numerous currently existing diagnosis The commenter recommended that of code 292.82. We found that there
codes. While we recognize that drug-induced dementia that is due to were only 134 cases reported with the
Medicare beneficiaries with severe the adverse effect of a drug or poisoning principal diagnosis code 292.82 in DRGs
sepsis are quite ill and require extensive be classified to the same DRGs as other 521 through 523 without a diagnosis of
hospital resources, we do not believe types of dementia, such as DRG 429 drug and alcohol abuse. The average
that they can be identified adequately to (Organic Disturbances and Mental standardized charges for cases with a
justify removing them from all of the Retardation). The commenter believed principal diagnosis of code 292.82 that
other DRGs in which they appear. We that when drug-induced dementia is did not have a secondary diagnosis of
are not proposing a new DRG for severe caused by a poisoning, either accidental drug/alcohol abuse or dependence were
sepsis at this time. or intentional, the appropriate
$12,244.35, compared to the average
poisoning code would be sequenced as
8. MDC 20 (Alcohol/Drug Use and standardized charges for all cases in
the principal diagnosis and, therefore,
Alcohol/Drug Induced Organic Mental DRG 521, which were $10,543.69. There
these cases would likely already be
Disorders): Drug-Induced Dementia were no cases in DRG 522 with a
assigned to DRGs 449 and 450
principal diagnosis of code 292.82. We
In the FY 2005 IPPS final rule (69 FR (Poisoning and Toxic Effects of Drugs,
found only 24 cases in DRG 523 with a
48939, August 11, 2004), we discussed Age Greater than 17, With and Without
principal diagnosis of code 292.82.
a request that CMS modify DRGs 521 CC, respectively) and DRG 451
Given the small number of cases in DRG
through 523 by removing the principal (Poisoning and Toxic Effects of Drugs,
522 and 523, and the similarity in
diagnosis code 292.82 (Drug-induced Age 0–17). The commenter stated that
these would be the appropriate DRG average standardized charges between
dementia) from these alcohol and drug
assignments for drug-induced dementia those cases in DRG 521 with a principal
abuse DRGs. These DRGs are as follows:
• DRG 521 (Alcohol/Drug Abuse or due to a poisoning. We received a diagnosis of code 292.82 and without a
Dependence With CC). similar comment from a hospital secondary diagnosis of drug/alcohol
• DRG 522 (Alcohol/Drug Abuse or organization. abuse or dependence to the overall
Dependence With Rehabilitation In the FY 2005 IPPS final rule, we average for all cases in the DRG, we do
Therapy Without CC). acknowledged that the commenters not believe the data suggest that a
• DRG 523 (Alcohol/Drug Abuse or raised additional issues surrounding the modification to DRGs 521 through 523
Dependence Without Rehabilitation DRG assignment for code 292.82 that is warranted. Therefore, we are not
Therapy Without CC). should be considered. The commenters proposing changes to the current
The commenter indicated that a provided alternatives for DRG structure of DRGs 521 through 523 for
patient who has a drug-induced assignment based on sequencing of the FY 2006.
dementia should not be classified to an principal diagnosis and reporting of 9. Medicare Code Editor (MCE) Changes
alcohol/drug DRG. However, the additional secondary diagnoses. We
commenter did not propose a new DRG recognized that patients may develop (If you choose to comment on issues
assignment for code 292.82. Our drug-induced dementia from drugs that in this section, please include the
medical advisors evaluated the request are prescribed, as well as from drugs caption ‘‘Medicare Code Editor’’ at the
and determined that the most that are not prescribed. However, beginning of your comment.)
appropriate DRG classification for a because dementia develops as a result of As explained under section II.B.1. of
patient with drug-induced dementia use of a drug, we believed the current this preamble, the Medicare Code Editor
was within MDC 20. The medical DRG assignment to DRGs 521 through (MCE) is a software program that detects
advisors indicated that because the 523 remained appropriate. Some and reports errors in the coding of
dementia is drug induced, it is commenters have agreed with the Medicare claims data. Patient diagnoses,
appropriately classified to DRGs 521 current DRG assignment of code 292.82 procedure(s), discharge status, and
through 523 in MDC 20. Therefore, we since the dementia was caused by use demographic information go into the
did not propose a new DRG of a drug. We agree that if either Medicare claims processing systems and
classification for the principal diagnosis accidental or intentional poisoning are subjected to a series of automated
code 292.82. caused the drug-induced dementia, the screens. The MCE screens are designed
In the FY 2005 IPPS final rule, we appropriate poisoning code should be to identify cases that require further
addressed a comment from an sequenced as the principal diagnosis. As review before classification into a DRG.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23331
a. Newborn Age Edit pediatric arena, we are not proposing to effective delivery of tobacco cessation
In the past, we have discussed and make the commenter’s suggested counseling services. Therefore, we will
received comments concerning revision changes to the MCE ‘‘newborn age edit’’ not cover tobacco cessation services if
of the pediatric portions of the Medicare for FY 2006. tobacco cessation is the primary reason
IPPS DRG classification system, that is, for the patient’s hospital stay.’’
b. Newborn Diagnoses Edit
MDC 15 (Newborns and Other Neonates Therefore, in order to maintain internal
Last year, in our changes to the MCE, consistency with CMS programs and
With Conditions Originating in the we inadvertently added code 796.6
Perinatal Period). Most recently, we decisions, we are proposing to add code
(Abnormal findings on neonatal 305.1 to the MCE edit ‘‘Questionable
addressed these comments in both the screening) to both the MCE edit for Admission-Principal Diagnosis Only’’ in
FY 2005 proposed rule (69 FR 28210) ‘‘Maternity Diagnoses—age 12 through order to make tobacco use disorder a
and the FY 2005 IPPS final rule (69 FR 55’’, and the MCE edit for ‘‘Diagnoses noncovered admission.
48938). In those rules, we indicated that Allowed for Females Only’’. We are
we would be responsive to specific proposing to remove code 796.6 from e. Noncovered Procedure Edit
requests for updating MDC 15 on a these two edits and add it to the Effective October 1, 2004, CMS
limited, case-by-case basis. ‘‘Newborn Diagnoses’’ edit. adopted the use of code 00.61
We have recently received a request (Percutaneous angioplasty or
through the Open Door Forum to revise c. Diagnoses Allowed for ‘‘Males Only’’
atherectomey of precerebral
the MCE ‘‘newborn age edit’’ by Edit
(extracranial) vessel(s) (PTA)) and code
removing over 100 codes located in We have received a request to remove 00.63 (Percutaneous insertion of carotid
Chapter 15 of ICD–9–CM that are two codes from the ‘‘Diagnoses Allowed artery stent(s). Both codes are to be
identified as ‘‘newborn’’ codes. This for Males Only’’ edit, related to recorded to indicate the insertion of a
request was made because these codes androgen insensitivity syndrome (AIS). carotid artery stent or stents. At the time
usually cause an edit or denial to be AIS is a new term for testicular of the creation of the codes, the coverage
triggered when they are used on feminization. Code 257.8 (Other indication for carotid artery stenting
children greater than 1 year of age. testicular dysfunction) is used to was only for patients in a clinical trial
However, the underlying issue with describe individuals who, despite setting, and diagnostic code V70.7
these particular edits is that other having XY chromosomes, develop as (Examination of participation in a
payers have adopted the CMS Medicare females with normal female genitalia clinical trial) was required for payment
Code Editor in a wholesale manner, and mammary glands. Testicles are of these cases. However, effective
instead of adapting it for use in their present in the same general area as the October 12, 2004, Medicare covers PTA
own patient populations. ovaries, but are undescended and are at of the carotid artery concurrent with the
We acknowledge that Medicare DRGs risk for development of testicular placement of an FDA-approved carotid
are sometimes used to classify other cancer, so are generally surgically stent for an FDA-approved indication
patient groups. However, CMS’ primary removed. These individuals have been when furnished in accordance with
focus of updates to the Medicare DRG raised as females, and would continue FDA-approved protocols governing
classification system is on changes to be considered female, despite their post-approval studies. Therefore, as the
relating to the Medicare patient XY chromosome makeup. Therefore, as coverage indication has changed, we are
population, not the pediatric or neonatal AIS is coded to 257.8, and has posed a proposing to remove codes 00.61, 00.63,
patient populations. problem associated with the gender edit, and V70.7 from the MCE noncovered
There are practical considerations we are proposing to remove this code procedure edit.
regarding the assumption of a larger role from the ‘‘Males Only’’ edit in the MCE.
for the Medicare DRG in the pediatric or A similar clinical scenario can occur 10. Surgical Hierarchies
neonatal areas, given the difference with certain disorders that cause a (If you choose to comment on issues
between the Medicare population and defective biosynthesis of testicular in this section, please include the
that of newborns and children. There androgen. This disorder is included in caption ‘‘Surgical Hierarchy’’ at the
are also challenges surrounding the code 257.2 (Other testicular beginning of your comment.)
development of DRG classification hypofunction). Therefore, we also are Some inpatient stays entail multiple
systems and applications appropriate to proposing to remove code 257.2 from surgical procedures, each one of which,
children. We do not have the clinical the ‘‘Male Only’’ gender edit in the MCE. occurring by itself, could result in
expertise to make decisions about these assignment of the case to a different
patients, and must rely on outside d. Tobacco Use Disorder Edit DRG within the MDC to which the
clinicians for advice. In addition, We have become aware of the possible principal diagnosis is assigned.
because newborns and other children need to add code 305.1 (Tobacco use Therefore, it is necessary to have a
are generally not eligible for Medicare, disorder) to the MCE in order to make decision rule within the GROUPER by
we must rely on outside data to make admissions for tobacco use disorder a which these cases are assigned to a
decisions. We recognize that there are noncovered Medicare service when single DRG. The surgical hierarchy, an
evolving alternative classification code 305.1 is reported as the principal ordering of surgical classes from most
systems for children and encourage diagnosis. On March 22, 2005, CMS resource-intensive to least resource-
payers to use the CMS MCE as a published a final decision memorandum intensive, performs that function.
template while making modifications and related national coverage Application of this hierarchy ensures
appropriate for pediatric patients. determination (NCD) on smoking that cases involving multiple surgical
Therefore, we would encourage those cessation counseling services on its Web procedures are assigned to the DRG
non-Medicare systems needing a more site: (http://www.cms.hhs.gov/ associated with the most resource-
comprehensive pediatric system of edits coverage/). Among other things, this intensive surgical class.
to update their systems by choosing NCD provides that: ‘‘Inpatient hospital Because the relative resource intensity
from other existing systems or programs stays with the principal diagnosis of of surgical classes can shift as a function
that are currently in use. Because of our 305.1, Tobacco Use Disorder, are not of DRG reclassification and
reluctance to assume expertise in the reasonable and necessary for the recalibrations, we reviewed the surgical
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23332 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
hierarchy of each MDC, as we have for are still occasionally performed on Musculoskeletal and Connective Tissue
previous reclassifications and patients in the MDC with these Disease) above DRG 545 (Revision of
recalibrations, to determine if the diagnoses. Therefore, assignment to Hip or Knee Replacement).
ordering of classes coincides with the these surgical classes should only occur • DRG 545 above DRG 544 (Major
intensity of resource utilization. if no other surgical class more closely Joint Replacement or Reattachment).
A surgical class can be composed of related to the diagnoses in the MDC is • DRG 544 above DRGs 519 and 520
one or more DRGs. For example, in appropriate. (Cervical Spinal Fusion With and
MDC 11, the surgical class ‘‘kidney A second example occurs when the Without CC, respectively).
transplant’’ consists of a single DRG difference between the average charges
(DRG 302) and the class ‘‘kidney, ureter 11. Refinement of Complications and
for two surgical classes is very small.
and major bladder procedures’’ consists Comorbidities (CC) List
We have found that small differences
of three DRGs (DRGs 303, 304, and 305). generally do not warrant reordering of (If you choose to comment on issues
Consequently, in many cases, the the hierarchy because, as a result of in this section, please include the
surgical hierarchy has an impact on reassigning cases on the basis of the caption ‘‘CC List’’ at the beginning of
more than one DRG. The methodology hierarchy change, the average charges your comment.)
for determining the most resource- are likely to shift such that the higher- a. Background
intensive surgical class involves ordered surgical class has a lower
weighting the average resources for each average charge than the class ordered As indicated earlier in this preamble,
DRG by frequency to determine the below it. under the IPPS DRG classification
weighted average resources for each Based on the preliminary system, we have developed a standard
surgical class. For example, assume recalibration of the DRGs, we are list of diagnoses that are considered
surgical class A includes DRGs 1 and 2 proposing to revise the surgical complications or comorbidities (CCs).
and surgical class B includes DRGs 3, 4, hierarchy for MDC 5 (Diseases and Historically, we developed this list
and 5. Assume also that the average Disorders of the Circulatory System) and using physician panels that classified
charge of DRG 1 is higher than that of MDC 8 (Diseases and Disorders of the each diagnosis code based on whether
DRG 3, but the average charges of DRGs Musculoskeletal System and Connective the diagnosis, when present as a
4 and 5 are higher than the average Tissue) as follows: secondary condition, would be
charge of DRG 2. To determine whether In MDC 5, we are proposing to considered a substantial complication or
surgical class A should be higher or reorder— comorbidity. A substantial complication
lower than surgical class B in the • DRG 116 (Other Permanent Cardiac or comorbidity was defined as a
surgical hierarchy, we would weight the Pacemaker Implant) above DRG 549 condition that, because of its presence
average charge of each DRG in the class (Percutaneous Cardiovascular Procedure with a specific principal diagnosis,
by frequency (that is, by the number of With Drug-Eluting Stent With AMI With would cause an increase in the length of
cases in the DRG) to determine average CC). stay by at least 1 day in at least 75
resource consumption for the surgical • DRG 549 above DRG 550 percent of the patients.
class. The surgical classes would then (Percutaneous Cardiovascular Procedure b. Comprehensive Review of the CC List
be ordered from the class with the With Drug-Eluting Stent With AMI
highest average resource utilization to Without CC). In previous years, we have made
that with the lowest, with the exception • DRG 550 above DRG 547 changes to the standard list of CCs,
of ‘‘other O.R. procedures’’ as discussed (Percutaneous Cardiovascular Procedure either by adding new CCs or deleting
below. With AMI With CC). CCs already on the list, but we have
This methodology may occasionally • DRG 547 above DRG 548 never conducted a comprehensive
result in assignment of a case involving (Percutaneous Cardiovascular Procedure review of the list. There are currently
multiple procedures to the lower- With AMI Without CC). 3,285 diagnosis codes on the CC list.
weighted DRG (in the highest, most • DRG 548 above DRG 527 There are 121-paired DRGs that are split
resource-intensive surgical class) of the (Percutaneous Cardiovascular Procedure on the presence or absence of a CC.
available alternatives. However, given With Drug-Eluting Stent Without AMI). We have reviewed these paired DRGs
that the logic underlying the surgical • DRG 527 above DRG 517 and found that the majority of cases that
hierarchy provides that the GROUPER (Percutaneous Cardiovascular Procedure are assigned to DRGs that have a CC
search for the procedure in the most With Non-Drug Eluting Stent Without split fall into the DRG with CC. While
resource-intensive surgical class, in AMI). this fact is not new, we have found that
cases involving multiple procedures, • DRG 517 above DRG 518 a much higher proportion of cases are
this result is sometimes unavoidable. (Percutaneous Cardiovascular Procedure being grouped to the DRG with a CC
We note that, notwithstanding the Without Coronary Artery Stent or AMI). than had occurred in the past. In our
foregoing discussion, there are a few • DRG 518 above DRGs 478 and 479 review of the DRGs included in Table 7b
instances when a surgical class with a (Other Vascular Procedures With and of the September 1, 1987 Federal
lower average charge is ordered above a Without CC, respectively). Register rule (52 FR 33125), we found
surgical class with a higher average In MDC 8, we are proposing to the following percentages of cases
charge. For example, the ‘‘other O.R. reorder— assigned a CC in those DRGs that had a
procedures’’ surgical class is uniformly • DRG 496 (Combined Anterior/ CC split (DRG Definitions Manual,
ordered last in the surgical hierarchy of Posterior Spinal Fusion) above DRG 546 GROUPER Version 5.0 (1986 data)):
each MDC in which it occurs, regardless (Spinal Fusion Except Cervical With • Cases with CC: 61.9 percent.
of the fact that the average charge for the Principal Diagnosis of Curvature of the • Cases without CC: 38.1 percent.
DRG or DRGs in that surgical class may Spine or Malignancy). When we compared the above DRG
be higher than that for other surgical • DRG 546 above DRGs 497 and 498 1986 data to the DRG 2004 data that
classes in the MDC. The ‘‘other O.R. (Spinal Fusion Except Cervical With were included in the DRGs Definitions
procedures’’ class is a group of and Without CC, respectively). Manual, GROUPER Version 22.0, we
procedures that are only infrequently • DRG 217 (Wound Debridement and found the following:
related to the diagnoses in the MDC, but Skin Graft Except Hand, For • Cases with CC: 79.9 percent.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23333
• Cases without CC: 20.1 percent. as currently defined, and we believe day) was used beginning in 1981 and
(We used DRGs Definitions Manual, that it is possible that the CC distinction has been part of the IPPS since its
GROUPER Version 5.0, for this analysis has lost much of its ability to inception in 1983. There has been no
because prior versions of the DRGs differentiate the resource needs of substantive review of the CC list since
Definitions Manual used age as a patients. The original definition used to its original development. In reviewing
surrogate for a CC and the split was ‘‘CC develop the CC list (the presence of a CC this issue, our clinical experts found
and/or age greater than 69’’.) would be expected to extend the length several diseases that appear to be
The vast majority of patients being of stay of at least 75 percent of the obvious candidates to be on the CC list,
treated in inpatient settings have a CC patients who had the CC by at least one but currently are not:
Conversely, our medical experts examples of common conditions that are to higher treatment costs when present
believe the following conditions are on the CC list, but are not likely to lead as a secondary diagnosis:
We note that the above conditions are Given the long period of time that has information on when a particular
examples only of why we believe the CC elapsed since the original CC list was condition is likely to increase hospital
list needs a comprehensive review. In developed, the incremental nature of costs. For example, Code 293.84
addition to this review, we note that changes to it, and changes in the way (Anxiety disorder in conditions
these conditions may be treated inpatient care is delivered, we are classified elsewhere), which is currently
differently under several DRG systems planning a comprehensive and listed as a CC, might be removed from
currently in use. For instance, ICD–9– systematic review of the CC list for the the CC list if analysis of the data do not
CM code 414.12 (Dissection of coronary IPPS rule for FY 2007. As part of this support the fact that it represents a
artery) is listed as a ‘‘Major CC’’ under process, we plan to consider revising significant increase in resource
the All Patient (AP) DRGs, GROUPER the standard for determining when a utilization, and a code such as 359.4
Version 21.0 and an ‘‘Extreme’’ CC condition is a CC. For instance, we may (Toxic myopathy), which is currently
under the All Patient Refined (APR) use an alternative to classifying a not listed as a CC, could be added to the
DRGs, GROUPER Version 20.0, but is condition as a CC based on how it CC list if the data support it. In addition
not listed as a CC at all in GROUPER affects the length of stay of a case. to using hospital charge data as a basis
Version 22.0 of the DRGs Definitions Similar to other aspects of the DRG for a review, we would expect to
Manual used by Medicare. Similarly, system, we may consider the effect of a
supplement the process with review by
ICD–9–CM code 424.0 (Mitral valve specific secondary diagnosis on the
our medical experts. Further, we may
disorder) is a CC under GROUPER charges or costs of a case to evaluate
also consider doing a comparison of the
Version 22.0 of the DRGs Definitions whether to include the condition on the
EP04MY05.014</GPH> EP04my05.015</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23334 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
By performing a comprehensive • Codes for the same condition that CCs that are added to the list are in
review of the CC list, we expect to revise cannot coexist, such as partial/total, Table 6G—Additions to the CC
the DRG classification system to better unilateral/bilateral, obstructed/ Exclusions List. Beginning with
reflect resource utilization and remove unobstructed, and benign/malignant, discharges on or after October 1, 2005,
conditions from the CC list that only should not be considered CCs for one the indented diagnoses would not be
have a marginal impact on a hospital’s another. recognized by the GROUPER as valid
costs. We believe that a comprehensive • Codes for the same condition in CCs for the asterisked principal
review of the CC list would be anatomically proximal sites should not diagnosis.
consistent with MedPAC’s be considered CCs for one another.
• Closely related conditions should CCs that are deleted from the list are
recommendation that we improve the
DRG system to better recognize severity. not be considered CCs for one another. in Table 6H—Deletions from the CC
We will provide more detail about how The creation of the CC Exclusions List Exclusions List. Beginning with
we expect to undertake this analysis in was a major project involving hundreds discharges on or after October 1, 2005,
the future, and any changes to the CC of codes. We have continued to review the indented diagnoses would be
list will only be adopted after a notice the remaining CCs to identify additional recognized by the GROUPER as valid
and comment rulemaking that fully exclusions and to remove diagnoses CCs for the asterisked principal
explains the methodology we plan to from the master list that have been diagnosis.
use in conducting this review. We shown not to meet the definition of a Copies of the original CC Exclusions
encourage comment at this time CC.1 List applicable to FY 1988 can be
regarding possible ways that more We are proposing a limited revision of obtained from the National Technical
meaningful indicators of clinical the CC Exclusions List to take into
Information Service (NTIS) of the
severity and their implications for account the proposed changes that will
Department of Commerce. It is available
resource use can be incorporated into be made in the ICD–9–CM diagnosis
in hard copy for $152.50 plus shipping
our comprehensive review and possible coding system effective October 1, 2004.
(See section II.B.13. of this preamble for and handling. A request for the FY 1988
restructuring of the CC list. CC Exclusions List (which should
a discussion of ICD–9–CM changes.) We
c. CC Exclusions List for FY 2006 are proposing these changes in include the identification accession
accordance with the principles number (PB) 88–133970) should be
In the September 1, 1987 final notice
(52 FR 33143) concerning changes to the established when we created the CC made to the following address: National
DRG classification system, we modified Exclusions List in 1987. Technical Information Service, United
the GROUPER logic so that certain Tables 6G and 6H in the Addendum States Department of Commerce, 5285
diagnoses included on the standard list to this proposed rule contain the Port Royal Road, Springfield, VA 22161;
of CCs would not be considered valid revisions to the CC Exclusions List that or by calling (800) 553–6847.
CCs in combination with a particular would be effective for discharges Users should be aware of the fact that
principal diagnosis. We created the CC occurring on or after October 1, 2005. all revisions to the CC Exclusions List
Exclusions List for the following Each table shows the principal (FYs 1989, 1990, 1991, 1992, 1993,
reasons: (1) to preclude coding of CCs diagnoses with changes to the excluded 1994, 1995, 1996, 1997, 1998, 1999,
for closely related conditions; (2) to CCs. Each of these principal diagnoses 2001, 2002, 2003, 2004, and 2005) and
preclude duplicative or inconsistent is shown with an asterisk, and the those in Tables 6G and 6H of this
coding from being treated as CCs; and additions or deletions to the CC proposed rule for FY 2006 must be
(3) to ensure that cases are appropriately Exclusions List are provided in an incorporated into the list purchased
classified between the complicated and indented column immediately following from NTIS in order to obtain the CC
uncomplicated DRGs in a pair. As we the affected principal diagnosis. Exclusions List applicable for
indicated above, we developed this list discharges occurring on or after October
1 See the FY 1989 final rule (53 FR 38485)
of diagnoses, using physician panels, to 1, 2005. (Note: There was no CC
[September 30, 1988] for the revision made for the
include those diagnoses that, when discharges occurring in FY 1989; the FY 1990 final Exclusions List in FY 2000 because we
present as a secondary condition, would rule (54 FR 36552) [September 1, 1989] for the FY did not make changes to the ICD–9–CM
be considered a substantial 1990 revision; the FY 1991 final rule (55 FR 36126) codes for FY 2000.)
complication or comorbidity. In [September 4, 1990] for the FY 1991 revision; the
previous years, we have made changes FY 1992 final rule (56 FR 43209) [August 30, 1991] Alternatively, the complete
for the FY 1992 revision; the FY 1993 final rule (57 documentation of the GROUPER logic,
to the list of CCs, either by adding new FR 39753) [September 1, 1992] for the FY 1993
CCs or deleting CCs already on the list. revision; the FY 1994 final rule (58 FR 46278)
including the current CC Exclusions
At this time, we are not proposing to [September 1, 1993] for the FY 1994 revisions; the List, is available from 3M/Health
delete any of the diagnosis codes on the FY 1995 final rule (59 FR 45334) [September 1, Information Systems (HIS), which,
1994] for the FY 1995 revisions; the FY 1996 final under contract with CMS, is responsible
CC list for FY 2006. rule (60 FR 45782) [September 1, 1995] for the FY
In the May 19, 1987 proposed notice 1996 revisions; the FY 1997 final rule (61 FR 46171) for updating and maintaining the
(52 FR 18877) and the September 1, [August 30, 1996] for the FY 1997 revisions; the FY GROUPER program. The current DRG
1987 final notice (52 FR 33154), we 1998 final rule (62 FR 45966) [August 29, 1997] for Definitions Manual, Version 22.0, is
the FY 1998 revisions; the FY 1999 final rule (63 available for $225.00, which includes
explained that the excluded secondary FR 40954) [July 31, 1998] for the FY 1999 revisions;
diagnoses were established using the the FY 2001 final rule (65 FR 47064) [August 1, $15.00 for shipping and handling.
following five principles: 2000] for the FY 2001 revisions; the FY 2002 final Version 23.0 of this manual, which will
• Chronic and acute manifestations of rule (66 FR 39851) [August 1, 2001] for the FY 2002 include the final FY 2006 DRG changes,
revisions; the FY 2003 final rule (67 FR 49998) will be available for $225.00. These
the same condition should not be [August 1, 2002] for the FY 2003 revisions; the FY
considered CCs for one another. 2004 final rule (68 FR 45364) [August 1, 2003] for manuals may be obtained by writing
• Specific and nonspecific (that is, the FY 2004 revisions; and the FY 2005 final rule 3M/HIS at the following address: 100
not otherwise specified (NOS)) (69 FR 49848) [August 11, 2004] for the FY 2005 Barnes Road, Wallingford, CT 06492; or
revisions. In the FY 2000 final rule (64 FR 41490)
diagnosis codes for the same condition [July 30, 1999], we did not modify the CC
by calling (203) 949–0303. Please
should not be considered CCs for one Exclusions List because we did not make any specify the revision or revisions
another. changes to the ICD–9–CM codes for FY 2000. requested.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23335
12. Review of Procedure Codes in DRGs a. Moving Procedure Codes From DRG have an adequate number of discharges
468, 476, and 477 468 or DRG 477 to MDCs to analyze the data.
We annually conduct a review of It has come to our attention that
(If you choose to comment on issues
procedures producing assignment to procedure code 26.12 (Open biopsy of
in this section, please include the
DRG 468 or DRG 477 on the basis of salivary gland or duct) is assigned to
caption ‘‘DRGs 468, 476, and 477’’ at the
volume, by procedure, to see if it would DRG 468 (Extensive O.R. Procedure
beginning of your comment.)
be appropriate to move procedure codes Unrelated to Principal Diagnosis). We
Each year, we review cases assigned
out of these DRGs into one of the believe this to be an error, as code 26.31
to DRG 468 (Extensive O.R. Procedure
surgical DRGs for the MDC into which (Partial sialoadenectomy), which is a
Unrelated to Principal Diagnosis), DRG
the principal diagnosis falls. The data more extensive procedure than code
476 (Prostatic O.R. Procedure Unrelated
are arrayed two ways for comparison 26.12, is assigned to DRG 477.
to Principal Diagnosis), and DRG 477
purposes. We look at a frequency count Therefore, we are proposing to correct
(Nonextensive O.R. Procedure Unrelated
of each major operative procedure code. this error by moving code 26.12 out of
to Principal Diagnosis) to determine
We also compare procedures across DRG 468 and reassigning it to DRG 477.
whether it would be appropriate to We are not proposing to move any
change the procedures assigned among MDCs by volume of procedure codes
within each MDC. procedure codes from DRG 476 to DRGs
these DRGs. 468 or 477, or from DRG 477 to DRGs
DRGs 468, 476, and 477 are reserved We identify those procedures
occurring in conjunction with certain 468 or 476.
for those cases in which none of the
O.R. procedures performed are related principal diagnoses with sufficient c. Adding Diagnosis or Procedure Codes
to the principal diagnosis. These DRGs frequency to justify adding them to one to MDCs
are intended to capture atypical cases, of the surgical DRGs for the MDC in
Based on our review this year, we are
that is, those cases not occurring with which the diagnosis falls. Based on this
not proposing to add any diagnosis
sufficient frequency to represent a year’s review, we did not identify any
codes to MDCs.
distinct, recognizable clinical group. procedures in DRGs 468 or 477 that
DRG 476 is assigned to those discharges should be removed to one of the surgical 13. Changes to the ICD–9–CM Coding
in which one or more of the following DRGs. Therefore, in this proposed rule, System
prostatic procedures are performed and we are not proposing any changes for As described in section II.B.1. of this
are unrelated to the principal diagnosis: FY 2006. preamble, the ICD–9–CM is a coding
• 60.0, Incision of prostate. b. Reassignment of Procedures Among system used for the reporting of
• 60.12, Open biopsy of prostate. DRGs 468, 476, and 477 diagnoses and procedures performed on
• 60.15, Biopsy of periprostatic a patient. In September 1985, the ICD–
We also annually review the list of
tissue. 9–CM Coordination and Maintenance
ICD–9–CM procedures that, when in
• 60.18, Other diagnostic procedures Committee was formed. This is a
combination with their principal
on prostate and periprostatic tissue. Federal interdepartmental committee,
diagnosis code, result in assignment to
• 60.21, Transurethral prostatectomy. co-chaired by the National Center for
DRGs 468, 476, and 477, to ascertain if
• 60.29, Other transurethral Health Statistics (NCHS) and CMS,
any of those procedures should be
prostatectomy. charged with maintaining and updating
reassigned from one of these three DRGs
• 60.61, Local excision of lesion of the ICD–9–CM system. The Committee
to another of the three DRGs based on
prostate. is jointly responsible for approving
average charges and the length of stay.
• 60.69, Prostatectomy, not elsewhere coding changes, and developing errata,
We look at the data for trends such as
classified. addenda, and other modifications to the
shifts in treatment practice or reporting
• 60.81, Incision of periprostatic ICD–9–CM to reflect newly developed
practice that would make the resulting
tissue. procedures and technologies and newly
DRG assignment illogical. If we find
• 60.82, Excision of periprostatic identified diseases. The Committee is
these shifts, we would propose to move
tissue. also responsible for promoting the use
cases to keep the DRGs clinically similar
• 60.93, Repair of prostate. of Federal and non-Federal educational
or to provide payment for the cases in
• 60.94, Control of (postoperative) programs and other communication
a similar manner. Generally, we move
hemorrhage of prostate. techniques with a view toward
only those procedures for which we
• 60.95, Transurethral balloon standardizing coding applications and
dilation of the prostatic urethra. upgrading the quality of the
rule (53 FR 38591). As part of the FY 1991 final rule
• 60.96, Transurethral destruction of (55 FR 36135), the FY 1992 final rule (56 FR 43212), classification system.
prostate tissue by microwave the FY 1993 final rule (57 FR 23625), the FY 1994 The Official Version of the ICD–9-CM
thermotherapy. final rule (58 FR 46279), the FY 1995 final rule (59 contains the list of valid diagnosis and
• 60.97, Other transurethral FR 45336), the FY 1996 final rule (60 FR 45783),
procedure codes. (The Official Version
the FY 1997 final rule (61 FR 46173), and the FY
destruction of prostate tissue by other 1998 final rule (62 FR 45981), we moved several of the ICD–9–CM is available from the
thermotherapy. other procedures from DRG 468 to DRG 477, and Government Printing Office on CD–
• 60.99, Other operations on prostate. some procedures from DRG 477 to DRG 468. No ROM for $25.00 by calling (202) 512–
All remaining O.R. procedures are procedures were moved in FY 1999, as noted in the
final rule (63 FR 40962); in FY 2000 (64 FR 41496); 1800.) The Official Version of the ICD–
assigned to DRGs 468 and 477, with in FY 2001 (65 FR 47064); or in FY 2002 (66 FR 9–CM is no longer available in printed
DRG 477 assigned to those discharges in 39852). In the FY 2003 final rule (67 FR 49999) we manual form from the Federal
which the only procedures performed did not move any procedures from DRG 477. Government; it is only available on CD–
are nonextensive procedures that are However, we did move procedure codes from DRG
468 and placed them in more clinically coherent ROM. Users who need a paper version
unrelated to the principal diagnosis.2 DRGs. In the FY 2004 final rule (68 FR 45365), we are referred to one of the many products
moved several procedures from DRG 468 to DRGs available from publishing houses.
2 The original list of the ICD–9–CM procedure 476 and 477 because the procedures are The NCHS has lead responsibility for
codes for the procedures we consider nonextensive nonextensive. In the FY 2005 final rule (69 FR
procedures, if performed with an unrelated 48950), we moved one procedure from DRG 468 to
the ICD–9–CM diagnosis codes included
principal diagnosis, was published in Table 6C in 477. In addition, we added several existing in the Tabular List and Alphabetic
section IV. of the Addendum to the FY 1989 final procedures to DRGs 476 and 477. Index for Diseases, while CMS has lead
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23336 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
responsibility for the ICD–9–CM Hyattsville, MD 20782. Comments may May 2005 will be included in Tables 6A
procedure codes included in the be sent by e-mail to: dfp4@cdc.gov. through 6F of the final rule.
Tabular List and Alphabetic Index for Questions and comments concerning Section 503(a) of Pub. L. 108–173
Procedures. the procedure codes should be included a requirement for updating
The Committee encourages addressed to: Patricia E. Brooks, Co- ICD–9–CM codes twice a year instead of
participation in the above process by Chairperson, ICD–9–CM Coordination a single update on October 1 of each
health-related organizations. In this and Maintenance Committee, CMS, year. This requirement was included as
regard, the Committee holds public Center for Medicare Management, part of the amendments to the Act
meetings for discussion of educational Hospital and Ambulatory Policy Group, relating to recognition of new
issues and proposed coding changes. Division of Acute Care, C4–08–06, 7500 technology under the IPPS. Section
These meetings provide an opportunity Security Boulevard, Baltimore, MD 503(a) amended section 1886(d)(5)(K) of
for representatives of recognized 21244–1850. Comments may be sent by the Act by adding a clause (vii) which
organizations in the coding field, such e-mail to: states that the ‘‘Secretary shall provide
as the American Health Information Patricia.Brooks1@cms.hhs.gov. for the addition of new diagnosis and
Management Association (AHIMA), the The ICD–9–CM code changes that procedure codes in April 1 of each year,
American Hospital Association (AHA), have been approved will become but the addition of such codes shall not
and various physician specialty groups, effective October 1, 2005. The new ICD– require the Secretary to adjust the
as well as individual physicians, 9–CM codes are listed, along with their payment (or diagnosis-related group
medical record administrators, health DRG classifications, in Tables 6A and classification) * * * until the fiscal year
information management professionals, 6B (New Diagnosis Codes and New that begins after such date.’’ This
and other members of the public, to Procedure Codes, respectively) in the requirement improves the recognition of
contribute ideas on coding matters. Addendum to this proposed rule. As we new technologies under the IPPS system
After considering the opinions stated above, the code numbers and by providing information on these new
expressed at the public meetings and in their titles were presented for public technologies at an earlier date. Data will
writing, the Committee formulates comment at the ICD–9–CM be available 6 months earlier than
recommendations, which then must be Coordination and Maintenance would be possible with updates
approved by the agencies. Committee meetings. Both oral and occurring only once a year on October
The Committee presented proposals 1.
written comments were considered
for coding changes for implementation While section 503(a) states that the
before the codes were approved. In this
in FY 2006 at a public meeting held on addition of new diagnosis and
proposed rule, we are only soliciting
October 7–8, 2004, and finalized the procedure codes on April 1 of each year
comments on the proposed
coding changes after consideration of shall not require the Secretary to adjust
comments received at the meetings and classification of these new codes. the payment, or DRG classification
in writing by January 12, 2005. Those For codes that have been replaced by under section 1886(d) of the Act until
coding changes are announced in Tables new or expanded codes, the the fiscal year that begins after such
6A through 6F of the Addendum to this corresponding new or expanded date, we have to update the DRG
proposed rule. The Committee held its diagnosis codes are included in Table software and other systems in order to
2005 meeting on March 31-April l, 2005. 6A. New procedure codes are shown in recognize and accept the new codes. We
Proposed new codes for which there Table 6B. Diagnosis codes that have also publicize the code changes and the
was a consensus of public support and been replaced by expanded codes or need for a mid-year systems update by
for which complete tabular and other codes or have been deleted are in providers to capture the new codes.
indexing charges can be made by May Table 6C (Invalid Diagnosis Codes). Hospitals also have to obtain the new
2005 will be included in the October 1, These invalid diagnosis codes will not code books and encoder updates, and
2005 update to ICD–9–CM. These be recognized by the GROUPER make other system changes in order to
additional codes will be included in beginning with discharges occurring on capture and report the new codes.
Tables 6A through 6F of the final rule. or after October 1, 2005. Table 6D The ICD–9–CM Coordination and
Copies of the minutes of the contains invalid procedure codes. These Maintenance Committee holds its
procedure codes discussions at the invalid procedure codes will not be meetings in the Spring and Fall, usually
Committee’s October 7–8, 2004 meeting recognized by the GROUPER beginning in April and September, in order to
can be obtained from the CMS Web site: with discharges occurring on or after update the codes and the applicable
http://www.cms.hhs.gov/ October 1, 2005. Revisions to diagnosis payment and reporting systems by
paymentsystems/icd9/. The minutes of code titles are in Table 6E (Revised October 1 of each year. Items are placed
the diagnoses codes discussions at the Diagnosis Code Titles), which also on the agenda for the ICD–9–CM
October 7–8, 2004 meeting are found at: includes the DRG assignments for these Coordination and Maintenance
http://www.cdc.gov/nchs/icd9.htm. revised codes. Table 6F includes revised Committee meeting if the request is
Paper copies of these minutes are no procedure code titles for FY 2006. received at least 2 months prior to the
longer available and the mailing list has In the September 7, 2001 final rule meeting. This requirement allows time
been discontinued. These Web sites also implementing the IPPS new technology for staff to review and research the
provide detailed information about the add-on payments (66 FR 46906), we coding issues and prepare material for
Committee, including information on indicated we would attempt to include discussion at the meeting. It also allows
requesting a new code, attending a proposals for procedure codes that time for the topic to be publicized in
Committee meeting, and timeline would describe new technology meeting announcements in the Federal
requirements and meeting dates. discussed and approved at the April Register as well as on the CMS Web site.
We encourage commenters to address meeting as part of the code revisions The public decides whether or not to
suggestions on coding issues involving effective the following October. As attend the meeting based on the topics
diagnosis codes to: Donna Pickett, Co- stated previously, ICD–9–CM codes listed on the agenda. Final decisions on
Chairperson, ICD–9–CM Coordination discussed at the March 31-April 1, 2005 code title revisions are currently made
and Maintenance Committee, NCHS, Committee meeting that receive by March 1 so that these titles can be
Room 2402, 3311 Toledo Road, consensus and that can be finalized by included in the IPPS proposed rule. A
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23337
complete addendum describing details frequently and most acutely where the provide any code updates to their
of all changes to ICD–9–CM, both new codes will capture new subscribers. Some publishers may
tabular and index, are publicized on technologies that are (or will be) under decide to publish mid-year book
CMS and NCHS Web pages in May of consideration for new technology add- updates. Others may decide to sell an
each year. Publishers of coding books on payments. Thus, we believe this addendum that lists the changes to the
and software use this information to provision was intended to expedite data October 1 code book. Coding personnel
modify their products that are used by collection through the assignment of should contact publishers to determine
health care providers. This 5-month new ICD–9–CM codes for new how they will update their books. CMS
time period has proved to be necessary technologies seeking higher payments. and its contractors will also consider
for hospitals and other providers to Current addendum and code title developing provider education articles
update their systems. information is published on the CMS concerning this change to the effective
A discussion of this timeline and the Web page at: http://www.cms.hhs.gov/ date of certain ICD–9–CM codes.
need for changes are included in the paymentsystems/icd9. Summary tables
December 4–5, 2003 ICD–9–CM showing new, revised, and deleted code 14. Other Issues: Acute Intermittent
Coordination and Maintenance titles are also posted on the following Porphyria
Committee minutes. The public agreed CMS Web page: http:// Acute intermittent porphyria is a rare
that there was a need to hold the fall www.cms.hhs.gov/medlearn/ metabolic disorder. The condition is
meetings earlier, in September or icd9code.asp. Information on ICD–9– described by code 277.1 (Disorders of
October, in order to meet the new CM diagnosis codes, along with the porphyrin metabolism). Code 277.1 is
implementation dates. The public Official ICD–9–CM Coding Guidelines, assigned to DRG 299 (Inborn Errors of
provided comment that additional time can be found on the Wep page at: http:// Metabolism) under MDC 10 (Endocrine,
would be needed to update hospital www.cdc.gov/nchs/icd9.htm. Nutritional, and Metabolic Diseases and
systems and obtain new code books and Information on new, revised, and Disorders).
coding software. There was considerable deleted ICD–9–CM codes is also In the FY 2005 final rule (69 FR
concern expressed about the impact this provided to the AHA for publication in 48981), we discussed the DRG
new April update would have on the Coding Clinic for ICD–9–CM. AHA assignment of acute intermittent
providers. also distributes information to porphyria. This discussion was a result
In the FY 2005 IPPS final rule, we publishers and software vendors. of correspondence that we received
implemented section 503(a) by CMS also sends copies of all ICD–9– during the comment period for the FY
developing a mechanism for approving, CM coding changes to its contractors for 2005 proposed rule in which the
in time for the April update, diagnoses use in updating their systems and commenter suggested that Medicare
and procedure code revisions needed to providing education to providers. hospitalization payments do not
describe new technologies and medical These same means of disseminating accurately reflect the cost of treatment.
services for purposes of the new information on new, revised, and At that time, we indicated that we
technology add-on payment process. We deleted ICD–9–CM codes will be used to would take this comment into
also established the following process notify providers, publishers, software consideration when we analyzed the
for making these determinations. Topics vendors, contractors, and others of any MedPAR data for this proposed rule for
considered during the Fall ICD–9–CM changes to the ICD–9–CM codes that are FY 2006.
Coordination and Maintenance implemented in April. Currently, code Our review of the most recent
Committee meeting are considered for titles are also published in the IPPS MedPAR data shows a total of 1,370
an April 1 update if a strong and proposed and final rules. The code titles cases overall in DRG 299, of which 471
convincing case is made by the are adopted as part of the ICD–9–CM had a principal diagnosis coded as
requester at the Committee’s public Coordination and Maintenance 277.1. The average length of stay for all
meeting. The request must identify the Committee process. The code titles are cases in DRG 299 was 5.17 days, while
reason why a new code is needed in not subject to comment in the proposed the average length of stay for porphyria
April for purposes of the new or final rules. We will continue to cases with code 277.1 was 6.0 days. The
technology process. The participants at publish the October code updates in this average charges for all cases in DRG 299
the meeting and those reviewing the manner within the IPPS proposed and were $15,891, while the average changes
Committee meeting summary report are final rules. For codes that are for porphyria cases with code 277.1
provided the opportunity to comment implemented in April, we will assign were $21,920. Based on our analysis of
on this expedited request. All other the new procedure code to the same these data, we do not believe that there
topics are considered for the October 1 DRG in which its predecessor code was is a sufficient difference between the
update. Participants at the Committee assigned so there will be no DRG impact average charges and average length of
meeting are encouraged to comment on as far as DRG assignment. This mapping stay for these cases to justify a change
all such requests. There were no was specified by Pub. L. 108–173. Any to the DRG assignment for treating this
requests for an expedited April l, 2005 midyear coding updates will be condition.
implementation of an ICD–9–CM code available through the websites indicated
at the October 7–8, 2004 Committee above and through the Coding Clinic for C. Proposed Recalibration of DRG
meeting. Therefore, there were no new ICD–9–CM. Publishers and software Weights
ICD–9–CM codes implemented on April vendors currently obtain code changes (If you choose to comment on issues
1, 2005. through these sources in order to update in this section, please include the
We believe that this process captures their code books and software systems. caption ‘‘DRG Weights’’ at the beginning
the intent of section 503(a). This We will strive to have the April 1 of your comment.)
requirement was included in the updates available through these We are proposing to use the same
provision revising the standards and websites 5 months prior to basic methodology for the FY 2006
process for recognizing new technology implementation (that is, early November recalibration as we did for FY 2005 (FY
under the IPPS. In addition, the need for of the previous year), as is the case for 2005 IPPS final rule (69 FR 48981)).
approval of new codes outside the the October 1 updates. Codebook That is, we have recalibrated the DRG
existing cycle (October 1) arises most publishers are evaluating how they will weights based on charge data for
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23338 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Medicare discharges using the most of a case based on the ratio of its transfer D. Proposed LTC–DRG Reclassifications
current charge information available payment under the per diem payment and Relative Weights for LTCHs for FY
(the FY 2004 MedPAR file). methodology to the full DRG payment 2006
The MedPAR file is based on fully for nontransfer cases. That is, a transfer (If you choose to comment on issues
coded diagnostic and procedure data for case receiving payment under the in this section, please include the
all Medicare inpatient hospital bills. transfer methodology equal to half of caption ‘‘LTC–DRGs’’ at the beginning of
The FY 2004 MedPAR data used in this what the case would receive as a your comment.)
final rule include discharges occurring nontransfer would be counted as 0.5 of
between October 1, 2003 and September a total case. 1. Background
30, 2004, based on bills received by • Statistical outliers were eliminated In the June 6, 2003 LTCH PPS final
CMS through December 31, 2004, from by removing all cases that are beyond rule (68 FR 34122), we changed the
all hospitals subject to the IPPS and 3.0 standard deviations from the mean LTCH PPS annual payment rate update
short-term acute care hospitals in of the log distribution of both the cycle to be effective July 1 through June
Maryland (which are under a waiver charges per case and the charges per day 30 instead of October 1 through
from the IPPS under section 1814(b)(3) for each DRG. September 30. In addition, because the
of the Act). The FY 2004 MedPAR file • The average charge for each DRG patient classification system utilized
includes data for approximately was then recomputed (excluding the under the LTCH PPS is based directly
11,910,025 Medicare discharges. statistical outliers) and divided by the on the DRGs used under the IPPS for
Discharges for Medicare beneficiaries national average standardized charge acute care hospitals, in that same final
enrolled in a Medicare+Choice managed per case to determine the relative rule, we explained that the annual
care plan are excluded from this weight. update of the long-term care diagnosis-
analysis. The data excludes CAHs, The proposed new weights are related group (LTC–DRG) classifications
including hospitals that subsequently normalized by an adjustment factor of and relative weights will continue to
became CAHs after the period from 1.47263 so that the average case weight remain linked to the annual
which the data were taken. after recalibration is equal to the average
The proposed methodology used to reclassification and recalibration of the
case weight before recalibration. This CMS–DRGs used under the IPPS. In that
calculate the DRG relative weights from
proposed adjustment is intended to same final rule, we specified that we
the FY 2004 MedPAR file is as follows:
• To the extent possible, all the ensure that recalibration by itself will continue to update the LTC–DRG
claims were regrouped using the DRG neither increases nor decreases total classifications and relative weights to be
classification revisions discussed in payments under the IPPS. effective for discharges occurring on or
section II.B. of this preamble. When we recalibrated the DRG after October 1 through September 30
• The transplant cases that were used weights for previous years, we set a each year. Furthermore, we stated that
to establish the relative weight for heart threshold of 10 cases as the minimum we will publish the annual update of
and heart-lung, liver, and lung number of cases required to compute a the LTC–DRGs in the proposed and final
transplants (DRGs 103, 480, and 495) reasonable weight. We used that same rules for the IPPS.
were limited to those Medicare- case threshold in recalibrating the In the past, the annual update to the
approved transplant centers that have proposed DRG weights for FY 2006. IPPS DRGs has been based on the
cases in the FY 2004 MedPAR file. Using the FY 2004 MedPAR data set, annual revisions to the ICD–9–CM codes
(Medicare coverage for heart, heart-lung, there are 41 DRGs that contain fewer and was effective each October 1. As
liver, and lung transplants is limited to than 10 cases. We are proposing to discussed in the FY 2005 IPPS final rule
those facilities that have received compute the weights for these low- (69 FR 48954 through 48957) and in the
approval from CMS as transplant volume DRGs by adjusting the FY 2005 February 3, 2005 LTCH PPS proposed
centers.) weights of these DRGs by the percentage rule (70 FR 5729 through 5733), with
• Organ acquisition costs for kidney, change in the average weight of the the implementation of section 503 (a) of
heart, heart-lung, liver, lung, pancreas, cases in the other DRGs. Pub. L. 108–173, there is the possibility
and intestinal (or multivisceral organs) Section 1886(d)(4)(C)(iii) of the Act that one feature of the GROUPER
transplants continue to be paid on a requires that, beginning with FY 1991, software program may be updated twice
reasonable cost basis. Because these reclassification and recalibration during a Federal fiscal year (October 1
acquisition costs are paid separately changes be made in a manner that and April 1) as required by the statute
from the prospective payment rate, it is assures that the aggregate payments are for the IPPS. Specifically, ICD–9–CM
necessary to subtract the acquisition neither greater than nor less than the diagnosis and procedure codes for new
charges from the total charges on each aggregate payments that would have medical technology may be created and
transplant bill that showed acquisition been made without the changes. added to existing DRGs in the middle of
charges before computing the average Although normalization is intended to the Federal fiscal year on April 1. This
charge for the DRG and before achieve this effect, equating the average policy change will have no effect,
eliminating statistical outliers. case weight after recalibration to the however, on the LTC–DRG relative
• Charges were standardized to average case weight before recalibration weights which will continue to be
remove the effects of differences in area does not necessarily achieve budget updated only once a year (October 1),
wage levels, indirect medical education neutrality with respect to aggregate nor will there be any impact on
and disproportionate share payments, payments to hospitals because payments Medicare payments under the LTCH
and, for hospitals in Alaska and Hawaii, to hospitals are affected by factors other PPS. The use of the ICD–9–CM code set
the applicable cost-of-living adjustment. than average case weight. Therefore, as is also compliant with the current
• The average standardized charge we have done in past years and as requirements of the Transactions and
per DRG was calculated by summing the discussed in section II.A.4.a. of the Code Sets Standards regulations at 45
standardized charges for all cases in the Addendum to this proposed rule, we are CFR Parts 160 and 162, promulgated in
DRG and dividing that amount by the making a budget neutrality adjustment accordance with the Health Insurance
number of cases classified in the DRG. to ensure that the requirement of section Portability and Accountability Act of
A transfer case is counted as a fraction 1886(d)(4)(C)(iii) of the Act is met. 1996 (HIPAA), Pub. L. 104–191.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23339
In the health care industry, effective each October 1. We explained 30, 2005 (FY 2005). The proposed
historically annual changes to the ICD– in the FY 2005 IPPS final rule (69 FR update to the ICD–9–CM coding system
9–CM codes were effective for 48955 and 48956), that since we do not for FY 2006 is discussed above in
discharges occurring on or after October publish a midyear IPPS rule, April 1 section II.B. of this preamble.
1 each year. Thus, the manual and code updates discussed above will not In this proposed rule, we are
electronic versions of the GROUPER be published in a midyear IPPS rule. proposing revisions to the LTC–DRG
software, which are based on the ICD– Rather, we will assign any new classifications and relative weights and,
9–CM codes, were also revised annually diagnostic or procedure codes to the to the extent that they are finalized, we
and effective for discharges occurring on same DRG in which its predecessor code will publish them in the corresponding
or after October 1 each year. As noted was assigned, so that there will be no IPPS final rule, to be effective October
above, the patient classification system impact on the DRG assignments. Any 1, 2005 through September 30, 2006 (FY
used under the LTCH PPS (LTC–DRGs) proposed coding updates will be 2006), using the latest available data.
is based on the patient classification available through the websites indicated The proposed LTC–DRGs and relative
system used under the IPPS (CMS– in the same rule and provided above in weights for FY 2006 in this proposed
DRGs), which historically had been section II.B. of this preamble and rule are based on the proposed IPPS
updated annually and effective for through the Coding Clinic for ICD–9– DRGs (GROUPER Version 23.0)
discharges occurring on or after October CM. Publishers and software vendors discussed in section II. of this proposed
1 through September 30 each year. As currently obtain code changes through rule.
mentioned above, the ICD–9–CM coding these sources in order to update their
code books and software system. If new 2. Proposed Changes in the LTC–DRG
update process has been revised, as
codes are implemented on April 1, Classifications
discussed in greater detail in the FY
2005 IPPS final rule (69 FR 48954 revised code books and software a. Background
through 48957). Specifically, section systems, including the GROUPER
Section 123 of Pub. L. 106–113
503(a) of Pub. L. 108–173 includes a software program, will be necessary
specifically requires that the PPS for
requirement for updating ICD–9–CM because we must use current ICD–9–CM
LTCHs be a per discharge system with
codes as often as twice a year instead of codes. Therefore, for purposes of the
a DRG-based patient classification
the current process of annual updates LTCH PPS, since each ICD–9–CM code
system reflecting the differences in
on October 1 of each year. This must be included in the GROUPER
patient resources and costs in LTCHs
requirement is included as part of the algorithm to classify each case into a
while maintaining budget neutrality.
amendments to the Act relating to LTC–DRG, the GROUPER software
Section 307(b)(1) of Pub. L. 106–554
recognition of new medical technology program used under the LTCH PPS
modified the requirements of section
under the IPPS. Section 503(a) of Pub L. would need to be revised to
accommodate any new codes. 123 of Pub. L. 106–113 by specifically
108–173 amended section 1886(d)(5)(K) requiring that the Secretary examine
of the Act by adding a new clause (vii) As we discussed in the FY 2005 IPPS
final rule (69 FR 48956), in ‘‘the feasibility and the impact of basing
which states that ‘‘the Secretary shall payment under such a system [the
provide for the addition of new implementing section 503(a) of Pub. L.
108–173, there will only be an April 1 LTCH PPS] on the use of existing (or
diagnosis and procedure codes in [sic] refined) hospital diagnosis-related
April 1 of each year, but the addition of update if new technology codes are
requested and approved. It should be groups (DRGs) that have been modified
such codes shall not require the to account for different resource use of
noted that any new codes created for
Secretary to adjust the payment (or long-term care hospital patients as well
April 1 implementation will be limited
diagnosis-related group classification) as the use of the most recently available
to those diagnosis and procedure code
* * * until the fiscal year that begins hospital discharge data.’’
revisions primarily needed to describe
after such date.’’ This requirement will In accordance with section 307(b)(1)
new technologies and medical services.
improve the recognition of new of Pub. L. 106–554 and § 412.515 of our
However, we reiterate that the process
technologies under the IPPS by existing regulations, the LTCH PPS uses
of discussing updates to the ICD–9–CM
accounting for those ICD–9–CM codes information from LTCH patient records
has been an open process through the
in the MedPAR claims data at an earlier to classify patient cases into distinct
ICD–9–CM C&M Committee since 1995.
date. Despite the fact that aspects of the Requestors will be given the LTC–DRGs based on clinical
GROUPER software may be updated to opportunity to present the merits of characteristics and expected resource
recognize any new technology ICD–9– their proposed new code and make a needs. The LTC–DRGs used as the
CM codes, as discussed in the February clear and convincing case for the need patient classification component of the
3, 2005 LTCH PPS proposed rule (70 FR to update ICD–9–CM codes for purposes LTCH PPS correspond to the DRGs
5730 through 5733), there will be no of the IPPS new technology add-on under the IPPS for acute care hospitals.
impact on either LTC–DRG assignments payment process through an April 1 Thus, in this proposed rule, we are
or payments under the LTCH PPS at that update. proposing to use the IPPS GROUPER
time. That is, changes to the LTC–DRGs In addition, in the FY 2005 IPPS final Version 23.0 for FY 2006 to process
(such as the creation or deletion of LTC– rule (69 FR 48956), we stated that at the LTCH PPS claims for LTCH occurring
DRGs) and the relative weights will October 2004 ICD–9–CM Coordination from October 1, 2005 through
continue to be updated in the manner and Maintenance Committee meeting, September 30, 2006. The proposed
and timing (October 1) as they are now. no new codes were proposed for an changes to the CMS DRG classification
As noted above and as described in April 1, 2005 implementation, and the system used under the IPPS for FY 2006
the February 3, 2005 LTCH PPS next update to the ICD–9–CM coding (GROUPER Version 23.0) are discussed
proposed rule (70 FR 5730), updates to system would not occur until October 1, in section II.B. of the preamble to this
the GROUPER for both the IPPS and the 2005 (FY 2006). Presently, as there were proposed rule.
LTCH PPS (with respect to relative no coding changes suggested for an Under the LTCH PPS, we determine
weights and the creation or deletion of April 1, 2005 update, the ICD–9–CM relative weights for each of the CMS
DRGs) are made in the annual IPPS coding set implemented on October 1, DRGs to account for the difference in
proposed and final rules and are 2004 will continue through September resource use by patients exhibiting the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23340 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
case complexity and multiple medical classifications and terminology used PPS PRICER program, which accounts
problems characteristic of LTCH under the LTCH PPS are consistent with for LTCH hospital-specific adjustments.
patients. In a departure from the IPPS, the ICD–9–CM and the Uniform As provided for under the IPPS, we
as we discussed in the August 30, 2002 Hospital Discharge Data Set (UHDDS), provide an opportunity for the LTCH to
LTCH PPS final rule (67 FR 55985), as recommended to the Secretary by the review the LTC–DRG assignments made
which implemented the LTCH PPS, and National Committee on Vital and Health by the fiscal intermediary and to submit
the FY 2004 IPPS final rule (68 FR Statistics (‘‘Uniform Hospital Discharge additional information within a
45374), we use low-volume quintiles in Data: Minimum Data Set, National specified timeframe (§ 412.513(c)).
determining the LTC–DRG weights for Center for Health Statistics, April
The GROUPER is used both to classify
LTC–DRGs with less than 25 LTCH 1980’’) and as revised in 1984 by the
past cases in order to measure relative
cases, because LTCHs do not typically Health Information Policy Council
hospital resource consumption to
treat the full range of diagnoses as do (HIPC) of the U.S. Department of Health
establish the LTC–DRG weights and to
acute care hospitals. Specifically, we and Human Services. We point out
classify current cases for purposes of
group those low-volume LTC–DRGs again that the ICD–9–CM coding
(LTC–DRGs with fewer than 25 cases) terminology and the definitions of determining payment. The records for
into 5 quintiles based on average charge principal and other diagnoses of the all Medicare hospital inpatient
per discharge. (A listing of the UHDDS are consistent with the discharges are maintained in the
composition of low-volume quintiles for requirements of the Transactions and MedPAR file. The data in this file are
the FY 2005 LTC–DRGs (based on FY Code Sets Standards under HIPAA (45 used to evaluate possible DRG
2003 MedPAR data) appears in section CFR Parts 160 and 162). classification changes and to recalibrate
II.D.3. of the FY 2005 IPPS final rule (69 The emphasis on the need for proper the DRG weights during our annual
FR 48985 through 48989).) We also coding cannot be overstated. update (as discussed in section II. of this
adjust for cases in which the stay at the Inappropriate coding of cases can preamble). The LTC–DRG relative
LTCH is less than or equal to five-sixths adversely affect the uniformity of cases weights are based on data for the
of the geometric average length of stay; in each LTC–DRG and produce population of LTCH discharges,
that is, short-stay outlier cases inappropriate weighting factors at reflecting the fact that LTCH patients
(§ 412.529), as discussed below in recalibration and result in inappropriate represent a different patient mix than
section II.D.4. of this preamble. payments under the LTCH PPS. LTCHs patients in short-term acute care
are to follow the same coding guidelines hospitals.
b. Patient Classifications into DRGs used by the acute care hospitals to 3. Development of the Proposed FY
Generally, under the LTCH PPS, ensure accuracy and consistency in 2006 LTC–DRG Relative Weights
Medicare payment is made at a coding practices. There will be only one
predetermined specific rate for each LTC–DRG assigned per long-term care a. General Overview of Development of
discharge; that is, payment varies by the hospitalization; it will be assigned at the the LTC–DRG Relative Weights
LTC–DRG to which a beneficiary’s stay discharge. Therefore, it is mandatory
is assigned. Similar to case classification that the coders continue to report the As we stated in the August 30, 2002
for acute care hospitals under the IPPS same principal diagnosis on all claims LTCH PPS final rule (67 FR 55981), one
(see section II.B. of this preamble), cases and include all diagnostic codes that of the primary goals for the
are classified into LTC–DRGs for coexist at the time of admission, that are implementation of the LTCH PPS is to
payment under the LTCH PPS based on subsequently developed, or that affect pay each LTCH an appropriate amount
the principal diagnosis, up to eight the treatment received. Similarly, all for the efficient delivery of care to
additional diagnoses, and up to six procedures performed during that stay Medicare patients. The system must be
procedures performed during the stay, are to be reported on each claim. able to account adequately for each
as well as age, sex, and discharge status Upon the discharge of the patient LTCH’s case-mix in order to ensure both
of the patient. The diagnosis and from a LTCH, the LTCH must assign fair distribution of Medicare payments
procedure information is reported by appropriate diagnosis and procedure and access to adequate care for those
the hospital using codes from the ICD– codes from the ICD–9–CM. Completed Medicare patients whose care is more
9–CM. claim forms are to be submitted costly. To accomplish these goals, we
As discussed in section II.B. of this electronically to the LTCH’s Medicare adjust the LTCH PPS standard Federal
preamble, the CMS DRGs are organized fiscal intermediary. Medicare fiscal prospective payment system rate by the
into 25 major diagnostic categories intermediaries enter the clinical and applicable LTC–DRG relative weight in
(MDCs), most of which are based on a demographic information into their determining payment to LTCHs for each
particular organ system of the body; the claims processing systems and subject case. Under the LTCH PPS, relative
remainder involve multiple organ this information to a series of automated weights for each LTC–DRG are a
systems (such as MDC 22, Burns). screening processes called the Medicare primary element used to account for the
Accordingly, the principal diagnosis Code Editor (MCE). These screens are variations in cost per discharge and
determines MDC assignment. Within designed to identify cases that require resource utilization among the payment
most MDCs, cases are then divided into further review before assignment into an groups (§ 412.515). To ensure that
surgical DRGs and medical DRGs. Some LTC–DRG can be made. Medicare patients classified to each
surgical and medical DRGs are further After screening through the MCE, LTC–DRG have access to an appropriate
differentiated based on the presence or each LTCH claim will be classified into level of services and to encourage
absence of CCs. (See section II.B. of this the appropriate LTC–DRG by the efficiency, we calculate a relative weight
preamble for further discussion of Medicare LTCH GROUPER. The LTCH for each LTC–DRG that represents the
surgical DRGs and medical DRGs.) GROUPER is specialized computer resources needed by an average
Because the assignment of a case to a software based on the same GROUPER inpatient LTCH case in that LTC–DRG.
particular LTC–DRG will help used under the IPPS. After the LTC– For example, cases in an LTC–DRG with
determine the amount that is paid for DRG is assigned, the Medicare fiscal a relative weight of 2 will, on average,
the case, it is important that the coding intermediary determines the prospective cost twice as much as cases in an LTC–
is accurate. As used under the IPPS, payment by using the Medicare LTCH DRG with a weight of 1.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23341
b. Data the development of the proposed FY average adjusted charge reflects the
To calculate the proposed LTC–DRG 2006 LTC–DRGs and relative weights average intensity of the health care
relative weights for FY 2006 in this presented in this proposed rule. services delivered by a particular LTCH
proposed rule, we obtained total and the average cost level of that LTCH.
c. Hospital-Specific Relative Value
Medicare allowable charges from FY The resulting ratio is multiplied by that
Methodology
2004 Medicare hospital bill data from LTCH’s case-mix index to determine the
By nature, LTCHs often specialize in standardized charge for the case.
the December 2004 update of the certain areas, such as ventilator- Multiplying by the LTCH’s case-mix
MedPAR file, and we used the proposed dependent patients and rehabilitation index accounts for the fact that the same
Version 23.0 of the CMS GROUPER for and wound care. Some case types relative charges are given greater weight
IPPS (as discussed in section II.B. of this (DRGs) may be treated, to a large extent, in a LTCH with higher average costs
preamble) to classify cases. Consistent in hospitals that have, from a than they would at a LTCH with low
with the methodology under the IPPS, perspective of charges, relatively high average costs which is needed to adjust
we are proposing to recalculate the FY (or low) charges. This nonarbitrary each LTCH’s relative charge value to
2006 LTC–DRG relative weights based distribution of cases with relatively high reflect its case-mix relative to the
on the best available data for this (or low) charges in specific LTC–DRGs average case-mix for all LTCHs. Because
proposed rule. has the potential to inappropriately we standardize charges in this manner,
As we discussed in the FY 2005 IPPS distort the measure of average charges. we count charges for a Medicare patient
final rule (69 FR 48984), we have To account for the fact that cases may at a LTCH with high average charges as
excluded the data from LTCHs that are not be randomly distributed across less resource intensive than they would
all-inclusive rate providers and LTCHs LTCHs, we use a hospital-specific be at a LTCH with low average charges.
that are reimbursed in accordance with relative value method to calculate the For example, a $10,000 charge for a case
demonstration projects authorized LTC–DRG relative weights instead of the in a LTCH with an average adjusted
under section 402(a) of Pub. L. 90–248 methodology used to determine the DRG charge of $17,500 reflects a higher level
(42 U.S.C. 1395b–1) or section 222(a) of relative weights under the IPPS of relative resource use than a $10,000
Pub. L. 92–603 (42 U.S.C. 1395b–1). described above in section II.C. of this charge for a case in a LTCH with the
Therefore, in the development of the preamble. We believe this method will same case-mix, but an average adjusted
proposed FY 2006 LTC–DRG relative remove this hospital-specific source of charge of $35,000. We believe that the
weights, we have excluded the data of bias in measuring LTCH average adjusted charge of an individual case
the 19 all-inclusive rate providers and charges. Specifically, we reduce the more accurately reflects actual resource
the 3 LTCHs that are paid in accordance impact of the variation in charges across use for an individual LTCH because the
with demonstration projects that had providers on any particular LTC–DRG variation in charges due to systematic
claims in the FY 2003 MedPAR file. relative weight by converting each differences in the markup of charges
In the FY 2005 IPPS final rule (6 FR LTCH’s charge for a case to a relative among LTCHs is taken into account.
48984), we discussed coding value based on that LTCH’s average
inaccuracies that were found in the charge. d. Proposed Low-Volume LTC–DRGs
claims data for a large chain of LTCHs Under the hospital-specific relative In order to account for LTC–DRGs
in the FY 2002 MedPAR file, which value method, we standardize charges with low-volume (that is, with fewer
were used to determine the LTC–DRG for each LTCH by converting its charges than 25 LTCH cases), in accordance
relative weights for FY 2004. As we for each case to hospital-specific relative with the methodology established in the
discussed in the same final rule, after charge values and then adjusting those August 30, 2002 LTCH PPS final rule
notifying the large chain of LTCHs values for the LTCH’s case-mix. The (67 FR 55984), we group those low-
whose claims contained the coding adjustment for case-mix is needed to volume LTC–DRGs into one of five
inaccuracies to request that they rescale the hospital-specific relative categories (quintiles) based on average
resubmit those claims with the correct charge values (which, by definition, charges, for the purposes of determining
diagnosis, from an analysis of LTCH averages 1.0 for each LTCH). The relative weights. For this proposed rule,
claims data from the December 2003 average relative weight for a LTCH is its using LTCH cases from the December
update of the FY 2003 MedPAR file, it case-mix, so it is reasonable to scale 2004 update of the FY 2004 MedPAR
appeared that such claims data no each LTCH’s average relative charge file, we identified 172 LTC–DRGs that
longer contain coding errors. Therefore, value by its case-mix. In this way, each contained between 1 and 24 cases. This
it was not necessary to correct the FY LTCH’s relative charge value is adjusted list of proposed LTC–DRGs was then
2003 MedPAR data for the development by its case-mix to an average that divided into one of the 5 low-volume
of the FY 2005 LTC–DRGs and relative reflects the complexity of the cases it quintiles, each containing a minimum of
weights established in the same final treats relative to the complexity of the 34 LTC–DRGs (172/5 = 34 with 2 LTC–
rule. cases treated by all other LTCHs (the DRGs as the remainder). For FY 2006,
As stated above, in this proposed rule, average case-mix of all LTCHs). we are proposing to make an assignment
we are proposing to use the December In accordance with the methodology to a specific low-volume quintile by
2004 update of the FY 2004 MedPAR established under § 412.523, we sorting the low-volume proposed LTC–
file for the determination of the standardize charges for each case by DRGs in ascending order by average
proposed FY 2006 LTC–DRG relative first dividing the adjusted charge for the charge. For this proposed rule, this
weights as these are the best available case (adjusted for short-stay outliers results in an assignment to a specific
data. Based on an analysis of LTCH under § 412.529 as described in section low volume quintile of the sorted 172
claims data from the December 2004 II.D.4. (step 3) of this preamble) by the low-volume proposed LTC–DRGs by
update of the FY 2004 MedPAR file, it average adjusted charge for all cases at ascending order by average charge.
appears that such claims data do not the LTCH in which the case was treated. Because the number of LTC–DRGs with
contain coding inaccuracies found Short-stay outliers under § 412.529 are less than 25 LTCH cases is not evenly
previously in LTCH claims data. cases with a length of stay that is less divisible by five, the average charge of
Therefore, it was not necessary to than or equal to five-sixths the average the low-volume proposed LTC–DRG
correct the FY 2004 MedPAR data for length of stay of the LTC–DRG. The was used to determine which low-
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23342 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
volume quintile received the additional low-volume quintiles contain 35 for each of the proposed five low-
proposed LTC–DRG. After sorting the proposed LTC–DRGs and 3 proposed volume quintiles using the formula that
172 low-volume LTC–DRGs in low-volume quintiles contain 34 we apply to the regular proposed LTC–
ascending order, we are proposing that proposed LTC–DRGs. DRGs (25 or more cases), as described
the first fifth of low-volume LTC–DRGs In order to determine the proposed below in section II.D.4. of this preamble.
with the lowest average charge would be relative weights for the proposed LTC– We are proposing to assign the same
grouped into Quintile 1. The highest DRGs with low volume for FY 2006, in relative weight and average length of
average charge cases would be grouped accordance with the methodology stay to each of the proposed LTC–DRGs
into Quintile 5. Since the average charge established in the August 30, 2002
that make up that proposed low-volume
of the proposed 35th LTC–DRG in the LTCH PPS final rule (67 FR 55984), we
quintile. We note that, as this system is
sorted list is closer to the proposed 34th are proposing to use the proposed five
low-volume quintiles described above. dynamic, it is possible that the number
LTC–DRG’s average charge (assigned to
Quintile 1) than to the average charge of The composition of each of the and specific type of LTC–DRGs with a
the proposed 36th LTC–DRG in the proposed five low-volume quintiles low volume of LTCH cases will vary in
sorted list (to be assigned to Quintile 2), shown in the chart below would be used the future. We use the best available
we are proposing to place it into in determining the proposed LTC–DRG claims data in the MedPAR file to
Quintile 1. This process was repeated relative weights for FY 2006. We would identify low-volume LTC–DRGs and to
through the remaining low-volume determine a proposed relative weight calculate the relative weights based on
proposed LTC–DRGs so that 2 proposed and (geometric) average length of stay our methodology.
EP04MY05.016</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23343
EP04MY05.017</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23344 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.018</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23345
EP04MY05.019</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23346 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
4. Steps for Determining the Proposed distribution of both charges per case and LTCH cases with a length of stay of 7
FY 2006 LTC–DRG Relative Weights the charges per day for each LTC–DRG. days or less.
As we noted previously, the proposed These statistical outliers are removed Step 3—Adjust charges for the effects
FY 2006 LTC–DRG relative weights are prior to calculating the proposed of short-stay outliers.
determined in accordance with the relative weights. We believe that they After removing cases with a length of
methodology established in the August may represent aberrations in the data stay of 7 days or less, we are left with
1, 2003 IPPS final rule (68 FR 45367). that distort the measure of average cases that have a length of stay of greater
In summary, LTCH cases must be resource use. Including those LTCH than or equal to 8 days. The next step
grouped in the appropriate LTC–DRG, cases in the calculation of the proposed in the calculation of the proposed FY
while taking into account the low- relative weights could result in an 2006 LTC–DRG relative weights is to
volume proposed LTC–DRGs as inaccurate proposed relative weight that adjust each LTCH’s charges per
described above, before the proposed FY does not truly reflect relative resource discharge for those remaining cases for
2006 LTC–DRG relative weights can be use among the proposed LTC–DRGs. the effects of short-stay outliers as
determined. After grouping the cases in Step 2—Remove cases with a length defined in § 412.529(a). (However, we
the appropriate proposed LTC–DRG, we of stay of 7 days or less. note that even if a case was removed in
are proposing to calculate the proposed The proposed FY 2006 LTC–DRG Step 2 (that is, cases with a length of
relative weights for FY 2006 in this relative weights reflect the average of stay of 7 days or less), it was paid as a
proposed rule by first removing resources used on representative cases short-stay outlier if its length of stay was
statistical outliers and cases with a of a specific type. Generally, cases with less than or equal to five-sixths of the
length of stay of 7 days or less, as a length of stay 7 days or less do not average length of stay of the LTC–DRG,
discussed in greater detail below. Next, belong in a LTCH because these stays do in accordance with § 412.529.)
we are proposing to adjust the number not fully receive or benefit from We make this adjustment by counting
of cases in each proposed LTC–DRG for treatment that is typical in a LTCH stay, a short-stay outlier as a fraction of a
the effect of short-stay outlier cases and full resources are often not used in discharge based on the ratio of the
under § 412.529, as also discussed in the earlier stages of admission to a length of stay of the case to the average
greater detail below. The short-stay LTCH. If we were to include stays of 7 length of stay for the proposed LTC–
adjusted discharges and corresponding days or less in the computation of the DRG for nonshort-stay outlier cases.
charges are used to calculate ‘‘relative proposed FY 2006 LTC–DRG relative This has the effect of proportionately
adjusted weights’’ in each proposed weights, the value of many proposed reducing the impact of the lower
LTC–DRG using the hospital-specific relative weights would decrease and, charges for the short-stay outlier cases
relative value method described above. therefore, payments would decrease to a in calculating the average charge for the
Below we discuss in detail the steps level that may no longer be appropriate. proposed LTC–DRG. This process
for calculating the proposed FY 2006 We do not believe that it would be produces the same result as if the actual
LTC–DRG relative weights. appropriate to compromise the integrity charges per discharge of a short-stay
Step 1—Remove statistical outliers. of the payment determination for those outlier case were adjusted to what they
The first step in the calculation of the LTCH cases that actually benefit from would have been had the patient’s
proposed FY 2006 LTC–DRG relative and receive a full course of treatment at length of stay been equal to the average
weights is to remove statistical outlier a LTCH, in order to include data from length of stay of the proposed LTC–
cases. We define statistical outliers as these very short-stays. Thus, in DRG.
cases that are outside of 3.0 standard determining the proposed FY 2006 As we explained in the FY 2005 IPPS
EP04MY05.020</GPH>
deviations from the mean of the log LTC–DRG relative weights, we remove final rule (69 FR 48991), counting short-
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23347
stay outlier cases as full discharges with Step 5–Adjust the proposed FY 2006 occasion that the data suggested that
no adjustment in determining the LTC–DRG relative weights to account cases classified to the LTC–DRG ‘‘with
proposed LTC–DRG relative weights for nonmonotonically increasing CCs’’ of a ‘‘with CC’’/‘‘without CC’’ pair
would lower the proposed LTC–DRG relative weights. have a lower average charge than the
relative weight for affected proposed As explained in section II.B. of this corresponding LTC–DRG ‘‘without CCs’’
LTC–DRGs because the relatively lower preamble, the proposed FY 2006 CMS for the FY 2005 LTC–DRG relative
charges of the short-stay outlier cases DRGs, which the proposed FY 2006 weights.
would bring down the average charge LTC–DRGs are based, contain ‘‘pairs’’ We believe this anomaly may be due
for all cases within a proposed LTC– that are differentiated based on the to coding that may not have fully
DRG. This would result in an presence or absence of CCs. The reflected all comorbidities that were
‘‘underpayment’’ to nonshort-stay proposed LTC–DRGs with CCs are present. Specifically, LTCHs may have
outlier cases and an ‘‘overpayment’’ to defined by certain secondary diagnoses failed to code relevant secondary
short-stay outlier cases. Therefore, in not related to or inherently a part of the diagnoses, which resulted in cases that
this proposed rule, we adjust for short- disease process identified by the actually had CCs being classified into a
stay outlier cases under § 412.529 in this principal diagnosis, but the presence of ‘‘without CC’’ LTC–DRG. It would not be
manner because it results in more additional diagnoses does not appropriate to pay a lower amount for
appropriate payments for all LTCH automatically generate a CC. As we the ‘‘with CC’’ LTC–DRG because, in
cases. discussed in the FY 2005 IPPS final rule general, cases classified into a ‘‘with
Step 4—Calculate the Proposed FY (69 FR 48991), the value of CC’’ LTC–DRG are expected to have
2006 LTC–DRG relative weights on an monotonically increasing relative higher resource use (and higher cost) as
iterative basis. weights rises as the resource use discussed above. Therefore, previously
The process of calculating the increases (for example, from when we determined the LTC–DRG
proposed LTC–DRG relative weights uncomplicated to more complicated). relative weights in accordance with the
using the hospital specific relative value The presence of CCs in a proposed LTC– methodology established in the August
DRG means that cases classified into a 30, 2002 LTCH PPS final rule (67 FR
methodology is iterative. First, for each
‘‘without CC’’ proposed LTC–DRG are 55990), we grouped both the cases ‘‘with
LTCH case, we calculate a hospital-
expected to have lower resource use CCs’’ and ‘‘without CCs’’ together for the
specific relative charge value by
(and lower costs). In other words, purpose of calculating the LTC–DRG
dividing the short-stay outlier adjusted
resource use (and costs) are expected to relative weights for FYs 2003 through
charge per discharge (see step 3) of the
decrease across ‘‘with CC’’/‘‘without CC’’ 2005. As we stated in that same final
LTCH case (after removing the statistical
pairs of proposed LTC–DRGs. rule, we will continue to employ this
outliers (see step 1)) and LTCH cases For a case to be assigned to a methodology to account for
with a length of stay of 7 days or less proposed LTC–DRG with CCs, more nonmonotonically increasing relative
(see step 2) by the average charge per coded information is called for (that is, weights until we have adequate data to
discharge for the LTCH in which the at least one relevant secondary calculate appropriate separate weights
case occurred. The resulting ratio is diagnosis), than for a case to be assigned for these anomalous LTC–DRG pairs.
then multiplied by the LTCH’s case-mix to a proposed LTC–DRG ‘‘without CCs’’ We expect that, as was the case when
index to produce an adjusted hospital- (which is based on only one principal we first implemented the IPPS, this
specific relative charge value for the diagnosis and no relevant secondary problem will be self-correcting, as
case. An initial case-mix index value of diagnoses). Currently, the LTCH claims LTCHs submit more completely coded
1.0 is used for each LTCH. data include both accurately coded data in the future.
For each proposed LTC–DRG, the cases without complications and cases There are three types of ‘‘with CC’’
proposed FY 2006 LTC–DRG relative that have complications (and cost more), and ‘‘without CC’’ pairs that could be
weight is calculated by dividing the but were not coded completely. Both nonmonotonic; that is, where the
average of the adjusted hospital-specific types of cases are grouped to a proposed ‘‘without CC’’ proposed LTC–DRG
relative charge values (from above) for LTC–DRG ‘‘without CCs’’ because only would have a higher average charge
the proposed LTC–DRG by the overall one principal diagnosis was coded. than the ‘‘with CC’’ proposed LTC–DRG.
average hospital-specific relative charge Since the LTCH PPS was only For this proposed rule, using the LTCH
value across all cases for all LTCHs. implemented for cost reporting periods cases in the December 2004 update of
Using these recalculated proposed LTC– beginning on or after October 1, 2002 the FY 2004 MedPAR file (the best
DRG relative weights, each proposed (FY 2003) and LTCHs were previously available data at this time), we
LTCH’s average relative weight for all of paid under cost-based reimbursement, identified one of the three types of
its cases (case-mix) is calculated by which is not based on patient diagnoses, nonmonotonic LTC–DRG pairs.
dividing the sum of all the proposed coding by LTCHs for these cases may The first category of
LTCH’s LTC–DRG relative weights by its not have been as detailed as possible. nonmonotonically increasing proposed
total number of cases. The LTCHs’ Thus, in developing the FY 2003 relative weights for FY 2006 proposed
hospital-specific relative charge values LTC–DRG relative weights for the LTCH LTC–DRG pairs ‘‘with and without CCs’’
above are multiplied by these hospital PPS based on FY 2001 claims data, as contains zero pairs of proposed LTC–
specific case-mix indexes. These we discussed in the August 30, 2002 DRGs in which both the proposed LTC–
hospital-specific case-mix adjusted LTCH PPS final rule (67 FR 55990), we DRG ‘‘with CCs’’ and the proposed LTC–
relative charge values are then used to found on occasion that the data DRG ‘‘without CCs’’ had 25 or more
calculate a new set of proposed LTC– suggested that cases classified to the LTCH cases and, therefore, did not fall
DRG relative weights across all LTCHs. LTC–DRG ‘‘with CCs’’ of a ‘‘with CC’’/ into one of the 5 low-volume quintiles.
In this proposed rule, this iterative ‘‘without CC’’ pair had a lower average For those nonmonotonic proposed LTC–
process is continued until there is charge than the corresponding LTC– DRG pairs, we would combine the
convergence between the weights DRG ‘‘without CCs.’’ Similarly, as LTCH cases and compute a new
produced at adjacent steps, for example, discussed in the FY 2005 IPPS final rule proposed relative weight based on the
when the maximum difference is less (69 FR 48991 through 48992), based on case-weighted average of the combined
than 0.0001. FY 2003 claims data, we also found on LTCH cases of the proposed LTC–DRGs.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23348 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
The case-weighted average charge is has the higher proposed relative weight. weights for the 194 proposed LTC–DRGs
determined by dividing the total charges We remove the proposed low-volume with no LTCH cases in the FY 2004
for all LTCH cases by the total number LTC–DRG from the proposed low- MedPAR file used in this proposed rule
of LTCH cases for the combined volume quintile and combine it with the by grouping them to the appropriate
proposed LTC–DRG. This new proposed other proposed LTC–DRG for the proposed low-volume quintile. This
relative weight would then be assigned computation of a new proposed relative methodology is consistent with our
to both of the proposed LTC–DRGs in weight for each of these proposed LTC– methodology used in determining
the pair. In this proposed rule, for FY DRGs. This new proposed relative proposed relative weights to account for
2006, there are no proposed LTC–DRGs weight is assigned to both proposed the proposed low-volume LTC–DRGs
that fall into this category. LTC–DRGs, so they each have the same described above.
The second category of proposed relative weight. In this Our methodology for determining
nonmonotonically increasing relative proposed rule, for FY 2006, there are no proposed relative weights for the
weights for proposed LTC–DRG pairs proposed LTC–DRGs that fall into this proposed ‘‘no volume’’ LTC–DRGs is as
‘‘with and without CCs’’ consists of one category. follows: We crosswalk the proposed no
pair of proposed LTC–DRGs that has Step 6–Determine a proposed FY 2006 volume LTC–DRGs by matching them to
fewer than 25 cases, and each proposed LTC–DRG relative weight for proposed other similar proposed LTC–DRGs for
LTC–DRG would be grouped to different LTC–DRGs with no LTCH cases. which there were LTCH cases in the FY
proposed low-volume quintiles in As we stated above, we determine the 2004 MedPAR file based on clinical
which the ‘‘without CC’’ proposed LTC– proposed relative weight for each similarity and intensity of use of
DRG is in a higher-weighted proposed proposed LTC–DRG using charges resources as determined by care
low-volume quintile than the ‘‘with CC’’ reported in the December 2004 update provided during the period of time
proposed LTC–DRG. For those pairs, we of the FY 2004 MedPAR file. Of the 526 surrounding surgery, surgical approach
would combine the LTCH cases and proposed LTC–DRGs for FY 2006, we (if applicable), length of time of surgical
determine the case-weighted average identified 194 proposed LTC–DRGs for procedure, post-operative care, and
charge for all LTCH cases. The case- which there were no LTCH cases in the length of stay. We assign the proposed
weighted average charge is determined database. That is, based on data from the relative weight for the applicable
by dividing the total charges for all FY 2004 MedPAR file used in this proposed low-volume quintile to the
LTCH cases by the total number of proposed rule, no patients who would proposed no volume LTC–DRG if the
LTCH cases for the combined proposed have been classified to those LTC–DRGs proposed LTC–DRG to which it is
LTC–DRG. Based on the case-weighted were treated in LTCHs during FY 2004 crosswalked is grouped to one of the
average LTCH charge, we determine and, therefore, no charge data were proposed low-volume quintiles. If the
within which low-volume quintile the reported for those proposed LTC–DRGs. proposed LTC–DRG to which the
‘‘combined LTC–DRG’’ is grouped. Both Thus, in the process of determining the proposed no volume LTC–DRG is
proposed LTC–DRGs in the pair are then proposed LTC–DRG relative weights, we crosswalked is not one of the proposed
grouped into the same proposed low- are unable to determine weights for LTC–DRGs to be grouped to one of the
volume quintile, and thus have the same these 194 proposed LTC–DRGs using proposed low-volume quintiles, we
proposed relative weight. In this the methodology described in steps 1 compare the proposed relative weight of
proposed rule, for FY 2006, proposed through 5 above. However, because the proposed LTC–DRG to which the
LTC–DRGs 531 and 532 fall into this patients with a number of the diagnoses proposed no volume LTC–DRG is
category. under these proposed LTC–DRGs may crosswalked to the proposed relative
The third category of be treated at LTCHs beginning in FY weights of each of the five quintiles and
nonmonotonically increasing relative 2006, we assign proposed relative we assign the proposed no volume LTC–
weights for proposed LTC–DRG pairs weights to each of the 194 ‘‘no volume’’ DRG the proposed relative weight of the
‘‘with and without CCs’’ consists of zero proposed LTC–DRGs based on clinical proposed low-volume quintile with the
pairs of proposed LTC–DRGs where one similarity and relative costliness to one closest weight. For this proposed rule, a
of the proposed LTC–DRGs has fewer of the remaining 332 (156—194 = 332) list of the proposed no volume FY 2006
than 25 LTCH cases and is grouped to proposed LTC–DRGs for which we are LTC–DRGs and the proposed FY 2006
a proposed low-volume quintile and the able to determine proposed relative LTC–DRG to which it is crosswalked in
other proposed LTC–DRG has 25 or weights, based on FY 2004 claims data. order to determine the appropriate
more LTCH cases and has its own As there are currently no LTCH cases proposed low-volume quintile for the
proposed LTC–DRG relative weight, and in these ‘‘no volume’’ proposed LTC– assignment of a relative weight for FY
the proposed LTC–DRG ‘‘without CCs’’ DRGs, we determine proposed relative 2006 is shown in the chart below.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23349
EP04my05.021</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23350 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04my05.022</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23351
EP04my05.023</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23352 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04my05.024</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23353
To illustrate this methodology for 25 cases in proposed LTC–DRG 90. an interest in becoming a transplant
determining the proposed relative Therefore, it would not be assigned to center.
weights for the 194 proposed LTC–DRGs a low-volume quintile for the purpose of However, if in the future a LTCH
with no LTCH cases, we are providing determining the proposed LTC–DRG applies for certification as a Medicare-
the following examples, which refer to relative weights. However, under our approved transplant center, we believe
the proposed no volume LTC–DRGs established methodology, proposed that the application and approval
crosswalk information for FY 2006 LTC–DRG 91, with no LTCH cases, procedure would allow sufficient time
provided in the chart above. would need to be grouped to a proposed for us to determine appropriate weights
Example 1: low-volume quintile. We determined for the LTC–DRGs affected. At the
There were no cases in the FY 2004 that the proposed low-volume quintile present time, we would only include
MedPAR file used for this proposed rule with the closest weight to proposed these six transplant LTC–DRGs in the
for proposed LTC–DRG 163 (Hernia LTC–DRG 90 (0.5004) (refer to Table 11 GROUPER program for administrative
Procedures Age 0–17). Since the in the Addendum to this proposed rule) purposes. Because we use the same
procedure is similar in resource use and would be proposed low-volume GROUPER program for LTCHs as is used
the length and complexity of the Quintile 1 (0. 4502) (refer to Table 11 in under the IPPS, removing these LTC–
procedures and the length of stay are the Addendum to this proposed rule). DRGs would be administratively
similar, we determined that proposed Therefore, we assign proposed LTC– burdensome.
LTC–DRG 178 (Uncomplicated Peptic DRG 91 a proposed relative weight of
Ulcer Without CC), which is assigned to Again, we note that as this system is
0.4502 for FY 2006.
proposed low-volume Quintile 3 for the Furthermore, we are proposing LTC– dynamic, it is entirely possible that the
purpose of determining the proposed FY DRG relative weights of 0.0000 for heart, number of proposed LTC–DRGs with a
2006 relative weights, would display kidney, liver, lung, pancreas, and zero volume of LTCH cases based on the
similar clinical and resource use. simultaneous pancreas/kidney system will vary in the future. We used
Therefore, we assign the same proposed transplants (LTC–DRGs 103, 302, 480, the best most recent available claims
relative weight of proposed LTC–DRG 495, 512, and 513, respectively) for FY data in the MedPAR file to identify zero
178 of 0.7586 (proposed Quintile 3) for 2006 because Medicare will only cover volume LTC–DRGs and to determine the
FY 2006 (Table 11 in the Addendum to these procedures if they are performed proposed relative weights in this
this proposed rule) to proposed LTC– at a hospital that has been certified for proposed rule.
DRG 163. the specific procedures by Medicare and Table 11 in the Addendum to this
Example 2: presently no LTCH has been so certified. proposed rule lists the proposed LTC–
There were no LTCH cases in the FY Based on our research, we found that DRGs and their respective proposed
2004 MedPAR file used in this proposed most LTCHs only perform minor relative weights, geometric mean length
rule for proposed LTC–DRG 91 (Simple surgeries, such as minor small and large of stay, and five-sixths of the geometric
Pneumonia and Pleurisy Age 0–17). bowel procedures, to the extent any mean length of stay (to assist in the
Since the severity of illness in patients surgeries are performed at all. Given the determination of short-stay outlier
with bronchitis and asthma is similar in extensive criteria that must be met to payments under § 412.529) for FY 2006.
patients regardless of age, we become certified as a transplant center E. Proposed Add-On Payments for New
determined that proposed LTC–DRG 90 for Medicare, we believe it is unlikely Services and Technologies
(Simple Pneumonia and Pleurisy Age that any LTCHs would become certified
>17 Without CC) would display similar as a transplant center. In fact, in the (If you choose to comment on issues
clinical and resource use characteristics nearly 20 years since the in this section, please include the
and have a similar length of stay to implementation of the IPPS, there has caption ‘‘New Technology Applications’’
EP04my05.025</GPH>
proposed LTC–DRG 91. There were over never been a LTCH that even expressed at the beginning of your comment.)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23354 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
1. Background production or drug production had been technology add-on payments for FY
Sections 1886(d)(5)(K) and (L) of the postponed until FDA approval due to 2005, using the section 503(b)(1)
Act establish a process of identifying shelf life concerns or manufacturing measures stated above, and posted these
and ensuring adequate payment for new issues). After the DRGs have been new thresholds on our Web site at:
medical services and technologies under recalibrated to reflect the costs of an http://www.cms.hhs.gov/providers/
the IPPS. Section 1886(d)(5)(K)(vi) of otherwise new medical service or hipps/newtech.asp. In the FY 2005 IPPS
the Act specifies that a medical service technology, the special add-on payment final rule (in Table 10 of the
or technology will be considered new if for new medical services or technology Addendum), we included the final
it meets criteria established by the ceases (§ 412.87(b)(2)). For example, an thresholds that are being used to
Secretary after notice and opportunity approved new technology that received evaluate applicants for new technology
for public comment. Section FDA approval in October 2004 and add-on payments for FY 2006. (Refer to
1886(d)(5)(K)(ii)(I) of the Act specifies entered the market at that time may be section IV.D. of the preamble to the FY
eligible to receive add-on payments as a 2005 IPPS final rule (69 FR 49084) for
that the process must apply to a new
new technology until FY 2007 a discussion of a revision of the
medical service or technology if, ‘‘based
(discharges occurring before October 1, regulations to incorporate the change
on the estimated costs incurred with
2006), when data reflecting the costs of made by section 503(b)(1) of Pub. L.
respect to discharges involving such
the technology would be used to 108–173.)
service or technology, the DRG Section 412.87(b)(1) of our existing
recalibrate the DRG weights. Because
prospective payment rate otherwise regulations provides that a new
the FY 2007 DRG weights will be
applicable to such discharges under this technology is an appropriate candidate
calculated using FY 2005 MedPAR data,
subsection is inadequate.’’ for an additional payment when it
the costs of such a new technology
The regulations implementing this
would likely be reflected in the FY 2007 represents an advance in medical
provision establish three criteria for new technology that substantially improves,
DRG weights.
medical services and techniques to Section 412.87(b)(3) further provides relative to technologies previously
receive an additional payment. First, that, to receive special payment available, the diagnosis or treatment of
§ 412.87(b)(2) defines when a specific treatment, new medical services or Medicare beneficiaries. For example, a
medical service or technology will be technologies must be inadequately paid new technology represents a substantial
considered new for purposes of new otherwise under the DRG system. To clinical improvement when it reduces
medical service or technology add-on assess whether technologies would be mortality, decreases the number of
payments. The statutory provision inadequately paid under the DRGs, we hospitalizations or physician visits or
contemplated the special payment establish thresholds to evaluate reduces recovery time compared to the
treatment for new medical services or applicants for new technology add-on technologies previously available. (See
technologies until such time as data are payments. In the FY 2004 IPPS final the September 7, 2001 final rule (66 FR
available to reflect the cost of the rule (68 FR 45385), we established the 46902) for a complete discussion of this
technology in the DRG weights through threshold at the geometric mean criterion.)
recalibration. There is a lag of 2 to 3 standardized charge for all cases in the The new medical service or
years from the point a new medical DRG plus 75 percent of 1 standard technology add-on payment policy
service or technology is first introduced deviation above the geometric mean provides additional payments for cases
on the market and when data reflecting standardized charge (based on the with high costs involving eligible new
the use of the medical service or logarithmic values of the charges and medical services or technologies while
technology are used to calculate the transformed back to charges) for all preserving some of the incentives under
DRG weights. For example, data from cases in the DRG to which the new the average-based payment system. The
discharges occurring during FY 2004 are medical service or technology is payment mechanism is based on the
used to calculate the proposed FY 2006 assigned (or the case-weighted average cost to hospitals for the new medical
DRG weights in this proposed rule. of all relevant DRGs, if the new medical service or technology. Under § 412.88,
Section 412.87(b)(2) provides that a service or technology occurs in many Medicare pays a marginal cost factor of
‘‘medical service or technology may be different DRGs). Table 10 in the 50 percent for the costs of a new
considered new within 2 or 3 years after Addendum to the FY 2004 IPPS final medical service or technology in excess
the point at which data begin to become rule (68 FR 45648) listed the qualifying of the full DRG payment. If the actual
available reflecting the ICD–9–CM code threshold by DRG, based on the costs of a new medical service or
assigned to the new medical service or discharge data that we used to calculate technology case exceed the DRG
technology (depending on when a new the FY 2004 DRG weights. payment by more than the 50-percent
code is assigned and data on the new However, section 503(b)(1) of Pub. L. marginal cost factor of the new medical
medical service or technology become 108–173 amended section service or technology, Medicare
available for DRG recalibration). After 1886(d)(5)(K)(ii)(I) of the Act to provide payment is limited to the DRG payment
CMS has recalibrated the DRGs, based for ‘‘applying a threshold* * *that is plus 50 percent of the estimated costs of
on available data, to reflect the costs of the lesser of 75 percent of the the new technology.
an otherwise new medical service or standardized amount (increased to The report language accompanying
technology, the medical service or reflect the difference between cost and section 533 of Pub. L. 106–554 indicated
technology will no longer be considered charges) or 75 percent of 1 standard Congressional intent that the Secretary
‘new’ under the criterion for this deviation for the diagnosis-related group implement the new mechanism on a
section.’’ involved.’’ The provisions of section budget neutral basis (H.R. Conf. Rep.
The 2-year to 3-year period during 503(b)(1) apply to classification for No. 106–1033, 106th Cong., 2nd Sess. at
which a technology or medical service fiscal years beginning with FY 2005. We 897 (2000)). Section 1886(d)(4)(C)(iii) of
can be considered new would ordinarily updated Table 10 from the October 6, the Act requires that the adjustments to
begin with FDA approval, unless there 2003 Federal Register correction annual DRG classifications and relative
was some documented delay in bringing document, which contains the weights must be made in a manner that
the product onto the market after that thresholds that we used to evaluate ensures that aggregate payments to
approval (for instance, component applications for new service or hospitals are not affected. Therefore, in
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23355
the past, we accounted for projected regarding whether a new service or add-on payment for a new medical
payments under the new medical technology represents an advance in service or technology, the Secretary
service and technology provision during medical technology that substantially shall seek to identify one or more DRGs
the upcoming fiscal year at the same improves the diagnosis or treatment of associated with the new technology,
time we estimated the payment effect of Medicare beneficiaries. based on similar clinical or anatomical
changes to the DRG classifications and • Make public and periodically characteristics and the costs of the
recalibration. The impact of additional update a list of the services and technology and assign the new
payments under this provision was then technologies for which an application technology into a DRG where the
included in the budget neutrality factor, for add-on payments is pending. average costs of care most closely
which was applied to the standardized • Accept comments, approximate the costs of care using the
amounts and the hospital-specific recommendations, and data from the new technology. No add-on payment
amounts. public regarding whether a service or shall be made with respect to such a
Section 503(d)(2) of Pub. L. 108–173 technology represents a substantial new technology.
amended section 1886(d)(5)(K)(ii)(III) of improvement. At the time an application for new
the Act to provide that there shall be no • Provide, before publication of a technology add-on payments is
reduction or adjustment in aggregate proposed rule, for a meeting at which submitted, the DRGs associated with the
payments under the IPPS due to add-on organizations representing hospitals, new technology are identified. We only
payments for new medical services and physicians, manufacturers, and any determine that a new technology add-on
technologies. Therefore, add-on other interested party may present payment is appropriate when the
payments for new medical services or comments, recommendations, and data reimbursement under these DRGs is not
technologies for FY 2005 and later years regarding whether a new service or adequate for this new technology. The
will not be budget neutral. technology represents a substantial criterion for this determination is the
Applicants for add-on payments for clinical improvement to the clinical cost threshold, which we discuss below.
new medical services or technologies for staff of CMS. We discuss the assignments of several
FY 2007 must submit a formal request, In order to provide an opportunity for
new technologies within the DRG
including a full description of the public input regarding add-on payments
payment system in section II.B. of this
clinical applications of the medical for new medical services and
proposed rule.
service or technology and the results of technologies for FY 2006 before
In this proposed rule, we evaluate
any clinical evaluations demonstrating publication of this proposed rule, we
whether new technology add-on
that the new medical service or published a notice in the Federal
payments will continue in FY 2006 for
technology represents a substantial Register on December 30, 2004 (69 FR
the three technologies that currently
clinical improvement, along with a 78466) and held a town hall meeting at
receive such payments. In addition, we
significant sample of data to the CMS Headquarters Office in
present our evaluations of eight
demonstrate the medical service or Baltimore, MD, on February 23, 2005. In
applications for add-on payments in FY
technology meets the high-cost the announcement notice for the
meeting, we stated that the opinions and 2006. The eight applications for FY
threshold, no later than October 15, 2006 include two applications for
2005. Applicants must submit a alternatives provided during the
meeting would assist us in our products that were denied new
complete database no later than technology add-on payments for FY
December 30, 2005. Complete evaluations of applications by allowing
public discussions of the substantial 2005.
application information, along with
final deadlines for submitting a full clinical improvement criteria for each of 3. FY 2006 Status of Technology
application, will be available after the FY 2006 new medical service and Approved for FY 2005 Add-On
publication of the FY 2006 final rule at technology add-on payment Payments
our Web site: http://www.cms.hhs.gov/ applications before the publication of
a. INFUSE TM (Bone Morphogenetic
providers/hipps/default.asp. To allow this FY 2006 IPPS proposed rule.
Approximately 45 participants Proteins (BMPs) for Spinal Fusions)
interested parties to identify the new
medical services or technologies under registered and attended in person, while INFUSE TM was approved by FDA for
review before the publication of the additional participants listened over an use on July 2, 2002, and became
proposed rule for FY 2007, the website open telephone line. The participants available on the market immediately
will also list the tracking forms focused on presenting data on the thereafter. In the FY 2004 IPPS final rule
completed by each applicant. substantial clinical improvement aspect (68 FR 45388), we approved INFUSE TM
of their products, as well as the need for for add-on payments under § 412.88,
2. Public Input Before Publication of additional payments to ensure access to effective for FY 2004. This approval was
This Notice of Proposed Rulemaking on Medicare beneficiaries. In addition, we on the basis of using INFUSE TM for
Add-On Payments received written comments regarding single-level, lumbar spinal fusion,
Section 503(b)(2) of Pub. L. 108–173 the substantial clinical improvement consistent with the FDA’s approval and
amended section 1886(d)(5)(K) of the criterion for the applicants. We have the data presented to us by the
Act by adding a clause (viii) to provide considered these comments in our applicant. Therefore, we limited the
for a mechanism for public input before evaluation of each new application for add-on payment to cases using this
publication of a notice of proposed FY 2006 in this proposed rule. We have technology for anterior lumbar fusions
rulemaking regarding whether a medical summarized these comments or, if in DRGs 497 (Spinal Fusion Except
service or technology represents a applicable, indicated that no comments Cervical With CC) and 498 (Spinal
substantial improvement or were received, at the end of the Fusion Except Cervical Without CC).
advancement. The revised process for discussion of the individual Cases involving INFUSE TM that are
evaluating new medical service and applications. eligible for the new technology add-on
technology applications requires the Section 503(c) of Pub. L. 108–173 payment are identified by assignment to
Secretary to— amended section 1886(d)(5)(K) of the DRGs 497 and 498 as a lumbar spinal
• Provide, before publication of a Act by adding a new clause (ix) fusion, with the combination of ICD–9–
proposed rule, for public input requiring that, before establishing any CM procedure codes 84.51 (Insertion of
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23356 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
interbody spinal fusion device) and b. InSync Defibrillator System (Cardiac 2005. The Kinetra device was
84.52 (Insertion of recombinant bone Resynchronization Therapy With approved by the FDA on December 16,
morphogenetic protein). Defibrillation (CRT–D)) 2003. The Kinetra implantable
The FDA approved INFUSE TM for use Cardiac Resynchronization Therapy neurostimulator is designed to deliver
on July 2, 2002. For FY 2005, (CRT), also known as bi-ventricular electrical stimulation to the subthalamic
INFUSE TM was still within the 2-year to pacing, is a therapy for chronic heart nucleus (STN) or internal globus
3-year period during which a failure. A CRT implantable system pallidus (GPi) in order to ameliorate
technology can be considered new provides electrical stimulation to the symptoms caused by abnormal
right atrium, right ventricle, and left neurotransmitter levels that lead to
under the regulations. Therefore, in the
ventricle to coordinate or resynchronize abnormal cell-to-cell electrical impulses
FY 2005 IPPS final rule (69 FR 49007
ventricular contractions and improve in Parkinson’s Disease and essential
through 49009), we continued add-on
cardiac output. tremor. Before the development of
payments for FY 2005 for cases
In the FY 2005 IPPS final rule (69 FR Kinetra, treating bilateral symptoms of
receiving INFUSE TM for spinal fusions
49016), we determined that cardiac patients with these disorders required
in DRGs 497 (Spinal Fusion Except the implantation of two
Cervical With CC) and 498 (Spinal resynchronization therapy with
defibrillator (CRT–D) was eligible for neurostimulators (in the form of a
Fusion Except Cervical Without CC). product called SoletraTM, also
add-on payments in FY 2005. Cases
As we discussed in the September 7, involving CRT–D that are eligible for manufactured by Medtronic): one for the
2001 final rule (66 FR 46915), an new technology add-on payments are right side of the brain (to control
approval of a new technology for special identified by either one of the following symptoms on the left side of the body),
payment should extend to all two ICD–9–CM procedure codes: 00.51 the other for the left side of the brain (to
technologies that are substantially (Implantation of Cardiac control symptoms on the right side of
similar. Otherwise, our payment policy Resynchronization Defibrillator, Total the body). Additional procedures were
would bestow an advantage to the first System (CRT–D)) or 00.54 (Implantation required to create pockets in the chest
applicant to receive approval for a or Replacement of Pulse Generator cavity to place the two generators
particular new technology. In last year’s Device Only (CRT–D)). InSync required to run the individual leads.
final rule (69 FR 49008), we discussed Defibrillation System received FDA The Kinetra neurostimulator generator,
another product, called OP–1 Putty, approval on June 26, 2002. However, implanted in the pectoral area, is
manufactured by Stryker Biotech, that another manufacturer, Guidant, received designed to eliminate the need for two
promotes natural bone growth by using FDA approval for its CRT–D device on devices by accommodating two leads
a closely related bone morphogenetic May 2, 2002. As we discussed in the that are placed in both the left and right
protein called rhBMP–7. (INFUSE TM is September 7, 2001 final rule (66 FR sides of the brain to deliver the
rhBMP–2.) We also stated in last year’s 46915), an approval of a new technology necessary impulses. The manufacturer
final rule that we had determined that for special payment should extend to all argued that the development of a single
the costs associated with the OP–1 Putty technologies that are substantially neurostimulator that treats bilateral
are similar to those associated with similar. Otherwise, our payment policy symptoms provides a less invasive
INFUSE TM. Because the OP–1 Putty would bestow an advantage to the first treatment option for patients, and
became available on the market in May applicant to receive approval for a simpler implantation, follow up, and
2004 (when it received FDA approval particular new technology. We also programming procedures for physicians.
for spinal fusions) for similar spinal noted that we would extend new In December 2003, the FDA approved
fusion procedures and because this technology add-on payments for the the device. Therefore, for FY 2006,
product also eliminates the need for the entire FY 2005 even though the 2–3 year Kinetra qualifies under the newness
autograft bone surgery, we extended period of newness ended in May 2005 criterion because FDA approval was
new technology add-on payments to this for CRT–D since predictability is an within the statutory timeframe of 2 to 3
technology as well for FY 2005. important aspect of the prospective years and its costs are not yet reflected
payment methodology and, therefore, in the DRG weights. Because there were
As noted above, the period for which no data available to evaluate costs
we believe it is appropriate to apply a
technologies are eligible to receive new associated with Kinetra, in the FY
consistent payment methodology for
technology add-on payments is 2 to 3 2005 IPPS final rule, we conducted the
new technologies throughout the fiscal
years after the product becomes cost analysis using SoletraTM, the
year (69 FR 49016).
available on the market and data predecessor technology used to treat
As noted in the FY 2005 IPPS final
reflecting the cost of the technology are rule (69 FR 49014), because CRT–Ds this condition, as a proxy for Kinetra.
reflected in the DRG weights. The FDA were available upon the initial FDA The preexisting technology provided the
approved INFUSE TM bone graft on July approval in May 2002, we considered closest means to track cases that have
2, 2002. Therefore, data reflecting the the technology to be new from this date. actually used similar technology and
cost of the technology are now reflected As a result, for FY 2006, the CRT–D will served to identify the need and use of
in the DRG weights. In addition, by the be beyond the 2–3 year period during the new device. The manufacturer
end of FY 2005, the add-on payment which a technology can be considered informed us that the cost of the Kinetra
will have been made for 2 years. new. Therefore, we are proposing to device is twice the price of a single
Therefore, we are proposing to discontinue add-on payments for the SoletraTM device. Because most patients
discontinue new technology add-on CRT–D for FY 2006. would receive two SoletraTM devices if
payment for INFUSE TM for FY 2006. the Kinetra device is not implanted,
Because we apply the same policies in c. Kinetra Implantable Neurostimulator we believed data regarding the cost of
making new technology payment for for Deep Brain Stimulation SoletraTM would give a good measure of
OP–1 Putty as we do for INFUSE TM, we Medtronic, Inc. submitted an the actual costs that would be incurred.
are proposing to discontinue new application for approval of the Kinetra Medtronic submitted data for 104 cases
technology add-on payment for OP–1 implantable neurostimulator device for that involved the SoletraTM device (26
Putty as well for FY 2006. new technology add-on payments for FY cases in DRG 1 (Craniotomy Age > 17
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23357
With CC), and 78 cases in DRG 2 inadvertent shutoff of the device, as neurostimulator pulse generator). If a
(Craniotomy Age > 17 Without CC)). occurs when accidentally tripped by claim has only the procedure code
These cases were identified from the FY electromagnetic inference (caused by identifying the implantation of the
2002 MedPAR file using procedure common products such as metal intracranial leads, or if the claim
codes 02.93 (Implantation, intracranial detectors and garage door openers). identifies only insertion of the
neurostimulator) and 86.09 (Other Kinetra also provides significant generator, no add-on payment will be
incision of skin and subcutaneous patient control, allowing patients to made.
tissue). In the analysis presented by the monitor whether the device is on or off, This technology received FDA
applicant, the mean standardized to monitor battery life, and to fine-tune approval on December 16, 2003, and
charges for cases involving SoletraTM in the stimulation therapy within remains within the 2 to 3 year period
DRGs 1 and 2 were $69,018 and clinician-programmed parameters. during which it can be considered new.
$44,779, respectively. The mean While Kinetra provides the ability for Therefore, we are proposing to continue
standardized charge for these SoletraTM patients to better control their add-on payments for Kinetra
cases according to Medtronic’s data was symptoms and reduce the complications Inplantable Neurostimulator for deep
$50,839. associated with the existing technology, brain stimulation for FY 2006.
Last year, we used the same it does not eliminate the necessity for
procedure codes to identify 187 cases two surgeries. Because the patients who 4. FY 2006 Applications for New
involving the SoletraTM device in DRGs receive the device are often frail, the Technology Add-On
1 and 2 in the FY 2003 MedPAR file. implantation generally occurs in two a. INFUSE TM Bone Graft (Bone
Similar to the Medtronic data, 53 of the phases: the brain leads are implanted in Morphogenetic Proteins (BMPs) for
cases were found in DRG 1, and 134 one surgery, and the generator is Tibia Fractures)
cases were found in DRG 2. The average implanted in another surgery, typically
Bone Morphogenetic Proteins (BMPs)
standardized charges for these cases in on another day. However, implanting
have been shown to have the capacity
DRGs 1 and 2 were $51,163 and Kinetra does reduce the number of
$44,874, respectively. Therefore, the to induce new bone formation and,
potential surgeries compared to its
case-weighted average standardized therefore, to enhance the healing of
predecessor (which requires two
charge for cases that included fractures. Using recombinant
surgeries to implant the two single-lead
implantation of the SoletraTM device techniques, some BMPs (also referred to
arrays to the brain and an additional
was $46,656. The new cost thresholds as rhBMPs) can be produced in large
surgery for implantation of the second
quantities. This innovation has cleared
established under the revised criteria in generator). Therefore, the Kinetra
Pub. L. 108–173 for DRGs 1 and 2 are device reduces the number of surgeries the way for the potential use of BMPs
$43,245 and $30,129, respectively. from 3 to 2. in a variety of clinical applications such
Accordingly, the case-weighted Last year, we solicited comments on as in delayed union and nonunion of
threshold to qualify for new technology (1) the issue of whether the device is fractured bones and spinal fusions. One
add-on payment using the data we sufficiently different from the such product, rhBMP–2, is developed as
identified was determined to be previously used technology to qualify as an alternative to bone graft with spinal
$33,846. Under this analysis, Kinetra a substantially improved treatment for fusions.
met the cost threshold. the same patient symptoms; (2) the cost Medtronic Sofamor Danek
We note that an ICD–9–CM code was of the device; and (3) the approval of the (Medtronic) resubmitted an application
approved for dual array pulse generator device for add-on payment, given the (previously submitted for consideration
devices, effective October 1, 2004, for uncertainty over the frequency with for FY 2005) for a new technology add-
IPPS tracking purposes. The new ICD– which the patients receiving the device on payment in FY 2006 for the use of
9–CM code that will be assigned to this have the generator implanted in a INFUSE TM Bone Graft in open tibia
device is 86.95 (Insertion or second hospital stay, and the frequency fractures. In cases of open tibia
replacement of dual array with which this implantation occurs in fractures, INFUSE TM is applied using an
neurostimulator pulse generator), which an outpatient setting. In the response, absorbable collagen sponge, which is
includes dual array and dual channel we received sufficient evidence to then applied to the fractured bone to
generators for intracranial, spinal, and demonstrate that Kinetra does promote new bone formation and
peripheral neurostimulators. The code represent a substantial clinical improved healing. The manufacturer
will not separately identify cases with improvement over the previous contends that patient access to this
the Kinetra device and will only be Soletra TM device. Specifically, the technology is restricted due to the
used to distinguish single versus dual increased patient control, reduced increased costs of treating these cases
channel-pulse generator devices. surgery, fewer complications, and with INFUSE TM. The FDA approved use
Because the code only became effective elimination of environmental of INFUSE TM for open tibia fractures on
on October 1, 2004, we do not have any interference significantly improve April 30, 2004.
specific data regarding the costs of cases patient outcomes. Therefore, we Medtronic’s first application for a new
involving dual array pulse generator approved Kinetra for new technology technology add-on payment for
devices. add-on payments for FY 2005. INFUSE TM Bone Graft in open tibia
The manufacturer claimed that Cases receiving Kinetra for fractures was denied. As we discussed
Kinetra provides a range of substantial Parkinson’s disease or essential tremor in the FY 2005 IPPS final rule (69 FR
improvements beyond previously on or after October 1, 2004, are eligible 49010), the FY 2005 application for
available technology. These include a to receive an add-on payment of up to INFUSE TM for open tibia fractures was
reduced rate of device-related $8,285, or half the cost of the device, denied because a similar product, OP–
complications and hospitalizations or which is approximately $16,570. These 1, was approved in 2001 for the
physician visits and less surgical trauma cases are identified by the presence of treatment of nonunion of tibia fractures.
because only one generator implantation procedure codes 02.93 (Implantation or Comment: In comments presented at
procedure is required. Kinetra has a replacement of intracranial the February 2005 new technology town
reed switch disabling function that neurostimulator leads) and 86.95 hall meeting, Medtronic contended that
physicians can use to prevent (Insertion or replacement of dual array there was no opportunity for public
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23358 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
comment on our decision regarding OP– studies as evidence of the clinical patient population that may be affected.
1 Putty: ‘‘the public had no opportunity superiority of INFUSE TM over OP–1. The FDA has stated that the HDE
to comment on whether the follow-on Medtronic presented studies at the approval process was established to
products were ‘substantially similar’ to February 2005 new technology town address cases involving devices used in
the primary technologies under hall meeting to provide evidence that the treatment or diagnosis of diseases
consideration. The absence of such INFUSE TM is superior to OP–1 in the affecting fewer than 4,000 individuals in
provisions led to unpredictability and time it takes for critical-sized defects to the United States per year: ‘‘A device
confusion about the new-technology heal and in radiographic assessment, manufacturer’s research and
add-on program.’’ mechanical testing of the repaired bone, development costs could exceed its
Response: In the FY 2005 IPPS final and histology of the union for trial market returns for diseases or
rule, we noted that a commenter subjects receiving INFUSE TM compared conditions affecting small patient
brought the existence of the Stryker with OP–1. (Study subjects were populations. FDA, therefore, developed
Biotech OP–1 product to our attention canines whose ulnas had 2.5 cm each of and published [the regulation
during the comment period on the IPPS bone removed and then equal amounts establishing the HDE process] to provide
proposed rule for FY 2005. The of OP–1 and INFUSE TM were put into an incentive for the development of
commenter noted OP–1’s clinical the front legs in a head to head trial.) devices for use in the treatment or
similarity to INFUSE TM and contended Medtronic has also argued that these diagnosis of diseases affecting these
that the products should be treated the studies demonstrate that OP–1 has been populations.’’ (http://
same with respect to new technology shown to be less effective than using the www.accessdata.fda.gov/scripts/cdrh/
payments when the product is used for patient’s own bone or the current cfdocs/cfHDE/HDEInformation.cfm).
tibia fractures. At that time, we standard of care (nail fixation with soft The fact that two products received
determined that, despite the differences tissue medical management). Medtronic different types of approval does not
in indications under the respective FDA argued that the INFUSE TM product is demonstrate either that they are
approvals, the two products were in use not only superior to OP–1 for patients substantially different for purposes of
for many of the same kinds of cases. with open tibia fractures, but also that new technology add-on payments, or
Specifically, clinical studies on the it is superior to any other treatment for that one is new and the other is not. Nor
safety of OP–1 included patients with these serious injuries. do the different types of FDA approval
complicated fractures of the tibia, and Medtronic also pointed out that the imply that one product could meet our
those cases were similar to the cases FDA approved OP–1 for Humanitarian substantial clinical improvement
described in the clinical trials for Device Exemption (HDE) status, criterion and the other could not.
INFUSE TM for open tibia fractures. In whereas INFUSE TM received a Pre- Neither type of FDA approval requires
addition, cases involving the use of OP– Market Approval (PMA). To receive that products establish substantial
1 for long bone union and open tibia HDE approval, a product only needs to clinical improvement, as is required for
fractures are assigned to the same DRGs meet a safety standard, while standards approval of new technology add-on
(DRGs 218 and 219 (Lower Extremity of both safety and efficacy have to be payments. Theoretically, a product that
Procedures With and Without CC, met for a PMA approval. Medtronic receives an FDA HDE approval could
respectively)) as cases involving argued that, because the only point the subsequently meet our substantial
INFUSE TM. Therefore, we denied new manufacturer of OP–1 was able to prove clinical improvement criterion, while a
technology add-on payments for was that it did not harm those product that receives an FDA PMA
INFUSE TM for open tibia fractures for individuals that received it, the efficacy
approval could fail to do so. We base
FY 2005 on the grounds that the of OP–1 not only has not been
our substantial clinical improvement
technology involving the use of bone demonstrated for the general
determinations on the evidence
morphogenetic proteins to treat severe population, but also more specifically, it
presented in the course of the
long bone fractures (including open has not been proven in the Medicare
application process, and not on the type
tibia fractures) and recalcitrant long population. Medtronic presented
of FDA approval.
bone fractures had been in use for more arguments that INFUSE TM is a superior
than 3 years. product to OP–1 because the INFUSE TM For purposes of determining whether
We note that Medtronic had ample product has demonstrated safety and the use of rhBMPs for open tibia fracture
opportunity, prior to the issuance of the efficacy, while the OP–1 product has represents a new technology, the crucial
FY 2005 IPPS final rule, to bring to our merely demonstrated that it is safe to consideration is whether the costs of
attention the fact that there was a use in humans. Medtronic pointed to this technology are represented in the
similar product on the market that was the labeled indications and package weights of the relevant DRGs. Cases that
being used in long bone fractures. We inserts provided with the two products, involve treatment of non-healed and
based our decision for FY 2005 on the stating that only INFUSE TM provides a acute tibia fractures fall into the same
record that was placed at our disposal substantial clinical improvement to DRGs. We have identified 10,047 cases
by the applicant and by commenters patients receiving a BMP product. involving the use of rhBMPs in the FY
during the comment period. We do not believe that the different 2004 MedPAR data file. This use
Nevertheless, we have considered the types of FDA approvals for the two includes the approved indications for
issues raised by these two products products are relevant to distinguish INFUSE TM in spinal fusions (6,712
again in the course of evaluating between the two products in cases) and tibia DRGs (77 cases).
Medtronic’s new application for determining whether either product However, we note that an additional
approval of INFUSE TM for new should be considered for new 3,258 cases involving the off-label use of
technology add-on payments in FY technology add-on payments under the rhBMPs were found in 47 DRGs in the
2006. IPPS. Manufacturers seek different types FY 2004 MedPAR data. We also note
As part of its FY 2006 application, of FDA approval for many different that, in our analysis of the FY 2003
Medtronic advanced several arguments reasons, including timing, the MedPAR data, an additional 890 cases
designed to demonstrate that OP–1 and availability of adequate studies, the of off-label use (identified by the
INFUSE TM are substantially different. availability of resources to pursue presence of ICD–9–CM code 84.52) were
The application cites data from several research studies, and the size of the found in 36 DRGs. Therefore, we note
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23359
that the use of rhBMPs, made by 1 is limited to secondary procedures (as comment on specific instances in which
Medtronic or otherwise, has penetrated would be expected with nonunions). substantial similarity is an issue. The
the cost data that were used to set the The number of patients able to receive suggested proposed revisions are:
FY 2005 and FY 2006 DRG weights. the device is limited to 4,000 patients • After receipt of all new applications
Whether or not it is possible to per year and with oversight from an for a fiscal year, CMS should publish a
differentiate between patient Institutional Review Board. Federal Register notice specifically
populations that would be eligible to • Medtronic argues the products do asking manufacturers to identify if they
receive the OP–1 Implant for nonunions not achieve the same level of substantial wish to receive consideration for
or the INFUSE TM bone graft for open improvement (as discussed above). products that may be substantially
tibia fractures, the patient populations Response: We agree with Medtronic similar to applications received. Such
both fall into the same DRGs. In that the first proposed criterion has notice would probably occur in January.
addition, we have determined that the some relevance in determining whether Responses would be required by a date
costs associated with the two products products are substantially similar. In certain in advance of the new
are comparable (69 FR 49009). evaluating the application for new technology town hall meeting, and
Therefore, because BMP products have technology add-on payments last year, would include justification of how the
been used in treating both types of we made the determination that, while products meet the ‘‘substantial
fractures included in the same DRGs these products are not identical similarity’’ criteria.
since 2001, we continue to believe that chemically, the products do use the • The new technology town hall
the hospital charge data used in same mechanism of action to achieve meeting should include a discussion of
developing the relative weights reflect the therapeutic outcome. However, we products identified by manufacturers as
the costs of these products. do not agree that the other two criteria ‘‘substantially similar’’ to other
Comment: In our Federal Register recommended by Medtronic are relevant approved products or pending
announcement of the February 23, 2005 considerations for this purpose. As we applications.
new technology town hall meeting, held have discussed above, we believe that • CMS should publish initial findings
on February 23, 2005, we solicited whether cases involving different about ‘‘substantial similarity’’ in the
comments on the issue of when products are assigned to the same DRGs proposed hospital inpatient rule, with
products should be considered is a more relevant consideration than opportunity for public comment.
substantially similar. As a result, whether the products have the same • CMS should publish ultimate
Medtronic recommended several criteria specific indications. In addition, as we findings in the inpatient final rule.
for determining whether two or more have already stated, we continue to Alternatively, Medtronic suggested
products are substantially similar and believe that the hospital charge data that, if a manufacturer identifies a
requested that we apply these criteria in used in developing the relative weights product that may be substantially
determining whether OP–1 and of the relevant DRGs reflect the costs of similar to a technology with an
INFUSE TM are similar for new these products. Furthermore, we do not approved add-on payment, the
technology add-on payment purposes. necessarily agree that considerations manufacturer may choose to submit an
The three criteria recommended by about the degrees of clinical application under the normal deadlines
Medtronic are: improvements offered by different for the add-on payment program.
• The technologies or services in products should enter into decisions Response: We appreciate Medtronic’s
question use the same, or a similar, about whether products are new. We suggestions for evaluating similar
mechanism of action to achieve the have always based our decisions about technologies for new technology add-on
therapeutic outcome. new technology add-on payments on a payment. We have stated on several
• The technologies or services are logical sequence of determinations, occasions that we wish to avoid creating
indicated for use in the same population moving from the newness criterion to situations in which similar products
for the same condition. the cost criterion and finally to the receive different treatment because only
• The technologies or services substantial clinical improvement one manufacturer has submitted an
achieve the same level of substantial criterion. Specifically, we do not make application for new technology add-on
improvement. determinations about substantial payments. As we discussed in the
Medtronic has also argued that, improvement unless a product has September 7, 2001 Federal Register (66
according to its proposed criteria, OP– already been determined to be new and FR 46915), an approval of a new
1 would fail on two of the three to meet the cost criterion. Therefore, we technology for special payment should
proposed tests for substantial similarity: are reluctant to import substantial extend to all technologies that are
• According to Medtronic, the OP–1 clinical improvement considerations substantially similar. Otherwise, our
implant ‘‘arguably’’ uses the same or a into the logical prior decision about payment policy would bestow an
similar mechanism of action to achieve whether technologies are new. advantage to the first applicant to
the therapeutic outcome. Furthermore, while we may sometimes receive approval for a particular new
• OP–1 and INFUSE TM are indicated need to make separate determinations technology.
for use in different population and about whether similar products meet the In addition, we note that commenters
different conditions. According to substantial clinical improvement on the FY 2005 proposed rule placed a
Medtronic, INFUSE TM Bone Graft has criterion, we do not believe that it great deal of emphasis on the fact that
an indication for acute, open tibia would be appropriate to make many manufacturers developing new
fractures only, used within 14 days, and determinations about whether one technologies are not aware of the
is to be used with an intramedullary product or another is clinically superior. existence of the add-on payment
(IM) nail as part of the primary However, we welcome comments while provision or lack the resources to apply
procedure. There is no limitation on the we continue to consider these issues. for add-on payment. Therefore,
number of patients that can receive the Comment: Medtronic suggested commenters on that proposed rule
technology. OP–1 Implant is indicated revisions to the application process that argued that the regulations we have
only for recalcitrant long-bone non- are designed to assist in identifying established are already too stringent and
unions that have failed to heal. The HDE substantially similar products and cumbersome, especially for small
approval also specifies that use of OP– provide the public with opportunity for manufacturers to access the new
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23360 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
technology add-on payment process. instability. It also avoids the inherent the Secretary establish a mechanism to
The proposal by Medtronic would place nephrotoxicity and tachyphylaxis recognize the costs of new medical
further burden on these small associated with aggressive diuretic services or technologies under the
manufacturers, both to know that an therapy, the mainstay of current therapy payment system established under
application has been made for a similar for fluid overload in congestive heart subsection (d) of section 1886, which
product and to make representations on failure. establishes the system for paying for the
a product that may or may not be on the The System 100 consists of: (1) An S– operating costs of inpatient hospital
market. Therefore, we are reluctant to 100 console; (2) a UF 500 blood circuit; services. The system of payment for
adopt a process that places the formal (3) an extended length catheter (ELC); capital costs is established under
burden on a competitor to seek equal and (4) a catheter extension tubing. The section 1886(g) of the Act, which makes
treatment. However, we welcome System 100 is designed to monitor the no mention of any add-on payments for
comments while we continue to extracorporeal blood circuit and to alert a new medical service or technology.
consider these issues. the user to abnormal conditions. Therefore, it is not appropriate to
We note that Medtronic submitted Vascular access is established via the include capital costs in the add-on
data on 236 cases using INFUSE TM for peripheral venous system, and up to 4 payments for a new medical service or
open tibia fractures in the FY 2003 liters of excess fluid can be removed in technology and these costs should also
MedPAR data file, as identified by an 8-hour period. not be considered in evaluating whether
procedure code 79.36 (Reduction, On June 3, 2002, FDA approved the a technology meets the cost criterion.
fracture, open, internal fixation, tibia System 100 for use with peripheral The applicant has applied for add-on
and fibula) and diagnosis codes of either venous access. On November 20, 2003, payments for only the circuits and
823.30 (Fracture of tibia alone, shaft, FDA approved the System 100 for catheter, which represent the operating
open) or 823.32 (Fracture of fibula and expanded use with central venous expenses of the device. However, as
tibia, shaft, open). Medtronic also noted access and catheter extension use for stated in the FY 2005 IPPS final rule, we
that the patients in clinical trials with infusion or withdrawal circuit line with believe that the catheters cannot be
malunion fractures (diagnosis code other commercially applicable venous considered new technology for this
733.81) or nonunion fractures (diagnosis catheters. According to the applicant, device. As a result, we considered only
code 733.82) would also be likely although the FDA first approved System the UF 500 disposable blood circuit as
candidates to receive INFUSE TM. Based 100 in June 2002, it was not used by relevant to the evaluation of the cost
on the data submitted by the applicant, hospitals until August 2002 because of criterion.
INFUSE TM would be used primarily in the substantial amount of time
two different DRGs: 218 and 219 (Lower necessary to market and sell the device The applicant submitted data from the
Extremity and Humerus Procedures to hospitals. The applicant presented FY 2003 MedPAR file in support of its
Except Hip, Foot, Femur Age > 17, With data and evidence demonstrating that application for new technology add-on
and Without CC, respectively). The the System 100 was not marketed until payments for FY 2006. The applicant
analysis performed by the applicant August 2002. used a combination of diagnosis codes
resulted in a case-weighted cost We note the applicant submitted an to determine which cases could
threshold of $24,461 for these DRGs. application for FY 2005 and was denied potentially use the System 100. The
The average case-weighted standardized new technology add-on payments. Our applicant found 28,155 cases with the
charge for cases using INFUSE TM in review indicated that the applicant did following combination of ICD–9-CM
these DRGs would be $39,537. not present sufficient objective clinical diagnosis codes: 428.0 through 428.9
Therefore, the applicant maintains that evidence to determine that the System (Heart Failure), 402.91 (Unspecified
INFUSE TM for open tibia fractures 100 meets the substantial clinical with Heart Failure), or 402.11
meets the cost criterion. improvement criterion (such as a large (Hypertensive Heart Disease with Heart
However, because the costs of prospective, randomized clinical trial) Failure), in combination with 276.6
INFUSE TM and OP–1 are already even though it is indicated for use in (Fluid Overload) and 782.3 (Edema).
reflected in the relevant DRGs, these patients with congestive heart failure, a The 28,155 cases were found among 148
products cannot be considered new. common condition in the Medicare DRGs with 50.1 percent of cases
Therefore, we are proposing to deny population. However, for FY 2006, we mapped across DRGs 88, 89, 127, 277
new technology add-on payments for are proposing to deny System 100 new and 316. The applicant eliminated those
INFUSE TM bone graft for open tibia technology add-on payments on the DRGs with less than 150 cases, which
fractures for FY 2006. basis of our determination that it is no resulted in a total of 22,620 cases that
longer new. Technology is no longer could potentially use the System 100.
b. AquadexTM System 100 Fluid considered new 2 to 3 years after data The case-weighted average standardized
Removal System (System 100) reflecting its costs begin to become charge across all DRGs was $13,619.32.
CHF Solutions, Inc. resubmitted an available. Because data on the costs of The case-weighted threshold across all
application (previously submitted for the System 100 first became available in DRGs was $16,125.42. Although the
consideration for FY 2005) for the 2002, the costs are currently reflected in case-weighted threshold is greater than
approval of the System 100 for new the DRG weights and the device is no the case-weighted standardized charge,
technology add-on payments for FY longer new. it is necessary to include the
2006. The System 100 is designed to The applicant also submitted standardized charge for the circuits used
remove excess fluid (primarily excess information for the cost and substantial in each case. In order to establish the
water) from patients suffering from clinical improvement criteria. As stated charge per circuit, the applicant
severe fluid overload through the last year, it is important to note at the submitted data regarding 76 actual cases
process of ultrafiltration. Fluid outset of the cost analysis that the that used the System 100. Based on
retention, sometimes to an extreme console is reusable and is, therefore, a these 76 cases, the standardized charge
degree, is a common problem for capital cost. Only the circuits and per circuit was $2,591. The applicant
patients with chronic congestive heart catheters are components that represent also stated that an average of two
failure. This technology removes excess operating expenses. Section circuits are used per case. Therefore,
fluid without causing hemodynamic 1886(d)(5)(K)(i) of the Act requires that adding $5,182 for the charge of the two
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23361
circuits to the case-weighted average prior to implantation of the CHARITETM $50,098 for DRG 497 and $41,290 for
standardized charge of $13,619.32 Artificial Disc. Because the device is DRG 498. Using revenue codes 272 and
results in a total case-weighted within the statutory timeframe of 2 to 3 278 from the MedPAR file, the applicant
standardized charge of $18,801.32. This years and data is not yet reflected then subtracted the charges for surgical
amount is greater than the case- within the DRGs, we consider the and medical supplies used in
weighted threshold of $16,125.42. CHARITETM Artificial Disc to meet the connection with spinal fusion
The applicant contended that the newness criterion. procedures, which resulted in a
System 100 represents a substantial We note that an ICD–9–CM code was standardized charge of all other charges
clinical improvement for the following effective October 1, 2004, for IPPS of $24,333 for DRG 497 and $22,183 for
reasons: It removes excess fluid without tracking purposes. The code assigned to DRG 498. Based on the actual cases
the use of diuretics; it does not lead to the CHARITETM was 84.65 (Insertion of above, the applicant then estimated the
electrolyte imbalance, hemodynamic total spinal disc prosthesis, average standardized charge for surgical
instability or worsening renal function; lumbosacral). and medical supplies per case for the
it can restore diuretic responsiveness; it For analysis of the cost criterion, the CHARITETM was $20,033. The applicant
does not adversely affect the renin- applicant submitted two sets of data: estimated that charges have grown by 15
angiotensin system; it reduces length of one that used actual cases and one that percent from FY 2003 to FY 2005 and,
hospital stay for the treatment of used FY 2003 MedPAR cases. The therefore, deflated the average
congestive heart failure, and it requires applicant expects that cases using the standardized charge for surgical and
only peripheral venous access. The CHARITETM will map to DRGs 499 and medical supplies of the CHARITETM by
applicant also noted that there are some 500. The applicant submitted 68 actual 15 percent to $17,420. The applicant
clinical trials that have demonstrated cases from 35 hospitals that used the then added the average standardized
the clinical safety and effectiveness as CHARITETM. Of these 68 cases, only 3 charge for surgical and medical supplies
well as cost effectiveness of the System were Medicare patients; the remaining of the CHARITETM to the standardized
100 in treating patients with fluid cases were privately insured patients or charge of all other charges for DRG 497
overload. patients for whom the payer was and 498 and also inflated the charges by
However, as stated above, we are unknown. Using data from the 68 actual 15 percent in order to update the data
proposing to deny new technology add- cases, the average standardized charge to FY 2005 charge levels. This
on payments for the System 100 because was $40,722. The applicant maintained amounted to a case-weighted average
it does not meet the newness criterion. that this figure is well in excess of the standardized charge of $46,256.
We received no public comments thresholds for DRGs 499 and 500 Although the analysis was completed
regarding this application for add-on (regardless of a case weighted threshold) with DRGs 497 and 498, it is necessary
payments. of $24,828 and $17,299 respectively. to compare the average standardized
c. CHARITETM Artificial Disc Based on this analysis, the applicant
charge to the thresholds of DRGs 499
(CHARITETM) maintained that the CHARITÉTM meets
and 500 because the GROUPER maps
the cost criterion because the average
DePuy SpineTM submitted an these cases to DRGs 499 and 500. As a
standardized charge exceeds the charge
application for new technology add-on result, the case-weighted threshold was
thresholds for DRGs 499 and 500.
payments for the CHARITETM Artificial In addition, as stated above, the $21,480. Similar to the analysis above,
Disc for FY 2006. This device is a applicant submitted cases from the FY the applicant stated that the case-
prosthetic intervertebral disc. DePuy 2003 MedPAR file. The applicant weighted average standardized charge is
SpineTM stated that the CHARITETM searched the MedPAR file for ICD–9– greater than the case-weighted threshold
Artificial Disc is the first artificial disc CM procedure codes 81.06, 81.07, and and, as a result, the applicant
approved for use in the United States. 81.08 in combination with diagnosis maintained that the CHARITETM meets
It is a 3-piece articulating medical codes 722.10, 722.2, 722.5, 722.52, the cost criterion.
device consisting of a sliding core that 722.6, 722.7, 722.73 and 756.12, to The applicant also contended that the
is placed between two metal endplates. identify a patient population that could CHARITETM represents a substantial
The sliding core is made from a medical be eligible for the CHARITETM Artificial clinical improvement over existing
grade plastic and the endplates are Disc and found a total of 12,680 cases. technology. Use of the CHARITETM may
made from medical grade cobalt However, these cases are from the FY eliminate the need for spinal fusion and
chromium alloy. The endplates support 2003 MedPAR file and precede the the use of autogenous bone, and the
the core and have small teeth that are effective date of ICD–9–CM code 84.65 applicant stated that, based on the
secured to the vertebrae above and that is currently used to track the Investigational Device Exemption (IDE)
below the disc space. The sliding core device. Of these 12,680 cases, 55.5 study, ‘‘A Prospective Randomized
fits in between the endplates. percent were reported in DRG 497, and Multicenter Comparison of Artificial
On October 26, 2004, the FDA 44.5 percent were reported in DRG 498. Disc vs. Fusion for Single Level Lumbar
approved the CHARITETM Artificial The applicant stated that cases using the Degenerative Disc Disease’’
Disc for single level spinal arthroplasty CHARITETM device group to the DRGs (Blumenthal, S, et al, National
in skeletally mature patients with for back and neck procedures that American Spine Society 2004 Abstract)
degenerative disc disease (DDD) exclude spinal fusions (DRGs 499 and that patients who received the
between L4 and S1. The FDA further 500). However, the applicant argues that CHARITETM Artificial Disc were
stated that DDD is defined as discogenic the CHARITETM could be a substitute discharged from the hospital after an
back pain with degeneration of the disc for spinal fusion procedures found in average of 3.7 days compared to 4.2
confirmed by patient history and DRGs 497 and 498 and, therefore, used days in the fusion group. Furthermore,
radiographic studies. These DDD cases from these DRGs to evaluate the applicant stated that patients who
patients should have no more than 3 whether the CHARITETM meets the cost received the CHARITETM Artificial Disc
mm of spondylolisthesis at an involved criterion and to argue that procedures had a statistically greater improvement
level. Patients receiving the CHARITETM using the technology should be grouped in Oswetry Disability Index scores and
Artificial Disc should have failed at to the spinal fusion DRGs. The average Visual Analog Scale Pain scores
least 6 months of conservative treatment standardized charge per case was compared to the fusion group at 6 weeks
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23362 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
and 3, 6 and 12 months. The study also the CHARITE TM Artificial Disc would sutured in place during open surgery.
showed greater improvement from be $11,500, the maximum add-on The device is identified using ICD–9–
baseline compared to the fusion group payment for the device would be CM procedure code 39.79 (Other
on the Physical Component Score at 3, $5,750. In the final rule, we will make endovascular repair (of aneurysm) of
6, and 23 months. In addition, the a final determination on whether the other vessels). The applicant has
applicant states that patients receiving CHARITE TM Artificial Disc should requested a unique ICD–9–CM
the CHARITETM Artificial Disc returned receive new technology add-on procedure code.
to normal activities in half the time, payments for FY 2006 based on public At this point the time of the initial
compared to patients who underwent comments and our continuing analyses. application, the FDA hads not yet
fusion, and at the 2 year follow up, 15 We finally note that the applicant approved this technology for general
percent of patients who underwent a requested a DRG reassignment for cases use. Subsequently, however, we were
fusion were dissatisfied with the of the CHARITE TM Artificial Disc from notified that FDA approval was granted
postoperative improvements compared DRGs 499 (Back and Neck Procedures on March 23, 2005. Although we
to 2 percent who received the Except Spinal Fusion With CC) and 500 discuss some of the data submitted with
CHARITETM Artificial Disc. Also, (Back and Neck Procedures Except the application for new technology add-
patients who received the CHARITETM Spinal Fusion Without CC) to DRGs 497 on payments below, we are unable to
Artificial Disc returned to work on (Spinal Fusion Except Cervical With include a detailed analysis of cost data
average of 12.3 weeks after surgery CC) and 498 (Spinal Fusion Except and substantial clinical improvement
compared to 16.3 weeks after Cervical Without CC). The applicant data in this proposed rule because FDA
circumferential fusion and 14.4 weeks argued that the costs associated with an approval occurred too late for us to
with Bagby and Kuslich cages. The artificial disc surgery are similar to conduct a complete analysis.
applicant finally stated that the motion spinal fusion and inclusion in DRGs 497 The applicant submitted cost
preserving technology of the and 498 would obviate the need to make threshold information for the GORE
CHARITETM Artificial Disc may reduce a new technology add-on payment. On TAG device. According to the
the risk of increase of degenerative disc October 1, 2004, we created new codes manufacturer, cases using the GORE
disease (DDD). The applicant explained for the insertion of spinal disc TAG device would fall into DRGs 110
that degeneration of adjacent discs due prostheses (codes 84.60 through 84.69). and 111 (Major Cardiovascular
to increased stress has been strongly In the FY 2005 IPPS proposed rule and Procedures With and Without CC,
associated with spinal fusion utilizing the final rule, we described the new respectively). The applicant identified
instrumentation. In a followup of 100 DRG assignments for these new codes in 185 cases in the FY 2003 MedPAR using
patients (minimum 10 years) who Table 6B of the Addendum to the rules. procedure code 39.79 (Other
received the CHARITETM Artificial Disc, We received a number of comments endovascular repair (of aneurysm) of
the incidence of adjacent level DDD was recommending that we change the DRG other vessels) and primary diagnosis
2 percent. assignments from DRGs 499 and 500 in codes 441.2 (Thoracic aneurysm,
We are continuing to review the MDC 8 to the DRGs for spinal fusion without mention of rupture), 441.1
information on whether the (DRGs 497 and 498). In the FY 2005 (Thoracic aneurysm, ruptured), or
CHARITE TM Artificial Disc would IPPS final rule (69 FR 48938), we 441.01 (Dissection of aorta, thoracic).
appear to represent a substantial clinical indicated that DRGs 497 and 498 are The case-weighted standardized charge
improvement over existing technology limited to spinal fusion procedures. for 177 of these cases was $60,905.
for certain patient populations. Based Because the surgery involving the According to the manufacturer, the case-
on the studies submitted to the FDA and CHARITE TM is not a spinal fusion, we weighted cost threshold for these DRGs
CMS, we remain concerned that the decided not to include this procedure in is $49,817. Based on this analysis, the
information presented may not these DRGs. However, we will continue manufacturer maintained that the
definitively substantiate whether the to analyze this issue and are interested technology meets our cost threshold.
CHARITE TM Artificial Disc is a in public comments on both the new The manufacturer argued that the
substantial clinical improvement over technology application for the GORE TAG represents a substantial
spinal fusion. In addition, we are CHARITE TM and the DRG assignment clinical improvement over existing
concerned that the cited IDE study for spinal disc prostheses. technology, primarily by avoiding the
enrolled no patients over 60 years of We received no public comments traditional open aneurysm repair
age, which excludes much of the regarding this application for new procedure with its associated high
Medicare population, and we are technology add-on payments. morbidity and mortality. The applicant
concerned that the device is argued that a descending thoracic aorta
d. Endovascular Graft Repair of the aneurysm is a potentially life
contraindicated in patients with
Thoracic Aorta threatening condition that currently
‘‘significant osteoporosis,’’ which is
quite common in the Medicare Endovascular stent-grafting of the requires a major operative procedure for
population. We invite comment on both descending thoracic aorta (TA) provides its treatment. The mortality and
of these points and on the more general a less invasive alternative to the complication rates associated with this
question of whether the device satisfies traditional open surgical approach surgery are very high, and the surgery is
the substantial clinical improvement required for the management of frequently performed under urgent or
criterion. descending thoracic aortic aneurysms. emergent conditions. The applicant
Despite the issues mentioned above, W.L. Gore & Associates, Inc. submitted noted that such complications can
we are still considering whether it is an application for consideration of its increase the length of the hospital stay
appropriate to approve new technology Endovascular Graft Repair of the and can include neurological damage,
add-on payment status for the Thoracic Aorta (GORE TAG) for new paralysis, renal failure, pulmonary
CHARITE TM Artificial Disc for FY 2006. technology add-on payments for FY emboli, hemorrhage, and sepsis. The
If approved for add-on payments, the 2006. The GORE TAG device is a average time for patients undergoing
device would be reimbursed up to half tubular stent-graft mounted on a surgical repair to return to normal
of the costs for the device. Because the catheter-based delivery system, and it activity is 3 to 4 months, but can be
manufacturer has stated that the cost for replaces the synthetic graft normally significantly longer.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23363
In comparison, the applicant argued FR 46915), an approval of a new (Advanced Bionics’ Precision
that endovascular stent-grafting done technology for special payment should Rechargeable Neurostimulator was
with the GORE TAG thoracic extend to all technologies that are approved by the FDA on April 27,
endoprosthesis is minimally invasive. substantially similar. Otherwise, our 2004.)
The manufacturer noted that patients payment policy would bestow an Medtronic Neurological also provided
treated with the endovascular technique advantage to the first applicant to data to determine whether the Restore
experience far less aneurysm-related receive approval for a particular new Rechargeable Implantable
mortality and morbidity, compared to technology. In this case, we will Neurostimulator meets the cost
those patients that receive the open determine whether the GORE TAG criterion. Medtronic Neurological stated
procedure resulting in reduced overall device qualifies for new technology add- that the cases involving use of the
length-of-stay, less intensive care unit on payments in the FY 2006 final rule. device would primarily fall into DRGs
days and less operative complications. In the event that this technology 499, 500, 531 and 532, which have a
We received the following public satisfies all the criteria, we would case-weighted threshold of $24,090. The
comments, in accordance with section extend new technology payments to any manufacturer stated that the anticipated
503(b)(2) of Pub. L. 108–173, regarding substantially similar technology that average standardized charge per case
this application for add-on payments. also receives FDA approval prior to involving the Restore technology is
Comment: Several commenters publication of the FY 2006 final rule. $59,265. This manufacturer derived this
expressed support for approval of new We welcome comments regarding this estimate by identifying cases in the FY
technology add-on payments for the technology in light of its recent FDA 2003 MedPAR that reported procedure
GORE TAG device. These commenters approval, particularly with regard to the code 03.93 (Insertion or replacement of
noted that the data presented to the FDA cost threshold and the substantial spinal neurostimulators). The
advisory panel for consideration for clinical improvement criteria. manufacturer then added the total cost
FDA approval of the device clearly of the Restore Rechargeable
demonstrate the safety and efficacy of e. Restore Rechargeable Implantable Implantable Neurostimulator to the
the GORE TAG device. They also noted Neurostimulator average standardized charges for those
that nearly 200 patients have been Medtronic Neurological submitted an cases. Of the applicable charges for the
treated with the endografts, with a application for new technology add-on Restore Rechargeable Implantable
highly significant difference in both payments for its Restore Rechargeable Neurostimulator, only the components
postoperative mortality and a reduction Implantable Neurostimulator. The that the applicant identified as new
in the incidence of spinal cord ischemic Restore Rechargeable Implantable would be eligible for new technology
complications, with some commenters Neurostimulator is designed to deliver add-on payments. Medtronic
noting the trial results, which showed a electrical stimulation to the spinal cord Neurological submitted information that
reduction in the rate of paraplegia from for treatment of chronic, intractable distinguished the old and new
14 percent to 3 percent, compared to pain. components of the device and submitted
open surgery. The commenters also Neurostimulation is designed to data indicating that the neurostimulator
stressed the rigorous nature of the open deliver electrical stimulation to the itself is $17,995 and the patient
surgery, which requires a left lateral spinal cord to block the sensation of recharger, antenna, and belt are $3,140.
thoracotomy, resulting in significant pain. The current technology standard Thus, the total cost for new components
morbidity. The commenters further for neurostimulators utilizes internal would be $21,135, with a maximum
argued that, since many of the patients sealed batteries as the power source to add-on amount of $10,568 if the product
with degenerative aneurysm of the generate the electrical current. These were to be approved for new technology
thoracic aorta are elderly or present internal batteries have finite lives, and payments.
with significant comorbidities, or both, require replacement when their power We note that we reviewed a
it is ‘‘a common circumstance in clinical has been completely discharged. technology for add-on payments for FY
practice to deny repair to such patients According to the manufacturer, the 2003 called RenewTM Radio Frequency
because of the magnitude of the Restore Rechargeable Implantable Spinal Cord Stimulation (SCS) Therapy,
conventional open surgery.’’ Other Neurostimulator ‘‘represents the next made by Advanced Neuromodulation
commenters stated that the 5-year generation of neurostimulator Systems (ANS). In the FY 2003 final
mortality in all patients diagnosed with technology, allowing the physician to rule, we discussed and subsequently
thoracic aortic aneurysm is as high as 80 set the voltage parameters in such a way denied an application for new
percent in some groups of patients. that fully meets the patient’s technology add-on payment for
Therefore, the commenters argued, the requirements to achieve adequate pain RenewTM SCS because ‘‘RenewTM SCS
GORE TAG device for thoracic aortic relief without fear of premature was introduced in July 1999 as a device
aneurysm satisfies the criteria for depletion of the battery.’’ The applicant for the treatment of chronic intractable
substantial clinical improvement. stated that the expected life of the pain of the trunk and limbs.’’ (67 FR
Response: We appreciate the Restore rechargeable battery is 9 years, 50019) We also noted, ‘‘[t]his system
commenters’ input on this criterion. We compared to an average life of 3 years only requires one surgical placement
will consider these comments regarding for conventional neurostimulator and does not require additional
the substantial clinical improvement batteries. The applicant stated that this surgeries to replace batteries as do other
criterion in the final rule if we represents a significant clinical internal SCS systems.’’
determine that the technology meets the improvement because patients can use The applicant also stated in its
other two criteria. any power settings that are necessary to application for Restore that cases
Comment: A representative of another achieve pain relief with less concern for where it is used will be identified by
device manufacturer stated at the town battery depletion and subsequent ICD–9–CM procedure code 03.93
hall meeting that the manufacturer has battery replacement. (Insertion or replacement of spinal
a similar product awaiting FDA This device has not yet received neurostimulators). As we discussed in
approval. approval for use by the FDA; however, the FY 2003 final rule (67 FR 50019),
Response: As we discussed in the another manufacturer has received the RenewTM SCS is identified by the
September 7, 2001 Federal Register (66 approval for a similar device. same ICD–9–CM procedure code. The
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23364 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
applicant has also applied for a new We received no public comments from two hospitals. Of these 27 cases,
ICD–9–CM code for rechargeable regarding this application for add-on 25.1 percent of the cases were reported
neurostimulator pulse generator (We payments. in DRGs 24 (Seizure and Headache Age
refer readers to Tables 6A through 6H in >17 With CC), 107 (Coronary Bypass
f. Safe-Cross Radio Frequency Total
the Addendum to this proposed rule for With Cardiac Catheterization), 125
Occlusion Crossing System (Safe-
information regarding ICD–9–CM Cross) (Circulatory Disorders Except AMI,
codes.) Because both technologies are With Cardiac Catheterization and
similar, we asked Medtronic to provide Intraluminal Therapeutics submitted Without Complex Diagnosis), 518
information that would demonstrate an application for the Safe Cross Radio (Percutaneous Cardiovascular Procedure
how the products were substantially Frequency (RF) Total Occlusion Without Coronary Artery Stent or AMI),
Crossing System. This device performs and 526 (Percutaneous Cardiovascular
different. The applicant noted that the
the function of a guidewire during Procedure With Drug-Eluting Stent With
RenewTM SCS, while programmable and
percutaneous transluminal angioplasty AMI); and 74.9 percent were reported in
rechargeable, is not a good option for
of chronic total occlusions of peripheral DRG 527 (Percutaneous Cardiovascular
those patients who have high energy and coronary arteries. Using fiberoptic
requirements because of chronic Procedure With Drug-Eluting Stent
guidance and radiofrequency ablation, it Without AMI). This resulted in a case-
intractable pain that will result in more is able to cross lesions where a standard
battery wear and subsequent surgery to weighted threshold of $35,956 and a
guidewire is unsuccessful. On case-weighted average standardized
replace the device. Both systems rely on November 21, 2003, the FDA approved
rechargeable batteries, and in the case of charge of $40,319. Because the case-
the Safe Cross for use in iliac and weighted average standardized charge is
RenewTM SCS the energy is transmitted superficial femoral arteries. The device
through the skin from a radiofrequency greater than the case-weighted
was approved by the FDA for all native threshold, the applicant maintained that
source for the purpose of recharging. peripheral arteries except carotids in
The manufacturer of the Restore device the Safe Cross meets the cost criterion.
August 2004. In January 2004, the FDA
contends that it is superior to the approved the Safe Cross for coronary The applicant also submitted cases
RenewTM device because RenewTM arteries as well. Because the device is from the FY 2003 MedPAR. The
requires an external component that within the statutory timeframe of 2 to 3 applicant found a total of 1,274,535
uses a skin adhesive that is years for all approved uses and data cases that could be eligible for the Safe
uncomfortable and inconvenient (causes regarding the cost of this device are not Cross using diagnosis codes 411
skin irritation, is affected by moisture yet reflected within the DRG weights, through 411.89 (Other acute and
that will come from bathing, sweating, we consider the Safe Cross to meet the subacute forms of ischemic heart
swimming, etc.), leading to patient newness criterion. disease) or 414 through 414.19 (Other
noncompliance. We note that the applicant submitted forms of chronic ischemic heart disease)
an application for a distinctive ICD–9– in combination with any of the
Because FDA approval has not yet following procedure codes: 36.01
been received for this device, we are CM code. The applicant noted in its
application that the device is currently (Single vessel percutaneous
making no decision concerning the transluminal coronary angioplasty
coded with ICD–9–CM procedure codes
Restore application at this time. We (PTCA) or coronary atherectomy
36.09 (Other removal of coronary artery
will make a formal determination if without mention of thrombolytic agent),
obstruction) and 39.50 (Angioplasty or
FDA approval occurs in sufficient time 36.02 (Single vessel PTCA or coronary
atherectomy of other noncoronary
for full consideration in the final FY vessels). atherectomy with mention of
2006 rule. However, we have As we stated in last year’s final rule, thrombolytic agent), 36.05 (Multiple
reservations about whether this section 1886(d)(5)(K)(i) of the Act vessel PTCA or coronary atherectomy
technology is new for purposes of the requires that the Secretary establish a performed during the same operation
new technology add-on payments mechanism to recognize the costs of with or without mention of
because of its similarity to other new medical services or technologies thrombolytic agent), 36.06 (Insertion of
products that are also used to treat the under the payment system established nondrug-eluting coronary artery
same conditions. Although we recognize under subsection (d) of section 1886, stent(s)), 36.07 (Insertion of drug-eluting
the benefits of a more easily which establishes the system for paying coronary artery stent(s)) and 36.09
rechargeable neurostimulator system, for the operating costs of inpatient (Other removal of coronary artery
we believe that the Restore device may hospital services. The system of obstruction). A total of 59.40 percent of
not be sufficiently different from payment for capital costs is established these cases fell into DRG 517
predecessor devices to meet the under section 1886(g) of the Act, which (Percutaneous Cardiovascular Procedure
newness criterion for the new makes no mention of any add-on With Nondrug-Eluting Stent Without
technology add-on payment. As we payments for a new medical service or AMI), 16.4 percent of cases into DRG
discussed above, similar products have technology. Therefore, it is not 516 (Percutaneous Cardiovascular
been on the market since 1999. appropriate to include capital costs in Procedure With AMI), and 16.2 percent
Therefore, these technologies are the add-on payments for a new medical of cases into DRG 527, while the rest of
already represented in the DRG weights service or technology, and these costs the cases fell into the remaining DRGs
and are not considered new for the should not be considered in evaluating 124, 518 and 526. The average case-
purposes of the new technology add-on whether a technology meets the cost weighted standardized charge per case
payment provision. We welcome criterion. As a result, we consider only was $40,318. This amount included an
comments on this issue, specifically the Safe Cross crossing wire, ground extra $6,000 for the charges related to
regarding how the Restore device may pad, and accessories to be operating the Safe Cross. The case-weighed
or may not be significantly different equipment that is relevant to the threshold across the DRGs mentioned
from previous devices. We also seek evaluation of the cost criterion. above was $35,955. Similar to the
comments on whether the product The applicant submitted the following analysis above, because the case-
meets the cost and significant two analyses on the cost criterion. The weighted average standardized charge is
improvement criteria. first analysis contained 27 actual cases greater than the case-weighted
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23365
threshold, the applicant maintained that available treatments. Some examples of rather than metal-on-plastic or metal-on-
the Safe Cross meets the cost criterion. outcomes that are frequently evaluated metal. Alumina ceramic is the hardest
The applicant maintained that the in studies of medical devices are the material next to diamond. The Trident
device meets the substantial clinical following: System is a patented design that
improvement criterion. The applicant —Reduced mortality rate with use of the captures the ceramic insert in a titanium
explained that many traditional device. sleeve. This design increases the
guidewires fail to cross a total arterial —Reduced rate of device-related strength of the ceramic insert by 50
occlusion due to difficulty in navigating complications. percent over other designs. The
the vessel and to the fibrotic nature of —Decreased rate of subsequent manufacturer stated that the alumina
the obstructing plaque. By using diagnostic or therapeutic ceramic bearing of the device is a
fiberoptic guidance and radiofrequency interventions (for example, due to substantial clinical improvement
ablation, the Safe Cross succeeds reduced rate of recurrence of the because it is extremely hard and scratch
where standard guidewires fail. The disease process). resistant, has a low coefficient of
applicant further maintained that in —Decreased number of future friction and excellent wear resistance,
clinical trials where traditional hospitalizations or physician visits. has improved lubrication over metal or
guidewires failed, the Safe Cross —More rapid beneficial resolution of polyethylene, has no potential for metal
succeeded in 54 percent of cases of the disease process treatment because ion release, and has less alumina
coronary artery chronic total occlusions of the use of the device. particle debris. The manufacturer also
(CTOs), and in 76 percent of cases of —Decreased pain, bleeding, or other stated that fewer hip revisions are
peripheral artery CTOs. quantifiable symptom. needed when this product is used (2.7
However, we note that we use similar percent of ceramic versus 7.5 percent for
—Reduced recovery time.
standards to evaluate substantial polyethylene). Stryker stated that the
clinical improvement in the IPPS and In a letter to the applicant dated
ceramic implant also causes less
OPPS. The IPPS regulations provide that October 25, 2004, we denied approval of
osteolysis (or bone loss from particulate
technology may be approved for add-on the Safe Cross for pass-through debris). Due to these improvements over
payments when it ‘‘represents an payments for the OPPS on the basis that traditional hip implants, the
advance in medical technology that the technology did not meet the manufacturer stated the Trident
substantially improves, relative to substantial clinical improvement Ceramic Acetabular System has
technologies previously available, the criterion. In particular, we found that demonstrated significantly lower wear
diagnosis or treatment of Medicare studies failed to show long-term or versus the conventional plastic/metal
beneficiaries’’ (66 FR 46912). Under the intermediate-term results, and the system in the laboratory; therefore, it is
OPPS, the standard for approval of new device had a relatively low rate of anticipated that these improved wear
devices is ‘‘a substantial improvement in successfully opening occlusions. Since characteristics will extend the life of the
medical benefits for Medicare that initial determination, the applicant implant.
beneficiaries compared to the benefits has requested reconsideration for pass- The Trident Ceramic Acetabular
obtained by devices in previously through payments under the IPPS. System received FDA approval in
established (that is, existing or However, on the basis of the original February 3, 2003. However, this product
previously existing) categories or other findings under the OPPS, we do not was not available on the market until
available treatments’’ (67 FR 66782). now believe that the technology can April 2003. The period that technologies
Furthermore, the OPPS and IPPS qualify for new technology add-on are eligible to receive new technology
employ identical language (for IPPS, see payments under the IPPS. Therefore, we add-on payment is no less than 2 years
66 FR 46914, and for OPPS, see 67 FR are proposing to deny new technology but not more than 3 years from the point
66782) to explain and elaborate on the add-on payment for FY 2006 for Safe the product comes on the market. At
kinds of considerations that are taken Cross on the grounds that it does not this point, we begin to collect charges
into account in determining whether a appear to be a substantial clinical reflecting the cost of the device in the
new technology represents substantial improvement over existing technologies. MedPAR data. Because the device
improvement. In both systems, we We welcome further information on became available on the market in April
employ the following kinds of whether this device meets the 2003, charges reflecting the cost of the
considerations in evaluating particular substantial clinical improvement device may have been included in the
requests for special payment for new criterion, and we will consider any data used to calculate the DRG weights
technology: further information prior to making our in FY 2005 and the proposed DRG
• The device offers a treatment option final determination in the final rule. weights for FY 2006. Therefore, the
for a patient population unresponsive We received no public comments technology may no longer be considered
to, or ineligible for, currently available regarding this application for add-on new for the purposes of new technology
treatments. payments. add-on payments. For this reason, we
• The device offers the ability to are proposing to deny add-on payments
g. Trident Ceramic Acetabular System
diagnose a medical condition in a for the Trident Ceramic Acetabular
patient population where that medical Stryker Orthopaedics submitted an System for FY 2006.
condition is currently undetectable or application for new technology add-on Although we are proposing not to
offers the ability to diagnose a medical payments for the Trident Ceramic approve this application because the
condition earlier in a patient population Acetabular System. This system is used Trident Ceramic Acetabular System
than allowed by currently available to replace the ‘‘ball and socket’’ joint of does not meet the newness criterion, we
methods. There must also be evidence a hip when a total hip replacement is note that the applicant submitted
that use of the device to make a performed for patients suffering from information on the cost and substantial
diagnosis affects the management of the arthritis or related conditions. The clinical improvement criteria.
patient. applicant stated that, unlike The applicant submitted cost
• Use of the device significantly conventional hip replacement systems, threshold information for the Trident
improves clinical outcomes for a patient the Trident system utilizes alumina Ceramic Acetabular System, stating that
population as compared to currently ceramic-on-ceramic bearing surfaces cases using the system would be
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23366 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
included in DRG 209 (Major Joint and all other replacements and attachment working closely with CMS to review
Limb Reattachment Procedures of Lower procedures in a separate, new DRG. We this decision upon FDA approval.
Extremity). The manufacturer indicated also stated that we will be reviewing Because the device is neither FDA-
that there is not an ICD–9–CM code these DRGs based on new procedure approved nor Medicare-covered, we do
specific to ceramic hip arthroplasty, but codes that will provide more detailed not believe it is appropriate to present
it is currently reported using code 81.51 data on the specific nature of the our full analysis on whether the
(Total hip replacement). Of the revision procedures performed. In technology meets the individual criteria
applicable charges for the Trident addition, we are creating new procedure for the new technology add-on payment.
Ceramic Acetabular System, only the codes that will identify the type of However, we note that the applicant did
components that the applicant bearing surface of a hip replacement. As submit the following information below
identified as new would be eligible for we obtain data from these new codes, on the cost criterion and substantial
new technology add-on payments. The we will consider additional DRG clinical improvement criterion.
estimated cost of the new portions of the revisions to better capture the various The manufacturer submitted data
device, according to the information types of joint procedures. We may from MedPAR and non-MedPAR
provided in the application, is $6,009. consider a future restructuring of the databases. The non-MedPAR data was
The charge threshold for DRG 209 is joint replacement and revision DRGs from the 2003 patient discharge data
$34,195. The data submitted by Stryker that would better capture the higher from California’s Office of Statewide
Orthopaedics showed an average costs of products that offer greater Health Planning and Development
standardized charge, assuming a 28 durability, extended life, and improved database for hospitals in California and
percent implant markup, of $34,230. outcomes. In doing so, of course, we from the 2003 patient data from
Regarding the issue of substantial may need to create additional, more Florida’s Agency for Health Care
clinical improvement, we recognize that precise ICD–9–CM codes. We welcome Administration for hospitals in Florida.
the Trident Ceramic Acetabular comments on this issue, and generally The applicant identified cases that had
System represents an incremental on whether the Trident Ceramic a diagnosis code of 437.0 (Cerebral
advance in prosthetic hip technology. Acetabular System meets the criteria to atherosclerosis), 437.1 (Other
However, we also recognize that there qualify for new technology add-on generalized ischemic cerebrovascular
are a number of other new prostheses payments. disease) or 437.9 (Unspecified) or any
available that utilize a variety of bearing diagnosis code that begins with the
surface materials that also offer h. Wingspan TM Stent System with
Gateway TM PTA Balloon Catheter prefix of 434 (Occlusion of cerebral
increased longevity and decreased wear.
Boston Scientific submitted an arteries) in combination with procedure
For this reason, we do not believe that
code 39.50 (Angioplasty or atherectomy
the Trident system has demonstrated application for the Wingspan TM Stent
System with Gateway TM PTA Balloon of noncoronary vessel) or procedure
itself to be a clearly superior new
Catheter for new technology add-on code 39.90 (Insertion of nondrug-
technology.
We received the following public payments. The device is designed for eluting, noncoronary artery stents). The
comments, in accordance with section the treatment of patients with applicant used procedure codes 39.50
503(b)(2) of Pub. L. 108–173, regarding intracranial atherosclerotic disease who and 39.90 because procedure codes
this application for add-on payments. suffer from recurrent stroke despite 00.62 and 00.65 were not available until
Comment: One commenter noted that medical management. The device FY 2005. The applicant found cases in
clinical outcomes for the Trident consists of the following: a self- DRG 5 (Extracranial Vascular
Ceramic Acetabular System are not a expanding nitinol stent, a multilumen Procedures) (which previously existed
significant clinical improvement over over the wire delivery catheter, and a under the Medicare IPPS DRG system
similar devices on the market. A Gateway PTA Balloon Catheter. The prior to a DRG split) and in DRGs 533
member of the orthopedic community device is used to treat stenoses that (Extracranial Procedure with CC) and
noted at the new technology town hall occur in the intracranial vessels. Prior to 534 (Extracranial Procedure Without
meeting that this system is not the only stent placement, the Gateway PTA CC). Even though DRG 5 was split into
new product that promises significantly Balloon is inflated to dilate the target DRGs 533 and 534 in FY 2003, some
improved results because of lesion, and then the stent is deployed hospitals continued to use DRG 5 for
enhancements to materials and design. across the lesion to restore and maintain non-Medicare cases. The applicant
This commenter suggested that it may luminal patency. Effective October 1, found 22 cases that had an intracranial
be inappropriate to recognize only one 2004, two new ICD–9–CM procedure PTA with a stent. The average
of these new hip replacement products codes were created to code intracranial (nonstandardized) charge per case was
for new technology add-on payments. angioplasty and intracranial stenting $78,363.
Response: We appreciate the procedures: procedure codes 00.62 The applicant also submitted data
commenter’s input on this criterion. We (Percutaneous angioplasty or from the FY 2002 and FY 2003 MedPAR
will consider these comments regarding atherectomy of intracranial vessels) and files. Using the latest data from the FY
the substantial clinical improvement 00.65 (Percutaneous insertion of 2003 MedPAR and the same
criterion. However, based on the intracranial vascular stents). combination of diagnosis and procedure
observations provided at the town hall On January 9, 2004, the FDA codes mentioned above to identify cases
meeting, we are considering alternative designated the Wingspan TM as a of intracranial PTA with stenting, the
methods of recognizing technological Humanitarian Use Designation (HUD). applicant found 116 cases in DRG 533
improvements in this area other than The manufacturer has also applied for and 20 cases in DRG 534. The case-
approving only one of these new Humanitarian Device Exemption (HDE) weighted average standardized charge
technologies for add-on payments. For status and expects approval from the per case was $51,173. The average case-
example, as discussed in section FDA in July 2005. It is important to note weighted threshold was $25,394. Based
II.B.6.a. of the preamble to this proposed that currently CMS has a noncoverage on this analysis, the applicant
rule, we are proposing to split DRG 209 policy for percutaneous transluminal maintained that the technology meets
to create a new DRG for revisions of hip angioplasty to treat lesions of the cost criteria since the average case-
and knee replacements. We would leave intracranial vessels. The applicant is weighted standardized charge per case
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23367
is greater than the average case- As discussed below in section III.G. of deemed ‘‘Outside CBSAs.’’ In the past,
weighted threshold. this preamble, we also take into account OMB defined MSAs around areas with
The applicant also maintained that the geographic reclassification of a minimum core population of 50,000,
the technology meets the substantial hospitals in accordance with sections and smaller areas were ‘‘Outside MSAs.’’
clinical improvement criterion. 1886(d)(8)(B) and 1886(d)(10) of the Act The general concept of the CBSAs is
Currently, there is no available surgical when calculating the wage index. Under that of an area containing a recognized
or medical treatment for recurrent stroke section 1886(d)(8)(D) of the Act, the population nucleus and adjacent
that occurs despite optimal medical Secretary is required to adjust the communities that have a high degree of
management. The Wingspan TM is the standardized amounts so as to ensure integration with that nucleus. The
first commercially available PTA/stent that aggregate payments under the IPPS purpose of the standards is to provide
system designed specifically for the after implementation of the provisions nationally consistent definitions for
intracranial vasculature. However, of sections 1886(d)(8)(B) and (C) and collecting, tabulating, and publishing
because the Wingspan TM does not have 1886(d)(10) of the Act are equal to the Federal statistics for a set of geographic
FDA approval or Medicare coverage, as aggregate prospective payments that areas. CBSAs include adjacent counties
stated above, we are proposing to deny would have been made absent these that have a minimum of 25 percent
add-on payment for this new provisions. The proposed budget commuting to the central counties of the
technology. neutrality adjustment for FY 2006 is area. (This is an increase over the
discussed in section II.B. of the minimum commuting threshold of 15
We received no public comments Addendum to this proposed rule. percent for outlying counties applied in
regarding this application for add-on Section 1886(d)(3)(E) of the Act also the previous MSA definition.)
payments. provides for the collection of data every The new CBSAs established by OMB
III. Proposed Changes to the Hospital 3 years on the occupational mix of comprised MSAs and the new
Wage Index employees for short-term, acute care Micropolitan Areas based on Census
hospitals participating in the Medicare 2000 data. (A copy of the announcement
A. Background program, in order to construct an may be obtained at the following
Section 1886(d)(3)(E) of the Act occupational mix adjustment to the Internet address: http://
requires that, as part of the methodology wage index. A discussion of the www.whitehouse.gov/omb/bulletins/
for determining prospective payments to proposed occupational mix adjustment fy04/b04–03.html.) The definitions
hospitals, the Secretary must adjust the that we are proposing to apply recognize 49 new MSAs and 565 new
standardized amounts ‘‘for area beginning October 1, 2005 (the proposed Micropolitan Areas, and extensively
differences in hospital wage levels by a FY 2006 wage index) appears under revised the composition of many of the
section III.C. of this preamble. existing MSAs.
factor (established by the Secretary)
The new area designations resulted in
reflecting the relative hospital wage B. Core-Based Statistical Areas Used for a higher wage index for some areas and
level in the geographic area of the the Proposed Hospital Wage Index lower wage index for others. Further,
hospital compared to the national (If you choose to comment on issues some hospitals that were previously
average hospital wage level.’’ In in this section, please include the classified as urban are now in rural
accordance with the broad discretion caption ‘‘CBSAs’’ at the beginning of areas. Given the significant payment
conferred under the Act, we currently your comment.) impacts upon some hospitals because of
define hospital labor market areas based The wage index is calculated and these changes, we provided a transition
on the definitions of statistical areas assigned to hospitals on the basis of the period to the new labor market areas in
established by the Office of Management labor market area in which the hospital the FY 2005 IPPS final rule (69 FR
and Budget (OMB). A discussion of the is located. In accordance with the broad 49027 through 49034). As part of that
proposed FY 2006 hospital wage index discretion under section 1886(d)(3)(E) of transition, we allowed urban hospitals
based on the statistical areas, including the Act, beginning with FY 2005, we that became rural under the new
OMB’s revised definitions of define hospital labor market areas based definitions to maintain their assignment
Metropolitan Areas, appears under on the Core-Based Statistical Areas to the Metropolitan Statistical Area
section III.B. of this preamble. (CBSAs) established by OMB and (MSA) where they were previously
Beginning October 1, 1993, section announced in December 2003 (69 FR located for the 3-year period of FY 2005,
1886(d)(3)(E) of the Act requires that we 49027). OMB defines a CBSA, beginning FY 2006, and FY 2007. Specifically,
update the wage index annually. in 2003, as ‘‘a geographic entity these hospitals were assigned the wage
Furthermore, this section provides that associated with at least one core of index of the urban area to which they
the Secretary base the update on a 10,000 or more population, plus previously belonged. (For purposes of
survey of wages and wage-related costs adjacent territory that has a high degree wage index computation, the wage data
of short-term, acute care hospitals. The of social and economic integration with of these hospitals remained assigned to
survey should measure the earnings and the core as measured by commuting the statewide rural area in which they
paid hours of employment by ties.’’ The standards designate and are located.) The hospitals receiving this
occupational category, and must define two categories of CBSAs: transition will not be considered urban
exclude the wages and wage-related Metropolitan Statistical Areas (MSAs) hospitals; rather they will maintain their
costs incurred in furnishing skilled and Micropolitan Statistical Areas (65 status as rural hospitals. Thus, the
nursing services. This provision also FR 82235). hospital would not be eligible, for
requires us to make any updates or According to OMB, MSAs are based example, for a large urban add-on
adjustments to the wage index in a on urbanized areas of 50,000 or more payment under the capital PPS. In other
manner that ensures that aggregate population, and Micropolitan Statistical words, it is the wage index, but not the
payments to hospitals are not affected Areas (referred to in this discussion as urban or rural status, of these hospitals
by the change in the wage index. The Micropolitan Areas) are based on urban that is being affected by this transition.
proposed adjustment for FY 2006 is clusters with a population of at least The higher wage indices that these
discussed in section II.B. of the 10,000 but less than 50,000. Counties hospitals are receiving are also being
Addendum to this proposed rule. that do not fall within CBSAs are taken into consideration in determining
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23368 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
whether they qualify for the out- due to the new definitions, including associated with these choices reflect
commuting adjustment discussed in providers who were reclassifying under hospital management decisions rather
section III.I. of this preamble and the MGCRB requirements, section than geographic differences in the costs
amount of any adjustment. 1886(d)(8)(B) of the Act, or section 508 of labor.
FY 2006 will be the second year of of Pub. L. 108–173. In the FY 2005 IPPS
1. Development of Data for the Proposed
this transition period. We will continue final rule (69 FR 49027 through 49033),
Occupational Mix Adjustment
to assign the wage index for the urban we described the determination of this
area in which the hospital was blend in detail. We noted that this blend In the FY 2005 IPPS final rule (69 FR
previously located through FY 2007. In would not prevent a decrease in wage 49034), we discussed in detail the data
order to ensure this provision remains index due to any reason other than we used to calculate the occupational
budget neutral, we will continue to adoption of CBSAs, nor did it apply to mix adjustment to the FY 2005 wage
adjust the standardized amount by a hospitals that benefited from a higher index. For the FY 2006 wage index, we
transition budget neutrality factor to wage index due to the new labor market are proposing to use the same CMS
account for these hospitals. Doing so is definitions. Wage Index Occupational Mix Survey
consistent with the requirement of Consistent with the FY 2005 IPPS and Bureau of Labor Statistics (BLS)
section 1886(d)(3)(E) of the Act that any final rule, we are proposing that data that we used for the FY 2005 wage
‘‘adjustments or updates [to the hospitals receive 100 percent of their index, with two exceptions. The CMS
adjustment for different area wage wage index based upon the new CBSA survey requires hospitals to report the
levels] * * * shall be made in a manner configurations beginning in FY 2006. number of total paid hours for directly
that assures that aggregate payments Specifically, we will determine for each hired and contract employees in
* * * are not greater or less than those hospital a new wage index employing occupations that provide the following
that would have been made in the year wage index data from FY 2002 hospital services: nursing, physical therapy,
without such adjustment.’’ cost reports and using the CBSA labor occupational therapy, respiratory
Beginning in FY 2008, these hospitals market definitions. therapy, medical and clinical laboratory,
will receive their statewide rural wage dietary, and pharmacy. These services
index, although they will be eligible to C. Proposed Occupational Mix each include several standard
apply for reclassification by the Adjustment to FY 2006 Index occupational classifications (SOCs), as
MGCRB, both during this transition (If you choose to comment on issues defined by the BLS’ Occupational
period as well as in subsequent years. in this section, please include the Employment Statistics (OES) survey.
In addition, in the FY 2005 IPPS final caption ‘‘Occupational Mix Adjustment’’ For the proposed FY 2006 wage index,
rule (69 FR 49032 through 49033), we at the beginning of your comment.) we used revised survey data for 20
provided a 1-year transition blend for As stated earlier, section 1886(d)(3)(E) hospitals that took advantage of the
hospitals that, due solely to the changes of the Act provides for the collection of opportunity we afforded hospitals to
in the labor market definitions, data every 3 years on the occupational submit changes to their occupational
experienced a decrease in their FY 2005 mix of employees for each short-term, mix data during the FY 2006 wage index
wage index compared to the wage index acute care hospital participating in the data collection process (see discussion
they would have received using the Medicare program, in order to construct of wage data corrections process under
labor market areas included in an occupational mix adjustment to the section III.J. of this preamble). We also
calculating their FY 2004 wage index. wage index, for application beginning excluded survey data for hospitals that
Hospitals that experienced a decrease in October 1, 2004 (the FY 2005 wage became designated as CAHs since the
their wage index as a result of adoption index). The purpose of the occupational original survey data were collected and
of the new labor market area changes mix adjustment is to control for the hospitals for which there are no
received a wage index based on 50 effect of hospitals’ employment choices corresponding cost report data for the
percent of the CBSA labor market area on the wage index. For example, proposed FY 2006 wage index. The
definitions and 50 percent of the wage hospitals may choose to employ proposed FY 2006 wage index includes
index that the provider would have different combinations of registered occupational mix data from 3,563 out of
received under the FY 2004 MSA nurses, licensed practical nurses, 3,765 hospitals (94.6 percent response
boundaries (in both cases using the FY nursing aides, and medical assistants for rate). The results of the occupational
2001 wage data). This blend applied to the purpose of providing nursing care to mix survey are included in the chart
any provider experiencing a decrease their patients. The varying labor costs below:
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23369
EP04my05.026</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23370 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
2. Calculation of the Proposed FY 2006 Step 5—For each hospital, the An example of the occupational mix
Occupational Mix Adjustment Factor occupational mix adjusted salaries and adjustment was included in the FY 2005
and the Proposed FY 2006 Occupational wage-related costs for a general service IPPS final rule (69 FR 49043).
Mix Adjusted Wage Index category is calculated by multiplying For the FY 2005 final wage index, we
the hospital’s total salaries and wage- used the unadjusted wage data for
For the proposed FY 2006 wage related costs (from Step 5 of the hospitals that did not submit
index, we are proposing to use the same unadjusted wage index calculation in occupational mix survey data. For
methodology that we used to calculate section F) by the percentage of the calculation purposes, this equates to
the occupational mix adjustment to the hospital’s total workers attributable to applying the national SOC mix to the
FY 2005 wage index (69 FR 49042). We the general service category and by the wage data for these hospitals, because
are proposing to use the following steps general service category’s occupational hospitals having the same mix as the
for calculating the proposed FY 2006 mix adjustment factor (from Step 4 Nation would have an occupational mix
occupational mix adjustment factor and above). Repeat this calculation for each adjustment factor equaling 1.0000. In
the occupational mix adjusted wage of the 7 general service categories. The the FY 2005 IPPS final rule (69 FF
index: remaining portion of the hospital’s total 49035), we noted that we would revisit
Step 1—For each hospital, the salaries and wage-related costs that is this matter with subsequent collections
percentage of the general service attributable to all other employees of the of the occupational mix data. Because
category attributable to an SOC is hospital is not adjusted for occupational we are using essentially the same survey
determined by dividing the SOC hours mix. data for the proposed FY 2006
by the general service category’s total Step 6—For each hospital, the total occupational mix adjustment that we
hours. Repeat this calculation for each occupational mix adjusted salaries and used for FY 2005, with the only
of the 19 SOCs. wage-related costs for a hospital are exceptions as stated in section III.C.1. of
Step 2—For each hospital, the calculated by summing the occupational this preamble, we are proposing to treat
weighted average hourly rate for an SOC mix adjusted salaries and wage-related the wage data for hospitals that did not
is determined by multiplying the costs for the 7 general service categories respond to the survey in this same
percentage of the general service (from Step 5) and the unadjusted manner for the proposed FY 2006 wage
category (from Step 1) by the national portion of the hospital’s salaries and index.
average hourly rate for that SOC from wage-related costs for all other In implementing an occupational mix
the 2001 BLS OES survey, which was employees. To compute a hospital’s adjusted wage index based on the above
used in calculating the occupational occupational mix adjusted average calculation, the proposed wage index
mix adjustment for the FY 2005 wage hourly wage, divide the hospital’s total values for 14 rural areas (29.8 percent)
index. The 2001 OES survey is BLS’ occupational mix adjusted salaries and and 206 urban areas (53.5 percent)
latest available hospital-specific survey. wage-related costs by the hospital’s total would decrease as a result of the
(See Chart 4 in the FY 2005 IPPS final hours (from Step 4 of the unadjusted adjustment. Six (6) rural areas (12.8
rule, 69 FR 49038.) Repeat this wage index calculation in Section F). percent) and 111 urban areas (28.8
calculation for each of the 19 SOCs. Step 7—To compute the occupational percent) would experience a decrease of
mix adjusted average hourly wage for an 1 percent or greater in their wage index
Step 3—For each hospital, the urban or rural area, sum the total values. The largest negative impact for
hospital’s adjusted average hourly rate occupational mix adjusted salaries and a rural area would be 1.9 percent and for
for a general service category is wage-related costs for all hospitals in an urban area, 4.3 percent. Meanwhile,
computed by summing the weighted the area, then sum the total hours for all 33 rural areas (70.2 percent) and 179
hourly rate for each SOC within the hospitals in the area. Next, divide the urban areas (46.5 percent) would
general category. Repeat this calculation area’s occupational mix adjusted experience an increase in their wage
for each of the 7 general service salaries and wage-related costs by the index values. Although these results
categories. area’s hours. show that rural hospitals would gain the
Step 4—For each hospital, the Step 8—To compute the national most from an occupational mix
occupational mix adjustment factor for occupational mix adjusted average adjustment to the wage index, their
a general service category is calculated hourly wage, sum the total occupational gains may not be as great as might have
by dividing the national adjusted mix adjusted salaries and wage-related been expected. Further, it might not
average hourly rate for the category by costs for all hospitals in the nation, then have been anticipated that almost one-
the hospital’s adjusted average hourly sum the total hours for all hospitals in third of rural hospitals would actually
rate for the category. (The national the nation. Next, divide the national fare worse under the adjustment.
adjusted average hourly rate is occupational mix adjusted salaries and Overall, a fully implemented
computed in the same manner as Steps wage-related costs by the national occupational mix adjusted wage index
1 through 3, using instead, the total SOC hours. The proposed national would have a redistributive effect on
and general service category hours for occupational mix adjusted average Medicare payments to hospitals.
all hospitals in the occupational mix hourly wage for FY 2006 is $27.9988. In the FY 2005 IPPS, we indicated
survey database.) Repeat this calculation Step 9—To compute the occupational that, for future data collections, we
for each of the 7 general service mix adjusted wage index, divide each would revise the occupational mix
categories. If the hospital’s adjusted rate area’s occupational mix adjusted survey to allow hospitals to provide
is less than the national adjusted rate average hourly wage (Step 7) by the both salaries and hours data for each of
(indicating the hospital employs a less national occupational mix adjusted the employment categories that are
costly mix of employees within the average hourly wage (Step 8). included on the survey. We also
category), the occupational mix Step 10—To compute the Puerto Rico indicated that we would assess whether
adjustment factor will be greater than specific occupational mix adjusted wage future occupational mix surveys should
1.0000. If the hospital’s adjusted rate is index, follow the Steps 1 through 9 be based on the calendar year or if the
greater than the national adjusted rate, above. The proposed Puerto Rico data should be collected on a fiscal year
the occupational mix adjustment factor occupational mix adjusted average basis as part of the Medicare cost report.
will be less than 1.0000. hourly wage for FY 2006 is $12.9875. (One logistical problem is that cost
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23371
report data are collected yearly, but • Wage-related costs, including health services, costs related to GME
occupational mix survey data are pensions and other deferred (teaching physicians and residents) and
collected only every 3 years.) We are compensation costs. certified registered nurse anesthetists
currently reviewing options for revising The September 1, 1994 Federal (CRNAs), and other subprovider
the occupational mix survey and Register (59 FR 45356) included a list of components that are not paid under the
improving the data collection process. core wage-related costs that are IPPS. The proposed FY 2006 wage index
We will publish any changes we make included in the wage index, and also excludes the salaries, hours, and
to the occupational mix survey in a discussed criteria for including other wage-related costs of hospital-based
Federal Register notice. wage-related costs. In that discussion, rural health clinics (RHCs), and
In our continuing efforts to meet the we instructed hospitals to use generally Federally qualified health centers
information needs of the public, we are accepted accounting principles (GAAPs) (FQHCs) because Medicare pays for
providing three additional public use in developing wage-related costs for the these costs outside of the IPPS (68 FR
files for the proposed occupational mix wage index for cost reporting periods 45395). In addition, salaries, hours and
adjusted wage index: (1) A file beginning on or after October 1, 1994. wage-related costs of CAHs are excluded
including each hospital’s unadjusted We discussed our rationale that ‘‘the from the wage index, for the reasons
and adjusted average hourly wage (FY application of GAAPs for purposes of explained in the FY 2004 IPPS final rule
2006 Proposed Rule Occupational Mix compiling data on wage-related costs (68 FR 45397).
Adjusted and Unadjusted Average used to construct the wage index will Data collected for the IPPS wage
Hourly Wage by Provider); (2) a file more accurately reflect relative labor index are also currently used to
including each CBSA’s adjusted and costs, because certain wage-related costs calculate wage indices applicable to
unadjusted average hourly wage (FY (such as pension costs), as recorded other providers, such as SNFs, home
2006 Proposed Rule Occupational Mix under GAAPs, tend to be more static health agencies, and hospices. In
Adjusted and Unadjusted Average from year to year.’’ addition, they are used for prospective
Hourly Wage and Pre-Reclassified Wage Since publication of the September 1, payments to rehabilitation, psychiatric,
Index by CBSA); and (3) a file including 1994 rule, we have periodically received and long-term care hospitals, and for
each hospital’s occupational mix inquiries for more specific guidance on hospital outpatient services.
adjustment factors by occupational developing wage-related costs for the In the August 11, 2004 final rule, we
category (Provider Occupational Mix wage index. In response, we have stated that a commenter had asked CMS
Adjustment Factors for Each provided clarifications in the IPPS rules to designate provider-based clinics as
Occupational Category). These (for example, health insurance costs (66 IPPS-excluded areas in order to remove
additional files are being released FR 39859)) and in the cost report the costs from the wage index (69 FR
concurrently with the publication of instructions (Provider Reimbursement 49049). The commenter noted that
this proposed rule and are posted on the Manual (PRM), Part II, Section 3605.2). provider-based clinics are like physician
Internet, at http://www.cms.hhs.gov/ Due to recent questions and concerns private offices, which are excluded from
providers/hipps/ippswage.asp. We will we received regarding inconsistent the wage index calculation, and that
also post these files with future reporting and overreporting of pension services provided in the provider-based
applications of the occupational mix and other deferred compensation plan clinics are paid for not through the
adjustment. costs, as a result of an ongoing Office of IPPS, but rather under the hospital
Inspector General review, we are outpatient PPS. In response to the
D. Worksheet S–3 Wage Data for the clarifying in this proposed rule that comment, we stated that we were not
Proposed FY 2006 Wage Index Update hospitals must comply with the PRM, prepared to grant the commenter’s
(If you choose to comment on issues Part I, sections 2140. 2141, and 2142 request without first studying the issue,
in this section, please include the and related Medicare program and that we would explore the matter of
caption ‘‘Wage Data’’ at the beginning of instructions for developing pension and salaries related to provider-based clinics
your comment.) other deferred compensation plan costs in a future rule.
The proposed FY 2006 wage index as wage-related costs for the wage index. Regulations at 42 CFR 413.65 describe
values (effective for hospital discharges The Medicare instructions for pension the criteria and procedures for
occurring on or after October 1, 2005 costs and other deferred compensation determining whether a facility or
and before October 1, 2006) in section costs combine GAAPs, Medicare organization is provider-based.
VI. of the Addendum to this proposed payment principles, and other Federal Historically, under the Medicare
rule are based on the data collected from labor requirements. We believe that the program, some providers, referred to as
the Medicare cost reports submitted by Medicare instructions allow for ‘‘main providers,’’ have functioned as
hospitals for cost reporting periods consistent reporting among hospitals single entities while owning and
beginning in FY 2002 (the FY 2005 wage and for the development of reasonable operating multiple provider-based
index was based on FY 2001 wage data). deferred compensation plan costs for departments, locations, and facilities
The proposed FY 2006 wage index purposes of the wage index. that are treated as part of the main
includes the following categories of data Beginning with the FY 2007 wage provider for Medicare purposes. Section
associated with costs paid under the index, hospitals and fiscal 413.65(a)(2) defines various types of
IPPS (as well as outpatient costs): intermediaries must ensure that provider-based facilities, including
• Salaries and hours from short-term, pension, post-retirement health benefits, ‘‘department of a provider.’’ A
acute care hospitals (including paid and other deferred compensation plan ‘‘department of a provider’’ means a
lunch hours and hours associated with costs for the wage index are developed facility or organization that is either
military leave and jury duty). according to the above terms. created by, or acquired by, a main
• Home office costs and hours. Consistent with the wage index provider for the purposes of furnishing
• Certain contract labor costs and methodology for FY 2005, the proposed health care services of the same type as
hours (which includes direct patient wage index for FY 2006 also excludes those furnished by the main provider
care, certain top management, the direct and overhead salaries and under the name, ownership, and
pharmacy, laboratory, and nonteaching hours for services not subject to IPPS financial and administrative control of
physician Part A services). payment, such as SNF services, home the main provider * * * a department
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23372 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
of a provider may not itself be qualified 2002 Medicare cost reports. Instructions proposed rule excludes hospitals that
to participate in Medicare as a provider for completing the Worksheet S–3, Parts are designated as CAHs by February 1,
under § 489.2 * * * the term II and III are in the Provider 2005, the date of the latest available
‘department of a provider’ does not Reimbursement Manual, Part I, sections Medicare CAH listing at the time we
include an RHC or * * * an FQHC.’’ 3605.2 and 3605.3. The data file used to released the proposed wage index
Thus, if a facility offers services that are construct the proposed wage index public use file on February 25, 2005.
similar to those provided in a includes FY 2002 data submitted to us
F. Computation of the Proposed FY
freestanding physician’s office, and the as of February 23, 2005. As in past
2006 Unadjusted Wage Index
facility meets the criteria to become years, we performed an intensive review
provider-based under § 413.65, the of the wage data, mostly through the use (If you choose to comment on issues
facility would be considered a of edits designed to identify aberrant in this section, please include the
‘‘department of a provider.’’ More data. caption ‘‘Wage Index’’ at the beginning
specifically, the facility would be part of We asked our fiscal intermediaries to of your comment.)
the main provider’s outpatient revise or verify data elements that The method used to compute the
department, since the facility offers resulted in specific edit failures. Some proposed FY 2006 wage index without
health care services of the same type as unresolved data elements are included an occupational mix adjustment
those furnished by the main provider, in the calculation of the proposed FY follows:
and because a physician’s office would 2006 wage index, pending their Step 1—As noted above, we based the
not be subject to a provider agreement resolution before calculation of the final proposed FY 2006 wage index on wage
or receive a Medicare provider number FY 2006 index. We instructed the fiscal data reported on the FY 2002 Medicare
under § 489.2. (We note that a provider- intermediaries to complete their data cost reports. We gathered data from each
based RHC or FQHC may, by itself, be verification of questionable data of the non-Federal, short-term, acute
qualified to participate in Medicare as a elements and to transmit any changes to care hospitals for which data were
provider under § 489.2 and, thus, would the wage data no later than April 15, reported on the Worksheet S–3, Parts II
be classified not as a ‘‘department of a 2005. We believe all unresolved data and III of the Medicare cost report for
provider’’ but as a ‘‘provider-based elements will be resolved by the date the hospital’s cost reporting period
entity,’’ as defined at § 413.65(a)(2)). the final rule is issued. The revised data beginning on or after October 1, 2001
This provider-based facility, or will be reflected in the final rule. and before October 1, 2002. In addition,
provider-based clinic, as the commenter Also, as part of our editing process, we included data from some hospitals
referred to it, would be reported on the we removed the data for 438 hospitals that had cost reporting periods
main provider’s Medicare cost report as from our database: 402 hospitals became beginning before October 2001 and
an outpatient service cost center, on CAHs by the time we published the reported a cost reporting period
Worksheet A, line 60. With the February public use file, and 28 covering all of FY 2002. These data were
exception of RHC and FQHC salaries hospitals were low Medicare utilization included because no other data from
that have been excluded from the wage hospitals or failed edits that could not these hospitals would be available for
index beginning with FY 2004 (68 FR be corrected because the hospitals the cost reporting period described
45395, August 1, 2003), the salaries terminated the program or changed above, and because particular labor
attributable to employees working in ownership. In addition, we removed the market areas might be affected due to
these outpatient service cost centers, wage data for 8 hospitals with the omission of these hospitals.
including emergency departments, are incomplete or inaccurate data resulting However, we generally describe these
included in the main provider’s total in zero or negative, or otherwise wage data as FY 2002 data. We note
salaries on Worksheet S–3, Part II, line aberrant, average hourly wages. We have that, if a hospital had more than one
1, and accordingly, are included in the notified the fiscal intermediaries of cost reporting period beginning during
wage index calculation. We have these hospitals and will continue to FY 2002 (for example, a hospital had
historically included the salaries and work with the fiscal intermediaries to two short cost reporting periods
wages of hospital employees working in correct these data until we finalize our beginning on or after October 1, 2001
the outpatient departments in the database to compute the final wage and before October 1, 2002), we
calculation of the hospital wage index index. The data for these hospitals will included wage data from only one of the
since these employees often work in be included in the final wage index if cost reporting periods, the longer, in the
both the IPPS and in the outpatient we receive corrected data that passes wage index calculation. If there was
areas of the hospital. Consistent with our edits. As a result, the proposed FY more than one cost reporting period and
this longstanding treatment of 2006 wage index is calculated based on the periods were equal in length, we
outpatient salary costs in the wage FY 2002 wage data from 3,765 hospitals. included the wage data from the later
index calculation, we believe it is In constructing the proposed FY 2006 period in the wage index calculation.
appropriate to continue to include the wage index, we include the wage data Step 2—Salaries—The method used
salaries and wages of employees for facilities that were IPPS hospitals in to compute a hospital’s average hourly
working in outpatient departments, FY 2002, even for those facilities that wage excludes certain costs that are not
including provider-based clinics, in the have since terminated their paid under the IPPS. In calculating a
wage index calculation. participation in the program as hospital’s average salaries plus wage-
hospitals, as long as those data do not related costs, we subtracted from Line 1
E. Verification of Worksheet S–3 Wage fail any of our edits for reasonableness. (total salaries) the GME and CRNA costs
Data We believe that including the wage data reported on Lines 2, 4.01, 6, and 6.01,
(If you choose to comment on issues for these hospitals is, in general, the Part B salaries reported on Lines 3,
in this section, please include the appropriate to reflect the economic 5 and 5.01, home office salaries reported
caption ‘‘Wage Data’’ at the beginning of conditions in the various labor market on Line 7, and excluded salaries
your comment.) areas during the relevant past period. reported on Lines 8 and 8.01 (that is,
The wage data for the proposed FY However, we exclude the wage data for direct salaries attributable to SNF
2006 wage index were obtained from CAHs (as discussed in 68 FR 45397). services, home health services, and
Worksheet S–3, Parts II and III of the FY The proposed wage index in this other subprovider components not
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23373
subject to the IPPS). We also subtracted then allocated overhead costs to areas of associated with excluded areas from the
from Line 1 the salaries for which no the hospital excluded from the wage total salaries (plus wage-related costs)
hours were reported. To determine total index calculation. First, we determined and hours derived in Steps 2 and 3.
salaries plus wage-related costs, we the ratio of excluded area hours (sum of Step 5—For each hospital, we
added to the net hospital salaries the Lines 8 and 8.01 of Worksheet S–3, Part adjusted the total salaries plus wage-
costs of contract labor for direct patient II) to revised total hours (Line 1 minus related costs to a common period to
care, certain top management, the sum of Part II, Lines 2, 3, 4.01, 5, determine total adjusted salaries plus
pharmacy, laboratory, and nonteaching 5.01, 6, 6.01, 7, and Part III, Line 13 of wage-related costs. To make the wage
physician Part A services (Lines 9 and Worksheet S–3). We then computed the adjustment, we estimated the percentage
10), home office salaries and wage- amounts of overhead salaries and hours change in the employment cost index
related costs reported by the hospital on to be allocated to excluded areas by (ECI) for compensation for each 30-day
Lines 11 and 12, and nonexcluded area multiplying the above ratio by the total increment from October 14, 2001
wage-related costs (Lines 13, 14, and overhead salaries and hours reported on through April 15, 2003 for private
18). Line 13 of Worksheet S–3, Part III. Next, industry hospital workers from the
We note that contract labor and home we computed the amounts of overhead Bureau of Labor Statistics’
office salaries for which no wage-related costs to be allocated to Compensation and Working Conditions.
corresponding hours are reported were excluded areas using three steps: (1) We We use the ECI because it reflects the
not included. In addition, wage-related determined the ratio of overhead hours price increase associated with total
costs for nonteaching physician Part A (Part III, Line 13) to revised hours (Line compensation (salaries plus fringes)
employees (Line 18) are excluded if no 1 minus the sum of Lines 2, 3, 4.01, 5, rather than just the increase in salaries.
corresponding salaries are reported for 5.01, 6, 6.01, 7, 8, and 8.01); (2) we In addition, the ECI includes managers
those employees on Line 4. computed overhead wage-related costs as well as other hospital workers. This
Step 3—Hours—With the exception of by multiplying the overhead hours ratio methodology to compute the monthly
wage-related costs, for which there are by wage-related costs reported on Part update factors uses actual quarterly ECI
no associated hours, we computed total II, Lines 13, 14, and 18; and (3) we data and assures that the update factors
hours using the same methods as multiplied the computed overhead match the actual quarterly and annual
described for salaries in Step 2. wage-related costs by the above percent changes. The factors used to
Step 4—For each hospital reporting excluded area hours ratio. Finally, we adjust the hospital’s data were based on
both total overhead salaries and total subtracted the computed overhead the midpoint of the cost reporting
overhead hours greater than zero, we salaries, wage-related costs, and hours period, as indicated below.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23374 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
For example, the midpoint of a cost that area to determine the total adjusted Step 10—Following the process set
reporting period beginning January 1, salaries plus wage-related costs for the forth above, we developed a separate
2002 and ending December 31, 2002 is labor market area. Puerto Rico-specific wage index for
June 30, 2002. An adjustment factor of Step 7—We divided the total adjusted purposes of adjusting the Puerto Rico
1.03083 would be applied to the wages salaries plus wage-related costs obtained standardized amounts. (The national
of a hospital with such a cost reporting under both methods in Step 6 by the Puerto Rico standardized amount is
period. In addition, for the data for any sum of the corresponding total hours adjusted by a wage index calculated for
cost reporting period that began in FY (from Step 4) for all hospitals in each all Puerto Rico labor market areas based
2002 and covered a period of less than labor market area to determine an
on the national average hourly wage as
360 days or more than 370 days, we average hourly wage for the area.
Step 8—We added the total adjusted described above.) We added the total
annualized the data to reflect a 1-year adjusted salaries plus wage-related costs
cost report. Dividing the data by the salaries plus wage-related costs obtained
in Step 5 for all hospitals in the nation (as calculated in Step 5) for all hospitals
number of days in the cost report and in Puerto Rico and divided the sum by
and then divided the sum by the
then multiplying the results by 365 the total hours for Puerto Rico (as
national sum of total hours from Step 4
accomplishes annualization. calculated in Step 4) to arrive at an
to arrive at a national average hourly
Step 6—Each hospital was assigned to wage. Using the data as described above, overall proposed average hourly wage of
its appropriate urban or rural labor the proposed national average hourly $12.9957 for Puerto Rico. For each labor
market area before any reclassifications wage is $27.9730. market area in Puerto Rico, we
under section 1886(d)(8)(B), section Step 9—For each urban or rural labor calculated the Puerto Rico-specific wage
1886(d)(8)(E), or section 1886(d)(10) of market area, we calculated the hospital index value by dividing the area average
the Act. Within each urban or rural wage index value by dividing the area hourly wage (as calculated in Step 7) by
labor market area, we added the total average hourly wage obtained in Step 7 the overall Puerto Rico average hourly
adjusted salaries plus wage-related costs by the national average hourly wage wage.
EP04MY05.027</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23375
Step 11—Section 4410 of Pub. L. 105– areas, we believed that hospitals might hospitals to the geographic labor market
33 provides that, for discharges on or be accounting for shortages of areas used for calculating the wage
after October 1, 1997, the area wage physicians by hiring more registered index. For hospitals that were harmed
index applicable to any hospital that is nurses. (A complete discussion of the by the new geographic boundaries, we
located in an urban area of a State may FY 2005 wage index adjustment factor used a blended rate based on 50 percent
not be less than the area wage index can be found in section III.G. of the FY of the wage index that would apply
applicable to hospitals located in rural 2005 IPPS final rule (69 FR 49052)). using the new geographic boundaries
areas in that State. Furthermore, this In the FY 2005 final rule, we noted effective for FY 2005 and 50 percent of
wage index floor is to be implemented that while the statute required us to the wage index that would apply using
in such a manner as to ensure that collect occupational mix data every 3 the old geographic boundaries that were
aggregate IPPS payments are not greater years, the statute does not specify how effective during FY 2004 (69 FR 49033).
or less than those that would have been the occupational mix adjustment is to be Similarly, beginning with FY 2000, we
made in the year if this section did not constructed or applied. We are began phasing out costs related to GME
apply. For FY 2006, this change affects clarifying in this proposed rule that the and CRNAs from the wage index (64 FR
147 hospitals in 52 urban areas. The October 1, 2004 deadline for 41505). Thus, for example, the FY 2001
areas affected by this provision are implementing an occupational mix wage index was based on a blend of 60
identified by a footnote in Table 4A in adjustment is not codified in section percent of an average hourly wage
the Addendum of this proposed rule. 1886(d)(3)(E) of the Act, which requires including these costs, and 40 percent of
only a collection and measurement of an average hourly wage excluding these
G. Computation of the Proposed FY occupational mix data, but rather stems costs (65 FR 47071).
2006 Blended Wage Index from the effective date provisions in For FY 2006, we are again proposing
(If you choose to comment on issues section 304(c) of the Medicare, to adjust 10 percent of the wage index
in this section, please include the Medicaid and SCHIP Benefits factor for occupational mix. In
caption ‘‘Blended Wage Index’’ at the Improvement and Protection Act of computing the occupational mix
beginning of your comments.) 2000, Pub. L. 106–554 (BIPA). Although adjustment for the proposed FY 2006
For the final FY 2005 wage index, we we believe that applying the wage index, we used the occupational
used a blend of the occupational mix occupational mix to 10 percent of the mix survey data that we collected for
adjusted wage index and the unadjusted wage index factor fully implements the the FY 2005 wage index, replacing the
wage index. Specifically, we adjusted 10 occupational mix adjustment, we also survey data for 20 hospitals that
percent of the FY 2005 wage index interpret BIPA as requiring only that we submitted revised data, and excluding
adjustment factor by a factor reflecting begin applying an adjustment by the survey data for hospitals with no
occupational mix. Given that 2003–2004 October 1, 2004. BIPA required the corresponding Worksheet S–3 wage data
was the first time for the administration Secretary to complete, ‘‘by not later than for FY 2006 wage index. While we
of the occupational mix survey, September 30, 2003, for application considered adjusting 100 percent of the
hospitals had a short timeframe for beginning October 1, 2004,’’ both the wage index by the occupational mix, we
collecting their occupational mix survey collection of occupational mix data and did not believe it was appropriate to use
data and documentation, the wage data the measurement of such data. (BIPA, first-year survey data to make such a
were not in all cases from a 1-year section 304(c)(3).) Thus, even if large adjustment. As hospitals gain
period, and there was no baseline data adjusting 10 percent of the wage index additional experience with the
for purposes of developing a desk for occupational mix were not (as we occupational mix survey, and as we
review program, we found it prudent believe it to be) considered to be full develop more information upon which
not to adjust the entire wage index implementation of the BIPA effective to audit the data we receive, we expect
factor by the occupational mix. date, we certainly began our application to increase the portion of the wage
However, we did find the data of the adjustment as of October 1, 2004. index that is adjusted.
sufficiently reliable for applying an In addition, section 1886(d)(3)(E) of We also acknowledge the District
adjustment to 10 percent of the wage the Act provides broad authority for us Court opinion in Bellevue Hospital
index. We found the data reliable to establish the factor we use to adjust Center v. Leavitt, No. 04–8639 (S.D.N.Y,
because hospitals were given an hospital costs to take into account area March 2005) finding that the statute
opportunity to review their survey data differences in wage levels. The statute is requires full implementation of the
and submit changes in the Spring of clear that the wage index factor is to be occupational mix adjustment beginning
2004, hospitals were already familiar ‘‘established by the Secretary.’’ The October 1, 2004, and granting summary
with the BLS OES survey categories, occupational mix is only one part of this judgment to plaintiffs on the matter. At
hospitals were required to be able to wage index factor, which, for the most the time this proposed rule was written,
provide documentation that could be part, is calculated on the basis of an appeal had not yet been heard in the
used by fiscal intermediaries to verify average hourly wage data submitted by Circuit Court. Thus, because it was not
survey data, and the results of our all hospitals in the United States. In yet clear whether the decision would be
survey were consistent with the findings exercising the Secretary’s broad appealed, we determined that, for FY
of the 2001 BLS OES survey, especially discretion to establish the factor that 2006, we would continue to propose the
for nursing and physical therapy adjusts for geographic wage differences, policy we believe to be most prudent in
categories. In addition, we noted that we in FY 2005 we adjusted 10 percent of light of the survey data being used to
were moving cautiously with such factor to account for occupational adjust the wage index.
implementing the occupational mix mix. With 10 percent of the proposed FY
adjustment in recognition of changing Indeed, we have often used 2006 wage index adjusted for
trends in hiring nurses, the largest group percentage figures or blended amounts occupational mix, the wage index
in the survey. We noted that some States in exercising the Secretary’s authority to values for 13 rural areas (27.7 percent)
had recently established floors on the establish the factor that adjusts for wage and 204 urban areas (53.0 percent)
minimum level of registered nurse differences. For example, in the FY 2005 would decrease as a result of the
staffing in hospitals in order to maintain final rule, we implemented new adjustment. These decreases would be
licensure. In addition, in some rural mapping boundaries for assigning minimal; the largest negative impact for
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23376 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
a rural area would be 0.19 percent and Section 304(b) of Pub. L. 106–554 determined by considering the
for an urban area, 0.42 percent. provides that the Secretary must following:
Conversely, 34 rural areas (72.3 percent) establish a mechanism under which a • If including the wage data for the
and 181 urban areas (47.0 percent) statewide entity may apply to have all redesignated hospitals would reduce the
would benefit from this adjustment, of the geographic areas in the State wage index value for the area to which
with 1 urban area increasing 2.1 percent treated as a single geographic area for the hospitals are redesignated by 1
and 1 rural area increasing 0.39 percent. purposes of computing and applying a percentage point or less, the area wage
As there are no significant differences single wage index, for reclassifications index value determined exclusive of the
between the FY 2005 and the FY 2006 beginning in FY 2003. The wage data for the redesignated hospitals
occupational mix survey data and implementing regulations for this applies to the redesignated hospitals.
results, we believe it is appropriate to provision are located at § 412.235. • If including the wage data for the
again apply the occupational mix to 10 Section 1886(d)(8)(B) of the Act redesignated hospitals reduces the wage
percent of the proposed FY 2006 wage requires the Secretary to treat a hospital index value for the area to which the
index. (See Appendix A to this located in a rural county adjacent to one hospitals are redesignated by more than
proposed rule for further analysis of the or more urban areas as being located in 1 percentage point, the area wage index
impact of the occupational mix the MSA to which the greatest number determined inclusive of the wage data
adjustment on the proposed FY 2006 of workers in the county commute if: for the redesignated hospitals (the
wage index.) the rural county would otherwise be combined wage index value) applies to
The wage index values in Tables 4A, considered part of an urban area under the redesignated hospitals.
• If including the wage data for the
4B, 4C, and 4F and the average hourly the standards for designating MSAs if
redesignated hospitals increases the
wages in Tables 2, 3A, and 3B in the the commuting rates used in
wage index value for the urban area to
Addendum to this proposed rule determining outlying counties were
which the hospitals are redesignated,
include the occupational mix determined on the basis of the aggregate
both the area and the redesignated
adjustment. number of resident workers who
hospitals receive the combined wage
commute to (and, if applicable under
H. Proposed Revisions to the Wage index value. Otherwise, the hospitals
the standards, from) the central county
Index Based on Hospital Redesignation located in the urban area receive a wage
or counties of all contiguous MSAs. In
index excluding the wage data of
(If you choose to comment on issues light of the new CBSA definitions and
hospitals redesignated into the area.
in this section, please include the the Census 2000 data that we
• The wage data for a reclassified
caption ‘‘Hospital Redesignations and implemented for FY 2005 (69 FR
urban hospital is included in both the
Reclassifications’’ at the beginning of 49027), we undertook to identify those
wage index calculation of the area to
your comment.) counties meeting these criteria. The
which the hospital is reclassified
eligible counties are identified below
1. General (subject to the rules described above)
under section III.H.5. of this preamble.
and the wage index calculation of the
Under section 1886(d)(10) of the Act,
2. Effects of Reclassification urban area where the hospital is
the Medicare Geographic Classification
physically located.
Review Board (MGCRB) considers Section 1886(d)(8)(C) of the Act • Rural areas whose wage index
applications by hospitals for geographic provides that the application of the values would be reduced by excluding
reclassification for purposes of payment wage index to redesignated hospitals is the wage data for hospitals that have
under the IPPS. Hospitals must apply to dependent on the hypothetical impact been redesignated to another area
the MGCRB to reclassify by September that the wage data from these hospitals continue to have their wage index
1 of the year preceding the year during would have on the wage index value for values calculated as if no redesignation
which reclassification is sought. the area to which they have been had occurred (otherwise, redesignated
Generally, hospitals must be proximate redesignated. These requirements for rural hospitals are excluded from the
to the labor market area to which they determining the wage index values for calculation of the rural wage index).
are seeking reclassification and must redesignated hospitals is applicable • The wage index value for a
demonstrate characteristics similar to both to the hospitals located in rural redesignated rural hospital cannot be
hospitals located in that area. The counties deemed urban under section reduced below the wage index value for
MGCRB issues its decisions by the end 1886(d)(8)(B) of the Act and hospitals the rural areas of the State in which the
of February for reclassifications that that were reclassified as a result of the hospital is located.
become effective for the following fiscal MGCRB decisions under section
year (beginning October 1). The 1886(d)(10) of the Act. Therefore, as 3. Proposed Application of Hold
regulations applicable to provided in section 1886(d)(8)(C) of the Harmless Protection for Certain Urban
reclassifications by the MGCRB are Act,3 the wage index values were Hospitals Redesignated as Rural
located in §§ 412.230 through 412.280. Section 401(a) of Pub. L. 106–113 (the
Section 1886(d)(10)(D)(v) of the Act 3 Although section 1886(d)(8)(C)(iv)(I) of the Act Balanced Budget Refinement Act of
provides that, beginning with FY 2001, also provides that the wage index for an urban area 1999) amended section 1886(d)(8) of the
may not decrease as a result of redesignated
a MGCRB decision on a hospital hospitals if the urban area wage index is already
Act by adding paragraph (E). Section
reclassification for purposes of the wage below the wage index for rural areas in the State 401(a) created a mechanism that permits
index is effective for 3 fiscal years, in which the urban area is located, the provision an urban hospital to apply to the
unless the hospital elects to terminate was effectively made moot by section 4410 of Pub. Secretary to be treated, for purposes of
L. 105–33, which provides that the area wage index
the reclassification. Section applicable to any hospital that is located in an
subsection (d), as being located in the
1886(d)(10)(D)(vi) of the Act provides urban area of a State may not be less than the area rural area of the State in which the
that the MGCRB must use the 3 most wage index applicable to hospitals located in rural hospital is located. A hospital that is
recent years’ average hourly wage data areas in that State. Also, section 1886(d)(8)(C)(iv)(II) granted redesignation under section
of the Act provides that an urban area’s wage index
in evaluating a hospital’s may not decrease as a result of redesignated
1886(d)(8)(E) of the Act, as added by
reclassification application for FY 2003 hospitals if the urban area is located in a State that section 401 of Pub. L. 106–113 is,
and any succeeding fiscal year. is composed of a single urban area. therefore, treated as a rural hospital for
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23377
all purposes of payment under the when rural hospitals are reclassifying Pub. L. 108–173 established that all
Medicare IPPS, including the out of the rural area (from rural to hospitals will be paid on the basis of the
standardized amount, wage index, and urban) to situations where hospitals are large urban standardized amount,
disproportionate share calculations as of reclassifying into the rural area (from beginning with FY 2004. Consequently,
the effective date of the redesignation. urban to rural under section all hospitals are paid on the basis of the
Under current policy, as a result of an 1886(d)(8)(E) of the Act). Thus, the rule same standardized amount, which made
approved redesignation of an urban would be that the wage data of the such reclassifications moot. Although
hospital as a rural hospital, the wage urban hospital reclassifying into the there could still be some benefit in
index data are excluded from the wage rural area is included in the rural area’s terms of payments for some hospitals
index calculation for the area where the wage index, if including the urban under the DSH payment adjustment for
urban hospital is geographically located hospital’s data increases the wage index operating IPPS, section 402 of Pub. L.
and included in the rural hospital wage of the rural area. Otherwise, the wage 108–173 equalized DSH payment
index calculation. data is excluded. Similarly, we are adjustments for rural and urban
Last year, we became aware of an proposing to apply to these cases the hospitals, with the exception that the
instance where the approved rule that currently applies when urban rural DSH adjustment is capped at 12
redesignation of an urban hospital as hospitals reclassify under the MGCRB percent (except that RRCs have no cap).
rural under section 1886(d)(8)(E) of the process. Thus, the wage data for an (A detailed discussion of this
Act resulted in the hospital’s data urban hospital reclassifying under application appears in section IV.I. of
having an adverse impact on the rural section 1886(d)(8)(E) of the Act is the preamble of the FY 2005 IPPS final
wage index. We received a public always included in the wage index of rule (69 FR 49085.)
comment noting that specific ‘‘hold the urban area where the hospital is
harmless’’ provisions apply to 5. Proposed FY 2006 Redesignations
located, and can also be included in the
reclassifications that occur under Under Section 1886(d)(8)(B) of the Act
wage index of the rural area to which it
section 1886(d)(8)(B) and section is reclassifying (if doing so increases the Beginning October 1, 1988, section
1886(d)(10) of the Act. That is, if a rural area’s wage index). We believe this 1886(d)(8)(B) of the Act required us to
hospital is granted geographic proposal provides uniformity in the way treat a hospital located in a rural county
reclassification under section geographic areas are treated under all adjacent to one or more urban areas as
1886(d)(8)(B) or section 1886(d)(10) of types of reclassifications. In addition, being located in the MSA if certain
the Act, there are certain rules that our proposal promotes predictability by criteria were met. Prior to FY 2005, the
apply when the inclusion of the alleviating fluctuations in the wage rule was that a rural county adjacent to
hospital’s data results in a reduction of indexes due to a section 401 one or more urban areas would be
the reclassification area’s wage index, redesignation. treated as being located in the MSA to
and these rules are slightly different for We are including in the Addendum to which the greatest number of workers in
urban areas versus rural areas. These this proposed rule Table 9C, which the county commute, if the rural county
rules are more fully described in the FY shows hospitals redesignated under would otherwise be considered part of
2005 IPPS final rule (69 FR 49053). section 1886(d)(8)(E) of the Act. an urban area under the standards
Generally stated, these rules prevent a published in the Federal Register on
4. FY 2006 MGCRB Reclassifications January 3, 1980 (45 FR 956) for
rural area from being adversely affected
as a result of reclassification. That is, if At the time this proposed rule was designating MSAs (and NECMAs), and
excluding the reclassifying hospitals’ constructed, the MGCRB had completed if the commuting rates used in
wage data would decrease the wage its review of FY 2006 reclassification determining outlying counties (or, for
index of the rural area, the reclassifying requests. There were 295 hospitals New England, similar recognized areas)
hospitals are included in the rural area’s approved for wage index were determined on the basis of the
wage index. Otherwise, the reclassifying reclassifications by the MGCRB for FY aggregate number of resident workers
hospitals are excluded. For hospitals 2006. Because MGCRB wage index who commute to (and, if applicable
reclassifying out of urban areas, the reclassifications are effective for 3 years, under the standards, from) the central
rules provide that the wage data for the hospitals reclassified during FY 2004 or county or counties of all contiguous
reclassified urban hospital is included FY 2005 are eligible to continue to be MSAs (or NECMAs). Hospitals that met
in the wage index calculation of the reclassified based on prior the criteria using the January 3, 1980
urban area where the hospital is reclassifications to current MSAs during version of these OMB standards were
physically located. FY 2006. There were 395 hospitals deemed urban for purposes of the
The commenter recommended that reclassified for wage index for FY 2005, standardized amounts and for purposes
we revise our regulations and apply and 94 hospitals reclassified for wage of assigning the wage data index.
similar hold harmless provisions and index in FY 2004. Some of the hospitals On June 6, 2003, OMB announced the
treat hospitals redesignated under that reclassified in FY 2004 and FY new CBSAs based on Census 2000 data.
1886(d)(8)(E) of the Act in the same 2005 have elected not to continue their For FY 2005, we used OMB’s 2000
manner as reclassifications under reclassifications in FY 2006 because, CBSA standards and the Census 2000
section 1886(d)(8)(B) and section under the new labor market area data to identify counties qualifying for
1886(d)(10) of the Act. In our continued definitions, they are now physically redesignation under section
effort to promote consistency, equity located in the areas to which they 1886(d)(8)(B) for the purpose of
and to simplify our rules with respect to previously reclassified. Of all of the assigning the wage index to the urban
how we construct the wage indexes of hospitals approved for reclassification area. We presented this listing, effective
rural and urban areas, we are persuaded for FY 2004, FY 2005, and FY 2006, 672 for discharges occurring on or after
that there is a need to modify our policy hospitals will be in a reclassification October 1, 2004 (FY 2005), in Chart 6 of
when hospital redesignations occur status for FY 2006. the FY 2005 final rule (69 FR 49057).
under section 1886(d)(8)(E) of the Act. Prior to FY 2004, hospitals had been However, Chart 6 in the FY 2005 final
Therefore, for the FY 2006 wage index, able to apply to be reclassified for rule contained a printing error in which
we are proposing to apply the hold purposes of either the wage index or the we misidentified rural counties that
harmless rule that currently applies standardized amount. Section 401 of qualified for redesignation under
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23378 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
section 1886(d)(8)(B) of the Act. The list entire Metropolitan Statistical Areas 1886(d)(8)(B) of the Act that we are
of rural counties qualifying to be urban rather than the Metropolitan Division proposing to use for FY 2006. We are
in that Chart 6 incorrectly included names. Because we recognized proposing that, for discharges occurring
Monroe, PA and Walworth, WI. This Metropolitan Divisions as MSAs in the on or after October 1, 2005, hospitals
error was made only in the chart and FY 2005 IPPS final rule (69 FR 49029), located in the first column of this chart
not in the application of the rules; that we should have printed the division will be redesignated for purposes of
is, we correctly applied the rules to the names for the following counties: using the wage index of the urban area
correct rural counties qualifying to be Henry, FL; Starke, IN; Henderson, TX; listed in the second column.
urban for FY 2005. Fannin, TX; and Island, WA. BILLING CODE 4120–01–P
In addition, we discovered that, in the The chart below contains the
FY 2005 IPPS final rule, we had corrected listing of the rural counties
erroneously printed the names of the designated as urban under section
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23379
EP04MY05.028</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23380 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23381
As in the past, hospitals redesignated I. Proposed FY 2006 Wage Index index that is equal to the average of the
under section 1886(d)(8)(B) of the Act Adjustment Based on Commuting differences between the wage indexes of
are also eligible to be reclassified to a Patterns of Hospital Employees the labor market area(s) with higher
different area by the MGCRB. Affected (If you choose to comment on issues wage indexes and the wage index of the
hospitals are permitted to compare the in this section, please include the resident county, weighted by the overall
reclassified wage index for the labor caption ‘‘Out-Migration Adjustment’’ at percentage of hospital workers residing
market area in Table 4C in the the beginning of your comment.) in the qualifying county who are
Addendum of this proposed rule into In accordance with the broad employed in any labor market area with
which they have been reclassified by the discretion under section 1886(d)(13) of a higher wage index. We have employed
MGCRB to the wage index for the area the Act, as added by section 505 of Pub. the prereclassified wage indexes in
L. 108–173, beginning with FY 2005, we making these calculations.
to which they are redesignated under We are proposing that hospitals
section 1886(d)(8)(B) of the Act. established a process to make
located in the qualifying counties
Hospitals may withdraw from an adjustments to the hospital wage index
identified in Table 4J in the Addendum
MGCRB reclassification within 45 days based on commuting patterns of
to this proposed rule that have not
of the publication of this proposed rule. hospital employees. The process,
already reclassified through section
outlined in the FY 2005 IPPS final rule
6. Reclassifications Under Section 508 1886(d)(10) of the Act, redesignated
(69 FR 49061), provides for an increase
of Pub. L. 108–173 through section 1886(d)(8) of the Act,
in the wage index for hospitals located
received a section 508 reclassification,
in certain counties that have a relatively
Under section 508 of Pub. L. 108–173, or requested to waive the application of
high percentage of hospital employees
a qualifying hospital could appeal the the out-migration adjustment would
who reside in the county but work in a
wage index classification otherwise receive the wage index adjustment
different county (or counties) with a listed in the table for FY 2006. We used
applicable to the hospital and apply for higher wage index. Such adjustments to
reclassification to another area of the the same formula described in the FY
the wage index are effective for 3 years, 2005 final rule (69 FR 49064) to
State in which the hospital is located unless a hospital requests to waive the calculate the out-migration adjustment.
(or, at the discretion of the Secretary, to application of the adjustment. A county This proposed adjustment was
an area within a contiguous State). We will not lose its status as a qualifying calculated as follows:
implemented this process through county due to wage index changes Step 1. Subtract the wage index for
notices published in the Federal during the 3-year period, and counties the qualifying county from the wage
Register on January 6, 2004 (69 FR 661) will receive the same wage index index for the higher wage area(s).
and February 13, 2004 (69 FR 7340). increase for those 3 years. However, a Step 2. Divide the number of hospital
Such reclassifications are applicable to county that qualifies in any given year employees residing in the qualifying
discharges occurring during the 3-year may no longer qualify after the 3-year county who are employed in such
period beginning April 1, 2004 and period, or it may qualify but receive a higher wage index area by the total
ending March 31, 2007. Under section different adjustment to the wage index number of hospital employees residing
508(b), reclassifications under this level. Hospitals that receive this in the qualifying county who are
process do not affect the wage index adjustment to their wage index are not employed in any higher wage index
computation for any area or for any eligible for reclassification under area. Multiply this result by the result
other hospital and cannot be effected in section 1886(d)(8) or section 1886(d)(10) obtaining in Step 1.
a budget neutral manner. of the Act. Adjustments under this Step 3. Sum the products resulting
provision are not subject to the IPPS from Step 2 (if the qualifying county has
We show the reclassifications budget neutrality requirements at workers commuting to more than one
effective under the one-time appeal section 1886(d)(3)(E) or section higher wage area).
process in Table 9B in the Addendum 1886(d)(8)(D) of the Act. Step 4. Multiply the result from Step
to this proposed rule. Hospitals located in counties that 3 by the percentage of hospital
qualify for the wage index adjustment employees who are residing in the
EP04MY05.030</GPH>
are to receive an increase in the wage qualifying county and who are
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23382 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
employed in any higher wage index this proposed rule. The request for mix data for the 12-month reporting
area. withdrawal of an application for period could not switch to submitting
The proposed adjustments calculated reclassification or termination of an data for the 4-week reporting period and
for qualifying hospitals are listed in existing 3-year reclassification that vice versa. Further, a hospital could not
Table 4J in the Addendum to this would be effective in FY 2006 must be submit an occupational mix survey for
proposed rule. These proposed received by the MGCRB within 45 days the periods beginning before January 1,
adjustments would be effective for each of the publication of this proposed rule. 2003, or after January 11, 2004. In
county for a period of 3 fiscal years. Hospitals should carefully review the addition, a hospital that did not submit
Hospitals that received the adjustment wage index adjustment that they would an occupational mix survey for the FY
in FY 2005 will be eligible to retain that receive under this provision (as listed in 2005 wage index was not permitted to
same adjustment for FY 2006 and FY Table 2 in the Addendum to this submit a survey for the FY 2006 wage
2007. For hospitals in newly qualified proposed rule) in comparison to the index.
counties, adjustments to the wage index wage index adjustment that they would The fiscal intermediaries notified the
would be effective for 3 years, beginning receive under the MGCRB hospitals by mid-February 2005 of any
with discharges occurring on or after reclassification (Table 9 in the changes to the wage index data as a
October 1, 2005. Addendum to this proposed rule). result of the desk reviews and the
As previously noted, hospitals resolution of the hospitals’ late
receiving the wage index adjustment J. Process for Requests for Wage Index November 2004 change requests. The
under section 1886(d)(13)(F) of the Act Data Corrections fiscal intermediaries also submitted the
are not eligible for reclassification under (If you choose to comment on issues revised data to CMS by mid-February
section 1886(d)(10) of the Act or in this section, please include the 2005. CMS published the proposed
reclassifications under section 508 of caption ‘‘Wage Index Data Corrections’’ wage index public use files that
Pub. L. 108–173. Hospitals that wish to at the beginning of your comment.) included hospitals’ revised wage data
waive the application of this wage index In the FY 2005 IPPS final rule (68 FR on February 25, 2005. In a
adjustment must notify CMS within 45 27194), we revised the process and memorandum also dated February 25,
days of the publication of this proposed timetable for application for 2005, we instructed fiscal
rule. Waiver notification should be sent development of the wage index, intermediaries to notify all hospitals
to the following address: Centers for beginning with the FY 2005 wage index. regarding the availability of the
Medicare and Medicaid Services, Center The preliminary and unaudited proposed wage index public use files
for Medicare Management, Attention: Worksheet S–3 wage data and and the criteria and process for
Wage Index Adjustment Waivers, occupational mix survey files were requesting corrections and revisions to
Division of Acute Care, Room C4–08– made available on October 8, 2004 the wage index data. Hospitals had until
06, 7500 Security Boulevard, Baltimore, through the Internet on the CMS Web March 14, 2005 to submit requests to the
MD 21244–1850. We will assume that site at: http://cms.hhs.gov/providers/ fiscal intermediaries for reconsideration
hospitals that have been redesignated hipps/ippswage.asp. In a memorandum of adjustments made by the fiscal
under section 1886(d)(8) of the Act or dated October 6, 2004, we instructed all intermediaries as a result of the desk
reclassified under section 886(d)(10) of Medicare fiscal intermediaries to inform review, and to correct errors due to
the Act or under section 508 of Pub. L. the IPPS hospitals they service of the CMS’s or the fiscal intermediary’s
108–173 would prefer to keep their availability of the wage index data files mishandling of the wage index data.
redesignation/reclassification unless and the process and timeframe for Hospitals were also required to submit
they explicitly notify CMS that they requesting revisions (including the sufficient documentation to support
would like to receive the out-migration specific deadlines listed below). We also their requests.
adjustment instead. In addition, instructed the fiscal intermediaries to After reviewing requested changes
hospitals that wish to retain their advise hospitals that these data are also submitted by hospitals, fiscal
redesignation/reclassification (instead of made available directly through their intermediaries are to submit any
receiving the out-migration adjustment) representative hospital organizations. additional revisions resulting from the
for FY 2006 do not need to submit a If a hospital wished to request a hospitals’ reconsideration requests by
formal request to CMS, and will change to its data as shown in the April 15, 2005. The deadline for a
automatically retain their redesignation/ October 8, 2004 wage and occupational hospital to request CMS intervention in
reclassification status for FY 2006. mix data files, the hospital was to cases where the hospital disagrees with
However, consistent with § 412.273, submit corrections along with complete, the fiscal intermediary’s policy
hospitals that have been reclassified by detailed supporting documentation to interpretations is April 22, 2005.
the MGCRB are permitted to withdraw its fiscal intermediary by November 29, Hospitals should also examine Table
their applications within 45 days of the 2004. Hospitals were notified of this 2 in the Addendum to this proposed
publication of this proposed rule. deadline and of all other possible rule. Table 2 contains each hospital’s
Hospitals that have been reclassified by deadlines and requirements, including adjusted average hourly wage used to
the MGCRB (including reclassifications the requirement to review and verify construct the wage index values for the
under section 508 of Pub. L. 108–173) their data as posted on the preliminary past 3 years, including the FY 2002 data
may terminate an existing 3-year wage index data file on the Internet, used to construct the FY 2006 wage
reclassification within 45 days of the through the October 6, 2004 index. We note that the hospital average
publication of this proposed rule in memorandum referenced above. hourly wages shown in Table 2 only
order to receive the wage index In the October 6, 2004 memorandum, reflect changes made to a hospital’s data
adjustment under this provision. we also specified that a hospital could and transmitted to CMS by February 23,
Hospitals that are eligible to receive the only request revisions to the 2005.
wage index adjustment and that occupational mix data for the reporting We will release a final wage index
withdraw their application for period that the hospital used in its data public use file in early May 2005
reclassification will then automatically original FY 2005 wage index to hospital associations and the public
receive the wage index adjustment occupational mix survey. That is, a on the Internet at http://
listed in Table 4J in the Addendum to hospital that submitted occupational www.cms.hhs.gov/providers/hipps/
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23383
ippswage.asp. The May 2005 public use We created the processes described CMS makes the wage data available to
file will be made available solely for the above to resolve all substantive wage a hospital on the CMS website prior to
limited purpose of identifying any index data correction disputes before we publishing both the proposed and final
potential errors made by CMS or the finalize the wage and occupational mix IPPS rules, and the fiscal intermediaries
fiscal intermediary in the entry of the data for the FY 2006 payment rates. notify hospitals directly of any wage
final wage data that result from the Accordingly, hospitals that do not meet data changes after completing their desk
correction process described above the procedural deadlines set forth above reviews, we do not expect that midyear
(revisions submitted to CMS by the will not be afforded a later opportunity corrections would be necessary.
fiscal intermediaries by April 15, 2005). to submit wage index data corrections or However, under our current policy, if
If, after reviewing the May 2005 final to dispute the fiscal intermediary’s the correction of a data error changes
file, a hospital believes that its wage decision with respect to requested the wage index value for an area, the
data were incorrect due to a fiscal changes. Specifically, our policy is that revised wage index value will be
intermediary or CMS error in the entry hospitals that do not meet the effective prospectively from the date the
or tabulation of the final wage data, it procedural deadlines set forth above correction is made.
should send a letter to both its fiscal will not be permitted to challenge later, We are proposing to revise
intermediary and CMS that outlines before the Provider Reimbursement § 412.64(k)(2) to specify that a change to
why the hospital believes an error exists Review Board, the failure of CMS to the wage index can be made retroactive
and provide all supporting information, make a requested data revision (See W. to the beginning of the Federal fiscal
including relevant dates (for example, A. Foote Memorial Hospital v. Shalala, year only when: (1) The fiscal
when it first became aware of the error). No. 99–CV–75202–DT (E.D. Mich. intermediary or CMS made an error in
CMS and the fiscal intermediaries must 2001), also Palisades General Hospital tabulating data used for the wage index
receive these requests no later than June v. Thompson, No. 99–1230 (D.D.C. calculation; (2) the hospital knew about
10, 2005. Requests mailed to CMS 2003)). the error and requested that the fiscal
should be sent to: Again, we believe the wage index data
intermediary and CMS correct the error
correction process described above
Centers for Medicare & Medicaid using the established process and
provides hospitals with sufficient
Services, Center for Medicare within the established schedule for
opportunity to bring errors in their wage
Management, Attention: Wage Index requesting corrections to the wage data,
index data to the fiscal intermediaries’
Team, Division of Acute Care, C4–08– before the beginning of the fiscal year
attention. Moreover, because hospitals
06, 7500 Security Boulevard, for the applicable IPPS update (that is,
will have access to the final wage index
Baltimore, MD 21244–1850. by the June 10, 2005 deadline for the FY
data by early May 2005, they have the
Each request also must be sent to the opportunity to detect any data entry or 2006 wage index); and (3) CMS agreed
fiscal intermediary. The fiscal tabulation errors made by the fiscal that the fiscal intermediary or CMS
intermediary will review requests upon intermediary or CMS before the made an error in tabulating the
receipt and contact CMS immediately to development and publication of the hospital’s wage data and the wage index
discuss its findings. final FY 2006 wage index by August 1, should be corrected. We are proposing
At this point in the process, that is, 2005, and the implementation of the FY this change because there may be
after the release of the May 2005 wage 2006 wage index on October 1, 2005. If instances in which a hospital identifies
index data file, changes to the hospital hospitals avail themselves of the an error in its wage data and submits a
wage data will only be made in those opportunities afforded to provide and correction request using all appropriate
very limited situations involving an make corrections to the wage data, the procedures and by the June deadline,
error by the fiscal intermediary or CMS wage index implemented on October 1 CMS agrees that the fiscal intermediary
that the hospital could not have known should be accurate. Nevertheless, in the or CMS caused the error in the
about before its review of the final wage event that errors are identified by hospital’s wage data and that the wage
index data file. Specifically, neither the hospitals and brought to our attention index must be corrected, but CMS fails
intermediary nor CMS will approve the after June 10, 2005, we retain the right to publish or implement the corrected
following types of requests: to make midyear changes to the wage wage index value by the beginning of
• Requests for wage data corrections index under very limited circumstances. the Federal fiscal year. We believe that
that were submitted too late to be Specifically, in accordance with the above proposed revision to
included in the data transmitted to CMS § 412.64(k)(1) of our existing § 412.64(k)(2) is appropriate and fair.
by fiscal intermediaries on or before regulations, we make midyear We also believe that unlike a
April 15, 2005. corrections to the wage index for an area generalized retroactive policy, the
• Requests for correction of errors only if a hospital can show that: (1) The situations where this will occur will be
that were not, but could have been, fiscal intermediary or CMS made an minimal, thus minimizing the
identified during the hospital’s review error in tabulating its data; and (2) the administrative burden associated with
of the February 25, 2005 wage index requesting hospital could not have such retroactive corrections. In those
data file. known about the error or did not have circumstances where a hospital requests
• Requests to revisit factual an opportunity to correct the error, a correction to its wage data before CMS
determinations or policy interpretations before the beginning of the fiscal year. calculates the final wage index (that is,
made by the fiscal intermediary or CMS For purposes of this provision, ‘‘before by the June deadline), and CMS
during the wage index data correction the beginning of the fiscal year’’ means acknowledges that the error in the
process. by the June deadline for making hospital’s wage data caused by CMS’s or
Verified corrections to the wage index corrections to the wage data for the the fiscal intermediary’s mishandling of
received timely by CMS and the fiscal following fiscal year’s wage index. This the data, we believe that the hospital
intermediaries (that is, by June 10, 2005) provision is not available to a hospital should not be penalized by our delay in
will be incorporated into the final wage seeking to revise another hospital’s data publishing or implementing the
index to be published by August 1, that may be affecting the requesting correction. As with our current policy,
2005, and to be effective October 1, hospital’s wage index for the labor this provision would not be available to
2005. market area. As indicated earlier, since a hospital seeking to revise another
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23384 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
hospital’s data. In addition, the January 1, 2005. As noted, our current also refer the reader to the August 1,
provision could not be used to correct regulations allow only for a prospective 2002 Federal Register (67 FR 50032) in
prior years’ wage data; it could only be correction to the hospitals’ area wage which we discussed the previous
used for the current Federal fiscal year. index values. However, we believe that, rebasing of the hospital input price
In other situations, we continue to in the limited circumstance mentioned index.
believe that it is appropriate to make above, a retroactive correction to the FY The hospital market basket is a fixed
prospective corrections to the wage 2005 wage index is appropriate and weight, Laspeyres-type price index that
index in those circumstances where a meets the condition of section 903(a)(1) is constructed in three steps. First, a
hospital could not have known about or of Pub. L. 108–173 that ‘‘failure to apply base period is selected (in this proposed
did not have the opportunity to correct the change retroactively would be rule, FY 2002) and total base period
the fiscal intermediary’s or CMS’s error contrary to the public interest.’’ expenditures are estimated for a set of
before the beginning of the fiscal year mutually exclusive and exhaustive
IV. Proposed Rebasing and Revision of spending categories based upon type of
(that is, by the June deadline).
We are proposing to make this change the Hospital Market Baskets expenditure. Then the proportion of
to § 412.64(k)(2) effective on October 1, (If you choose to comment on issues total operating costs that each category
2005, that is, beginning with the FY in this section, please include the represents is determined. These
2006 wage index. We note that, as with caption ‘‘Hospital Market Basket’’ at the proportions are called cost or
prospective changes to the wage index, beginning of your comment.) expenditure weights. Second, each
the proposed retroactive correction A. Background expenditure category is matched to an
would be made irrespective of whether appropriate price or wage variable,
the change increases or decreases a Effective for cost reporting periods referred to as a price proxy. In nearly
hospital’s payment rate. In addition, we beginning on or after July 1, 1979, we every instance, these price proxies are
note that the policy of retroactive developed and adopted a hospital input price levels derived from publicly
adjustment would still apply in those price index (that is, the hospital market available statistical series that are
instances where a judicial decision basket for operating costs). Although published on a consistent schedule,
reverses a CMS denial of a hospital’s ‘‘market basket’’ technically describes preferably at least on a quarterly basis.
wage data revision request. the mix of goods and services used to Finally, the expenditure weight for
In addition, we are proposing to produce hospital care, this term is also each cost category is multiplied by the
correct the FY 2005 wage index commonly used to denote the input level of its respective price proxy. The
retroactively (that is, from October 1, price index (that is, cost category sum of these products (that is, the
2004) on a one-time only basis for a weights and price proxies combined) expenditure weights multiplied by their
limited circumstance using the derived from that market basket. price levels) for all cost categories yields
authority provided under section Accordingly, the term ‘‘market basket’’ the composite index level of the market
903(a)(1) of Pub. L. 108–173. This as used in this document refers to the basket in a given period. Repeating this
provision authorizes the Secretary to hospital input price index. step for other periods produces a series
make retroactive changes to items and The terms ‘‘rebasing’’ and ‘‘revising,’’ of market basket levels over time.
services if failure to apply such changes while often used interchangeably, Dividing an index level for a given
would be contrary to the public interest. actually denote different activities. period by an index level for an earlier
However, as indicated, our current ‘‘Rebasing’’ means moving the base year period produces a rate of growth in the
regulations at § 412.64(k)(1) allow only for the structure of costs of an input input price index over that time period.
for a prospective correction to the price index (for example, in this The market basket is described as a
hospitals’ area wage index values. We proposed rule, we are proposing to shift fixed-weight index because it describes
are proposing to correct the FY 2005 the base year cost structure for the IPPS the change in price over time of the
wage index retroactively in the limited hospital index from FY 1997 to FY same mix of goods and services
circumstance where a hospital meets all 2002). ‘‘Revising’’ means changing data purchased to provide hospital services
of the following criteria: (1) The fiscal sources, or price proxies, used in the in a base period. The effects on total
intermediary or CMS made an error in input price index. expenditures resulting from changes in
tabulating a hospital’s FY 2005 wage The percentage change in the market the quantity or mix of goods and
index data; (2) the hospital informed the basket reflects the average change in the services (intensity) purchased
fiscal intermediary or CMS, or both, price of goods and services hospitals subsequent to the base period are not
about the error, following the purchase in order to furnish inpatient measured. For example, shifting a
established schedule and process for care. We first used the market basket to traditionally inpatient type of care to an
requesting corrections to its FY 2005 adjust hospital cost limits by an amount outpatient setting might affect the
wage index data; and (3) CMS agreed that reflected the average increase in the volume of inpatient goods and services
before October 1 that the fiscal prices of the goods and services used to purchased by the hospital, but would
intermediary or CMS made an error in provide hospital inpatient care. This not be factored into the price change
tabulating the hospital’s wage data and approach linked the increase in the cost measured by a fixed weight hospital
the wage index should be corrected by limits to the efficient utilization of market basket. In this manner, the
the beginning of the Federal fiscal year resources. market basket measures only the pure
(that is, by October 1, 2004), but CMS Since the inception of the IPPS, the price change. Only when the index is
was unable to publish the correction by projected change in the hospital market rebased using a more recent base period
the beginning of the fiscal year. basket has been the integral component would the quantity and intensity effects
On December 30, 2004, we published of the update factor by which the be captured in the cost weights.
in the Federal Register a correction prospective payment rates are updated Therefore, we rebase the market basket
notice to the FY 2005 IPPS final rule every year. An explanation of the periodically so the cost weights reflect
that included the corrected wage data hospital market basket used to develop changes in the mix of goods and
for four hospitals that meet all of the the prospective payment rates was services that hospitals purchase
three above stated criteria (69 FR published in the Federal Register on (hospital inputs) to furnish inpatient
78526). These corrections were effective September 1, 1983 (48 FR 39764). We care between base periods. We last
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23385
rebased the hospital market basket cost B. Rebasing and Revising the Hospital reports. These cost reports are from IPPS
weights effective for FY 2003 (67 FR Market Basket hospitals only. They do not reflect data
50032, August 1, 2002), with FY 1997 from hospitals excluded from the IPPS
1. Development of Cost Categories and or CAHs. The IPPS cost reports yield
data used as the base period for the
Weights seven major expenditure or cost
construction of the market basket cost
weights. a. Medicare Cost Reports categories: wages and salaries, employee
benefits, contract labor,
The major source of expenditure data pharmaceuticals, professional liability
for developing the proposed rebased insurance (malpractice), blood and
and revised hospital market basket cost blood products, and a residual ‘‘all
weights is the FY 2002 Medicare cost other.’’
b. Other Data Sources Annual I–O estimates. The 1997 Annual 2. PPS—Selection of Price Proxies
In addition to the Medicare cost I–O is an update of the 1992 I–O tables, After computing the FY 2002 cost
reports, other sources of data used in while the 1997 Benchmark I–O is an weights for the proposed rebased
developing the market basket weights entirely new set of numbers derived hospital market basket, it is necessary to
are the Benchmark Input-Output Tables from the 1997 Economic Census. The select appropriate wage and price
(I–Os) created by the Bureau of 2002 Benchmark Input-Output tables proxies to reflect the rate-of-price
Economic Analysis, U.S. Department of are not yet available. Therefore, we are change for each expenditure category.
Commerce, and the Business Expenses proposing to use the 1997 Benchmark I– With the exception of the Professional
Survey developed by the Bureau of the O data in the proposed FY 2002-based Liability proxy, all the indicators are
Census, U.S. Department of Commerce, market basket, to be effective for FY based on Bureau of Labor Statistics
from its Economic Census. 2006. Instead of using the less detailed, (BLS) data and are grouped into one of
New data for these Census sources are less accurate Annual I–O data, we aged the following BLS categories:
scheduled for publication every 5 years, the 1997 Benchmark I–O data forward to • Producer Price Indexes—Producer
but often take up to 7 years after the FY 2002. The methodology we used to Price Indexes (PPIs) measure price
reference year. Only an Annual I–O is age the data involves applying the changes for goods sold in other than
produced each year, but the Annual I– annual price changes from the price retail markets. PPIs are preferable price
O contains less industry detail than proxies for goods that hospitals
proxies to the appropriate cost
does the Benchmark I–O. When we purchase as inputs in producing their
categories. We repeat this practice for
rebased the market basket using FY outputs because the PPIs would better
each year.
1997 data in the FY 2003 IPPS final reflect the prices faced by hospitals. For
rule, the 1997 Benchmark I–O was not The ‘‘all other’’ cost category is further example, we use a special PPI for
yet available. Therefore, we did not divided into other hospital expenditure prescription drugs, rather than the
incorporate data from that source into category shares using the 1997 Consumer Price Index (CPI) for
the FY 1997-based market basket (67 FR Benchmark Input-Output tables. prescription drugs because hospitals
50033). However, we did use a Therefore, the ‘‘all other’’ cost category generally purchase drugs directly from
secondary source, the 1997 Annual expenditure shares are proportional to the wholesaler. The PPIs that we use
Input-Output tables. The third source of their relationship to ‘‘all other’’ totals in measure price change at the final stage
data, the 1997 Business Expenditure the I–O tables. For instance, if the cost of production.
Survey (now known as the Business for telephone services were to represent • Consumer Price Indexes—
Expenses Survey) was used to develop 10 percent of the sum of the ‘‘all other’’ Consumer Price Indexes (CPIs) measure
weights for the utilities and telephone I–O (see below) hospital expenditures, change in the prices of final goods and
services categories. then telephone services would represent services bought by the typical
The 1997 Benchmark I–O data are a 10 percent of the market basket’s ‘‘all consumer. Because they may not
much more comprehensive and represent the price faced by a producer,
other’’ cost category.
EP04MY05.031</GPH>
complete set of data than the 1997 we used CPIs only if an appropriate PPI
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23386 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
was not available, or if the expenditures rates and employee benefits per hour. cost category weight to which it is
were more similar to those of retail Appropriately, they are not affected by applied. The CPIs, PPIs, and ECIs
consumers in general rather than shifts in employment mix. selected meet these criteria.
purchases at the wholesale level. For We evaluated the price proxies using
Chart 2 sets forth the complete
example, the CPI for food purchased the criteria of reliability, timeliness,
availability, and relevance. Reliability proposed market basket including cost
away from home is used as a proxy for
indicates that the index is based on categories, weights, and price proxies.
contracted food services.
• Employment Cost Indexes— valid statistical methods and has low For comparison purposes, the
Employment Cost Indexes (ECIs) sampling variability. Timeliness implies corresponding FY 1997-based market
measure the rate of change in employee that the proxy is published regularly, at basket is listed as well. A summary
wage rates and employer costs for least once a quarter. Availability means outlining the choice of the various
employee benefits per hour worked. that the proxy is publicly available. proxies follows the chart.
These indexes are fixed-weight indexes Finally, relevance means that the proxy BILLING CODE 4120–01–P
and strictly measure the change in wage is applicable and representative of the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23387
EP04MY05.032</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23388 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23389
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23390 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
measured by the PPI (Commodity Code Code #SOP3500) is applied to this the PPI for finished goods less food and
#1562) is applied to this component. component. Using this index removes energy for the blood proxy because we
The same proxy was used in the FY the double-counting of food and energy believe it will best be able to proxy price
1997-based market basket. prices, which are already captured changes (not quantities or required tests)
elsewhere in the market basket. The associated with blood purchased by
m. Photographic Supplies
same proxy was used in the FY 1997- hospitals. We will continue to evaluate
The percentage change in the price of based index. The weight for this cost this proxy for its appropriateness and
photographic supplies as measured by category is higher than in the FY 1997- will explore the development of
the PPI (Commodity Code #1542) is based index because the weight for alternative price indexes to proxy the
applied to this component. The same blood and blood products (1.082) is price changes associated with this cost.
proxy was used in the FY 1997-based added to it. In the FY 1997-based market
market basket. s. Telephone
basket, we included a separate cost
n. Rubber and Plastics category for blood and blood products, The percentage change in the price of
using the BLS PPI (Commodity Code telephone services as measured by the
The percentage change in the price of #063711) for blood and derivatives as a CPI for all urban consumers (CPI Code
rubber and plastic products as measured price proxy. A review of recent trends # CUUR0000SEED) is applied to this
by the PPI (Commodity Code #07) is in the PPI for blood and derivatives component. The same proxy was used
applied to this component. The same suggests that its movements may not be in the FY 1997-based market basket.
proxy was used in the FY 1997-based consistent with the trends in blood costs
market basket. t. Postage
faced by hospitals. While this proxy did
o. Paper Products not match exactly with the product The percentage change in the price of
hospitals are buying, its trend over time postage as measured by the CPI for all
The percentage change in the price of
appears to be reflective of the historical urban consumers (CPI Code #
converted paper and paperboard
price changes of blood purchased by CUUR0000SEEC01) is applied to this
products as measured by the PPI
hospitals. However, an apparent component. The same proxy was used
(Commodity Code #0915) is used. The
divergence over recent periods led us to in the FY 1997-based market basket.
same proxy was used in the FY 1997-
reevaluate whether the PPI for blood
based market basket. u. All Other Services: Labor Intensive
and derivatives was an appropriate
p. Apparel measure of the changing price of blood. The percentage change in the ECI for
The percentage change in the price of We ran test market baskets classifying compensation paid to service workers
apparel as measured by the PPI blood in three separate cost categories: employed in private industry is applied
(Commodity Code #381) is applied to blood and blood products, contained to this component. The same proxy was
this component. The same proxy was within chemicals as was done for the FY used in the FY 1997-based market
used in the FY 1997-based market 1992-based index, and within basket.
basket. miscellaneous products. These v. All Other Services: Nonlabor
categories use as proxies the following Intensive
q. Machinery and Equipment PPIs: The PPI for blood and blood
The percentage change in the price of products, the PPI for chemicals, and the The percentage change in the all-
machinery and equipment as measured PPI for finished goods less food and items component of the CPI for all urban
by the PPI (Commodity Code #11) is energy, respectively. Of these three consumers (CPI Code # CUUR0000SA0)
applied to this component. The same proxies, the PPI for finished goods less is applied to this component. The same
proxy was used in the FY 1997-based food and energy moved most like the proxy was used in the FY 1997-based
market basket. recent blood cost and price trends. In market basket.
addition, the impact on the overall For further discussion of the
r. Miscellaneous Products market basket by using different proxies rationales for choosing many of the
The percentage change in the price of for blood was negligible, mostly due to specific price proxies, we refer the
all finished goods less food and energy the relatively small weight for blood in reader to the August 1, 2002 final rule
as measured by the PPI (Commodity the market basket. Therefore, we chose (67 FR 50037).
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23391
adding the relative weights for these services, we are proposing to use the When we rebased the market basket to
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23392 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
reflect FY 1997 data, we did not change Therefore, the FY 1992-based labor-
the labor-related share (67 FR 50041). related share is the current measure.
Although we are proposing to validated consistently through our highlighted some apparent problems
continue to calculate the labor-related regression analysis. Regression analysis with the specification because the
share by adding the relative weights of is a statistical technique that determines overall regression results appear to be
the labor-related operating cost the relationship between a dependent masking underlying problems. It did not
categories, we continue to evaluate variable and one or more independent seem reasonable that urban hospitals
alternative methodologies. In the May 9, variables. We tried several regression would have a labor share below their
2002 Federal Register (67 FR 31447), we specifications in an effort to determine actual compensation share or that the
discussed our research on the the proportion of costs that are discrepancy between urban and rural
methodology for the labor-related share. influenced by the area wage index. hospitals would be this large. When we
This research involved analyzing the Furthermore, MedPAC raised the standardized the Medicare operating
compensation share (the sum of wages possibility that regression may be an cost per Medicare discharge for case
and salaries and benefits) separately for alternative to the current market basket mix, the fit, as measured by adjusted R-
urban and rural hospitals, using methodology. Our initial regression squared, fell dramatically and the
regression analysis to determine the specification (in log form) was Medicare urban/rural discrepancy became even
proportion of costs influenced by the operating cost per Medicare discharge as larger.
area wage index, and exploring the dependent variable and the Based on this initial result, we tried
alternative methodologies to determine independent variables being the area two modifications to the FY 1997
whether all or only a portion of wage index, the case-mix index, the regressions to correct for the underlying
professional fees and nonlabor intensive ratio of residents per bed (as proxy for problems. First, we edited the data
services should be considered labor- IME status), and a dummy variable that differently to determine if a few reports
related. equals one if the hospital is located in were causing the inconsistent results.
Our original analysis, which appeared a metropolitan area with a population of We found when we tightened the edits,
in the May 9, 2002 Federal Register (67 1 million or more. (A dummy variable the wage index coefficient was lower
FR 31447) and which focused mainly on represents the presence or absence of a and the fit was worse. When we
edited FY 1997 hospital data, found that particular characteristic.) This loosened the edits, we found higher
the compensation share of costs for regression produced a coefficient for all wage index coefficients and still a worse
hospitals in rural areas was higher on hospitals for the area wage index of fit. Second, we added additional
average than the compensation share for 0.638 (which is equivalent to the labor variables to the regression equation to
hospitals in urban areas. We also share and can be interpreted as an attempt to explain some of the variation
researched whether only a proportion of elasticity because of the log that was not being captured. We found
the costs in professional fees and labor- specification) with an adjusted R- the best fit occurred when the following
intensive services should be considered squared of 64.3. (Adjusted R-squared is variables were added: The occupancy
labor-related, not the entire cost a measure of how well the regression rate, the number of hospital beds, a
categories. However, there was not model fits the data.) While, on the dummy variable that equals one if the
enough information available to make surface, this appeared to be a reasonable hospital is privately owned and zero
this determination. result, this same specification for urban otherwise, a dummy variable that equals
Our finding that the average hospitals had a coefficient of 0.532 one if the hospital is government-
compensation share of costs for rural (adjusted R-squared = 53.2) and a controlled and zero otherwise, the
hospitals was higher than the average coefficient of 0.709 (adjusted R-squared Medicare length-of-stay, the number of
EP04my05.036</GPH>
compensation for urban hospitals was = 36.4) for rural hospitals. This FTEs per bed, and the age of fixed
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23393
assets. The result of this specification model to the one described in the May hospitals in urban areas. Rural areas had
was a wage index coefficient of 0.620 9, 2002 Federal Register (67 FR 31447) an average compensation share of 63.3
(adjusted R-squared = 68.7), with the as having the best fit, with two notable percent, while urban areas had a share
regression on rural hospitals having a exceptions. First, the area wage index is of 60.5 percent. This compares to a
coefficient of 0.772 (adjusted R-squared replaced by compensation per FTE, share of 61.2 percent for all hospitals.
= 45.0) and the regression on urban where compensation is the sum of Due to these problems, we do not
hospitals having a coefficient of 0.474 hospital wages and salaries, contract believe the regression analysis is
(adjusted R-squared = 60.9). Neither of labor costs, and benefits. The area wage producing sound enough evidence at
these alternatives seemed to help the index is a payment variable computed this point for us to make the decision to
underlying difficulties with the by averaging wages across all hospitals change from the current method for
regression analysis. within each MSA, whereas calculating the labor-related share. We
Subsequent to the work described compensation per FTE differs from one continue to analyze these data and work
above, we have undertaken the research hospital to the next. Second, the case- on alternative specifications, including
necessary to reevaluate the current mix index is no longer included as a working with MedPAC, who in the past
assumptions used in determining the regressor because it is correlated with have done similar analysis in their
labor-related share. We ran regressions other independent variables in the studies of payment adequacy.
applying the previous specifications to regression. In other words, the other Comments on this approach would be
more recent data (FY 2001 and FY independent variables are capturing part welcomed, given the difficulties we
2002), and, as described below, we ran of the effect of the case-mix index. We have encountered.
regressions using alternative made these two specification changes in We also continue to look into ways to
specifications. Once again we encourage an attempt to only use cost variables to refine our market basket approach to
comments on this research and any explain the variation in Medicare more accurately account for the
information that is available to help operating costs per discharge. We proportion of costs influenced by the
determine the most appropriate believe this is appropriate in order to local labor market. Specifically, we are
measure. compare to the results we are getting looking at the professional fees and
The first step in our regression from the market basket methodology, labor-intensive cost categories to
analysis to determine the proportion of which is based solely on cost data. As determine if only a proportion of the
hospitals’ costs that varied with labor- we will show below, the use of payment costs in these categories should be
related costs was to edit the data, which variables on the right-hand side of the considered labor-related, not the entire
had significant outliers in some of the equation appears to be producing less cost category. Professional fees include
variables we used in the regressions. We reasonable results when cost data are management and consulting fees, legal
originally began with an edit that used.
services, accounting services, and
excluded the top and bottom 5 percent engineering services. Labor-intensive
of reports based on average Medicare The revised specification for FY 2002 services are mostly building services,
cost per discharge and number of produced a coefficient for all hospitals but also include other maintenance and
discharges. We also used edits to for compensation per FTE of 0.673 repair services.
exclude reports that did not meet basic (which is roughly equivalent to the We conducted preliminary research
criteria for use, such as having costs labor share and can be interpreted as an into whether the various types of
greater than zero for total, operating, elasticity because of the log professional fees are more or less likely
and capital for the overall facility and specification) with an adjusted R- to be purchased in local labor markets.
just the Medicare proportion. We also squared of 63.7. The coefficient result Through contact with a handful of
required that the hospital occupancy for FY 2001 is 64.5, with an adjusted R- hospitals in only two States, we asked
rate, length-of-stay, number of beds, squared of 65.2. (For comparison, a for the percentages of their advertising,
FTEs, and overall and Medicare separate regression for FY 2002 with the legal, and management and consulting
discharges be greater than zero. Finally, log area wage index and log case-mix services that they purchased in either
we excluded reports with occupancy index included in the set of regressors local, regional, or national labor
rates greater than one. displays a log area wage index markets. The results were quite
Our regression specification (in log coefficient of 75.6 (adjusted R-squared = consistent across all of the hospitals,
form) was Medicare operating cost per 67.7).) For FY 2001, the coefficient for indicating most advertising and legal
Medicare discharge as the dependent the log area wage index is 72.3 (adjusted services are purchased in local or
variable (the same dependent variable R-squared = 67.9). On the surface, these regional markets and nearly all
we used in the regression analysis seem to be reasonable results. However, management and consulting services are
described in the May 9, 2002 Federal a closer look reveals some problems. In purchased in national labor markets.
Register) with the independent FY 2001, the coefficient for urban This suggested we may be appropriately
variables being the compensation per hospitals was 59.6 (adjusted R-squared reflecting advertising and legal services
FTE, the ratio of interns and residents = 57.3), and the coefficient for rural in the labor-related share, but we plan
per bed (as proxy for IME status), the hospitals was 61.3 (adjusted R-squared to investigate further whether
occupancy rate, the number of hospital = 50.6). On the other hand, in FY 2002, management and consulting services are
beds, a dummy variable that equals one the coefficient for urban hospitals appropriately reflected. We do not
if the hospital is privately owned and is increased to 69.2 (adjusted R-squared = believe that this limited effort produced
zero otherwise, a dummy variable that 55.9), and the coefficient for rural enough evidence for us to change our
equals one if the hospital is government- hospitals decreased to 58.2 (adjusted R methodology. However, we do plan to
controlled and is zero otherwise, the squared = 46.0). The results for FY 2001 expand our efforts in this area to ensure
Medicare length-of-stay, the number of seem reasonable, but not when we appropriately determine the labor-
FTEs per bed, the age of fixed assets, compared with the results for FY 2002. related share. We are soliciting data or
and a dummy variable that equals one Furthermore, for FY 2002 the studies that would be helpful in this
if the hospital is located in a compensation share of costs for analysis. We are unsure if we will be
metropolitan area with a population of hospitals in rural areas was higher on able to finish this analysis in time for
1 million or more. This is a similar average than the compensation share for inclusion in the FY 2006 IPPS final rule.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23394 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
As mentioned previously, we are the percentage increase of the limits, children’s and cancer hospitals and
proposing to continue to calculate the which in certain years was based upon RNHCIs. However, when we compare
labor-related share by adding the the market basket percentage increase. the weights for LTCHs and IPFs to the
relative weights of the operating cost Beginning in FY 2003 and subsequent weights for IPPS hospitals, we did not
categories that are related to, influenced years, the applicable rate-of-increase is find them comparable. Therefore, we do
by, or vary with the local labor markets. the market basket percentage increase. not believe it is appropriate to use the
These categories include wages and The market basket currently (and IPPS market basket for LTCHs and IPFs.
salaries, fringe benefits, professional historically) used is the excluded For similar reasons, we are
fees, contract labor and labor-intensive hospital operating market basket, considering at some other date
services. Since we no longer believe that representing the cost structure of proposing a separate market basket to
postage costs meet our definition of rehabilitation, long-term care, update the adjusted Federal payment
labor-related, we are excluding them psychiatric, children’s, and cancer amount for IRFs, LTCHs, and IPFs. We
from the labor-related share. Using this hospitals (FY 2003 final rule, 67 FR expect that these changes would be
methodology, we calculated a labor- 50042). proposed in separate proposed rules for
related share of 69.731. Therefore, we Because IRFs, LTCHs, and some IPFs each of these three hospital types. We
are proposing a labor-related share of are now paid under a PPS, we are envision that these changes should
69.731. considering developing a separate apply to the adjusted Federal payment
C. Separate Market Basket for Hospitals market basket for these hospitals that rate, and not the portion of the payment
and Hospital Units Excluded from the contains both operating and capital that is based on a facility-specific (or
IPPS costs. We would publish any proposal reasonable cost) payment to the extent
(If you choose to comment on issues to use a revised separate market basket such a hospital or unit is paid under a
in this section, please include the for each of these types of hospitals when blend methodology. In other words, to
caption ‘‘Excluded Hospital Market we propose the nest update of their the extent any of these hospitals are
Basket’’ at the beginning of your respective PPS rates. Children’s and paid under a blend methodology
comment.) cancer hospitals are two of the whereby a percentage of the payment is
remaining three types of hospitals based on reasonable cost principles, we
1. Hospitals Paid Based on Their excluded from the IPPS that are still would not propose to make changes to
Reasonable Costs being paid based solely on their the existing methodology for developing
On August 7, 2001, we published a reasonable costs, subject to target the market basket for the reasonable cost
final rule in the Federal Register (66 FR amounts. (RNHCIs, the third type of portion of the payment because this
41316) establishing the PPS for IRFs, IPPS-excluded entity still subject to portion of the payment is being phased
effective for cost reporting periods target amounts, are reimbursed under out, if it is not already a nonexistent
beginning on or after January 1, 2002. § 403.752(a) of the regulations.) Because feature of the PPSs for IRFs, LTCHs, and
On August 30, 2002, we published a there are a small number of children’s IPFs. We do not believe that it makes
final rule in the Federal Register (67 FR and cancer hospitals and RNHCIs, sense to propose to create an entirely
55954) establishing the PPS for LTCHs, which receive in total less than 1 new methodology for creating the
effective for cost reporting periods percent of all Medicare payments to market basket index which updates the
beginning on or after October 1, 2002. hospitals and because these hospitals ‘‘reasonable cost’’ portion of a blend
On November 15, 2004, we published a provide limited Medicare cost report methodology since the ‘‘reasonable cost
final rule in the Federal Register (69 FR data, we are not proposing to create a portion’’ will last at most for just 1 or
66922) establishing the PPS for the IPFs, separate market basket specifically for 3 additional years (1 year for LTCHs
effective for cost reporting periods these hospitals. Under the broad paid under a blend methodology since
beginning on or after January 1, 2005. authority in sections 1886(b)(3)(A) and LTCHs only have 1 year remaining in
Prior to being paid under a PPS, IRFs, (B), 1886(b)(3)(E), and 1871 of the Act, their transition, and 3 years for IPFs
LTCHs, and IPFs were reimbursed we are proposing to use the proposed since IPFs paid under a blend
solely under the reasonable cost-based FY 2002 IPPS operating market basket methodology only have 3 years
system under § 413.40 of the percentage increase to update the target remaining under a blend methodology).
regulations, which impose rate-of- amounts for children’s and cancer However, the same cannot be said for
increase limits. Children’s and cancer hospitals reimbursed under sections the adjusted Federal payment amount.
hospitals and religious nonmedical 1886(b)(3)(A) and (b)(3)(E) of the Act In the case of the IRF PPS, all IRFs are
health care institutions (RNHCIs) are and the market basket for RNHCIs under paid at 100 percent of the adjusted
still reimbursed solely under the § 403.752(a) of the regulations. This Federal payment amount and will
reasonable cost-based system, subject to proposal reflects our belief that it is best continue to be paid based on 100
the rate-of-increase limits. Under these to use an index that most closely percent of this amount for perpetuity. In
limits, an annual target amount represents the cost structure of the LTCH PPS, most LTCHs (98 percent)
(expressed in terms of the inpatient children’s and cancer hospitals and are already paid at 100 percent of the
operating cost per discharge) is set for RNHCIs. The FY 2002 cost weights for adjusted Federal payment amount. In
each hospital based on the hospital’s wages and salaries, professional the case of the few LTCHs that are paid
own historical cost experience trended liability, and ‘‘all other’’ for children’s under a blend methodology for cost
forward by the applicable rate-of- and cancer hospitals are noticeably reporting periods beginning on or after
increase percentages. To the extent a closer to those in the IPPS operating October 1, 2006, payment will be based
LTCH or IPF receives a blend of market basket than those in the entirely on the adjusted Federal
reasonable cost-based payment and the excluded hospital market basket, which prospective payment rate. In the case of
Federal prospective payment rate is based on the cost structure of IRFs, IPFs, new IPFs (as defined in
amount, the reasonable cost portion of LTCHs, IPFs, and children’s and cancer § 412.426(c)) will be paid at 100 percent
the payment is also subject to the hospitals and RNHCIs. Therefore, we of the adjusted Federal prospective
applicable rate-of-increase percentage. believe it is more appropriate to use the payment rate (the Federal per diem
Section 1886(b)(3)(B)(ii) of the Act sets IPPS operating market basket for payment amount), while all others will
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23395
continue to transition to 100 percent of Although the percent change in the IPPS RNHCIs under § 403.752(a) of the
the Federal per diem payment amount. operating market basket is typically regulations.
In any event, even those transitioning lower than the percent change in the FY Chart 5 shows the historical and
will be at 100 percent of the adjusted 2002-based excluded hospital market forecasted updates under both the
Federal prospective payment rate in 3 basket (see charts), we believe it is proposed FY 2002-based IPPS operating
years. important to propose using the market
Chart 5 compares the updates for the market basket and the proposed FY
basket that most closely reflects the cost 2002-based excluded hospital market
FY 2002-based IPPS operating market structure of children’s and cancer
basket, our proposed index used to basket. The forecasts are based on
hospitals. We invite comments on our Global Insight, Inc. 4th quarter, 2004
update the target amounts for children’s
proposal to use the proposed FY 2002 forecast with historical data through the
and cancer hospitals, and RNHCIs, with
a FY 2002-based excluded hospital IPPS operating market basket to update 3rd quarter of 2004. Global Insight, Inc.
market basket that is based on the the target amounts for children’s and is a nationally recognized economic and
current methodology (that is, based on cancer hospitals reimbursed under financial forecasting firm that contracts
the cost structure of IRFs, LTCHs, IPFs, sections 1886(b)(3)(A) and (b)(3)(E) of with CMS to forecast the components of
and children’s and cancer hospitals). the Act and the market basket for the market baskets.
2. Excluded Hospitals Paid Under a LTCHs and most IPFs are or will be and an increasing percentage of the
Blend Methodology transitioning from reasonable cost-based Federal prospective payment rate. For
As we discuss in greater detail in payments (subject to the TEFRA limits) those LTCHs and IPFs whose PPS
Appendix B to this proposed rule, in the to prospective payments under their payment is comprised in part of a
past, hospitals and hospital units respective PPSs. Under the respective reasonable cost-based payment will
excluded from the IPPS have been paid transition period methodologies for the have those reasonable cost-based
based on their reasonable costs, subject LTCH PPS and the IPF PPS, which are payment amounts limited by the
to TEFRA limits. However, some of described below, payment is based, in hospital’s TEFRA ceiling.
these categories of excluded hospitals part, on a decreasing percentage of the Effective for cost reporting periods
and hospital units are now paid under reasonable cost-based payment amount, beginning on or after October 1, 2002,
EP04MY05.037</GPH>
their own PPSs. Specifically, some which is subject to the TEFRA limits LTCHs are paid under the LTCH PPS,
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23396 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
which was implemented with a 5-year portion of their payments. The proposed is, 15 percent higher or lower) of the
transition period, transitioning existing market basket update is described in total facility average length of stay for
LTCHs to a payment based on the fully detail below. We do not believe the IPPS the hospital. We are proposing to use a
Federal prospective payment rate operating market basket should be used less stringent edit for Medicare length of
(August 30, 2002; 67 FR 55954). for the proposed update to the stay for IPFs, requiring the average
However, a LTCH may elect to be paid reasonable cost-based portion of the length of stay to be within 30 or 50
at 100 percent of the Federal payments to LTCHs or IPFs because this percent (depending on the total facility
prospective rate at the start of any of its market basket does not reflect the cost average length of stay) of the total
cost reporting periods during the 5-year structure of LTCHs and IPFs. facility length of stay. This allows us to
transition period. A ‘‘new’’ LTCH, as increase our sample size by over 150
3. Development of Cost Categories and
defined in § 412.23(e)(4), are paid based reports and produce a cost weight more
Weights for the Proposed FY 2002-
on 100 percent of the standard Federal consistent with the overall facility. The
Based Excluded Hospital Market Basket
rate. Effective for cost reporting periods edit we applied to IPFs when
beginning on or after January 1, 2005, a. Medicare Cost Reports developing the FY 1997-based excluded
IPFs are paid under the IPF PPS under The major source of expenditure data hospital market basket was based on the
which they receive payment based on a for developing the proposed rebased best available data at the time.
prospectively determined Federal per and revised excluded hospital market We believe that limiting our sample to
diem rate that is based on the sum of the basket cost weights is the FY 2002 hospitals with a Medicare average
average routine operating, ancillary, and Medicare cost reports. We choose FY length of stay within a comparable range
capital costs for each patient day of 2002 as the base year because we of the total facility average length of stay
psychiatric care in an IPF, adjusted for believe this is the most recent, relatively provides a more accurate reflection of
budget neutrality. During a 3-year complete year (with a 90-percent the structure of costs for Medicare
transition period, existing IPFs are paid reporting rate) of Medicare cost report treatments. Our method results in
based on a blend of the reasonable cost- data. These cost reports are from including in our data set hospitals with
based payments and the Federal rehabilitation, psychiatric, long-term a share of Medicare patient days relative
prospective per diem base rate. For cost care, children’s, cancer, and religious to total patient days that was
reporting periods beginning on or after nonmedical excluded hospitals. They approximately three times greater than
January 1, 2008, existing IPFs are to be do not reflect data from IPPS hospitals for those hospitals excluded from our
paid based on 100 percent of the Federal or CAHs. These are the same hospitals sample. Our goal is to measure cost
per diem rate. A ‘‘new’’ IPF, as defined included in the FY 1997-based excluded shares that are reflective of case-mix and
in § 412.426(c), are paid based on 100 hospital market basket, except for practice patterns associated with
percent of the Federal per diem religious nonmedical hospitals. Due to providing services to Medicare
payment amount. Any LTCHs or IPFs insufficient Medicare cost report data beneficiaries.
that receive a PPS payment that for these excluded hospitals, their cost Cost weights for benefits, contract
includes a reasonable cost-based reports yield only four major labor and blood and blood products
payment during its respective transition expenditure or cost categories: Wages were derived using the proposed FY
period will have that portion of its and salaries, pharmaceuticals, 2002-based IPPS market basket. This is
payment subject to the TEFRA limits. professional liability insurance necessary because these data are poorly
Under the broad authority of section (malpractice), and a residual ‘‘all other.’’ reported in the cost reports for non-IPPS
1886(b)(3)(A) and (b)(3)(B) of the Act, Since the cost weights for the FY hospitals. For example, the ratio of the
for LTCHs and IPFs that are 2002-based excluded hospital market benefit cost weight to the wages and
transitioning to the fully Federal basket are based on facility costs, we are salaries cost weight was applied to the
prospective payment rate, we are proposing to use those cost reports for proposed excluded hospital wages and
proposing to use the rebased FY 2002 IRFs, LTCHs, and children’s, cancer, salaries cost weight to derive a benefit
based-excluded hospital market basket and RNHCIs whose Medicare average cost weight for the proposed excluded
to update the reasonable cost-based length of stay is within 15 percent (that hospital market basket.
EP04MY05.038</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23397
b. Other Data Sources The ‘‘all other’’ cost category is further change in the prices of final goods and
In addition to the Medicare cost divided into other hospital expenditure services bought by the typical
reports, the other source of data used in category shares using the 1997 consumer. Because they may not
developing the excluded hospital Benchmark Input-Output tables. represent the price faced by a producer,
market basket weights is the Benchmark Therefore, the ‘‘all other’’ cost category we used CPIs only if an appropriate PPI
Input-Output Tables (I–Os) created by expenditure shares are proportional to was not available, or if the expenditures
the Bureau of Economic Analysis, U.S. their relationship to ‘‘all other’’ totals in were more similar to those of retail
Department of Commerce. the I–O tables. For instance, if the cost consumers in general rather than
New data for this source are for telephone services were to represent purchases at the wholesale level. For
scheduled for publication every 5 years, 10 percent of the sum of the ‘‘all other’’ example, the CPI for food purchased
but often take up to 7 years after the I–O (see below) hospital expenditures, away from home is used as a proxy for
reference year. Only an Annual I–O is then telephone services would represent contracted food services.
produced each year, but the Annual I– 10 percent of the market basket’s ‘‘all
• Employment Cost Indexes—
O contains less industry detail than other’’ cost category. The remaining
detailed cost categories under the Employment Cost Indexes (ECIs)
does the Benchmark I–O. When we
residual ‘‘all other’’ cost category were measure the rate of change in employee
rebased the excluded hospital market
derived using the 1997 Benchmark wage rates and employer costs for
basket using FY 1997 data in the FY
Input-Output Tables aged to FY 2002 employee benefits per hour worked.
2003 IPPS final rule, the 1997
Benchmark I–O was not yet available. using relative price changes. These indexes are fixed-weight indexes
Therefore, we did not incorporate data and strictly measure the change in wage
4. Proposed 2002–Based Excluded rates and employee benefits per hour.
from that source into the FY 1997-based Hospital Market Basket—Selection of
excluded hospital market basket (67 FR Appropriately, they are not affected by
Price Proxies shifts in employment mix.
50033). However, we did use a
secondary source the 1997 Annual After computing the FY 2002 cost We evaluated the price proxies using
Input-Output tables. The third source of weights for the proposed rebased the criteria of reliability, timeliness,
data, the 1997 Business Expenditure excluded hospital market basket, it is availability, and relevance. Reliability
Survey (now known as the Business necessary to select appropriate wage indicates that the index is based on
Expenses Survey), was used to develop and price proxies to reflect the rate-of- valid statistical methods and has low
weights for the utilities and telephone price change for each expenditure sampling variability. Timeliness implies
services categories. category. With the exception of the that the proxy is published regularly, at
The 1997 Benchmark I–O data are a Professional Liability proxy, all the least once a quarter. Availability means
much more comprehensive and indicators are based on Bureau of Labor that the proxy is publicly available.
complete set of data than the 1997 Statistics (BLS) data and are grouped Finally, relevance means that the proxy
Annual I–O estimates. The 1997 Annual into one of the following BLS categories: is applicable and representative of the
I–O is an update of the 1992 I–O tables, • Producer Price Indexes—Producer cost category weight to which it is
while the 1997 Benchmark I–O is an Price Indexes (PPIs) measure price applied. The CPIs, PPIs, and ECIs
entirely new set of numbers derived changes for goods sold in other than selected meet these criteria and,
from the 1997 Economic Census. The retail markets. PPIs are preferable price therefore, we believe they continue to be
2002 Benchmark Input-Output tables proxies for goods that hospitals the best measure of price changes for the
are not yet available. Therefore, we are purchase as inputs in producing their
cost categories to which they are
proposing to use the 1997 Benchmark I– outputs because the PPIs would better
applied.
O data in the proposed FY 2002-based reflect the prices faced by hospitals. For
excluded hospital market basket, to be example, we use a special PPI for Chart 7 sets forth the complete
effective for FY 2006. Instead of using prescription drugs, rather than the proposed FY 2002-based excluded
the less detailed, less accurate Annual Consumer Price Index (CPI) for hospital market basket including cost
I–O data, we aged the 1997 Benchmark prescription drugs because hospitals categories, weights, and price proxies.
I–O data forward to FY 2002. The generally purchase drugs directly from For comparison purposes, the
methodology we used to age the data the wholesaler. The PPIs that we use corresponding FY 1997-based excluded
involves applying the annual price measure price change at the final stage hospital market basket is listed as well.
changes from the price proxies to the of production. A summary outlining the choice of the
appropriate cost categories. We repeat • Consumer Price Indexes— various proxies follows the charts.
this practice for each year. Consumer Price Indexes (CPIs) measure BILLING CODE 4120–01–P
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23398 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.039</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23399
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23400 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
d. Fuel, Oil, and Gasoline i. Food: Direct Purchases (Commodity Code #381) is applied to
The percentage change in the price of this component. The same proxy was
The percentage change in the price of
processed foods and feeds as measured used in the FY 1997-based excluded
gas fuels as measured by the PPI
by the PPI (Commodity Code #02) is hospital market basket.
(Commodity Code #0552) is applied to
this component. The same proxy was applied to this component. The same q. Machinery and Equipment
used in the FY 1997-based excluded proxy was used in the FY 1997-based The percentage change in the price of
hospital market basket. excluded hospital market basket. machinery and equipment as measured
e. Electricity j. Food: Contract Services by the PPI (Commodity Code #11) is
The percentage change in the price of applied to this component. The same
The percentage change in the price of proxy was used in the FY 1997-based
commercial electric power as measured food purchased away from home as
measured by the CPI for all urban excluded hospital market basket.
by the PPI (Commodity Code #0542) is
applied to this component. The same consumers (CPI Code # r. Miscellaneous Products
proxy was used in the FY 1997-based CUUR0000SEFV) is applied to this The percentage change in the price of
excluded hospital market basket. component. The same proxy was used all finished goods less food and energy
in the FY 1997-based excluded hospital as measured by the PPI (Commodity
f. Water and Sewerage market basket. Code #SOP3500) is applied to this
The percentage change in the price of k. Chemicals component. Using this index removes
water and sewerage maintenance as the double-counting of food and energy
measured by the CPI for all urban The percentage change in the price of
prices, which are already captured
consumers (CPI Code # industrial chemical products as elsewhere in the market basket. The
CUUR0000SEHG01) is applied to this measured by the PPI (Commodity Code same proxy was used in the FY 1997-
component. The same proxy was used #061) is applied to this component. based excluded hospital market basket.
in the FY 1997-based excluded hospital While the chemicals hospitals purchase The weight for this cost category is
market basket. include industrial as well as other types higher than in the FY 1997-based index
of chemicals, the industrial chemicals because it also includes blood and blood
g. Professional Liability Insurance component constitutes the largest products. In the FY 1997-based
The proposed FY 2002-based proportion by far. Thus, we believe that excluded hospital market basket, we
excluded hospital market basket uses Commodity Code #061 is the included a separate cost category for
the percentage change in the hospital appropriate proxy. The same proxy was blood and blood products, using the
professional liability insurance (PLI) used in the FY 1997-based excluded BLS PPI (Commodity Code #063711) for
premiums as estimated by the CMS hospital market basket. blood and derivatives as a price proxy.
Hospital Professional Liability Index for l. Medical Instruments A review of recent trends in the PPI for
the proxy of this category. Similar to the blood and derivatives suggests that its
Physicians Professional Liability Index, The percentage change in the price of
movements may not be consistent with
we attempt to collect commercial medical and surgical instruments as
the trends in blood costs faced by
insurance premiums for a fixed level of measured by the PPI (Commodity Code hospitals. While this proxy did not
coverage, holding nonprice factors #1562) is applied to this component. match exactly with the product
constant (such as a change in the level The same proxy was used in the FY hospitals are buying, its trend over time
of coverage). In the FY 1997-based 1997-based excluded hospital market appears to be reflective of the historical
excluded hospital market basket, the basket. price changes of blood purchased by
same price proxy was used. m. Photographic Supplies hospitals. However, an apparent
We continue to research options for The percentage change in the price of divergence over recent periods led us to
improving our proxy for professional reevaluate whether the PPI for blood
photographic supplies as measured by
liability insurance. This research and derivatives was an appropriate
the PPI (Commodity Code #1542) is
includes exploring various options for measure of the changing price of blood.
applied to this component. The same
expanding our current survey, including We ran test market baskets classifying
proxy was used in the FY 1997-based
the identification of another entity that blood in three separate cost categories:
excluded hospital market basket.
would be willing to work with us to blood and blood products, contained
collect more complete and n. Rubber and Plastics within chemicals as was done for the FY
comprehensive data. We are also The percentage change in the price of 1992-based index, and within
exploring other options such as third rubber and plastic products as measured miscellaneous products. These
party or industry data that might assist by the PPI (Commodity Code #07) is categories use as proxies the following
us in creating a more precise measure of applied to this component. The same PPIs: the PPI for blood and blood
PLI premiums. At this time, we have not proxy was used in the FY 1997-based products, the PPI for chemicals, and the
yet identified a preferred option. excluded hospital market basket. PPI for finished goods less food and
Therefore, we are not proposing to make energy, respectively. Of these three
any changes to the proxy in this o. Paper Products proxies, the PPI for finished goods less
proposed rule. The percentage change in the price of food and energy moved most like the
converted paper and paperboard recent blood cost and price trends. In
h. Pharmaceuticals addition, the impact on the overall
products as measured by the PPI
The percentage change in the price of (Commodity Code #0915) is used. The market basket by using different proxies
prescription drugs as measured by the same proxy was used in the FY 1997- for blood was negligible, mostly due to
PPI (PPI Code #PPI283D#RX) is used as based excluded hospital market basket. the relatively small weight for blood in
a proxy for this category. This is a the market basket. Therefore, we chose
special index produced by BLS and is p. Apparel the PPI for finished goods less food and
the same proxy used in the FY 1997- The percentage change in the price of energy for the blood proxy because we
based excluded hospital market basket. apparel as measured by the PPI believe it will best be able to proxy price
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00096 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23401
changes (not quantities or required tests) t. Postage used in the FY 1997-based excluded
associated with blood purchased by hospital market basket.
hospitals. We will continue to evaluate The percentage change in the price of
this proxy for its appropriateness and postage as measured by the CPI for all v. All Other Services: Nonlabor
will explore the development of urban consumers (CPI Code Intensive
alternative price indexes to proxy the #CUUR0000SEEC01) is applied to this
The percentage change in the all-
price changes associated with this cost. component. The same proxy was used
items component of the CPI for all urban
in the FY 1997-based excluded hospital
s. Telephone consumers (CPI Code #CUUR0000SA0)
market basket. is applied to this component. The same
The percentage change in the price of
telephone services as measured by the u. All Other Services: Labor Intensive proxy was used in the FY 1997-based
CPI for all urban consumers (CPI Code excluded hospital market basket.
The percentage change in the ECI for
#CUUR0000SEED) is applied to this For further discussion of the rationale
compensation paid to service workers for choosing many of the specific price
component. The same proxy was used
in the FY 1997-based excluded hospital employed in private industry is applied proxies, we refer the reader to the
market basket. to this component. The same proxy was August 1, 2002 final rule (67 FR 50037).
D. Frequency of Updates of Weights in more frequently than once every 5 years; on a consistent basis in order to rebase
IPPS Hospital Market Basket and and revise the index when necessary.
‘‘(b) Incorporation of explanation in The decision to rebase and revise the
Section 404 of Pub. L. 108–173 rulemaking. The Secretary shall include index has been driven in large part by
(MMA) requires CMS to report in this in the publication of the final rule for the availability of the data necessary to
proposed rule the research that has been payment for inpatient hospitals services produce a complete index. In the past,
done to determine a new frequency for under section 1886(d) of the Social we have supplemented the Medicare
rebasing the hospital market basket. Security Act (42 U.S.C. 1395ww(d)) for cost report data that are available on an
Specifically, section 404 states: fiscal year 2006, an explanation of the annual basis with Bureau of the Census
‘‘(a) More frequent updates in weights. reasons for, and options considered, in hospital expense data that are typically
After revising the weights used in the determining the frequency established available only every 5 years (usually in
hospital market basket under section under subsection (a).’’ years ending in 2 and 7). Because of
1886(b)(3)(B)(iii) of the Social Security This section of the proposed rule this, we have generally rebased the
Act (42 U.S.C. 1395ww(b)(3)(B)(iii)) to discusses the research we have done to index every 5 years. However, prior to
reflect the most current data available, fulfill this requirement, and proposes a the requirement associated with section
the Secretary shall establish a frequency rebasing frequency that makes optimal 404 of Pub. L. 108–173, there was no
for revising such weights, including the use of available data. legislative requirement regarding the
labor share, in such market basket to Our past practice has been to monitor timing of rebasing the hospital market
EP04MY05.041</GPH>
reflect the most current data available the appropriateness of the market basket basket nor was there a hard rule that we
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23402 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
used in determining this frequency. basket percent changes were over developing the hospital market basket
ProPAC, one of MedPAC’s predecessor various periods. We used the results weights, we have used the Medicare
organizations, did a report to the from these areas of research to assist in cost reports to determine the weights for
Secretary on April 1, 1985, that our determination of a new rebasing six major cost categories (wages,
supported periodic rebasing at least frequency. Based on this analysis, we benefits, contract labor,
every 5 years. are proposing to rebase the hospital pharmaceuticals, professional liability,
The most recent rebasing of the market basket every 4 years. This would and blood). In FY 2002, these six
hospital market basket was just 3 years mean the next rebasing would occur for categories accounted for 68.5 percent of
ago, for the FY 2003 update. Since its the FY 2010 update. the hospital market basket. Therefore, it
inception with the hospital PPS in FY As we have described in numerous is possible to develop a new set of
1984, the hospital market basket has Federal Register documents over the market basket weights for these
been rebased several times (FY 1987 past few decades, the hospital market categories on an annual basis, but with
update, FY 1991 update, FY 1997 basket weights are the compilation of a substantial lag (for the FY 2006
update, FY 1998 update, and FY 2003 data from more than one data source. update, we consider the latest year of
update). One of the reasons we believe When we are discussing rebasing the historical data to be FY 2002).
it appropriate to rebase the index on a weights in the hospital market basket, The second source of data is the U.S.
periodic basis is that rebasing (as there are two major data sources: (1) The Department of Commerce, Bureau of
opposed to revising, as explained in Medicare cost reports; and (2) expense Economic Analysis’ Benchmark Input-
section IV.A. of this preamble) tends to surveys from the Bureau of the Census Output (I–O) table. These data are
have only a minor impact on the actual (the Economic Census is used to published every 5 years with a more
percentage increase applied to the PPS develop data for the Bureau of significant lag than the Medicare cost
update. There are two major reasons for Economic Analysis’ input-output reports. For example, the 1997
this: (1) The cost category weights tend series). We will explore the future Benchmark I–O tables were not
to be relatively stable over shorter term availability of each of these data published until the beginning of 2003.
periods (3 to 5 years); and (2) the update sources. We have sometimes used data from a
is based on a forecast, which means the Each Medicare-participating hospital third data source, the Bureau of the
individual price series tend not to grow submits a Medicare cost report to CMS Census’ Business Expenses Survey
as differently as they have in some on an annual basis. It takes roughly 2 (BES), which is also published every 5
historical periods. years before ‘‘nearly complete’’ Medicare years. The BES data are used as an input
We focused our research in two major cost report data are available. For into the I–O data, and thus are
areas. First, we reviewed the frequency example, approximately 90 percent of published a few months prior to the
and availability of the data needed to FY 2002 Medicare cost report data were release of the I–O. However, the BES
produce the market basket. Second, we available in October 2004 (only 50 contains only a fraction of the detail
analyzed the impact on the market percent of FY 2003 data was available), contained in the I–O.
basket of determining the market basket although only 20 percent of these Chart 9 below takes into consideration
weights under various frequencies. We reports were settled. We choose FY 2002 the expected availability of these major
did this by developing market baskets as the base year because we believe this data sources and summarizes how they
that had base years for every year is the most recent, relatively complete could be incorporated into the
between 1997 and 2002, and then year (with a 90 percent reporting rate) development of future market basket
analyzed how different the market of Medicare cost report data. In weights.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23403
It would be necessary to age the I–O (there can be significant utilization and and 2002 I–O data) and FY 2015 (using
or BES data to the year for which cost intensity changes over that length FY 2011 cost report data and 2002 I–O
report data are available using the price period, as opposed to only a year or data). This means that while we are
changes between those periods. While two), it would be significantly worse to making optimal use of the Medicare cost
not a preferred method in developing age data over an 8-year or 9-year period. report data, we would be forced to use
the market basket weights, we have If we were on a 5-year rebasing the same I–O data in consecutive
done this in the past when rebasing the frequency, for the FY 2016 update, we rebasings and would have to age that
index. We are proposing to age the 1997 would use cost report data for FY 2012 data as much as 9 years to use the same
Benchmark I–O data for this proposed and the newly available 2007 I–O data. year as the cost report data.
rule. Again, the I–O data would have to be For a rebasing frequency of every 4
As the table clearly indicates, the aged only 5 years to match the cost years, our next rebasing would be for
most optimal rebasing frequency from a report data. the FY 2010 update using FY 2006
data availability standpoint is every 5 We can look at the implications of Medicare cost report data and 1997 I–O
years. That is, if we were to next rebase determining a rebasing frequency of data. This is also problematic because
for the FY 2011 update, we could use every 3 or 4 years. Considering a the 1997 I–O data would need to be
the 2002 Benchmark I–O data that frequency of 3 years first, we would aged 9 years to match the cost report
would recently be available. In order to next rebase for the FY 2009 update data. The next two rebasings would be
match the Medicare cost report data that using FY 2005 Medicare cost report data for the FY 2014 update (using FY 2010
would be available at that time (FY 2007 and 1997 I–O data (the same data cost report data and 2002 I–O data) and
data), we would have to age the I–O data currently being used in the proposed FY FY 2018 (using FY 2014 cost report data
to FY 2007. However, this would be 2002-based market basket). This is and 2007 I–O data). Again, this
aging the data only 5 years, whereas if problematic because the 1997 I–O data frequency would make optimal use of
the rebasing frequency was determined would need to be aged 8 years to match the Medicare cost report data but would
to be every 4 years, we would have to the cost report data. The next two require aging of the I–O data between 7
age 1997 I–O data to FY 2006. While rebasings would be for the FY 2012 and 9 years in order to match the cost
EP04MY05.042</GPH>
aging data over 5 years is problematic update (using FY 2008 cost report data report data.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23404 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
It is clear from this analysis that did this by using the current historical weights for wages and salaries, benefits,
neither the 3-year nor 4-year rebasing data that are available (both Medicare contract labor, pharmaceuticals, blood
frequencies makes as good use of all the cost report and I–O) to develop market and blood products, and all other costs.
data as rebasing every 5 years. In baskets with base year weights for each We used the 1997 Benchmark I–O data
addition, when comparing the 3-year year between FY 1997 and FY 2002. We to fill out the remainder of the market
and 4-year rebasing frequencies, no one then analyzed how differently the basket weights (note that this produces
method stands out as being significantly market baskets moved over various a different index for FY 1997 than the
improved over another. Thus, this historical periods. official FY 1997-based hospital market
analysis does not lead us to draw any Approaching the analysis this way
basket that used the Annual 1997 I–O
definitive conclusions as to a rebasing allowed us to develop six hypothetical
data), aging the data to the appropriate
frequency more appropriate than every market baskets with different base years
(FY 1997, FY 1998, FY 1999, FY 2000, year to match the cost report data. This
5 years.
Our second area of research in FY 2001, and FY 2002). As we have means the FY 2002-based index used in
determining a new rebasing frequency done when developing the official this analysis matches the FY 2002-based
was to analyze the impact on the market market baskets, we used Medicare cost market basket we are proposing in this
basket of determining the market basket report data where available. Thus, cost rule. Chart 10 shows the weights from
weights under various frequencies. We report data were used to determine the these hypothetical market baskets:
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23405
Note that the weights remain the results of this analysis will show, it consider the hypothetical FY 1997-
relatively stable between periods. It is is for this reason that rebasing the based index to be the benchmark
for this reason that we believe defining market basket more frequently than measure and the other indexes to
the market basket as a Laspeyres-type, every 5 years is expected to have little indicate the impact of rebasing over
fixed-weight index is appropriate. impact on the overall percent change in various frequencies. The hypothetical
Because the weights in the market the hospital market basket. FY 2000-based index would reflect the
basket are generally for aggregated costs Using these hypothetical market impact of rebasing every 3 years, the
(for example, wages and salaries for all baskets, we can produce market basket hypothetical FY 2001-based index
employees), there is not much volatility percent changes over historical periods would reflect the impact of rebasing
in the weights between periods, to determine what is the impact of using every 4 years, and the hypothetical FY
especially over shorter time spans. As 2002-based index would reflect the
EP04MY05.043</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23406 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
It is clear from this comparison that be published 60 days before the FR 27876), September 1, 1994 (59 FR
there is little difference between the provisions of the rule can become 45517), June 2, 1995 (60 FR 29229),
indexes, and, for some FYs, there would effective. September 1, 1995 (60 FR 45815), May
be no difference in the market basket We would like to rebase all of our 31, 1996 (61 FR 27466), and August 30,
update factor if we had rebased the indexes (PPS operating, PPS capital, 1996 (61 FR 46196) issues of the Federal
market basket more frequently. In excluded hospital with capital, SNFs, Register. The August 1, 2002 (67 FR
particular, there is no difference in the HHAs, and Medicare Economic Index) 50032) rule discussed the most recent
hypothetical indexes based between FY on a regular schedule. Therefore, if we revision and rebasing of the CIPI to a FY
2000 and FY 2002. This suggests that were to choose a 3-year rebasing 1997 base year, which reflects the
setting the rebasing frequency to 3, 4, or schedule, we would have to rebase more capital cost structure facing hospitals in
5 years will have little or no impact on than one index at a time. This may that year.
the resulting market basket. As we potentially limit the amount of time we We are proposing to revise and rebase
found when analyzing data availability, could devote to the market basket the CIPI to a FY 2002 base year to reflect
this portion of our research does not rebasing process. In addition, we the more recent structure of capital costs
suggest that rebasing the market basket recognize that, in the future, we may be in hospitals. Unlike the PPS operating
more frequently than every 5 years required to develop additional market market basket, we do not have FY 2002
results in an improved market basket or baskets that would require frequent Medicare cost report data available for
that there is any noticeable difference rebasing. the development of the capital cost
between rebasing every 3 or 4 years. Given the number of market baskets weights, due to a change in the FY 2002
Market basket rebasing is a 1-year to we are responsible for rebasing and cost reporting requirements. Rather, we
2-year long process that includes data revising, the regulatory process for each, used hospital capital expenditure data
processing, analytical work, and the availability of source data, we for the capital cost categories of
methodology reevaluation, and believe that while it is not necessary, depreciation, interest, and other capital
regulatory process. After developing a rebasing and revising the hospital expenses for FY 2001 and aged these
rebased and revised market basket, there market baskets every 4 years is the most data to a FY 2002 base year using the
are extensive internal review processes appropriate frequency to meet the relevant vintage-weighted price proxies.
that a rule must undergo, both in legislative requirement. As with the FY 1997-based index, we
proposed and final form. Once the have developed two sets of weights in
E. Capital Input Price Index Section
proposed rule has been published, there order to calculate the proposed FY
is a 60-day comment period set aside for The Capital Input Price Index (CIPI) 2002-based CIPI. The first set of
the public to respond to the proposed was originally described in the proposed weights identifies the
rule. After comments are received, we September 1, 1992 Federal Register (57 proportion of hospital capital
then need adequate time to research and FR 40016). There have been subsequent expenditures attributable to each
reply to all comments submitted. The discussions of the CIPI presented in the expenditure category, while the second
last part of the regulatory process is the May 26, 1993 (58 FR 30448), September set of proposed weights is a set of
EP04MY05.044</GPH>
60-day requirement—the final rule must 1, 1993 (58 FR 46490), May 27, 1994 (59 relative vintage weights for depreciation
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00102 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23407
and interest. The set of vintage weights are distributed among the cost interest, proxied by average yield on
is used to identify the proportion of categories of depreciation, interest, and domestic municipal bonds, and 15
capital expenditures within a cost other, reflecting the assumption that the percent to for-profit interest, proxied by
category that is attributable to each year underlying cost structure of leases is average yield on Moody’s Aaa bonds (67
over the useful life of the capital assets similar to capital costs in general. As FR 50044). The methodology used to
in that category. A more thorough was done in previous rebasings of the derive this split is explained in the June
discussion of vintage weights is CIPI, we assumed 10 percent of lease 2, 1995 issue of the Federal Register (60
provided later in this section. expenses are overhead and assigned FR 29233). We are proposing to derive
Both sets of proposed weights are them to the other capital expenses cost the split using the relative FY 2001
developed using the best data sources category as overhead. The remaining
Medicare cost report data on interest
available. In reviewing source data, we lease expenses were distributed to the
determined that the Medicare cost expenses for government/nonprofit and
three cost categories based on the
reports provided accurate data for all proportion of depreciation, interest, and profit hospitals. Based on these data, we
capital expenditure cost categories. We other capital expenses to total capital are proposing a 75/25 split between
are proposing to use the FY 2001 costs excluding lease expenses. government/nonprofit and profit
Medicare cost reports for PPS hospitals, Depreciation contains two interest. We believe it is important that
aged to FY 2002, excluding expenses subcategories: building and fixed this split reflects the latest relative cost
from hospital-based subproviders, to equipment and movable equipment. The structure of interest expenses. The
determine weights for all three cost split between building and fixed proposed split of 75/25 had little (less
categories: depreciation, interest, and equipment and movable equipment was than 0.1 percent in any given year) or
other capital expenses. We compared determined using the Medicare cost no effect on the annual capital market
the weights determined from the reports. This methodology was also basket percent change in both the
Medicare cost reports to the 2002 used to compute the FY 1997-based historical and forecasted periods.
Bureau of the Census’ Business index.
Chart 12 presents a comparison of the
Expenses Survey and found the weights Total interest expense cost category is
split between government/nonprofit and proposed FY 2002-based CIPI capital
to be similar to those developed from
profit interest. The FY 1997-based CIPI cost weights and the FY 1997-based CIPI
the Medicare cost reports.
Lease expenses are not broken out as allocated 85 percent of the total interest capital cost weights.
a separate cost category in the CIPI, but cost weight to government/nonprofit
EP04my05.045</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00103 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23408 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Because capital is acquired and paid Survey began collecting depreciation capture the actual amount of the
for over time, capital expenses in any expenses. We hope to be able to use physical acquisition, net of the effect of
given year are determined by both past these data in future rebasings. price inflation. This real annual
and present purchases of physical and In order to estimate capital purchases purchase amount for building and fixed
financial capital. The vintage-weighted from AHA data on depreciation equipment was produced by deflating
CIPI is intended to capture the long- expenses, the expected life for each cost the nominal annual purchase amount by
term consumption of capital, using category (building and fixed equipment, the building and fixed equipment price
vintage weights for depreciation movable equipment, and interest) is proxy, the Boeckh Institutional
(physical capital) and interest (financial needed to calculate vintage weights. We Construction Index. Because building
capital). These vintage weights reflect used FY 2001 Medicare cost reports to and fixed equipment have an expected
the proportion of capital purchases determine the expected life of building life of 23 years, the vintage weights for
attributable to each year of the expected and fixed equipment and movable building and fixed equipment are
life of building and fixed equipment, equipment. The expected life of any deemed to represent the average
movable equipment, and interest. We piece of equipment can be determined purchase pattern of building and fixed
used the vintage weights to compute by dividing the value of the asset equipment over 23-year periods. With
vintage-weighted price changes (excluding fully depreciated assets) by real building and fixed equipment
associated with depreciation and its current year depreciation amount. purchase estimates available back to
interest expense. This calculation yields the estimated 1963, we averaged sixteen 23-year
Vintage weights are an integral part of useful life of an asset if depreciation periods to determine the average vintage
the CIPI. Capital costs are inherently were to continue at current year levels, weights for building and fixed
complicated and are determined by assuming straight-line depreciation. equipment that are representative of
complex capital purchasing decisions, From the FY 2001 cost reports, the average building and fixed equipment
over time, based on such factors as expected life of building and fixed purchase patterns over time. Vintage
interest rates and debt financing. In equipment was determined to be 23 weights for each 23-year period are
addition, capital is depreciated over years, and the expected life of movable calculated by dividing the real building
time instead of being consumed in the equipment was determined to be 11 and fixed capital purchase amount in
same period it is purchased. The CIPI years. The FY 1997-based CIPI showed any given year by the total amount of
accurately reflects the annual price the same expected life for the two purchases in the 23-year period. This
changes associated with capital costs, categories of depreciation. calculation is done for each year in the
and is a useful simplification of the Although we are proposing to use this 23-year period, and for each of the
actual capital investment process. By methodology for deriving the useful life sixteen 23-year periods. We are
accounting for the vintage nature of of an asset, we intend to conduct a proposing to use the average of each
capital, we are able to provide an further review of the methodology
year across the sixteen 23-year periods
accurate, stable annual measure of price between the publication of this
to determine the 2002 average building
changes. Annual nonvintage price proposed rule and the final rule. We
and fixed equipment vintage weights for
changes for capital are unstable due to plan to review alternate data sources, if
the FY 2002-based CIPI.
the volatility of interest rate changes available, and analyze in more detail the
and, therefore, do not reflect the actual hospital’s capital cost structure reported For movable equipment vintage
annual price changes for Medicare in the Medicare cost reports. weights, the real annual capital
capital-related costs. CMS’ CIPI reflects We are proposing to use the building purchase amounts for movable
the underlying stability of the capital and fixed equipment and movable equipment derived from the AHA Panel
acquisition process and provides equipment weights derived from FY Survey were used to capture the actual
hospitals with the ability to plan for 2001 Medicare cost reports to separate amount of the physical acquisition, net
changes in capital payments. the depreciation expenses into annual of price inflation. This real annual
To calculate the vintage weights for amounts of building and fixed purchase amount for movable
depreciation and interest expenses, we equipment depreciation and movable equipment was calculated by deflating
needed a time series of capital equipment depreciation. Year-end asset the nominal annual purchase amount by
purchases for building and fixed costs for building and fixed equipment the movable equipment price proxy, the
equipment and movable equipment. We and movable equipment were PPI for Machinery and Equipment.
found no single source that provides the determined by multiplying the annual Based on our determination that
best time series of capital purchases by depreciation amounts by the expected movable equipment has an expected life
hospitals for all of the above life calculations from the FY 2001 of 11 years, the vintage weights for
components of capital purchases. The Medicare cost reports. We then movable equipment represent the
early Medicare cost reports did not have calculated a time series back to 1963 of average expenditure for movable
sufficient capital data to meet this need. annual capital purchases by subtracting equipment over an 11-year period. With
While the AHA Panel Survey provided the previous year asset costs from the real movable equipment purchase
a consistent database back to 1963, it current year asset costs. From this estimates available back to 1963,
did not provide annual capital capital purchase time series, we were twenty-eight 11-year periods were
purchases. The AHA Panel Survey able to calculate the vintage weights for averaged to determine the average
provided a time series of depreciation building and fixed equipment and vintage weights for movable equipment
expenses through 1997 which could be movable equipment. Each of these sets that are representative of average
used to infer capital purchases over of vintage weights is explained in detail movable equipment purchase patterns
time. From 1998 to 2001, hospital below. over time. Vintage weights for each 11-
depreciation expenses were calculated For building and fixed equipment year period are calculated by dividing
by multiplying the AHA Annual Survey vintage weights, the real annual capital the real movable capital purchase
total hospital expenses by the ratio of purchase amounts for building and amount for any given year by the total
depreciation to total hospital expenses fixed equipment derived from the AHA amount of purchases in the 11-year
from the Medicare cost reports. Panel Survey were used. The real period. This calculation was done for
Beginning in 2001, the AHA Annual annual purchase amount was used to each year in the 11-year period, and for
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00104 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23409
each of the twenty-eight 11-year determined that hospital debt calculated by dividing the nominal total
periods. We are proposing to use the instruments have an expected life of 23 capital purchase amount for any given
average of each year across the twenty- years, the vintage weights for interest year by the total amount of purchases in
eight 11-year periods to determine the are deemed to represent the average the 23-year period. This calculation is
average movable equipment vintage purchase pattern of total equipment done for each year in the 23-year period
weights for the FY 2002-based CIPI. over 23-year periods. With nominal total and for each of the sixteen 23-year
For interest vintage weights, the equipment purchase estimates available periods. We are proposing to use the
nominal annual capital purchase back to 1963, sixteen 23-year periods average of each year across the sixteen
amounts for total equipment (building
were averaged to determine the average 23-year periods to determine the average
and fixed, and movable) derived from
vintage weights for interest that are interest vintage weights for the FY 2002-
the AHA Panel and Annual Surveys
were used. Nominal annual purchase representative of average capital based CIPI. The vintage weights for the
amounts were used to capture the value purchase patterns over time. Vintage FY 1997 CIPI and the proposed FY 2002
of the debt instrument. Because we have weights for each 23-year period are CIPI are presented in Chart 13.
After the capital cost category weights reflect the rate of increase for each are the same as those used in the FY
were computed, it was necessary to expenditure category. Our proposed 1997-based CIPI. We still believe these
select appropriate price proxies to price proxies for the FY 2002-based CIPI are the most appropriate proxies for
EP04MY05.046</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00105 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23410 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
hospital capital costs that meet our Moody’s Baa bonds average yield as explained more fully in the August 30,
selection criteria of relevance, proxy for the for-profit interest cost 1996 final rule (61 FR 46196). The
timeliness, availability, and reliability. category. There was no difference in the proposed proxies are presented in Chart
We ran the proposed FY 2002-based two sets of index percent changes either 14.
index using the Moody’s Aaa bonds historically or forecasted. The rationale
average yield and then using the for selecting these price proxies is
Global Insight, Inc. forecasts a 0.7 (building and fixed equipment, and 2006, as indicated in Chart 15.
percent increase in the FY 2002-based movable equipment) and a 2.7 percent Accordingly, we are proposing a 0.7
CIPI for 2006, as shown in Chart 15. increase in other capital expense prices, percent increase in the CIPI.
This is the result of a 1.3 percent partially offset by a 2.3 percent decrease
increase in projected depreciation prices in vintage-weighted interest rates in FY
EP04MY05.047</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00106 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23411
Rebasing the CIPI from FY 1997 to FY caption ‘‘Postacute Care Transfers’’ at day (§ 412.4(f)(1)). Transfer cases are
2002 decreased the percent change in the beginning of your comment.) also eligible for outlier payments. The
the FY 2006 forecast by 0.1 percentage outlier threshold for transfer cases is
1. Background
point, from 0.8 to 0.7, as shown in Chart equal to the fixed-loss outlier threshold
12. The difference is caused mostly by Existing regulations at § 412.4(a) for nontransfer cases, divided by the
changes in the relationships between define discharges under the IPPS as geometric mean length of stay for the
the cost category weights within situations in which a patient is formally DRG, multiplied by the length of stay for
depreciation and interest. The fixed released from an acute care hospital or the case, plus one day. The purpose of
depreciation cost weight relative to the dies in the hospital. Section 412.4(b) the IPPS transfer payment policy is to
movable depreciation cost weight and defines transfers from one acute care avoid providing an incentive for a
the nonprofit/government interest cost hospital to another, and § 412.4(c) hospital to transfer patients to another
weight relative to the for-profit interest defines transfers to certain postacute hospital early in the patients’ stay in
cost weight are both less in the FY 2002- care providers. Our policy provides that, order to minimize costs while still
based CIPI. The changes in these in transfer situations, full payment is receiving the full DRG payment. The
relationships have a small effect on the made to the final discharging hospital transfer policy adjusts the payments to
FY 2002-based CIPI percent changes. and each transferring hospital is paid a approximate the reduced costs of
However, when added together, they are per diem rate for each day of the stay, transfer cases.
responsible for a negative one-tenth not to exceed the full DRG payment that 2. Changes to DRGs Subject to the
percentage point difference between the would have been made if the patient Postacute Care Transfer Policy
FY 2002-based CIPI and the FY 1997- had been discharged without being (§§ 412.4(c) and (d))
based CIPI. transferred. Section 1886(d)(5)(J) of the Act
The per diem rate paid to a provides that, effective for discharges on
V. Other Decisions and Proposed transferring hospital is calculated by or after October 1, 1998, a ‘‘qualified
Changes to the IPPS for Operating Costs dividing the full DRG payment by the discharge’’ from one of 10 DRGs
and GME Costs geometric mean length of stay for the selected by the Secretary to a postacute
A. Postacute Care Transfer Payment DRG. Based on an analysis that showed care provider would be treated as a
Policy (§ 412.4) that the first day of hospitalization is the transfer case. This section required the
most expensive (60 FR 45804), our Secretary to define and pay as transfers
(If you choose to comment on issues policy provides for payment that is all cases assigned to one of 10 DRGs
EP04MY05.048</GPH>
in this section, please include the double the per diem amount for the first selected by the Secretary, if the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00107 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23412 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
individuals are discharged to one of the DRG must meet, for both of the 2 most procedure, in addition to the
following postacute care settings: recent years for which data are tracheostomy code that was previously
• A hospital or hospital unit that is available, in order to be included under required for assignment to DRG 483.
not a subsection 1886(d) hospital. the postacute care transfer policy: Specifically, if the patient’s case
(Section 1886(d)(1)(B) of the Act • At least 14,000 postacute care involves a major O.R. procedure (a
identifies the hospitals and hospital transfer cases; procedure whose code is included on
units that are excluded from the term • At least 10 percent of its postacute the list that is assigned to DRG 468
‘‘subsection (d) hospital’’ as psychiatric care transfers occurring before the (Extensive O.R. Procedure Unrelated to
hospitals and units, rehabilitation geometric mean length of stay; Principal Diagnosis), except for
hospitals and units, children’s hospitals, • A geometric mean length of stay of tracheostomy codes 31.21 and 31.29),
long-term care hospitals, and cancer at least 3 days; and the case is assigned to the DRG 541. If
hospitals.) • If a DRG is not already included in the patient does not have an additional
• A SNF (as defined at section the policy, a decline in its geometric major O.R. procedure (that is, if there is
1819(a) of the Act). mean length of stay during the most only a tracheostomy code assigned to
• Home health services provided by a recent 5-year period of at least 7 the case), the case is assigned to DRG
home health agency, if the services percent. 542.
relate to the condition or diagnosis for In the FY 2004 IPPS final rule, we Based on data analysis, we
which the individual received inpatient identified 21 new DRGs that met these determined that neither DRG 541 nor
hospital services, and if the home health criteria. We also determined that one DRG 542 would have enough cases to
services are provided within an DRG from the original group of 10 DRGs meet the existing threshold of 14,000
appropriate period (as determined by (DRG 263) no longer met the volume transfer cases for inclusion in the
the Secretary). criterion of 14,000 transfer cases. postacute care transfer policy.
In the July 31, 1998 IPPS final rule (63 Therefore, we removed DRGs 263 and Nevertheless, we believed the cases that
FR 40975 through 40976), we specified 264 (DRG 264 is paired with DRG 263) would be incorporated into these two
that a patient discharged to home would from the policy and expanded the DRGs remained appropriate candidates
be considered transferred to postacute postacute care transfer policy to include for application of the postacute care
care if the patient received home health payments for transfer cases in the new transfer policy and that the subdivision
services within 3 days after the date of 21 DRGs, effective October 1, 2003. As of DRG 483 should not change the
discharge. In addition, in the July 31, a result, a total of 29 DRGs were subject original application of the postacute
1998 final rule, we did not include to the postacute care transfer policy in care transfer policy to the cases once
patients transferred to a swing-bed for FY 2004. In the FY 2004 IPPS final rule, included in that DRG. Therefore, for FY
skilled nursing care in the definition of we indicated that we would review and 2005, we proposed alternate criteria to
postacute care transfer cases (63 FR update this list periodically to assess be applied in cases where DRGs do not
40977). whether additional DRGs should be satisfy the existing criteria, for
Section 1886(d)(5)(J) of the Act added or existing DRGs should be discharges occurring on or after October
directed the Secretary to select 10 DRGs removed (68 FR 45413). 1, 2004 (69 FR 28273 and 28374). The
based upon a high volume of discharges For FY 2005, we analyzed the proposed new criteria were designed to
to postacute care and a disproportionate available data from the FY 2003 address situations such as those posed
use of postacute care services. As MedPAR file. For the 2 most recent by the split of DRG 483, where there
discussed in the July 31, 1998 final rule, years of available data (FY 2002 and FY remain substantial grounds for inclusion
these 10 DRGs were selected in 1998 2003), we found that no additional of cases within the postacute care
based on the MedPAR data from FY DRGs qualified under the four criteria transfer policy, although one or more of
1996. Using that information, we set forth in the IPPS final rule for FY the original criteria may no longer
identified and selected the first 20 DRGs 2004. We also analyzed the DRGs apply. Under the proposed alternate
that had the largest proportion of included under the policy for FY 2004 criteria, DRGs 430, 541, and 542 would
discharges to postacute care (and at least to determine if they still met the criteria have qualified for inclusion in the
14,000 such transfer cases). In order to to remain under the policy. In addition, postacute care transfer policy.
select 10 DRGs from the 20 DRGs on our we analyzed the special circumstances In the response to comments on our
list, we considered the volume and arising from a change to one of the DRGs FY 2005 proposal, we decided not to
percentage of discharges to postacute included under the policy in FY 2004. adopt the proposed alternate criteria for
care that occurred before the mean In the FY 2005 IPPS final rule (69 FR including DRGs under the postacute
length of stay and whether the 48942), we deleted DRG 483 care transfer policy in the FY 2005 IPPS
discharges occurring early in the stay (Tracheostomy With Mechanical final rule. Instead we adopted the policy
were more likely to receive postacute Ventilation 96+ Hours or Principal of simply grandfathering, for a period of
care. We identified 10 DRGs to be Diagnosis Except Face, Mouth, and 2 years, any cases that were previously
subject to the postacute care transfer Neck Diagnosis) and established the included within a DRG that has split,
rule starting in FY 1999. following new DRGs as replacements: when the split DRG qualified for
Section 1886(d)(5)(J)(iv) of the Act DRG 541 (Tracheostomy With inclusion in the postacute care transfer
authorizes the Secretary to expand the Mechanical Ventilation 96+ Hours or policy for both of the previous 2 years.
postacute care transfer policy for FY Principal Diagnosis Except Face, Mouth Under this policy, the cases that were
2001 or subsequent fiscal years to and Neck Diagnoses With Major O.R. previously assigned to DRG 483 and that
additional DRGs based on a high Procedure) and DRG 542 (Tracheostomy now fall into DRGs 541 and 542
volume of discharges to postacute care with Mechanical Ventilation 96+ Hours continue to be subject to the policy.
facilities and a disproportionate use of or Principal Diagnosis Except Face, Therefore, effective for discharges on or
postacute care services. In the FY 2004 Mouth and Neck Diagnoses Without after October 1, 2004, 30 DRGs,
IPPS final rule (68 FR 45412), we Major O.R. Procedure). Cases in the including new DRGs 541 and 542, are
expanded the postacute care transfer existing DRG 483 were assigned to the subject to the postacute care transfer
policy to include additional DRGs. We new DRGs 541 and 542 based on the policy. We indicated that we would
established the following criteria that a presence or absence of a major O.R. monitor the frequency with which these
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00108 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23413
cases are transferred to postacute care transfer policy is applied to a DRG, but criteria to be included under the policy
settings and the percentage of these the frequency of transfers may well rise in subsequent fiscal years. Because the
cases that are short-stay transfer cases. again if the DRG is removed from the geometric mean length of stay for DRG
Because we did not adopt the proposed policy.’’ We indicated that we would 263 showed only a 6-percent decrease
alternate criteria for DRG inclusion in consider adopting this general policy since 1999, DRG 263 did not qualify to
the postacute care transfer policy, DRG once we had evaluated the experience be added to the policy for FY 2005
430 (Psychoses) did not meet the criteria with the specific cases that are subject under the existing criteria that were
for inclusion and has not been subject to the grandfathering policy for FY 2005 included in last year’s rule. DRG 263
to the postacute care transfer policy for and FY 2006. would have qualified under the volume
FY 2005. We also invited comments on In the May 18, 2004 proposed rule, we threshold and percent of short-stay
how to treat the cases formerly included also called attention to the data transfer cases under the proposed new
in a split DRG after the grandfathering concerning DRG 263, which was subject alternate criteria contained in the FY
period. to the postacute care transfer policy 2005 proposed rule. However, it still
We note that some commenters also until FY 2004. We removed DRG 263 would not have met the proposed
suggested that, in place of the proposed from the postacute care transfer policy required decline in length of stay to
alternate criteria, we should adopt a for FY 2004 because it did not have the qualify to be added to the policy for FY
policy of permanently applying the minimum number of cases (14,000) 2005. We indicated that we would
postacute care transfer policy to a DRG transferred to postacute care (13,588 continue to monitor the experience with
once it has initially qualified for transfer cases in FY 2002, with more DRG 263, especially in light of the
inclusion in the policy. These than 50 percent of transfer cases being comment that recommended a general
commenters noted that removing DRGs short-stay transfers). The FY 2003 policy of grandfathering cases that
from the postacute care transfer policy MedPAR data show that there were qualify under the criteria for inclusion
makes the payment system less stable 15,602 transfer cases in the DRG in FY in the postacute care transfer policy.
and results in inconsistent incentives 2003, of which 46 percent were short- The table below displays the 30 DRGs
over time. They also argued that ‘‘a drop stay transfers. Because we removed the that are included in the postacute care
in the number of transfers to postacute DRG from the postacute care transfer transfer policy, effective for discharges
care settings is to be expected after the policy in FY 2004, it must meet all occurring on or after October 1, 2004.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00109 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23414 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
For this year’s proposed rule, we have examined the relationship between rates decline in the geometric mean length of
conducted an extensive analysis of the of postacute care utilization and the stay is associated with an increase in the
FY 2003 and FY 2004 MedPAR data to geometric mean length of stay and the volume and proportion of total cases in
monitor the effects of the postacute care relationship between a high volume and a DRG that are discharges to postacute
transfer policy. We have also conducted a high proportion of postacute care care. We analyzed these data as part of
an overall assessment of the postacute transfers within a DRG in light of determining whether to retain the
care transfer policy since its inception experience under the current policy. criteria that a DRG must have a decline
in FY 1999. Specifically, we have Specifically, we examined whether a in the geometric mean length of stay of
EP04my05.049</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00110 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23415
at least 7 percent in the previous 5-year in the DRG’s geometric mean length of utilization during the past several years
period to be included under the stay during the most recent 5-year have also experienced an increase in the
postacute care transfer policy. period. It has come to our attention that geometric mean length of stay. The table
Our current criteria for inclusion in not all DRGs that experience an increase below lists a number of DRGs that
the postacute care transfer policy in postacute care utilization also experienced increases in postacute care
include a requirement that, if a DRG is experience a decrease in geometric utilization and increases in the
not already included in the policy, there mean length of stay. In fact, some DRGs geometric mean length of stay from FY
must be a decline of at least 7 percent with increases in postacute care 2002 through FY 2004:
Our current criteria also include a of postacute care transfer cases in care transfer policy to them would have
requirement that a DRG have at least proportion to the total volume of cases no effect.
14,000 total postacute care transfer cases for the DRG or a relatively high volume • Of the remaining 507 DRGs, 220
in order to be included in the policy. of discharges to postacute care facilities, have geometric mean lengths of stay that
We have examined the data on the or both. For this reason, we reviewed are less than 3.0 days. Because the
numbers of transfers and the percentage the data for all DRGs before proposing transfer payment policy provides 2
of postacute care transfer cases across a change to the postacute care transfer times the per diem rate for the first day
DRGs. Among the 30 DRGs currently payment policy. As part of this review, of care (due to the large proportion of
included within the postacute care we found that: charges incurred on the first day of a
transfer policy, the percentage of
• Of 550 DRGs, 26 have been patient’s treatment), including these
postacute care transfer cases ranges from
deactivated and 17 have no cases in the DRGs in the transfer policy would be
a low of 15 percent to a high of 76
FY 2004 MedPAR files. We are not relatively meaningless as they would all
percent. Among DRGs that are not
currently included within the policy, proposing any changes for these DRGs receive a full DRG payment. For this
because application of the postacute reason, we are not proposing any
EP04my05.050</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00111 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23416 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
changes to the postacute care transfer requirement that a DRG have at least recent 5-year period of at least 7
policy for these DRGs. 14,000 total postacute care transfer cases percent; and
• Of the remaining 287 DRGs, 64 have to be included within the postacute care • If the DRG is one of a paired set of
fewer than 100 short-stay transfer cases. transfer policy. DRGs based on the presence or absence
In addition, 39 of these 64 DRGs have Our analysis does confirm that it is of a comorbidity or complication, both
fewer than 50 short-stay transfer cases. appropriate to maintain the requirement paired DRGs are included if either one
Consistent with the statutory guidance, that a DRG must have a geometric mean meets the first three criteria above.
we are not proposing any change to how length of stay of at least 3.0 days in As a result of our analysis, we
we apply the postacute care transfer order to be included within the considered two options for revising the
payment policy to these DRGs because postacute care transfer policy. We
current criteria. Option 1 is to include
we believe that these DRGs do not have believe that this policy should be
all DRGs within the postacute care
a high volume of discharges to postacute retained because, under the transfer
transfer policy. This option has the
care facilities or involve a payment methodology, hospitals receive
advantage of providing consistent
disproportionate use of postacute care the entire payment for cases in these
treatment of all DRGs. However, as we
services. DRGs in the first 2 days of the stay.
Once we eliminated the DRGs cited discussed above, our analysis tends to
Lowering the limit below 3.0 days
above from consideration for the indicate that, at a minimum, it may be
would, therefore, have no effect on
postacute care transfer policy, we appropriate to maintain the requirement
payment for DRGs with geometric mean
examined the characteristics of the that a DRG must have a geometric mean
lengths-of-stay in this range. For the
remaining 223 DRGs. We found that reasons discussed in the May 19, 2003 length of stay of at least 3.0 days
these DRGs had three common proposed rule (68 FR 27199) and because, under the transfer payment
characteristics: because it is a common characteristic of methodology, hospitals receive the
• The DRG had at least 2,000 total DRGs with a large number of cases entire payment for these DRGs in the
postacute care transfer cases. discharged to postacute care, we also first 2 days of the stay. Lowering the
• At least 20 percent of all cases in continue to believe that it is appropriate limit below 3.0 days, would therefore
the DRG were discharged to postacute to retain the criterion that at least 10 have little or no effect on payment for
care settings. percent of all cases that are transferred DRGs with geometric mean lengths of
• 10 percent of all discharges to to postacure care should be short-stay stay in this range.
postacute care were prior to the cases where the patient is transferred Option 2 that we considered is to
geometric mean length of stay for the before the geometric mean length of stay expand the application of the postacute
DRG. for the DRG. We also continue to believe care transfer policy by applying the
Consistent with the statutory that both DRGs in a CC/non-CC pair policy to any DRG that meets the
guidance giving the Secretary the should be subject to the postacute care following criteria:
authority to make a DRG subject to the transfer policy if one of the DRGs meets • The DRG has at least 2,000
postacute care transfer policy based on the criteria for inclusion. By including postacute care transfer cases;
a high volume of discharges to postacute both DRGs in a CC/non-CC pair, our • At least 20 percent of the cases in
care facilities and a disproportionate use policy will preclude an incentive for the DRG are discharged to postacute
of postacute care services, we believe hospitals to code cases in ways designed care;
these DRGs have characteristics that to avoid triggering the application of the • Out of the cases discharged to
make them appropriate for inclusion in policy, for example, by excluding codes postacute care, at least 10 percent occur
the postacute care transfer policy. that would identify a complicating or
As a result of our analysis, we believe before the geometric mean length of stay
comorbid condition in order to assign a for the DRG;.
that it is appropriate to consider major case to a non-CC DRG that is not subject
revisions to the criteria for including a • The DRG has a geometric mean
to the policy. length of stay of at least 3.0 days;
DRG within the postacute care transfer Therefore, we are considering
policy. First, our analysis calls into • If the DRG is one of a paired set of
substantial revisions to the four criteria
question the requirement that a DRG DRGs based on the presence or absence
that are currently used to determine
experience a decline in the geometric of a comorbidity or complication, both
whether a DRG qualifies for inclusion in
mean length of stay over the most recent paired DRGs are included if either one
the postacute care transfer policy. The
5-year period. Our findings that some meets the first three criteria above.
current criteria provide that, in order to
DRGs with increases in postacute care be included within the policy, a DRG Option 2 would expand the
utilization during the past several years must have, for both of the 2 most recent application of the postacute care
have also experienced increases in years for which data are available: transfer policy to 223 DRGs that have
geometric mean length of stay indicate • At least 14,000 total postacute care both a relatively high volume and a
that this criterion is no longer effective transfer cases; relatively high proportion of postacute
to identify those DRGs that should be • At least 10 percent of its postacute care utilization. The proposed change
subject to the postacute care transfer care transfers occurring before the would also avoid applying the postacute
policy. In addition, our findings about geometric mean length of stay; care transfer policy to DRGs with only
the number of DRGs with relatively high • A geometric mean length of stay of a small number or proportion of cases
volumes (at least 2,000 cases) and at least 3 days; transferred to postacute care. The table
relatively high proportions (at least 20 • If a DRG is not already included in below shows the DRGs that would be
percent) of postacute care utilization the policy, a decline in its geometric included in the postacute care transfer
suggest that we should revise the mean length of stay during the most policy under this option:
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00112 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23417
EP04MY05.051</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00113 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23418 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.052</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00114 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23419
EP04MY05.053</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00115 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23420 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.054</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00116 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23421
EP04MY05.055</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00117 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23422 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.056</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00118 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23423
We believe that the analysis that we Option 2. The proposed DRG relative discussion of DRG recalibration in
have conducted suggest that substantial weights included in Tables 5 and 7 of section II.C. of the preamble to this
revisions to the criteria for including a the Addendum to this proposed rule proposed rule, additional transfer cases
DRG within the postacute care transfer also include the effect of changing the would be counted as a fraction of a case
policy are warranted. In this proposed postacute care transfer policy as based on the ratio of a hospital’s transfer
rule, we are formally proposing Option described in Option 2 above. We note payment under the per diem payment
2 as presented above. However, we that if we adopt either option discussed methodology to the full DRG payment
invite comments on both of these above, or a variation based on comments for nontransfer cases.
options and on the analysis that we submitted, we would follow procedures Section 1886(d)(5)(J)(i) of the Act
have presented. similar to those that are currently recognizes that, in some cases, a
The impact section in Appendix A of followed for treating cases identified as substantial portion of the cost of care is
this proposed rule discusses our transfers in the DRG recalibration incurred in the early days of the
EP04MY05.057</GPH>
findings on the effects of adopting process. That is, as described in the inpatient stay. Similar to the policy for
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00119 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23424 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
transfers between two acute care only to the fiscal year involved, and will Was an ACE inhibitor given for the patient
hospitals, transferring hospitals receive not be taken into account in computing with heart failure?
twice the per diem rate for the first day the applicable percentage increase for a • Heart failure
of treatment and the per diem rate for subsequent fiscal year. This measure Did the patient get an assessment of his or
each following day of the stay before the establishes an incentive for IPPS her heart function?
transfer, up to the full DRG payment, for hospitals to submit data on the quality Was an ACE inhibitor given to the patient?
cases discharged to postacute care. measures established by the Secretary. • Pneumonia
However, three of the DRGs subject to We initially implemented section Was an antibiotic given to the patient in a
the postacute care transfer policy 1886(b)(3)(B)(vii) of the Act in the FY timely way?
exhibit an even higher share of costs 2005 IPPS final rule (August 11, 2004, Had a patient received a pneumococcal
very early in the hospital stay in 69 FR 49078) in continuity with the vaccination?
postacute care transfer situations. For Department’s Hospital Quality Initiative Was the patient’s oxygen level assessed?
these DRGs, hospitals receive 50 percent as described at the CMS Web site: These measures have been endorsed
of the full DRG payment plus the single http://www.cms.hhs.gov/quality/ by the National Quality Forum (NQF)
per diem (rather than double the per hospitals. At a press conference on and are a subset of the same measures
diem) for the first day of the stay and December 12, 2002, the Secretary of the currently collected for the JCAHO by its
50 percent of the per diem for the Department of Health and Human accredited hospitals. The Secretary
remaining days of the stay, up to the full Services (HHS) announced a series of
DRG payment. adopted collection of data on these 10
steps that HHS and its collaborators
In previous years, we determined that quality measures in order to: (1) provide
were taking to promote public reporting
DRGs 209 and 211 met this cost useful and valid information about
of hospital quality information. These
threshold and qualified to receive this collaborators include the American hospital quality to the public; (2)
special payment methodology. Because Hospital Association, the Federation of provide hospitals with a sense of
DRG 210 is paired with DRG 211, we American Hospitals, the Association of predictability about public reporting
include payment for cases in that DRG American Medical Colleges, the Joint expectations; (3) begin to standardize
for the same reason we include paired Commission on Accreditation of data and data collection mechanisms;
DRGs in the postacute care transfer Healthcare Organizations (JCAHO), the and (4) foster hospital quality
policy (to eliminate any incentive to National Quality Forum, the American improvement. Many hospitals are
code incorrectly in order to receive Medical Association, the Consumer- currently participating in the National
higher payment for those cases). The FY Purchaser Disclosure Project, the Voluntary Hospital Reporting Initiative
2004 MedPAR data show that DRGs 209 American Association of Retired (NVHRI), and are submitting data to the
and 211 continue to have charges on the Persons, the American Federation of QIO Clinical Warehouse for that
first day of the stay that are higher than Labor-Congress of Industrial purpose.
50 percent of the average charges in the Organizations, the Agency for
DRGs. In addition, several of the DRGs Over the next several years, hospitals
Healthcare Research and Quality, as are encouraged to take steps toward the
that may be added to the postacute care well as CMS, Quality Improvement
transfer policy under the options that adoption of electronic medical records
Organizations (QIOs), and others. (EMRs) that will allow for reporting of
we are considering may also meet the 50 In July 2003, CMS began the National
percent threshold in their average clinical quality data from the electronic
Voluntary Hospital Reporting Initiative record directly to a CMS data repository.
charges. We have identified those (NVHRI), now known as the Hospital
additional DRGs that are subject to the CMS intends to begin working toward
Quality Alliance (HQA): Improving Care
special payment methodology in Tables creating measures specifications and a
through Information. Data from this
5 and 7 of the Addendum to this system or mechanism, or both, that will
initiative have been used to populate a
proposed rule. professional Web site providing data to accept the data directly without
healthcare professionals. This website requiring the transfer of the raw data
B. Reporting of Hospital Quality Data
will be followed by the development of into an XML file as currently exists. The
for Annual Hospital Payment Update
a consumer Web site in an easy-to-use Department is presently working
(§ 412.64(d)(2))
format. The consumer Web site is cooperatively with other Federal
(If you choose to comment on issues agencies in the development of Federal
intended to be an important tool for
in this section, please include the health architecture data standards. CMS
individuals to use in making decisions
caption ‘‘Hospital Quality Data’’ at the encourages hospitals that are developing
about health care options. This
beginning of your document.) systems to conform them to both
information will assist beneficiaries by
1. Background providing comparison information for industry standards and the Federal
Section 1886(b)(3)(B)(vii) of the Act, consumers who need to select a health architecture data standards, and
as added by section 501(b) of Pub. L. hospital. It will also serve as a way to to ensure that they would capture the
108–173 revised the mechanism used to encourage accountability of hospitals for data necessary for quality measures.
update the standardized amount of the care they provide to patients. Ideally, such systems will also provide
payment for inpatient hospital operating The 10 measures that were employed point-of-care decision support that
costs. Specifically, the statute provides in this voluntary initiative as of enables high levels of performance on
for a reduction of 0.4 percentage points November 1, 2003, are: the measures. Hospitals using EMRs to
to the update percentage increase (also • Heart Attack (Acute Myocardial Infarction) produce data on quality measures will
known as the market basket update) for Was aspirin given to the patient upon be held to the same performance
each of FYs 2005 through 2007 for any arrival to the hospital? expectations as hospitals not using
Was aspirin prescribed when the patient EMRs. We are exploring requirements
‘‘subsection (d) hospital’’ that does not was discharged?
submit data on a set of 10 quality Was a beta-blocker given to the patient for the submission of electronically
indicators established by the Secretary upon arrival to the hospital? produced data and other options to
as of November 1, 2003. The statute also Was a beta-blocker prescribed when the encourage the submission of such data,
provides that any reduction will apply patient was discharged? and invite comments on this issue.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00120 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23425
2. Requirements for Hospital Reporting Because section 501(b) of Pub. L. 108– percentage points in their update. By
of Quality Data 173 granted a 30-day grace period for law, a hospital’s actions each year will
The procedures for participating in submission of data for purposes of the not affect its update in a subsequent
the Reporting Hospital Quality Data for FY 2005 update, hospitals were given year. Therefore, a hospital must meet
the Annual Payment Update until August 1, 2004, for completed the requirements for RHQDAPU each
(RHQDAPU) program created in submissions to be successfully accepted year the program is in effect. Failure of
accordance with section 501(b) of Pub. into the QIO Clinical Warehouse. a hospital to receive the full update in
L. 108–173 can be found on the Hospitals were required to submit data one year does not affect its update in a
QualityNet Exchange at the Web site: for the first calendar quarter of 2004. We succeeding year.
received data from over 98 percent of For the first year, FY 2005, there were
http://www.qnetexchange.org in the
the eligible hospitals. no chart-audit validation criteria in
‘‘Reporting Hospital Quality Data for
For FY 2006, we are proposing that place. Based upon our experience from
Annual Payment Update Reference hospitals must continuously submit the the FY 2005 submissions, and upon our
Checklist’’. This checklist also contains required 10 measures each quarter requirement for reliable and valid data,
all of the forms to be completed by according to the schedule found on the we are proposing to place the following
hospitals participating in the program. Web site at http:// additional requirements on hospitals for
In order to participate in the hospital www.qnetexchange.org. New facilities the data for the FY 2006 payment
reporting initiative, hospitals must must submit the data using the same update. These requirements, as well as
follow these steps: schedule, as dictated by the quarter they additional information on validation
• The hospital must identify a begin discharging patients. We will requirements, will be placed on
QualityNet Exchange Administrator expect that all hospitals will have QualityNet Exchange.
who follows the registration process and submitted data to the QIO Clinical • The hospital must have passed our
submits the information through the Warehouse for discharges through the validation requirement of a minimum of
QIO. This must be done regardless of fourth quarter of calendar year 2004 80 percent reliability, based upon our
whether the hospital uses a vendor for (October to December 2004). Hospitals chart-audit validation process, for the
transmission of data. have 41⁄2 months from the end of the third quarter data of calendar year 2004
• All participants must first register fourth quarter until the closing of the in order to receive the full market basket
with the QualityNet Exchange, warehouse (from December 31, 2004, update in FY 2006. These data were due
regardless of the method used for data until May 15, 2005) to make sure there to the clinical warehouse by February
submission. If a hospital is currently are no errors in the submitted data. The 15, 2005. We will use appropriate
participating in the voluntary reporting warehouse is closed at that time in order confidence intervals to determine if a
initiative, re-registration on QualityNet to draw the validation sample and to hospital has achieved an 80-percent
Exchange is unnecessary. However, the begin preparing the public file for reliability. The use of confidence
hospital must complete the Reporting Hospital Compare public reporting. Data intervals will allow us to establish an
Hospital Quality Data for Annual from fourth quarter 2004 discharges appropriate range below the 80-percent
Payment Update Notice of Participation (October through December 2004) will reliability threshold that will
form. All hospitals must send this form be the last quarter of data with a demonstrate a sufficient level of validity
to their QIOs. submission deadline (May 15, 2005) that to allow the data to still be considered
• The hospital must collect data for precedes our deadline for certifying the valid. We will estimate the percent
all 10 measures and submit the data to hospitals eligible to receive the full reliability based upon a review of five
the QIO Clinical Warehouse either using update for FY 2006. As we required for charts and then calculate the upper 95
the CMS Abstraction & Reporting Tool FY 2005, the data for each quarter must percent confidence limit for that
(CART), the JCAHO Oryx Core Measures be submitted on time and pass all of the estimate. If this upper limit is above the
Performance Measurement System edits and consistency checks required in required 80 percent, the hospital data
(PMS), or another third-party vendor the clinical warehouse. Hospitals that will be considered validated. We are
that has met the measurement do not treat a condition or have very few proposing to use the design specific
specification requirements for data discharges will not be penalized and estimate of the variance for the
transmission to QualityNet Exchange. will receive the full annual payment confidence interval calculation, which,
The QIO Clinical Warehouse will update if they submit all the data they in this case, is a single stage cluster
submit the data to CMS on behalf of the do possess. sample, with unequal cluster sizes. (For
hospitals. The submission will be done New hospitals should begin collecting reference, see Cochran, William G.
through QualityNet Exchange, which is and reporting data immediately and (1977) Sampling Techniques, John
a secure site that voluntarily meets or complete the registration requirements Wiley & Sons, New York, chapter 3,
exceeds all current Health Insurance for the RHQDAPU. New hospitals will section 3.12.)
Portability and Accountability Act be held to the same standard as We will use a two-step process to
(HIPAA) requirements, while established facilities when determining determine if a hospital is submitting
maintaining QIO confidentiality as the expected number of discharges for valid data. At the first step, we will
required under the relevant regulations the calendar quarters covered for each calculate the percent agreement for all
and statutes. The information in the fiscal year. The annual payment updates of the variables submitted in all of the
Clinical Warehouse is considered QIO would be based on the successful charts, whether or not they are related
data and, therefore, is subject to the submission of data to CMS via the QIO to the 10 measures. If a hospital falls
stringent QIO confidentiality regulations Clinical Warehouse by the established below the 80 percent cutoff, we will
in 42 CFR Part 480. deadlines. then restrict the comparison to those
For the first year of the program, FY For FY 2005, hospitals could variables associated with the 10
2005, hospitals were required to begin withdraw from RHQDAPU at any time measures required under section 501(b)
the submission of data by July 1, 2004, up to August 1, 2004. Hospitals of Pub. L. 108–173. We will recalculate
under the provisions of section withdrawing from the program did not the percent agreement and the estimated
1886(b)(3)(B)(vii)(II) of the Act, as added receive the full market basket update 95 percent confidence interval and
by section 501(b) of Pub. L. 108–173. and, instead, received a reduction of 0.4 again compare to the 80 percent cutoff
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00121 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23426 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
point. If a hospital passes under this for example). A hospital with more Allowances would be made for
restricted set of variables, the hospital variation among charts will achieve a hospitals that do not treat a particular
will be considered to be submitting broader confidence interval, which may condition and for new hospitals that
valid data for purposes of this proposed allow it to pass even though some charts have not had the opportunity to provide
rule. score very low and others very high. As the required data.
Under the standard appeal process, all we gain experience with this system, we
will adjust it as appropriate over time as C. Sole Community Hospitals (SCHs)
hospitals are given the detailed results and Medicare Dependent Hospitals
of the Clinical Data Abstraction Center we build our sample of validated cases
and learn more about hospital (MDHs) (§§ 412.73, 412.75, 412.77,
(CDAC) reabstraction along with their 412.92 and 412.108)
estimated percent reliability and the performance against the thresholds we
upper bound of the 95 percent establish. (If you choose to comment on issues
confidence interval. If a hospital We believe we have adopted the most in this section, please include the
disagrees with any of the abstraction suitable statistical tests for the hospital caption ‘‘Sole Community Hospitals and
results from the CDAC, the hospital has data we are trying to validate, but we Medicare Dependent Hospitals’’ at the
10 days to appeal these results to their invite public comments on this and any beginning of your comments.)
QIO. The QIO will review the appeal other approaches hospitals choose to
1. Background
with the hospital and, if the QIO review comment on. We are particularly
interested in comments from hospitals Under the IPPS, special payment
agrees with the hospitals original protections are provided to a sole
on the initial starting points for the
abstraction, the QIO will forward the community hospital (SCH). Section
passing threshold, the confidence
appeal to the CDAC for a final 1886(d)(5)(D)(iii) of the Act defines an
interval established, and the sampling
determination. If the QIO does not agree SCH as a hospital that, by reason of
approach. Because we will be receiving
with the hospital’s appeal, then the factors such as isolated location,
data each quarter from hospitals, our
original results stand. When the CDAC weather conditions, travel conditions,
information on the sampling
has made its final determination, the absence of other like hospitals (as
methodology will improve with each
new results will be provided to the determined by the Secretary), or
quarter’s submissions. We will analyze
hospital through the usual processes historical designation by the Secretary
this information to determine if any
and the validation described previously as an essential access community
changes in our methodology are
will be repeated. This process is required. We will make any necessary hospital, is the sole source of inpatient
described in detail at the following Web revisions to the sampling methodology hospital services reasonably available to
site: http://www.qnetexchange.org. and the statistical approach through Medicare beneficiaries. The regulations
Hospitals that fail to receive the manual issuances and other guidance to that set forth the criteria that a hospital
required 80-percent reliability after the hospitals. must meet to be classified as an SCH are
standard appeals process may ask that • The hospital must have two located in § 412.92 of the regulations.
CMS accept the fourth quarter of consecutive quarters of publishable Although SCHs and MDHs are paid
calendar year 2004 validation results as data. The information collected by CMS under a special payment methodology,
a final attempt to present evidence of through this rule will be displayed for they are hospitals that are paid under
reliability. However, in order to process public viewing on the Internet. Prior to section 1886(d) of the Act. Like all IPPS
the fourth quarter data in time to meet this display, hospitals are permitted to hospitals paid under section 1886(d) of
our internal deadlines, these hospitals preview their information as we have it the Act, SCHs and MDHs are paid for
will need to submit the charts requested recorded. In our previous experience, a their discharges based on the DRG
for reabstraction as soon as possible, but number of hospitals requested that this weights calculated under section
no later than August 1, 2005, in order information not be displayed due to 1886(d)(4) of the Act.
for us to guarantee consideration of this errors in the submitted data that were Effective with hospital cost reporting
information. Hospitals that make the not of the sort that could be detected by periods beginning on or after October 1,
early submission of these data and pass the normal edit and consistency checks. 2000, section 1886(d)(5)(D)(i) of the Act
the 80-percent reliability minimum We acquiesced to these requests in the (as amended by section 6003(e) of Pub.
level will satisfy this requirement. In public interest and because of our own L. 101–239) and section 1886(b)(3)(I) of
reviewing the data for these hospitals, desire to present correct data. However, the Act (as added by section 405 of Pub.
we plan to combine the 5 cases from the we still believe that the hospital bears L. 106–113 and further amended by
third quarter and the 5 cases from the the responsibility of submitting correct section 213 of Pub. L. 106–554), provide
fourth quarter into a single sample to data that can serve as valid and reliable that SCHs are paid based on whichever
determine whether the 80 percent information. Therefore, in order to of the following rates yields the greatest
reliability level is met. This gives us the receive the full market basket update for aggregate payment to the hospital for the
greatest accuracy when estimating the IPPS, we are proposing to establish a cost reporting period:
reliability level. The confidence interval requirement for two consecutive • The Federal rate applicable to the
approach accounts for the variation in quarters of publishable data. We hospital;
coding among the 5 charts pulled each published the first quarter of calendar • The updated hospital-specific rate
quarter and for the entire year around year 2004 data in November 2004. The based on FY 1982 costs per discharge;
the overall hospital mean score (on all first two quarters of calendar year 2004 • The updated hospital-specific rate
individual data elements compared). data were published in March 2005. Our based on FY 1987 costs per discharge;
The closer each case’s reliability score is plans are to publish the first three or
to the hospital mean score, the tighter quarters of calendar year 2004 in August • The updated hospital-specific rate
the confidence interval established for 2005. For the FY 2006 update, we will based on FY 1996 costs per discharge.
that hospital. A hospital may code each expect that all hospitals receiving the For purposes of payment to SCHs for
chart equally inaccurately, achieve a full market basket update for FY 2006 to which the FY 1996 hospital-specific rate
tight confidence interval, and fail to have published data for all of the yields the greatest aggregate payment,
pass even though its overall score is just required 10 measures for both the March payments for discharges during FYs
below the passing threshold (75 percent, and August 2005 publications. 2001, 2002, and 2003 were based on a
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00122 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23427
blend of the FY 1996 hospital-specific section 1886(d)(4)(C)(iii) of the Act the method for implementing budget
rate and the greater of the Federal rate requires the Secretary to ensure that neutrality. We have maintained since
or the updated FY 1982 or FY 1987 adjustments to DRG classifications and 1991 that the budget neutrality
hospital-specific rate. For discharges weighting factors result in aggregate adjustment is applied, as described
during FY 2004 and subsequent fiscal DRG payments that are budget neutral above, to all hospitals paid under
years, payments based on the FY 1996 (not greater or less than the aggregate section 1886(d) of the Act, including
hospital-specific rate are 100 percent of payments without the adjustments). In those that are paid based on a hospital-
the updated FY 1996 hospital-specific addition, section 1886(d)(3)(E) of the specific rate. Thus, the budget neutrality
rate. Act requires the Secretary to update the factor applies to payments to SCHs and
For each cost reporting period, the hospital wage index annually in a MDHs.
fiscal intermediary determines which of manner that does not affect aggregate Hospitals that are paid under section
the payment options will yield the payments to hospitals under section 1886(d) of the Act based on a hospital-
highest rate of payment. Payments are 1886(d) of the Act. specific rate are subject to the DRG
automatically made at the highest rate As discussed in the May 9, 1990 IPPS reclassification and recalibration factor
using the best data available at the time proposed rule (55 FR 19466), we component of the budget neutrality
the fiscal intermediary makes the normalize the proposed recalibrated adjustment because, as IPPS hospitals,
determination. However, it may not be DRG weights by an adjustment factor so they are paid based on DRGs. As
possible for the fiscal intermediary to that the average case weight after described above, changes in DRG
determine in advance precisely which recalibration is equal to the average case relative weights from one year to the
of the rates will yield the highest weight prior to recalibration. While this next affect aggregate SCH and MDH
payment by year’s end. In many adjustment is intended to ensure that payments, which in turn affect total
instances, it is not possible to forecast recalibration does not affect total Medicare payments to hospitals under
the outlier payments, the amount of the payments to hospitals under section section 1886(d) of the Act. Because
DSH adjustment, or the IME adjustment, 1886(d) of the Act, our analysis has SCHs and MDHs are paid under section
all of which are applicable only to indicated that the normalization 1886(d) of the Act, we believe their DRG
payments based on the Federal rate. The adjustment does not achieve budget payments should be factored into the
fiscal intermediary makes a final neutrality with respect to aggregate DRG reclassification and recalibration
adjustment at the close of the cost payments to hospitals under section factor component of the budget
reporting period to determine precisely 1886(d) of the Act. In order to comply neutrality adjustment to ensure that
which of the payment rates would yield with the requirement of section recalibration does not affect total
the highest payment to the hospital. 1886(d)(4)(C)(iii) of the Act that the DRG payments to hospitals under section
If a hospital disagrees with the fiscal reclassification changes and 1886(d) of the Act. Therefore, we
intermediary’s determination regarding recalibration of the relative weights be continue to believe it is appropriate to
the final amount of program payment to budget neutral and the requirement of apply the DRG reclassification and
which it is entitled, it has the right to section 1886(d)(3)(E) of the Act that the recalibration factor component of the
appeal the fiscal intermediary’s decision updated wage index be implemented in budget neutrality adjustment to SCHs
in accordance with the procedures set a budget neutral manner, we compare and MDHs. Furthermore, consistent
forth in subpart R of part 400, which the estimated aggregate payments using with the requirement of section
concern provider payment the current year’s relative weights and 1886(d)(4)(C)(iii) of the Act that DRG
determinations and appeals. wage index factors to aggregate reclassification changes and
Under section 1886(d)(5)(G) of the payments using the prior year’s weights recalibration of relative weights be
Act, Medicare dependent hospitals and factors. Based on this comparison, budget neutral, we continue to believe
(MDHs) are paid based on the Federal we compute a budget neutrality it is appropriate to apply this
national rate or, if higher, the Federal adjustment factor. This budget adjustment without removing the
national rate plus 50 percent of the neutrality adjustment factor is then previous year’s adjustment factor.
difference between the Federal national applied to the standardized per In the May 9, 1990 proposed rule (55
rate and the updated hospital-specific discharge payment amount. Beginning FR 19466), we discussed the rationale
rate based on FY 1982 or FY 1987 costs in FY 1994, in applying the current behind our decision to apply the wage
per discharge, whichever is higher. year’s budget neutrality adjustment index portion of the budget neutrality
MDHs do not have the option to use factor to both the standard Federal rate adjustment factors to hospitals that are
their FY 1996 hospital-specific rate. The and hospital-specific rates, we do not paid under section 1886(d) of the Act
regulations that set forth the criteria that remove the prior years’ budget based on a hospital-specific rate. We
a hospital must meet to be classified as neutrality adjustment factors because described how, even though the wage
an MDH are located in § 412.108. estimated aggregate payments after the index is only applicable to those
changes in the DRG relative weights and hospitals that are paid based on the
2. Budget Neutrality Adjustment to Federal rate, the changes in wage index
wage index factors must equal estimated
Hospital Payments Based on Hospital- can cause changes in the payment basis
aggregate payments prior to the changes.
Specific Rate for some SCHs, and MDHs. That is,
If we removed the prior year
Under section 1886(d)(4)(C)(i) of the adjustment, we would not satisfy this depending on the size of the increase in
Act, beginning in FY 1988 and for each condition. (58 FR 30269) their wage index values, some hospitals
fiscal year thereafter, the Secretary is We are bound by the Act to ensure that had been paid based on the
required to adjust the DRG that aggregate payments to hospitals hospital-specific rate could now be paid
classifications and weighting factors under section 1886(d) of the Act are based on the Federal rate when the wage
established under sections 1886(d)(4)(A) projected to neither increase nor index-adjusted Federal rate exceeds the
and (d)(4)(B) of the Act to reflect decrease as a result of the annual hospital-specific rate. In some instances,
changes in treatment patterns, updates to the DRG classifications and hospitals that had previously been paid
technology, and other factors that may weighting factors and for the updated based on the Federal rate may be paid
change the use of hospital resources. For wage indices. However, we have broad based on the hospital-specific rate if the
discharges beginning in FY 1991, authority under the statute to determine Federal rate is adjusted by a lower wage
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00123 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23428 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
index and the hospital-specific rate now the Act, without removing the previous paragraph (j) to § 412.77 relating to the
exceeds the Federal rate. These shifts in year’s budget neutrality adjustment. computation of the hospital-specific rate
the payment basis affect aggregate We have considered the concern that to clarify our longstanding policy that
program payments and, therefore, are it is inappropriate to apply a budget CMS makes an adjustment to the
taken into account in the budget neutrality factor that includes a hospital-specific rate to ensure that
neutrality adjustment. In addition, we component for changes in the wage changes to the DRG reclassifications and
maintained that because we apply the index to a hospital with a payment rate recalibrations of the DRG relative
adjustment to all hospitals paid based that is not adjusted by a wage index weights are made in a manner so that
on the Federal rate under section adjustment. In cases in which a aggregate payments to hospitals under
1886(d) of the Act, it would be fair to hospital’s payments are ultimately section 1886(d) of the Act are not
apply it to hospitals that are paid under based on a hospital-specific rate, that affected, and that this adjustment is
section 1886(d) of the Act based on portion of the payment is not adjusted made without removing the budget
hospital-specific rates. We believed that by a wage index. We believe that our neutrality adjustment for the prior year.
current policy is valid, for the reasons These provisions are cross-referenced in
if we did not apply the budget neutrality
indicated above and in previous § 412.92 for SCHs and § 412.108 for
factor to hospitals paid based on their
rulemaking documents, but we MDHs for purposes of computing the
hospital-specific rate, hospitals that are
recognize that there are also valid hospital-specific rates for these
paid on the Federal rate would be grounds to review the regulations and hospitals. This proposed regulatory text
subject to larger reductions to make up consider other approaches. Accordingly, will reflect the proposed changes to the
for not adjusting payments to hospitals we are revisiting this policy. After way CMS applies the budget neutrality
that are paid based on hospital-specific further consideration of these issues, we adjustment to hospitals paid under
rates. are proposing to remove the wage index section 1886(d) of the Act based on the
Concerns have been raised that component from the budget neutrality hospital-specific rate. Specifically, it
hospitals under section 1886(d) of the adjustment applied to the hospital- would indicate that the budget
Act whose reimbursement is based on a specific rate for hospitals paid under neutrality adjustment made to hospitals
hospital-specific rate should not be section 1886(d) of the Act. The DRG paid under section 1886(d) of the Act
subject to the wage index component of reclassification and recalibration factor based on the hospital-specific rate will
the budget neutrality adjustment. component of the budget neutrality only account for the DRG
Hospital-specific rates reflect the effects adjustment would still apply to these reclassification and recallibration factor
of hospitals’ area wage levels and, hospitals, as payments to SCHs and component. The budget neutrality
therefore, are not adjusted by an area MDHs are based on DRGs and affect adjustment would no longer include the
wage index. Accordingly, the concern is total Medicare payments to hospitals wage index factor component.
that a budget neutrality factor for under section 1886(d) of the Act. In
applying this budget neutrality 3. Technical Change
changes in the wage index should not be
applied to hospitals that are paid based adjustment factor, which would include In the September 4, 1990 IPPS final
on a hospital-specific rate. In addition, only the DRG reclassification and rule (55 FR 36056), we made changes to
it has been suggested that the budget recalibration factor component, to the the regulations at § 412.92 to
neutrality adjustment that CMS applies hospital-specific rate, we would not incorporate the provisions of section
to hospitals paid on a hospital-specific remove the prior years’ budget 6003(e) of Pub. L. 101–239. Section
rate should be similar to the budget neutrality adjustment factors. This 6003(e) of Pub. L. 101–239 provided for
would satisfy the statutory requirement a permanent payment methodology for
neutrality adjustment made to hospitals
that estimated aggregate payments after SCHs that recognized distortions in
in Puerto Rico. Hospitals in Puerto Rico
the changes in the DRG relative weights operating costs in years subsequent to
that are paid under the IPPS are paid
equal estimated aggregate payments the implementation of the IPPS and
based on a blend of the national
prior to the changes. We are proposing provided for opportunity for payment
prospective payment rate and the Puerto
that the wage index portion of the based on a new base year. As a result
Rico-specific prospective payment rate
budget neutrality adjustment would not of this legislation, we deleted from the
(42 CFR 412.212). Beginning in FY
be applied to hospital-specific amounts, regulations a special provision that we
1991, the Puerto Rico-specific as these amounts are not adjusted by an had included under § 412.92(g) that
standardized amount became subject to area wage index. While this may result provided for a payment adjustment to
a budget neutrality adjustment. This in a slightly higher budget neutrality compensate SCHs reasonably for the
budget neutrality adjustment included adjustment applied to all other IPPS increased operating costs resulting from
both the DRG reclassification and hospitals, because these hospitals the addition of new services or facilities.
recalibration factor component and the actually are paid based on the revised We have discovered that, in making
wage index component. However, wage indices and are affected by wage the changes to § 412.92 in the
beginning in FY 1998, the Puerto Rico- index changes, we believe this is September 4, 1990 final rule to remove
specific rate has been subject only to the appropriate. In addition, we note that in paragraph (g), we inadvertently failed to
DRG reclassification and recalibration FY 1990 when this policy was first make a conforming change to paragraph
factor component of the budget discussed, we did not calculate a budget (d)(3) that references the provisions of
neutrality adjustment (62 FR 46038) and neutrality factor that reflected only the paragraph (g) relating to a payment
not to the wage index component of the DRG changes. Because we now calculate adjustment for significant increases in a
budget neutrality adjustment. In other such a budget neutrality factor for SCH’s operating costs. In this proposed
words, beginning in FY 1998, the budget Puerto Rico hospitals, it would not be rule, we are proposing to make this
neutrality adjustment for the Puerto administratively burdensome to apply technical correction by revising
Rico-specific rate reflects only the DRG the same budget neutrality factor to paragraph (d)(3).
reclassification and recalibration factor SCHs and MDHs.
component. This adjustment is We are proposing to add a new D. Rural Referral Centers (§ 412.96)
computed, as described above, for all paragraph (f) to § 412.73, a new (If you choose to comment on issues
hospitals paid under section 1886(d) of paragraph (i) to § 412.75, and a new in this section, please include the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00124 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23429
caption ‘‘Rural Referral Centers’’ at the they were now urban for all purposes discharges criterion for an osteopathic
beginning of your document.) because of the OMB designation of their hospital is at least 3,000 discharges per
Under the authority of section geographic area as urban. However, year, as specified in section
1886(d)(5)(C)(i) of the Act, the subsequently, in the August 1, 2000 1886(d)(5)(C)(i) of the Act.)
regulations at § 412.96 set forth the final rule (65 FR 47089), we indicated
criteria that a hospital must meet in 1. Case-Mix Index
that we were revisiting that decision.
order to qualify under the IPPS as a Specifically, we stated that we would Section 412.96(c)(1) provides that
rural referral center. For discharges permit hospitals that previously CMS will establish updated national
occurring before October 1, 1994, rural qualified as a rural referral center and and regional case-mix index values in
referral centers received the benefit of lost their status due to OMB each year’s annual notice of prospective
payment based on the other urban redesignation of the county in which payment rates for purposes of
standardized amount rather than the they are located from rural to urban to determining rural referral center status.
rural standardized amount. Although be reinstated as a rural referral center. The methodology we use to determine
the other urban and rural standardized Otherwise, a hospital seeking rural the proposed national and regional case-
amounts are the same for discharges referral center status must satisfy the mix index values is set forth in
occurring on or after October 1, 1994, applicable criteria. For FYs 1984 regulations at § 412.96(c)(1)(ii). The
rural referral centers continue to receive through 2004, we used the definitions of proposed national median case-mix
special treatment under both the DSH ‘‘urban’’ and ‘‘rural’’ in § 412.63. For FY index value for FY 2006 includes all
payment adjustment and the criteria for 2005 and subsequent years, the revised urban hospitals nationwide, and the
geographic reclassification. definitions of ‘‘urban’’ and ‘‘rural’’ in proposed regional values for FY 2006
Section 402 of Pub. L. 108–173 raised § 412.64 apply. are the median values of urban hospitals
the DSH adjustment for other rural One of the criteria under which a
within each census region, excluding
hospitals with less than 500 beds and hospital may qualify as a rural referral
those hospitals with approved teaching
rural referral centers. Other rural center is to have 275 or more beds
hospitals with less than 500 beds are programs (that is, those hospitals
available for use (§ 412.96(b)(1)(ii)). A
subject to a 12-percent cap on DSH receiving indirect medical education
rural hospital that does not meet the bed
payments. Rural referral centers are not payments as provided in § 412.105).
size requirement can qualify as a rural
subject to the 12.0 percent cap on DSH These proposed values are based on
referral center if the hospital meets two
payments that is applicable to other discharges occurring during FY 2004
mandatory prerequisites (a minimum
rural hospitals (with the exception of (October 1, 2003 through September 30,
case-mix index and a minimum number
rural hospitals with 500 or more beds). 2004) and include bills posted to CMS’
of discharges) and at least one of three
Rural referral centers are not subject to optional criteria (relating to specialty records through December 2004.
the proximity criteria when applying for composition of medical staff, source of We are proposing that, in addition to
geographic reclassification, and they do inpatients, or referral volume) meeting other criteria, if they are to
not have to meet the requirement that a (§ 412.96(c)(1) through (c)(5)). (See also qualify for initial rural referral center
hospital’s average hourly wage must the September 30, 1988 Federal Register status for cost reporting periods
exceed 106 percent of the average (53 FR 38513)). With respect to the two beginning on or after October 1, 2005,
hourly wage of the labor market area mandatory prerequisites, a hospital may rural hospitals with fewer than 275 beds
where the hospital is located. be classified as a rural referral center must have a case-mix index value for FY
Section 4202(b) of Pub. L. 105–33 if— 2004 that is at least—
states, in part, ‘‘[a]ny hospital classified • The hospital’s case-mix index is at • 1.3659; or
as a rural referral center by the Secretary least equal to the lower of the median
* * * for fiscal year 1991 shall be case-mix index for urban hospitals in its • The median case-mix index value
classified as such a rural referral center census region, excluding hospitals with (not transfer-adjusted) for urban
for fiscal year 1998 and each subsequent approved teaching programs, or the hospitals (excluding hospitals with
year.’’ In the August 29, 1997 final rule median case-mix index for all urban approved teaching programs as
with comment period (62 FR 45999), we hospitals nationally; and identified in § 412.105) calculated by
also reinstated rural referral center • The hospital’s number of discharges CMS for the census region in which the
status for all hospitals that lost the is at least 5,000 per year, or, if fewer, the hospital is located.
status due to triennial review or MGCRB median number of discharges for urban The proposed median case-mix index
reclassification, but not to hospitals that hospitals in the census region in which values by region are set forth in the
lost rural referral center status because the hospital is located. (The number of following table:
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00125 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23430 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
The preceding numbers will be Medicare patient discharges subject to available cost report data we have at this
revised in the final rule to the extent DRG-based payment. time.
required to reflect the updated FY 2004 2. Discharges Therefore, we are proposing that, in
MedPAR file, which will contain data addition to meeting other criteria, a
from additional bills through March 31, Section 412.96(c)(2)(i) provides that
hospital, if it is to qualify for initial
2005. CMS will set forth the national and
rural referral center status for cost
regional numbers of discharges in each
Hospitals seeking to qualify as rural reporting periods beginning on or after
year’s annual notice of prospective
referral centers or those wishing to October 1, 2005, must have as the
payment rates for purposes of
know how their case-mix index value number of discharges for its cost
determining rural referral center status.
compares to the criteria should obtain reporting period that began during FY
As specified in section 1886(d)(5)(C)(ii)
hospital-specific case-mix index values 2002 a figure that is at least—
of the Act, the national standard is set
(not transfer-adjusted) from their fiscal at 5,000 discharges. We are proposing to • 5,000 (3,000 for an osteopathic
intermediaries. Data are available on the update the regional standards based on hospital); or
Provider Statistical and Reimbursement discharges for urban hospitals’ cost • The median number of discharges
(PS&R) System. In keeping with our reporting periods that began during FY for urban hospitals in the census region
policy on discharges, these case-mix 2002 (that is, October 1, 2001 through in which the hospital is located, as
index values are computed based on all September 30, 2002), which is the latest indicated in the following table:
EP04MY05.058</GPH> EP04MY05.059</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00126 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23431
These numbers will be revised in the and discharges for these low-volume and FY 2005, making the results of the
final rule based on the latest available hospitals. The statute also limits the earlier data less relevant. Furthermore,
cost report data. adjustment to no more than 25 percent. many of these policy changes may
We reiterate that if an osteopathic According to the analysis conducted already have helped increase payments
hospital is to qualify for rural referral for the FY 2005 IPPS final rule (69 FR to low-volume hospitals. We were
center status for cost reporting periods 49099 through 49102), a 25 percent low- unable to simulate the FY 2006
beginning on or after October 1, 2005, volume adjustment to all qualifying environment because payment factors
the hospital would be required to have hospitals with less than 200 discharges for FY 2006 were not available at the
at least 3,000 discharges for its cost was found to be most consistent with time of our analysis.
reporting period that began during FY the statutory requirement to provide In the first regression analysis, we
2002. relief to low-volume hospitals where used a dummy variable approach to
there is empirical evidence that higher model the relationship between
3. Technical Change
incremental costs are associated with standardized costs and total discharges.
In the FY 1998 IPPS final rule (62 FR low numbers of total discharges. Using FY 2002 cost data, we found some
46028), we removed paragraph (f) from However, we acknowledged that the evidence for a low-volume payment
§ 412.96. Paragraph (f) was removed empirical evidence did not provide adjustment for hospitals with up to 199
when the requirement for triennial robust support for that conclusion and discharges, consistent with our current
reviews of rural referral centers was indicated that we would reexamine the policy. Using FY 2003 cost data, the
terminated (62 FR 45998 through 45600, empirical evidence for the FY 2006 IPPS empirical evidence only supported an
46028 through 46029). However, we final rule with the intention of adjustment for hospitals with up to 99
inadvertently failed to address all of the modifying or even eliminating the total discharges.
related cross-references to paragraph (f) adjustment if the empirical evidence We also used a descriptive analysis
in the entire § 412.96. Therefore, we are indicates that it is appropriate to do so. approach to understand empirically the
proposing to revise § 412.96 to remove In the FY 2005 IPPS final rule (69 FR relationship between costs and total
paragraphs (h)(4) and (i)(4), consistent 49102), we indicated that our analysis discharges. We grouped all hospitals by
with the removal of paragraph (f). showed that there are fewer than 100 their total discharges and compared the
E. Payment Adjustment for Low-Volume hospitals with less than 200 total mean Medicare per discharge payment
Hospitals (§ 412.101) discharges. At that time, we were unable to Medicare per discharge cost ratios.
to determine how many of these Hospitals with less than 800 total
(If you choose to comment on issues hospitals also meet the requirement that discharges were split into 24 cohorts
in this section, please include the a low-volume hospital be more than 25 based on increments of 25 discharges.
caption ‘‘Low-Volume Hospital Payment road miles from the nearest IPPS When using the FY 2002 cost report
Adjustment’’ at the beginning of your hospital in order to qualify for the data, the mean payment-to-cost ratios
comment.) adjustment. Our data systems currently were below one (implying that Medicare
Section 1886(d)(12) of the Act, as indicate that 10 hospitals are receiving per discharge costs exceeded Medicare
added by section 406 of Pub. L. 108– the low-volume adjustment. per discharge payments) for all cohorts
173, provides for a payment adjustment As indicated in the FY 2005 IPPS of hospitals with less than 200
to account for the higher costs per final rule, we have now conducted a discharges, after which the ratio was
discharge of low-volume hospitals more detailed multivariate analysis on consistently above one. When using the
under the IPPS. Section the empirical basis for a low-volume FY 2003 cost report data, the mean
1886(d)(12)(C)(i) of the Act defines a adjustment for FY 2006. In order to payment-to-cost ratios were below one
low-volume hospital as a ‘‘subsection (d) further evaluate the need for a proposed for all but two cohorts up to those with
hospital * * * that the Secretary change in the development of the low- less than 175 total discharges, after
determines is located more than 25 road volume adjustment, we replicated much which the ratio was consistently above
miles from another subsection (d) of the analysis conducted for the FY one. No obvious increasing trend in the
hospital and that has less than 800 2005 IPPS final rule, using updated ratios, from which it would be possible
discharges during the fiscal year.’’ data. We again empirically modeled the to infer a formula to generate
Section 1886(d)(12)(C)(ii) of the Act relationship between hospital costs-per- adjustments for hospitals based upon
further stipulates that the term case and total discharges in several the number of discharges, was evident.
‘‘discharge’’ refers to total discharges, ways. We used both regression analysis Because more than 70 percent of
and not merely to Medicare discharges. and straight-line statistics to examine hospitals with less than 200 discharges
Specifically, the term refers to the this relationship. had ratios below 0.80, this analysis
‘‘inpatient acute care discharge of an We conducted three different supports applying the highest payment
individual regardless of whether the regression analyses. For all of the adjustment to all providers with less
individual is entitled to benefits under analyses, we simulated the FY 2005 cost than 200 discharges that are eligible for
part A.’’ Finally, the provision requires environment by inflating FY 2002 and the low-volume adjustment.
the Secretary to determine an applicable FY 2003 hospital cost report data to FY The second regression analysis
percentage increase for these low- 2005 using the full hospital market modeled the Medicare per discharge
volume hospitals based on the basket updates. We note that, at the time cost to Medicare per discharge payment
‘‘empirical relationship’’ between ‘‘the of this analysis, we only had cost report ratio as a function of total discharges.
standardized cost-per-case for such data from FY 2003 for approximately 57 The cost-to-payment ratio model more
hospitals and the total number of percent of the IPPS hospitals. Therefore, explicitly accounts for the relative
discharges of these hospitals and the we have placed a greater weight on the values of per discharge costs and per
amount of the additional incremental results from the simulated FY 2002 cost discharge payments. These models
costs (if any) that are associated with data, which are significantly more provided some evidence for a
such number of discharges.’’ The statute complete. We again simulated the FY statistically significant negative
thus mandates the Secretary to develop 2005 payment environment because relationship between the cost-to-
an empirically justifiable adjustment payments have undergone several payment ratio and total discharges.
based on the relationship between costs changes between FY 2002 and FY 2003 However, that result was limited to FY
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00127 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23432 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
2002 data. FY 2003 data displayed no F. Indirect Medical Education (IME) required to report unweighted FTE
significant relationship between the Adjustment (§ 412.105) resident counts for direct GME
cost-to-payment ratio and total (If you choose to comment on issues purposes. Therefore, a separate data
discharges. in this section, please include the collection effort was required to obtain
The third regression analysis the unweighted FTE resident counts.
caption ‘‘IME Adjustment’’ at the
employed per discharge costs minus per The fiscal intermediaries worked with
beginning of your comment.)
discharge payments as the dependent hospitals to determine the unweighted
variable and total discharges as an 1. Background FTE resident counts for direct GME for
explanatory variable. The results of this Section 1886(d)(5)(B) of the Act cost reporting periods ending on or
analysis were similar to the other before December 31, 1996, for purposes
provides that prospective payment
regression analyses: some evidence was of implementing the FTE cap.
hospitals that have residents in an
provided for an adjustment with the FY During this process, the fiscal
approved graduate medical education
2002 data, but not with the FY 2003 intermediaries did not determine IME
(GME) program receive an additional
data, simulated for FY 2005. In fact, the FTE resident counts for hospitals that
payment to reflect the higher indirect
FY 2003 data results suggest (with a were excluded from the IPPS (that is,
costs of teaching hospitals relative to
positive intercept and positive psychiatric hospitals, LTCHs,
nonteaching hospitals. The regulations
coefficient on total discharges) that rehabilitation hospitals, children’s
regarding the calculation of this
payments are greater than costs for all hospitals, and cancer hospitals) because
additional payment, known as the
hospitals, including the low-volume these hospitals were not paid under the
hospitals. indirect medical education (IME) IPPS and, therefore, did not receive any
Based upon these multivariate adjustment, are located at § 412.105. IME payment adjustments. Only the
analyses using the FY 2002 cost report The IME adjustment to the DRG FTE resident data related to direct GME
data, a case can be made that hospitals payment is based in part on the payments were relevant for these
with fewer than 200 total discharges applicable IME adjustment factor. The excluded hospitals and, therefore, only
have per discharge costs that are IME adjustment factor is calculated those data were collected. However, it
statistically significantly higher relative using a hospital’s ratio of residents to has come to our attention that some
to their Medicare per discharge beds, which is represented as r, and a hospitals that were excluded from the
payments in comparison to hospitals formula multiplier, which is IPPS during the cost reporting period
with 200 or more total discharges. represented as c, in the following ending on or before December 31, 1996
Therefore, we are proposing to extend equation: c × [{1 + r} .405 ¥ 1]. The (that is, the cost reporting period during
the existing low-volume adjustment for formula is traditionally described in which the hospital’s FTE resident limit
FY 2006. That is, a low-volume terms of a certain percentage increase in was established under section
adjustment would again be provided for payment for every 10-percent increase 1886(h)(4)(F) of the Act for purposes of
qualifying hospitals with less than 200 in the resident-to-bed ratio. direct GME payments) have either failed
discharges. As noted above, the 2. IME Adjustment for TEFRA Hospitals to continue to qualify for exclusion from
descriptive data do not reveal any Converting to IPPS Hospitals the IPPS or deliberately changed their
pattern that could provide a formula for operations in a way to become subject
calculating an adjustment in relation to The Balanced Budget Act of 1997 to the IPPS and, as a result, have
the number of discharges. However, the (Pub. L. 105–33) established a limit on subsequently become subject to the IME
descriptive analysis of the data does the number of allopathic and payment adjustment provisions of the
indicate that, for a large majority of the osteopathic residents that a hospital IPPS. For example, a provider that was
hospitals with less than 200 discharges, may include in its full-time equivalent a rehabilitation hospital during its cost
the maximum adjustment of 25 percent (FTE) count for direct GME and IME reporting period ending on December
would be appropriate because, for payment purposes. Under section 31, 1996, but no longer meets the
example, the payment-to-cost ratios for 1886(h)(4)(F) of the Act, a hospital’s regulatory criteria to qualify as a
more than 70 percent of these hospitals unweighted FTE count of residents may rehabilitation hospital would become
are 0.80 or less. The maximum not exceed the hospital’s unweighted subject to the IPPS and be able to
adjustment of 25 percent would still FTE count for its most recent cost receive IME payments. However,
leave most of these hospitals with reporting period ending on or before because no IME FTE resident count for
payment-to-cost ratios below 1.00. December 31, 1996. Under section the cost reporting period ending on or
Because a large majority of hospitals 1886(d)(5)(B)(v) of the Act, the limit on before December 31, 1996, was
with less than 200 discharges have the FTE resident count for IME purposes determined, such a hospital does not
payment-to-cost ratios below 1.00, we is effective for discharges occurring on have an unweighted FTE resident limit
are proposing to again provide hospitals or after October 1, 1997. A similar limit for IME.
with less than 200 total discharges in is effective for direct GME purposes for To address this situation, we are
the most recent submitted cost report an cost reporting periods beginning on or proposing to incorporate in the
adjustment of 25 percent on each after October 1, 1997. regulations (proposed
Medicare discharge. This policy is When these provisions were enacted, § 412.105(f)(1)(xiii)) CMS’ existing
consistent with the existing language in hospitals reported their weighted FTE policy in such situations which
§ 412.101(a) and (b). resident count for direct GME and their provides for the establishment of an IME
However, the initial analysis of the FY unweighted FTE resident count for IME FTE cap for a hospital that was
2003 data does not seem to provide on the Medicare cost report. The cost excluded from the IPPS during its base
strong empirical evidence for a report was subsequently modified to year and that subsequently became
relationship between Medicare per require reporting of unweighted FTE subject to the IPPS. We are clarifying
discharge costs and total discharges. resident counts for both direct GME and and proposing to adopt into regulations
Therefore, we will reevaluate the IME. However, for cost reporting our existing policy that, in such a
appropriateness of the low-volume periods ending on or before December situation, the fiscal intermediary would
adjustment in the FY 2007 proposed 31, 1996 (the cost report on which the determine an IME FTE cap for the
rule. FTE limit is based), hospitals were not hospital, applicable beginning with the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23433
hospital’s payments under the IPPS, merger. When a merger involves an 1886(d) of the Act. Therefore, an urban
based on the FTE count of residents IPPS-excluded hospital, the base year hospital that reclassifies as rural under
during the cost reporting period(s) used IME FTE count for the IPPS-excluded this provision may receive the 130-
to determine the hospital’s direct GME hospital has not been determined. We percent adjustment to its IME FTE
FTE cap in accordance with existing are clarifying and proposing to codify in resident cap. In addition, its IME FTE
§ 412.105(f) of the regulations. The new regulations our existing policy that, in cap may be adjusted for any new
IPPS hospital’s IME FTE cap would be such cases, the fiscal intermediary programs (similar to a hospital that is
subject to the same rules and would determine an IME FTE cap for actually located in an area designated as
adjustments as any IPPS hospital’s IME the IPPS-excluded hospital for purposes rural) under section 1886(d)(5)(B)(v) of
FTE cap in accordance with § 412.105(f) of determining the merged hospital’s the Act, as amended by section 407 of
of the regulations. IME FTE cap in accordance with Pub. L. 106–113 (BBRA).
While calculation of the IME FTE cap § 412.105(f) of the regulations. Once this An urban hospital treated as rural
for a TEFRA hospital that converts to an cap is determined, the aggregate IME under section 1886(d)(8)(E) of the Act
IPPS hospital may require that fiscal FTE cap of the surviving entity may be may subsequently withdraw its election
intermediaries obtain information from calculated in accordance with existing and return to its urban status under the
cost reporting periods that are closed, CMS policy for mergers. regulations at § 412.103. We are
allowing a fiscal intermediary to obtain We note that we would compute an proposing that, effective with discharges
this information should not be IME cap for an IPPS-excluded hospital occurring on or after October 1, 2005,
understood as allowing a fiscal only in cases of a merger between an hospitals that rescind their section
intermediary to reopen closed cost IPPS-excluded hospital and an acute 1886(d)(8)(E) reclassifications and
reports that are beyond the normal care IPPS hospital, where the entire return to being urban would not be
reopening period in order to carry out surviving entity is subject to the IPPS. eligible for permanent increases in their
the provisions of this proposed No such IME FTE cap would be IME caps. Rather, any adjustments the
regulation. computed for an IPPS-excluded hospital hospitals received to their IME caps due
Finally, there may be situations where in instances where an IPPS-excluded to their rural status would be forfeited
the data necessary to carry out this hospital and an acute care IPPS hospital upon returning to urban status.
policy are not available. For example, agree to form a Medicare GME affiliated Although we read the relevant IME FTE
under this proposal, if a children’s group for purposes of aggregating FTE cap provisions in section 1886(d)(5)(B)
hospital converts to an IPPS hospital on resident caps. In cases where an IPPS- of the Act as effecting a permanent
July 1, 2007, the fiscal intermediary may excluded hospital enters into a increase to the FTE cap, we believe we
need to determine the count of FTE Medicare GME affiliation agreement have the statutory authority under
residents for IME purposes training at with other IPPS hospitals, the IPPS- section 1886(d)(5)(I) of the Act to make
the hospital during the most recent cost excluded hospital can contribute only necessary adjustments to these caps that
reporting period ending on or before its direct GME FTE cap to the aggregate we believe are appropriate. Section
December 31, 1996, in order to establish FTE cap for the group. This is because, 1886(d)(5)(I)(i) of the Act grants the
an IME FTE cap for the hospital, as long as a hospital remains excluded Secretary authority to provide by
effective for discharges occurring on or from the IPPS, that hospital will not regulation for ‘‘such other exceptions
after October 1, 2007. However, the have an FTE resident cap established for and adjustments to such payment
count of FTE residents for IME purposes purposes of IME. Under no amounts under this subsection as the
from the cost reporting period ending on circumstances may an IPPS-excluded Secretary deems appropriate.’’ We
or before December 31, 1996, may no hospital be considered to contribute any believe it is appropriate that a section
longer be available, as the minimum FTE residents to a Medicare GME 1886(d)(8)(E) hospital forfeit the
time that hospitals are required to retain affiliation group for purposes of the adjustments it received solely due to its
records is 5 years from the date the aggregate IME FTE resident cap. IPPS- reclassification to rural status when it
hospital submits the cost report. We excluded hospitals do not currently, and returns to being urban. Otherwise, urban
believe this problem may not occur with would not under this proposed policy, hospitals might reclassify to rural areas
sufficient frequency to warrant specific have an IME FTE resident cap. under section 1886(d)(8)(E) of the Act
regulatory action. We are specifically for a short period of time solely as a
soliciting comments as to whether and 3. Section 1886(d)(8)(E) Teaching
means of receiving an increase to their
how hospitals believe this is a problem Hospitals That Withdraw Rural
IME FTE caps. These hospitals could
that needs to be addressed. Reclassification
reclassify for as little as one year, simply
In some cases, a hospital that was In section V.I. of this preamble, we in order to receive a permanent increase
previously excluded from the IPPS may discuss situations in which an urban to their IME FTE caps. Because section
become subject to the IPPS as a result hospital may become rural under a 1886(d)(8)(E) hospitals have control
of a merger between two or more reclassification request under section over when they switch in and out of
hospitals where the surviving hospital is 1886(d)(8)(E) of the Act. Under section rural status, we believe any other policy
subject to the IPPS (and not creating an 1886(d)(8)(E) of the Act, an urban would be subject to gaming and
IPPS hospital with an excluded unit). In hospital may file an application to be inappropriate usage of the section
such cases, CMS policy is that the FTE treated as being located in a rural area. 1886(d)(8)(E) authority. In contrast,
resident cap for the surviving hospital Becoming rural under this provision hospitals that become urban due to the
should reflect the combined FTE affects only payments under section OMB-revised labor area designations
resident caps for the hospitals that 1886(d) of the Act. If the hospital is a have no control in the matter, and
merged. If two or more hospitals merge teaching hospital, the hospital could not therefore would not be subject to the
after the conclusion of each hospital’s receive adjustments to its direct GME same type of manipulation of payment
base year for purposes of calculating FTE cap because payments for direct rates we believe would exist with the
resident FTE caps, the surviving GME are made under section 1886(h) of section 1886(d)(8)(E) hospitals.
hospital’s FTE resident cap is an the Act and the section 1886(d)(8)(E) (We note that the above proposed
aggregation of the FTE resident cap for reclassifications affect only the policy would have no effect on rural
each hospital participating in the payments that are made under section track resident training programs.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00129 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23434 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Section 1886(h)(4)(H)(iv) of the Act, adjustments to its IME FTE cap it hospitals that are located in an urban
which governs direct GME, provides received due to its rural status. Thus, for area and have 100 or more beds may
that an urban hospital may receive example, a hospital that reclassified as receive a DSH payment adjustment if
adjustments to its FTE caps for rural under section 1886(d)(8)(e) of the the hospital can demonstrate that,
establishing ‘‘separately accredited Act with an IME FTE cap of 10 would during its cost reporting period, more
approved medical residency training have received a 130 percent adjustment than 30 percent of its net inpatient care
programs (or rural tracks) in an [sic] to its IME cap (that is, 10 FTEs × 1.3). revenues are derived from State and
rural area.’’ The provisions governing Furthermore, if this hospital, while local government payments for care
IME state that ‘‘Rules similar to the rules reclassified as rural, started a new 3- furnished to indigent patients. These
of subsection (h)(4)(H) shall apply for year residency program with 2 residents hospitals are commonly known as
purposes of’’ determining FTE resident in each program year, its FTE cap would ‘‘Pickle hospitals.’’ The second method,
caps (section 1886(d)(5)(B)(viii) of the have been increased by an additional 6 which is also the most commonly used
Act). Since the requirement that the FTEs to 19 FTEs (that is, 13 FTEs + 6 method for a hospital to qualify, is
hospital be located in a rural area is FTEs). However, once this hospital based on a complex statutory formula
found in the provisions governing direct rescinds its reclassification under under which payment adjustments are
GME (section 1886(h) of the Act), not section 1886(d)(8)(E) of the Act to based on the level of the hospital’s DSH
the provision governing IME, and since become urban again, its IME FTE cap patient percentage, which is the sum of
hospitals cannot reclassify as rural for would return to 10 FTEs (its original two fractions: the ‘‘Medicare fraction’’
purposes of section 1886(h) of the Act, pre-reclassification IME FTE cap). and the ‘‘Medicaid fraction.’’ The
we believe that, as provided in section
1886(h) of the Act, the hospital with G. Payment to Disproportionate Share Medicare fraction is computed by
which the urban hospital establishes the Hospitals (DSHs) (§ 412.106) dividing the number of patient days that
rural track must be physically located in (If you choose to comment on issues are furnished to patients who were
an area designated as rural. We do not in this section, please include the entitled to both Medicare Part A and
believe we would be properly caption ‘‘DSH Adjustment Data’’ at the Supplemental Security Income (SSI)
incorporating the rules of section beginning of your comment.) benefits by the total number of patient
1886(h) of the Act or creating a rule days furnished to patients entitled to
similar to that used in section 1886(h) 1. Background benefits under Medicare Part A. The
of the Act if we were to allow counting Section 1886(d)(5)(F) of the Act Medicaid fraction is computed by
of such reclassified hospitals.) provides for additional payments to dividing the number of patient days
For the reasons stated above, we are subsection (d) hospitals that serve a furnished to patients who, for those
proposing to amend the regulations at disproportionate share of low-income days, were eligible for Medicaid but
§ 412.105 by adding a new paragraph patients. The Act specifies two methods were not entitled to benefits under
(f)(1)(xiv) to provide that a hospital that for a hospital to qualify for the Medicare Medicare Part A by the number of total
rescinds its section 1886(d)(8)(E) disproportionate share hospital (DSH) hospital patient days in the same
reclassification will forfeit any adjustment. Under the first method, period.
2. Implementation of Section 951 of agency’s records. Currently, as Medicare SSI days for each hospital
Pub. L. 108–173 (MMA) explained in more detail below, CMS during each fiscal year. These data are
provides the Medicare SSI days to maintained in the MedPAR Limited
Section 951 of Pub. L. 108–173 certain hospitals that request these data. Data Set (LDS) as described in more
requires the Secretary to arrange to Hospitals are currently required under detail below and discussed in a notice
furnish the data necessary for hospitals the regulation at § 412.106(b)(4)(iii) to published on August 18, 2000 in the
to compute the number of patient days provide the data adequate to prove Federal Register (65 FR 50548). The
used in calculating the disproportionate eligibility for the Medicaid, non- number of patient days furnished by the
patient percentages. The provision is Medicare days. hospital to Medicare beneficiaries
not specific as to whether it applies to As indicated above, the numerator of entitled to SSI is divided by the
the patient day data used to determine the Medicare fraction includes the hospital’s total number of Medicare
the Medicare fraction or the Medicaid number of patient days furnished by the days (the denominator of the Medicare
fraction. We are interpreting section 951 hospital to patients who were entitled to fraction). CMS determines this number
to require the Secretary to arrange to both Medicare Part A and SSI benefits. from Medicare claims data; hospitals
furnish to hospitals the data necessary This number is divided by the hospital’s also have this information in their
to calculate both the Medicare and total number of patient days furnished records. The Medicare fraction for each
Medicaid fractions. With respect to both to patients entitled to benefits under hospital is posted on the CMS Web site
the Medicare and Medicaid fractions, Medicare Part A. In order to determine (http://www.cms.hhs.gov) under the
we also are interpreting section 951 to the numerator of this fraction for each SSI/Medicare Part A Disproportionate
require CMS to arrange to furnish the hospital, CMS obtains a data file from Share Percentage File. Under current
personally identifiable information that the Social Security Administration regulations at § 412.106(b)(3), a hospital
would enable a hospital to compare and (SSA). CMS matches personally may request to have its Medicare
verify its records, in the case of the identifiable information from the SSI fraction recomputed based on the
Medicare fraction, against the CMS’ file against its Medicare Part A hospital’s cost reporting period if that
records, and in the case of the Medicaid entitlement information for the fiscal year differs from the Federal fiscal year.
EP04my05.088</GPH>
fraction, against the State Medicaid year to determine the number of This request may be made only once per
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00130 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23435
cost reporting period, and the hospital hospital’s cost reporting period. Under meet their obligation under
must accept the resulting DSH our proposal, the hospital could use § 412.106(b)(4)(iii) in the context of
percentage for that year, whether or not these data to calculate and verify its either an ‘‘eligibility inquiry’’ with the
it is a more favorable number than the Medicare fraction, and to decide State plan or in order to assist the
DSH percentage based on the Federal whether it prefers to have the fraction hospital, and thus the State plan, in
fiscal year. determined on the basis of its fiscal year determining the amount of medical
In accordance with section 951 of rather than a Federal fiscal year. The assistance.
Pub. L. 108–173, we are proposing to data set made available to hospitals In the process of developing a plan for
change the process that we use to make would be the same data set CMS uses to implementing section 951 with respect
Medicare data used in the DSH calculate the Medicare fractions for the to the data necessary to calculate the
calculation available to hospitals. Federal fiscal year. Medicaid fraction, we asked our
Currently, as stated above, CMS Because we interpret section 951 to regional offices to report on the
calculates the Medicare fraction for each require the Secretary to arrange to availability of this information to
section 1886(d) hospital using data from furnish these data, we do not believe hospitals and on any problems that
the MedPAR LDS (as established in a that it will continue to be appropriate to hospitals face in obtaining the
notice published in the August 18, 2000 charge hospitals to access the data. information that they need. The
Federal Register (65 FR 50548)). The These proposed changes would require information we received suggested that,
MedPAR LDS contains a summary of all CMS to modify the current routine use in the vast majority of cases, there are
services furnished to a Medicare for the MedPAR LDS to reflect changes established procedures for hospitals or
beneficiary, from the time of admission in the data provided and the their authorized representatives to
through discharge, for a stay in an circumstances under which they are obtain the information needed for
inpatient hospital or skilled nursing made available to hospitals. In a future hospitals to meet their obligation under
facility, or both; SSI eligibility Federal Register document, we will § 412.106(b)(4)(iii) and to calculate their
information; and enrollment data on publish the details of any necessary Medicaid fraction. There is no uniform
Medicare beneficiaries. The MedPAR modifications to the current routine use national method for hospitals to verify
LDS is protected by the Privacy Act of to implement section 951 of Pub. L. Medicaid eligibility for a specific
1974 (5 U.S.C. 552a) and the Privacy 108–173. We welcome comments on all patient on a specific day. For instance,
Rule of the Health Insurance Portability aspects of these proposed changes. some States, such as Arizona, have
and Accountability Act of 1996 (Pub. L. The numerator of the Medicaid secure online systems that providers
104–191). The Privacy Act allows us to fraction includes hospital inpatient days may use to check eligibility information.
disclose information without an that are furnished to patients who, for However, in most States, providers send
individual’s consent if the information those days, were eligible for Medicaid a list of patients to the State Medicaid
is to be used for a purpose that is but were not entitled to benefits under office for verification. Other States, such
compatible with the purpose(s) for Medicare Part A. Under the regulation at as Hawaii, employ a third party private
which the information was collected. § 412.106(b)(4)(iii), hospitals are company to maintain the Medicaid
Any such compatible use of data is responsible for proving Medicaid database and run eligibility matches for
known as a ‘‘routine use.’’ In order to eligibility for each Medicaid patient day providers. The information that
obtain this privacy-protected data, the and verifying with the State that providers submit to State plans (or third
hospital must qualify under the routine patients were eligible for Medicaid on party contractors) differs among States
use that was described in the August 18, the claimed days. The number of as well. Most States require the patient’s
2000 Federal Register. Currently, a Medicaid, non-Medicare days is divided name, date of birth, gender, social
hospital qualifies under the routine use by the hospital’s total number of security number, Medicaid
if it has an appeal properly pending inpatient days in the same period. Total identification, and admission and
before the Provider Reimbursement inpatient days are reported on the discharge dates. States or the third
Review Board (PRRB) or before an Medicare cost report. (This number is parties may respond with either ‘‘Yes/
intermediary on the issue of whether it also available in the hospital’s own No’’ or with more detailed Medicaid
is entitled to DSH payments, or the records.) enrollment and eligibility information
amount of such payments. Once Much of the data used to calculate the such as whether or not the patient is a
determined eligible to receive the data Medicaid fraction of the DSH patient dual-eligible, whether the patient is
under the routine use, the hospital is percentage are available to hospitals enrolled in a fee-for-service or HMO
then required to sign a data use from their own records or from the plan, and under which State assistance
agreement with CMS to ensure that the States. We recognize that Medicaid State category the individual qualified for
data are appropriately used and plans are only permitted to use and Medicaid.4
protected, and pay the requisite fee. disclose information concerning We note that we have been made
Beginning with cost reporting periods applicants and recipients for ‘‘purposes aware of at least one instance in which
that include December 8, 2004 (within directly connected with the a State is concerned about providing
one year of the date of enactment of administration of the [State] plan’’ hospitals with the requisite eligibility
Pub. L. 108–173), we are proposing to under section 1902(a)(7) of the Act. data. We understand that the basis for
furnish MedPAR LDS data for a Regulations at 42 CFR 431.302 define the State’s objections is section
hospital’s patients eligible for both SSI these purposes to include establishing 1902(a)(7) of the Act. The State is
and Medicare at the hospital’s request, eligibility (§ 431.302(a)) and concerned that section 1902(a)(7) of the
regardless of whether there is a properly determining the amount of medical Act prohibits the State from providing
pending appeal relating to DSH assistance (§ 431.302(b)). Thus, State eligibility data for any purpose other
payments. We are proposing to make the plans are permitted under the currently than a purpose related to State plan
information available for either the applicable statutory and regulatory
Federal fiscal year or, if the hospital’s provisions governing the disclosure of 4 Bear in mind that States and hospitals should,
fiscal year differs from the Federal fiscal individually identifiable data on in keeping with the HIPAA Privacy Rule, limit the
data exchanged in the context of these inquiries and
year, for the months included in the two Medicaid applicants and recipients to responses to the minimum necessary to accomplish
Federal fiscal years that encompass the provide hospitals the data needed to the task
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23436 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
administration. However, as described necessary or appropriate and has been request reclassification to another area
above, we believe that States are removed from our reclassification policy for purposes of the wage index and on
permitted to verify Medicaid eligibility (69 FR 49103). We implemented this all hospitals.
for hospitals as a purpose directly provision in the FY 2005 IPPS final rule Subsequent to the publication of the
related to State plan administration (69 FR 49103). As a result, hospitals can FY 2005 IPPS final rule, we became
under § 431.302. request reclassification for the purposes aware of a situation in which, as a result
In addition, we believe it is of the wage index only and not the of the new labor market areas, a
reasonable to continue to place the standardized amount. Implementing multicampus hospital previously
burden of furnishing the data adequate regulations in Subpart L of Part 412 located in a single MSA is now located
to prove eligibility for each Medicaid (§§ 412.230 et seq.) set forth criteria and in more than one CBSA. Under our
patient day claimed for DSH percentage conditions for reclassifications for current policy, a multicampus hospital
calculation purposes on hospitals purposes of the wage index from rural with campuses located in the same labor
because, since they have provided to urban, rural to rural, or from an urban market area receives a single wage
inpatient care to these patients for area to another urban area, with special index. However, if the campuses are
which they billed the relevant payors, rules for SCHs and rural referral centers. located in more than one labor market
including the State Medicaid plan, they Under section 1886(d)(8)(E) of the area, payment for each discharge is
will necessarily already be in possession Act, an urban hospital may file an determined using the wage index value
of much of this information. We application to be treated as being for the MSA (or metropolitan division,
continue to believe hospitals are best located in a rural area if certain where applicable) in which the campus
situated to provide and verify Medicaid conditions are met. The regulations of the hospital is located. In addition,
eligibility information. Although we implementing this provision are located the current provision set forth in section
believe the mechanisms are currently in under § 412.103. 2779F of the Medicare State Operations
place to enable hospitals to obtain the Effective with reclassifications for FY Manual provides that, in the case of a
data necessary to calculate their 2003, section 1886(d)(10)(D)(vi)(II) of merger of hospitals, if the merged
Medicaid fraction of the DSH patient the Act provides that the MGCRB must facilities operate as a single institution,
percentage, there is currently no use the average of the 3 years of hourly the institution must submit a single cost
mandatory requirement imposed upon wage data from the most recently report, which necessitates a single
State Medicaid agencies to verify published data for the hospital when provider identification number. This
eligibility for hospitals. At this point, evaluating a hospital’s request for provision does not differentiate between
we believe there is no need to modify reclassification. The regulations at merged facilities in a single wage index
the Medicaid State plan regulations to § 412.230(d)(2)(ii) stipulate that the area or in multiple wage index areas. As
require that State plans verify Medicaid wage data are taken from the CMS a result, the wage index data for the
eligibility for hospitals. However, hospital wage survey used to construct merged facility is reported for the entire
should we find that States are not the wage index in effect for prospective entity on a single cost report.
voluntarily providing or verifying payment purposes. To evaluate The current criteria for a hospital
Medicaid eligibility information for applications for wage index being reclassified to another wage area
hospitals, we will consider amending reclassifications for FY 2006, the by the MGCRB do not address the
the State plan regulations to add a MGCRB used the 3-year average hourly circumstances under which a single
requirement that State plans provide wages published in Table 2 of the campus of a multicampus hospital may
certain eligibility information to August 11, 2004 IPPS final rule (69 FR seek reclassification. That is, a hospital
hospitals. 49295). These average hourly wages are must provide data from the CMS
taken from data used to calculate the hospital wage survey for the average
H. Geographic Reclassifications wage indexes for FY 2003, FY 2004, and hourly wage comparison that is used to
(§§ 412.103 and 412.230) FY 2005, based on cost reporting support a request for reclassification.
(If you choose to comment on issues periods beginning during FY 1999, FY However, because a multicampus
in this section, please include the 2000, and FY 2001, respectively. hospital is required to report data for the
caption ‘‘Geographic Reclassifications’’ entire entity on a single cost report,
2. Multicampus Hospitals (§ 412.230)
at the beginning of your comment.) there is no wage survey data for the
As discussed in section III.B. of this individual hospital campus that can be
1. Background preamble, on June 6, 2003, the OMB used in a reclassification application. In
With the creation of the MGCRB, announced the new CBSAs, comprised an effort to remedy this situation, for FY
beginning in FY 1991, under section of Metropolitan Statistical Areas (MSAs) 2007 and subsequent year
1886(d)(10) of the Act, hospitals could and Micropolitan Statistical Areas, reclassifications, we are proposing to
request reclassification from one based on Census 2000 data. Effective allow a campus of a multicampus
geographic location to another for the October 1, 2004, for the IPPS, we hospital system that wishes to seek
purpose of using the other area’s implemented new labor market areas geographic reclassification to another
standardized amount for inpatient based on the CBSA definitions of MSAs. labor market area to report campus-
operating costs or the wage index value, In some cases, the new CBSAs resulted specific wage data using a supplemental
or both (September 6, 1990 interim final in previously existing MSAs being Form S–3 (CMS’ manual version of
rule with comment period (55 FR divided into two or more separate labor Worksheet S–3) for purposes of the
36754), June 4, 1991 final rule with market areas. In the FY 2005 IPPS final wage data comparison. These data
comment period (56 FR 25458), and rule (69 FR 48916), we acknowledged would then constitute the appropriate
June 4, 1992 proposed rule (57 FR that the implementation of the new wage data under § 412.232(d)(2) for
23631)). As a result of legislative MSAs would have a considerable purposes of comparing the hospital’s
changes under section 402(b) of Pub. L. impact on hospitals. Therefore, we wages to the wages of hospitals in the
108–7, Pub. L. 108–89, and section 401 made every effort to implement area to which it seeks reclassification as
of Pub. L. 108–173, the standardized transitional provisions that would well as the area in which it is located.
amount reclassification criterion for mitigate the negative effects of the new Before the data could be used in a
large urban and other areas is no longer labor market areas on hospitals that reclassification application, the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00132 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23437
hospital’s fiscal intermediary would meeting the proximity requirement for CBSA, as determined under the most
have to review the allocation of the reclassification to the urban area to recent version of the Goldsmith
entire hospital’s wage data among the which they seek redesignation.’’ Modification as determined by the
individual campuses. In making the determination to revise Office of Rural Health Policy. This
For FY 2006 reclassification our urban group reclassification policy, provision is implemented in our
applications, we are proposing to allow we took into consideration the regulations at § 412.103(a)(1).
a campus of a multicampus hospital magnitude of the changes that would
system to use the average hourly wage have resulted from our adoption of the The original Goldsmith Modification
data submitted for the entire new labor market areas. The resulting was developed using data from the 1980
multicampus hospital system as its policy was intended to preserve the census. In order to more accurately
appropriate wage data under reclassification opportunities for urban reflect current demographic and
§ 412.232(d)(2). We are establishing this county groups; in other words, an geographic characteristics of the Nation,
special rule for FY 2006 reclassifications eligible urban county group would have the Office of Rural Health Policy, in
because the deadline for submitting an to meet either the CSA or CMSA partnership with the Department of
application to the MGCRB was criteria, but not both to be eligible for Agriculture’s Economic Research
September 1, 2004, and there no longer consideration. Service and the University of
is an opportunity to provide a As a result of adopting the new labor Washington, has developed the Rural-
Supplemental Form S–3 that allocates market area definitions, we reexamined Urban Commuting Area codes (RUCAs)
the wage data by individual hospital the appropriateness of the FY 2005 (69 FR 47518 through 47529, August 5,
campus. This special rule will be changes with emphasis on determining 2004). Rather than being limited to large
applied only to an individual campus of whether including ‘‘* * * or in the area metropolitan counties (LAMCs),
a multicampus hospital system that same Consolidated Metropolitan RUCAs use urbanization, population
made an application for reclassification Statistical Area (CMSA) (under the density, and daily commuting data to
for FY 2006 and that otherwise meets all standards published by the OMB on categorize every census tract in the
of the reclassification criteria. We do not March 30, 1990)’’ as a qualifying country. RUCAs are the updated version
believe that the special rule is necessary criterion, is necessary or consistent with of the Goldsmith Modification and are
for reclassifications for FY 2007 because our plans to fully implement the new used to identify rural census tracts in all
the deadline for making those labor area market definitions. metropolitan counties.
applications has not yet passed and a Based on our experiences now that
hospital seeking reclassification will be the new labor market areas are in effect We are proposing to update the
able to provide the Supplemental Form and since we revised the urban county Medicare regulations at § 412.103(a)(1)
S–3 that allocates the wage data by group regulations, we no longer think it to incorporate this change in the
individual hospital campus. We are is necessary to retain use of a 1990- identification of rural census tracts. We
proposing to apply these new criteria to based standard as a criterion for are also proposing to update the website
geographic reclassification applications determining whether an urban county and the agency location at which the
that were received by September 1, group is eligible for reclassification. We RUCA codes are accessible.
2004, and that will take effect for FY believe it is reasonable to use the area
5. Cross-Reference Changes
2006. definitions that are based on the most
We are proposing to revise the recent statistics; in other words, the In the FY 2005 IPPS final rule, in
regulations at § 412.230(d)(2) by CSA standard. Therefore, we are conjunction with changes made by
redesignating paragraph (d)(2)(iii) as proposing to delete § 412.234(a)(3)(ii) to various sections of Pub. L. 108–173 and
paragraph (d)(2)(v) and adding new remove reference to the CMSA changes in the OMB standards for
paragraph (d)(2))(iii) and (d)(2)(iv) to eligibility criterion. Beginning with FY defining labor market areas, we
incorporate the proposed new criteria 2006, we are proposing to require that established a new § 412.64 governing
for multicampus hospitals. hospitals must be located in counties rules for establishing Federal rates for
that are in the same Combined inpatient operating costs for FY 2005
3. Urban Group Hospital
Statistical Area (under the MSA and subsequent years. In this new
Reclassifications
definitions announced by the OMB on section, we included definitions of
In FY 2005 IPPS final rule (69 FR June 6, 2003) as the urban area to which
49104), we set forth, under ‘‘urban’’ and ‘‘rural’’ for the purpose of
they seek redesignation to qualify as determining the geographic location or
§ 412.234(a)(3)(ii), revised criteria for meeting the proximity requirement for
urban hospitals to be reclassified as a classification of hospitals under the
reclassification to the urban area to
group. After the publication of the final IPPS. These definitions were previous
which they seek redesignation. We
rule, we became aware that portions of located in § 412.63(b), applicable to FYs
believe that this proposed change would
our policy discussion with respect to 1985 through 2004, and in § 412.62(f),
improve the overall consistency of our
the implementing decision were applicable to FY 1984. References to the
policies by using a single labor market
inadvertently omitted. This policy was area definition for all aspects of the definitions under § 412.62(f) and
corrected in the October 7, 2004, wage index and reclassification. § 412.63(b), appear throughout 42 CFR
correction to the final rule (69 FR Chapter IV. However, when we finalized
60248). The correction specified that 4. Clarification of Goldsmith the provisions of § 412.64, we
‘‘hospitals located in counties that are in Modification Criterion for Urban inadvertently omitted updating some of
the same Combined Statistical Area Hospitals Seeking Reclassification as these cross-references to reflect the
(under the MSA definitions announced Rural change in the location of the two
by the OMB on June 6, 2003); or in the Under section 1886(d)(8)(E) of the definitions for FYs 2005 and subsequent
same Consolidated Metropolitan Act, certain urban hospitals may file an years. We are proposing to change the
Statistical Area (CMSA) (under the application for reclassification as rural if cross-references to the definitions of
standards published by the OMB on the hospital meets certain criteria. One ‘‘urban’’ and ‘‘rural’’ to reflect their
March 30, 1990) as the urban area to of these criteria is that the hospital is current locations in Subpart D of Part
which they seek redesignation qualify as located in a rural census tract of a 412, as applicable.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00133 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23438 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
I. Payment for Direct Graduate Medical the locality-adjusted national average the definition of approved programs
Education (§ 413.79) PRA. Section 511 of the BIPA (Pub. L. * * * is counted toward the initial
(If you choose to comment on issues 106–554) increased the floor established residency period limitation.’’ Section
in this section, please include the by the BBRA to equal 85 percent of the 1886(h)(5)(F) of the Act further provides
caption ‘‘Graduate Medical Education’’ locality-adjusted national average PRA. that ‘‘the initial residency period shall
at the beginning of your comment.) Existing regulations at § 413.77(d)(2)(iii) be determined, with respect to a
specify that, for purposes of calculating resident, as of the time the resident
1. Background direct GME payments, each hospital- enters the residency training program.’’
Section 1886(h) of the Act, as added specific PRA is compared to the floor The IRP is determined as of the time
by section 9202 of the Consolidated and the ceiling to determine whether a the resident enters the ‘‘initial’’ or first
Omnibus Budget Reconciliation Act hospital-specific PRA should be revised. residency training program and is based
(COBRA) of 1985 (Pub. L. 99–272) and Section 1886(h)(4)(F) of the Act on the period of board eligibility
implemented in regulations at existing established limits on the number of associated with that medical specialty.
§§ 413.75 through 413.83, establishes a allopathic and osteopathic residents that Thus, these provisions limit the amount
methodology for determining payments hospitals may count for purposes of of FTE resident time that may be
calculating direct GME payments. For counted for a resident who, after
to hospitals for the costs of approved
most hospitals, the limits were the entering a training program in one
graduate medical education (GME)
number of allopathic and osteopathic specialty, switches to a program in a
programs. Section 1886(h)(2) of the Act,
FTE residents training in the hospital’s specialty with a longer period of board
as added by COBRA, sets forth a
most recent cost reporting period ending eligibility or completes training in one
payment methodology for the
on or before December 31, 1996. specialty training program and then
determination of a hospital-specific,
continues training in a subspecialty (for
base-period per resident amount (PRA) 2. Direct GME Initial Residency Period example, cardiology and
that is calculated by dividing a (IRP) § 413.79(a)(10) gastroenterology are subspecialties of
hospital’s allowable costs of GME for a
a. Background internal medicine).
base period by its number of residents
in the base period. The base period is, As we have generally described b. Direct GME Initial Residency Period
for most hospitals, the hospital’s cost above, the amount of direct GME Limitation: Simultaneous Match
reporting period beginning in FY 1984 payment to a hospital is based in part We understand that there are
(that is, the period of beginning between on the number of FTE residents the numerous programs, including
October 1, 1983, through September 30, hospital is allowed to count for direct anesthesiology, dermatology,
1984). Medicare direct GME payments GME purposes during a year. The psychiatry, and radiology, that require a
are calculated by multiplying the PRA number of FTE residents, and thus the year of generalized clinical training to
times the weighted number of full-time amount of direct GME payment to a be used as a prerequisite for the
equivalent (FTE) residents working in hospital, is directly affected by CMS subsequent training in the particular
all areas of the hospital (and policy on how ‘‘initial residency specialty. For example, in order to
nonhospital sites, when applicable), and periods’’ are determined for residents. become board eligible in anesthesiology,
the hospital’s Medicare share of total Section 1886(h)(4)(C)(ii) of the Act, a resident must first complete a
inpatient days. In addition, as specified implemented at § 413.79(b)(1), provides generalized training year and then
in section 1886(h)(2)(D)(ii) of the Act, that while a resident is in the ‘‘initial complete 3 years of training in
for cost reporting periods beginning on residency period’’ (IRP), the resident is anesthesiology. This first year of
or after October 1, 1993, through weighted at 1.00. Section generalized residency training is
September 30, 1995, each hospital- 1886(h)(4)(C)(iii) of the Act, commonly known as the ‘‘clinical base
specific PRA for the previous cost implemented at § 413.79(b)(2), requires year.’’ Often, the clinical base year
reporting period is not updated for that if a resident is not in the resident’s requirement is fulfilled by completing
inflation for any FTE residents who are IRP, the resident is weighted at .50 FTE either a preliminary year in internal
not either a primary care or an obstetrics resident. medicine (although the preliminary year
and gynecology resident. As a result, Section 1886(h)(5)(F) of the Act can also be in other specialties such as
hospitals that train primary care and defines ‘‘initial residency period’’ as the general surgery or family practice), or a
obstetrics and gynecology residents, as ‘‘period of board eligibility,’’ and, transitional year program (which is not
well as nonprimary care residents in FY subject to specific exceptions, limits the associated with any particular medical
1994 or FY 1995, have two separate initial residency period to an ‘‘aggregate specialty).
PRAs: One for primary care and period of formal training’’ of no more In many cases, during the final year
obstetrics and gynecology residents and than 5 years for any individual. Section of medical school, medical students
one for nonprimary care residents. 1886(h)(5)(G) of the Act generally apply for training in specialty residency
Pub. L. 106–113 amended section defines ‘‘period of board eligibility’’ for training programs. Typically, a medical
1886(h)(2) of the Act to establish a a resident as ‘‘the minimum number of student who wants to train to become a
methodology for the use of a national years of formal training necessary to specialist is ‘‘matched’’ to both the
average PRA in computing direct GME satisfy the requirements for initial board clinical base year program and the
payments for cost reporting periods eligibility in the particular specialty for specialty residency training program at
beginning on or after October 1, 2000, which the resident is training.’’ Existing the same time. For example, the medical
and on or before September 30, 2005. § 413.79(a) of the regulations generally student who wants to become an
Pub. L. 106–113 established a ‘‘floor’’ for defines ‘‘initial residency period’’ as the anesthesiologist will apply and ‘‘match’’
hospital-specific PRAs equal to 70 ‘‘minimum number of years required for simultaneously for a clinical base year
percent of the locality-adjusted national board eligibility.’’ Existing § 413.79(a)(5) in an internal medicine program for year
average PRA. In addition, the BBRA provides that ‘‘time spent in residency 1 and for an anesthesiology training
established a ‘‘ceiling’’ that limited the programs that do not lead to program beginning in year 2.
annual adjustment to a hospital-specific certification in a specialty or Prior to October 1, 2004, CMS’ policy
PRA if the PRA exceeded 140 percent of subspecialty, but that otherwise meet was that the IRP is determined for a
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00134 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23439
resident based on the program in which ‘‘residency match’’ to mean, for train and seek board certification and
he or she participates in the resident’s purposes of direct GME, a national prevent inappropriate revision of the
first year of training, without regard to process by which applicants to IRP in cases where a resident changes
the specialty in which the resident approved medical residency programs specialties subsequent to beginning
ultimately seeks board certification. are paired with programs on the basis of residency training. However, we note
Therefore, for example, a resident who preferences expressed by both the that when a medical student in his or
chooses to fulfill the clinical base year applicants and the program directors. her final year of medical school matches
requirement for an anesthesiology These policy changes, which were into an advanced program (for example,
program with a preliminary year in an effective October 1, 2004, are only anesthesiology) for the second program
internal medicine program will be applicable to residents that year, but fails to match in a clinical base
‘‘labeled’’ with the IRP associated with simultaneously match in both a clinical year, and obtains a preliminary year
internal medicine, that is, 3 years (3 base year program and a longer specialty position outside the match process, we
years of training are required to become residency program. We have become can still identify the specialty associated
board eligible in internal medicine), aware of situations where residents, with the program in which the resident
even though the resident may seek upon completion of medical school, is ultimately expected to train and seek
board certification in anesthesiology, only match for a program beginning in board certification and prevent
which requires a minimum of 4 years of the second residency year in an inappropriate changes to the IRP if the
training to become board eligible. As a advanced specialty training program but resident changes specialties subsequent
result, this resident would have an IRP fail to match for a clinical base year of to beginning residency training.
of 3 years and, therefore, be weighted at training. Residents that match into an Therefore, we are proposing to revise
0.5 FTE in his or her fourth year of advanced program but fail to match into § 413.79(a)(10) to state that, when a
anesthesiology training for purposes of a clinical base year program may hospital can document that a resident
direct GME payment. independently pursue unfilled matched in an advanced residency
Effective with cost reporting periods residency positions in preliminary year training program beginning in the
beginning on or after October 1, 2004, to programs after the match process is second residency year prior to
address programs that require a clinical complete. However, because these commencement of any residency
base year, we revised our policy in the residents do not ‘‘simultaneously training, the resident’s IRP will be
FY 2005 IPPS final rule (69 FR 49170 match’’ into both a preliminary year and determined based on the period of board
through 49174) concerning the IRP. an advanced program, currently their eligibility for the specialty associated
Specifically, under the revised policy, if IRP cannot be determined based on the with the advanced program, without
a hospital can document that a period of board eligibility associated regard to the fact that the resident had
particular resident matches with the advanced program, as specified not matched for a clinical base year
simultaneously for a first year of in § 413.79(a)(10). Rather, the IRP for training program.
training in a clinical base year in one such residents would continue to be We note that this proposed policy
medical specialty, and for additional determined based on the specialty change would not result in a policy to
year(s) of training in a different associated with the preliminary year determine the IRP for all residents who
specialty program, the resident’s IRP program. For example, a student in the must complete a clinical base year
will be based on the period of board final year of medical school may match during the second residency training
eligibility associated with the specialty into a radiology program that begins in year based on the specialty associated
program in which the resident matches the second residency year, but not with that second residency training
for the subsequent year(s) of training match with any clinical base year year. That is, we are not proposing that,
and not on the period of board program. Under our current policy, if for any resident whose first year of
eligibility associated with the clinical subsequent to conclusion of the match training is completed in a program that
base year program. This change in process, this resident secured a provides a general clinical base year as
policy is codified at § 413.79(a)(10) of preliminary year position in an internal required by the ACGME for certain
the regulations. medicine program, the resident would specialties, an IRP should be assigned in
This policy applies regardless of not have met the requirements at the second year based on the specialty
whether the resident completes the first § 413.79(a)(10) for a simultaneous match the resident enters in the second year of
year of training in a separately and the IRP for this resident would be training. As we stated in the FY 2005
accredited transitional year program or based on the length of time required to IPPS final rule (69 FR 49172), a ‘‘second
in a preliminary (or first) year in another complete an internal medicine program year’’ policy would not allow CMS to
residency training program such as (3 years) rather than the length of the distinguish between those residents
internal medicine. radiology program (4 years). who, in their second year of training,
In addition, because programs that The intent of the ‘‘simultaneous match in a specialty program prior to
require a clinical base year are match’’ provision of § 413.79(a)(10) is to their first year of training, those
nonprimary care specialties, we identify in a verifiable manner the residents who participated in a clinical
specified in § 413.79(a)(10) that the specialty associated with the program in base year in a specialty and then
nonprimary care PRA would apply for which the resident will initially train continued training in that specialty, and
the entire duration of the initial and seek board certification. It is also those residents who simply switched
residency period. By treating the first the intent of § 413.79(a)(10) that a specialties in their second year. Rather,
year as part of a nonprimary care resident’s IRP would not change if the we are proposing that, if a hospital can
specialty program, the hospital will be resident, after initially entering a document that a particular resident had
paid at the lower nonprimary care PRA training program in one specialty, matched in an advanced specialty
rather than the higher primary care changes programs to train in another program that requires completion of a
PRA, even if the residents are training medical specialty. The ‘‘simultaneous clinical base year prior to the resident’s
in a primary care program during the match’’ provisions of § 413.79(a)(10) first year of training, the IRP would not
clinical base year. allow CMS to both identify the specialty be determined based on the period of
In the FY 2005 IPPS final rule (69 FR associated with the program in which board eligibility for the specialty
49170 and 49171), we also defined the resident is ultimately expected to associated with the clinical base year
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00135 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23440 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
program, for purposes of direct GME statutory FTE resident caps by rotation will result in 5 FTE residents
payment. Rather, under those establishing new medical residency training at Hospital A. Through the
circumstances, the IRP would be programs in the new teaching hospitals affiliation agreement, Hospital A
determined based upon the period of solely for the purpose of affiliating with receives a positive adjustment of 5
board eligibility associated with the the new teaching hospitals to receive an FTE’s for both its direct GME and IME
specialty program in which the resident upward adjustment to their FTE cap caps. Hospital B receives a
has matched and is expected to begin under an affiliation agreement. This corresponding negative adjustment of 5
training in the second program year. would effectively allow existing FTEs under the affiliation agreement.
teaching hospitals to achieve an Hospital A’s Board of Directors is
3. New Teaching Hospitals’
increase in their FTE resident caps interested in starting a new residency
Participation in Medicare GME
beyond the number allowed by their program in Internal Medicine that
Affiliated Groups (§ 413.79(e)(1))
statutory caps. would begin training residents at
In the August 29, 1997 final rule (62 In contrast, hospitals in rural areas Hospital A on July 1, 2005. If Hospital
FR 46005 through 46006) and the May that qualify for an adjustment under A establishes the new program, under
12, 1998 final rule (63 FR 26331 through § 413.79(e)(1)(v) are allowed to enter existing Medicare regulations, Hospital
23336), we established rules for into a Medicare GME affiliation. A will have its direct GME and IME
applying the FTE resident limit (or ‘‘FTE Although we recognize that rural caps (which were both previously
cap’’) for calculating Medicare direct hospitals would not be immune from established at zero) permanently
GME and IME payments to hospitals. the kind of ‘‘gaming’’ arrangement adjusted to reflect the additional
We added regulations, currently at described above, we allow new rural residents training in the newly
§ 413.79(e), to provide for an adjustment teaching hospitals that begin training approved program in accordance with
to the FTE cap for certain hospitals that residents in new programs, and thereby § 413.79(e)(1). However, under existing
begin training residents in new medical increase their FTE cap, to affiliate regulations, Hospital A may no longer
residency training programs. For because we understand that rural enter into an affiliation with Hospital B
purposes of this provision, a new hospitals may not have a sufficient after it receives the adjustment to its
program is one that receives initial volume of patient care utilization at the FTE caps under § 413.79(e)(1).
accreditation or begins training rural hospital site to be able to support We are proposing to revise
residents on or after January 1, 1995. a training program that meets § 413.79(e)(1)(iv) so that new urban
Although we refer only to the direct accreditation standards. Securing teaching hospitals that qualify for an
GME provision throughout the sufficient patient volumes to meet adjustment under § 413.79(e)(1) may
remainder of this discussion, a similar accreditation requirements may enter into a Medicare GME affiliation
cap adjustment is made under necessitate rotations of the residents to agreement under certain circumstances.
§ 412.105(f) for IME purposes. another hospital. Accordingly, the Specifically, a new urban teaching
Therefore, this proposal applies to both regulations allow new teaching hospital that qualifies for an adjustment
IME and direct GME. hospitals in rural areas to enter into to its FTE caps for a newly approved
A new teaching hospital is one that Medicare GME affiliation agreements. program may enter into a Medicare GME
had no allopathic or osteopathic However, an affiliation is only affiliation agreement, but only if the
residents in its most recent cost permitted if the rural hospital provides resulting adjustments to its direct GME
reporting period ending on or before training for at least one-third of the FTE and IME caps are ‘‘positive
December 31, 1996. Under residents participating in all of the joint adjustments.’’ ‘‘Positive adjustment’’
§ 413.79(e)(1), if a new teaching hospital programs of the affiliated hospitals means, for the purpose of this policy,
establishes one or more new medical because, as we stated in the May 12, that there is an increase in the new
residency training programs, the 1998 Federal Register (63 FR 26333), we teaching hospital’s caps as a result of
hospital’s unweighted FTE caps for both believe that requiring at least one-third the affiliation agreement. At no time
direct GME and IME will be based on of the training to take place in the rural would the caps of a hospital located in
the product of the highest number of area allows operation of programs that an urban area that qualifies for
FTE residents in any program year in focus on, but are not exclusively limited adjustment to its FTE caps for a new
the third year of the hospital’s first new to, training in rural areas. program under § 413.79(e)(1), be
program and the number of years in Through comment and feedback from allowed to decrease as a result of a
which residents are expected to industry trade groups and hospitals, we Medicare GME affiliation agreement. We
complete the program(s), based on the understand that, while these rules were believe this proposed policy change
minimum number of years of training meant to prevent gaming on the part of would allow new urban teaching
that are accredited for the type of existing teaching hospitals, they could hospitals flexibility to start new
program(s). also preclude affiliations that clearly are teaching programs without jeopardizing
The regulations at § 413.79(e)(1)(iv) designed to facilitate additional training their ability to count additional FTE
specify that hospitals in urban areas that at the new teaching hospital. residents training at the hospital under
qualify for an FTE cap adjustment for For example, Hospital A had no an affiliation agreement.
residents in newly approved programs allopathic or osteopathic residents in its We remain concerned that hospitals
under § 413.79(e)(1) are not permitted to most recent cost reporting period ending with existing medical residency training
be part of a Medicare GME affiliated on or before December 31, 1996. As programs could cooperate with a new
group for purposes of establishing an such, Hospital A’s caps for direct GME teaching hospital to circumvent the
aggregate FTE cap. (A Medicare GME and IME are both zero. Hospital A and statutory FTE caps by establishing new
affiliated group is defined in the Hospital B enter into a Medicare GME programs at the new teaching hospital,
regulations at § 413.75(b).) We affiliation for the academic year and, through a Medicare GME affiliation
established this policy because of our beginning on July 1, 2003, and ending agreement, moving most or all of the
concern that hospitals with existing on June 30, 2004. On July 1, 2003, new residency program to its own
medical residency training programs Hospital A begins training residents hospital, thereby receiving an upward
could otherwise, with the cooperation of from an existing family medicine adjustment to its FTE caps. For this
new teaching hospitals, circumvent the program located at Hospital B. This reason, we are proposing to revise
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00136 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23441
§ 413.79(e)(1)(iv) of the regulations to Dental and podiatric residents were not Section 407 of the Pub. L. 106–113
provide that a hospital that qualifies for included in these statutorily mandated amended the FTE caps provision at
an adjustment to its caps under caps. sections 1886(h)(4)(F) and
§ 413.79(e)(1) would not be permitted to Congress provided certain exceptions 1886(d)(5)(B)(v) of the Act to provide
enter into an affiliation agreement that for rural hospitals when establishing the that ‘‘effective for cost reporting periods
would produce a negative adjustment to 1996 caps ‘‘with the intent of beginning on or after April 1, 2000, [a
its FTE resident cap. encouraging physician training and rural hospital’s FTE cap] is 130 percent
Continuing the example shown above, practice in rural areas’’ (65 FR 47032). of the unweighted FTE count * * * for
under the proposed change in policy, For example, the statute states at section those residents for the most recent cost
Hospital A and Hospital B would be 1886(h)(4)(H)(i) that, in promulgating reporting period ending on or before
able to continue the Medicare GME rules regarding application of the FTE December 31, 1996.’’ In other words, the
affiliation agreement under which caps to training programs established otherwise applicable FTE caps for rural
Hospital A trained residents from after January 1, 1995, ‘‘the Secretary hospitals were multiplied by 1.3 to
Hospital B’s family practice program shall give special consideration to encourage rural hospitals to expand
because Hospital A would receive an facilities that meet the needs of preexisting residency programs. (As
increase in its direct GME or IME caps underserved rural areas.’’ Accordingly, described above, even prior to the BBRA
under an affiliation after qualifying for in implementing this provision, we change, rural hospitals were able to
a new program adjustment under provided in the regulations under receive FTE cap adjustments for new
§ 413.79(e)(1). However, Hospital B § 413.86(g)(6)(i)(C) (now programs.) For example, a hospital that
would not be able to receive an increase § 413.79(e)(1)(iii)) that ‘‘except for rural was rural as of April 1, 2000, and had
in its caps as a result of a Medicare GME hospitals, the cap will not be adjusted a direct GME cap of 100 FTEs would
affiliation agreement with Hospital A. for new programs established more than receive a permanent cap adjustment of
Thus, we are proposing the above 3 years after the first program begins 30 FTEs (100 FTEs × 1.3 = 130 FTEs)
policy change to provide some training residents. In other words, only and effective for cost reporting periods
flexibility to hospitals that are currently hospitals located in rural areas (that is, beginning on or after April 1, 2000, its
prohibited from entering into a areas that are not designated as an FTE for direct GME would be 130. (A
Medicare GME affiliation agreement, MSA), receive adjustments to their similar adjustment would be made to
while continuing to protect the statutory unweighted FTE caps to reflect the FTE cap for IME for discharges
FTE resident caps from being residents in new medical residency occurring on or after April 1, 2000.)
undermined by gaming. We solicit training programs past the third year
comments on the proposed change. after the first residency program began We recently received questions
training in that hospital (62 FR 46006). regarding the application of the 130-
4. GME FTE Cap Adjustment for Rural percent FTE cap adjustment and the
Section 413.79(e)(1) specifies the new
Hospitals (§ 413.79(c) and (k)) new program adjustment for rural
program adjustment as the ‘‘product of
As stated earlier under section V.I.1. the highest number of residents in any hospitals in instances in which a rural
of this preamble, Medicare makes both program year during the third year of teaching hospital is later redesignated as
direct and indirect GME payments to the * * * program’s existence * * * an urban hospital or reclassifies back to
hospitals for the training of residents. and the number of years in which being an urban hospital after having
Direct GME payments are made in residents are expected to complete the been classified as rural. We are aware of
accordance with section 1886(h) of the program based on the minimum two circumstances when a rural hospital
Act, based generally on the hospital- accredited length for the type of may subsequently be reclassified as
specific PRA, the number of FTE program.’’ The regulation applies only urban. The first circumstance involves
residents a hospital trains, and the to new programs (as defined under labor market area changes, and the
hospital’s percentage of Medicare § 413.79(1)) established by rural second involves urban hospitals, after
inpatient utilization. Indirect GME hospitals, not for expansion of having been reclassified as rural through
payments (referred to as IME) are made previously existing programs. For section 1886(d)(8)(E) of the Act, that
in accordance with section 1886(d)(5)(B) example, if a rural hospital has an elect to be considered urban again. In
of the Act as an adjustment to DRG unweighted FTE cap for direct GME of both situations, if the hospital in
payment and are based generally on the 100 and begins training residents in a question was a teaching hospital, its
ratio of the hospital’s FTE residents to new 3-year residency program that has FTE caps would have been subject to
the number of hospital beds. It is well- 10 residents in each of its first 3 the 130 percent and new program FTE
established that the calculation of both program years (for a total of 30 residents cap adjustments while it was designated
direct GME and IME payments is in the entire program in the program’s or classified as rural. The issue is
affected by the number of FTE residents third year), the hospital’s direct GME whether the adjusted caps would
a hospital is allowed to count; generally, FTE cap of 100 would be permanently continue to apply after the hospital
the greater the number of FTE residents adjusted at the conclusion of the third becomes urban or returns to being
a hospital counts, the greater the program year by 30, and the hospital’s treated as urban. Below we first address
amount of Medicare direct GME and new FTE cap would be 130. A similar hospitals that lost their status as urban
IME payments the hospital will receive. adjustment would be made to the hospitals due to new labor market areas.
Effective October 1, 1997, Congress hospital’s FTE cap for IME in We then address hospitals that
instituted caps on the number of accordance with the regulations at rescinded their section 1886(d)(8)(E)
allopathic and osteopathic residents a § 412.105(f)(1)(iv)(A). However, the reclassifications. (We note that
hospital is allowed to count for direct rural hospital would not be able to reclassification by the MGCRB under
GME and IME purposes at sections receive adjustments to its FTE cap for section 1886(d)(10) of the Act, as well
1886(h)(4)(F) (direct GME) and any expansion of a preexisting program. as reclassifications under section
1886(d)(5)(B)(v) (IME) of the Act. These In 1999, Congress passed an 1886(d)(8)(B) of the Act, are effective
caps were instituted in an attempt to additional provision under section 407 only for purposes of the wage index and
end the implicit incentive for hospitals of Pub. L. 106–113 (BBRA) to promote would not affect the hospital’s IME or
to increase the number of FTE residents. physician training in rural areas. direct GME payments).
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00137 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23442 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
a. Formerly Rural Hospitals That programs. Therefore, we are clarifying would cause them to lose the
Became Urban Due to the New CBSA in this proposed rule our policy that adjustments, they would not have had
Labor Market Areas hospitals that became urban in FY 2005 the incentives Congress wished to
In the FY 2005 IPPS final rule, we due to the new labor market areas increase the number of FTE residents
adopted the new CBSA-based labor would nevertheless be permitted to training in their programs. These
market areas announced by OMB on retain the adjustments they received for hospitals might have feared losing the
June 6, 2003, and these areas became new programs as long as they were rural adjustments as a result of new labor
effective October 1, 2004. As a result of at the time they received them. (Once market areas, and therefore not carried
these new labor market areas, a number such hospitals receive a designation as out Congress’ intent to expand their
of hospitals that previously were located ‘‘urban,’’ they may no longer seek FTE already existing residency training
outside of an MSA and therefore cap adjustments relating to new training programs or add new residency training
considered rural are now located in a programs; they may only retain the programs.
adjustments they received for the new To provide an example of the how the
CBSA that is designated as urban and
programs they added when they were above statutory interpretations would be
considered urban.
rural.) applied, a hospital located in a rural
We believe that previously rural
Similarly, we believe that rural area prior to October 1, 2004, with an
hospitals that received adjustments due
hospitals that received the statutorily unweighted direct GME FTE cap of 100
to establishing new medical training
mandated 130 percent adjustment to would have received a 30-percent
programs should not now be required to
their FTE caps would be disadvantaged increase in its FTE cap so that its
forego such adjustments simply because
if we were to rescind this adjustment adjusted cap was 130 FTEs. The rural
they have now been redesignated as
due to new urban designation. Such hospital also could have received an
urban. Such hospitals added and
hospitals expanded their already adjustment for any new medical
received accreditation for new medical existing training programs under the residency program. If this hospital,
training programs under the assumption assumption that these expansions while rural, started a new 3-year
that such programs would effect a would cause a permanent increase in residency program with 10 residents in
permanent increase in their FTE caps. their FTE caps. Many of these hospitals each program year, its FTE cap would
Indeed, we believe it would be expanded their programs only once the have been increased by an additional 30
nonsensical to view the fact that these BBRA became effective (in 2000). Thus, FTEs to 160 FTEs (that is, (100 FTEs ×
hospitals are now urban as causing them they have had only a few years to 1.3) + 30 FTEs = 160 FTEs). Under our
to lose the adjustments that stemmed expand their programs and receive the reading of the statute, if this hospital is
directly from the permissible and cap adjustment mandated by statute. For now located in an urban area due to the
encouraged establishment of new these reasons, we believe it is new CBSAs, it would retain this cap of
medical training programs. Such permissible to read sections 160 FTEs.
hospitals cannot reach back into the 1886(h)(4)(F)(i) and 1886(d)(5)(B)(v) of We also believe that the statute
past and alter whether they added the the Act as permitting a permanent should be interpreted as permitting
new programs or not. Nor would it be adjustment to the FTE caps at the time urban hospitals with rural track training
reasonable to prohibit them from a rural hospital adds residents to its programs to retain the adjustment they
counting FTE residents training in new already existing program(s). The received for such programs at
programs that they worked to accredit. language states that the total number of § 413.79(k), even if the ‘‘rural’’ tracks as
(We note that the hospitals would not be FTE residents with respect to a of October 1, 2004, are now located in
required to close the programs. Rather, ‘‘hospital’s approved medical residency urban areas due to the new OMB labor
if they were not permitted to retain the training program in the fields of market areas. As explained in the FY
adjustments to their FTE caps they allopathic medicine and osteopathic 2001 IPPS final rule (66 FR 47033), we
received as a result of having medicine may not exceed the number provided that an urban hospital that
established new programs, they would (or, 130 percent of such number in the establishes a separately accredited
no longer be permitted to count FTE case of a hospital located in a rural area) medical residency training program in a
residents that exceeded their original, of such full-time equivalent residents rural area (that is, a rural track) may
preadjustment FTE caps for purposes of for the hospital’s most recent cost receive an adjustment to reflect the
direct GME and IME payments. The reporting period ending on or before number of residents in that program
effect might be that the hospital would December 31, 1996.’’ As with the (existing § 413.79(k)). Section
have to close the program(s) as a result addition of new programs, we interpret 1886(h)(4)(H)(iv) of the Act states: ‘‘In
of decreased Medicare funding, but the the language ‘‘130 percent of such the case of a hospital that is not located
hospital would be free to continue to number in the case of a hospital located in a rural area but establishes separately
operate the programs(s).) in a rural area,’’ as meaning only that accredited approved medical residency
For these reasons, we believe the best the hospital was required to be rural at training programs (or rural tracks) in an
reading of our regulation at the time it received the 30-percent (sic) rural area or has an accredited
§ 413.79(e)(3), which states that if a increase. Once the hospital received training program with an integrated
hospital ‘‘is located in a rural area,’’ it such increase, the increase became a rural track, the Secretary shall adjust the
may adjust its FTE cap to reflect permanent increase in the FTE cap and limitation under subparagraph (F) in an
residents training in new programs, is should not be rescinded based on appropriate manner insofar as it applies
that hospitals were permitted to receive subsequent designation as an urban to such programs in such rural areas in
a permanent adjustment to their FTE hospital. order to encourage the training of
caps if, at the time of adding a new We believe our interpretations are physicians in rural areas.’’
program, the hospitals were rural. A consistent with legislative intent. Again, we believe that the reading
hospital’s subsequent designation as Congress provided for these FTE cap that best carries out Congressional
urban or rural due to labor market area adjustments for rural hospitals with the intent is one that allows the adjustment
changes becomes irrelevant, because the intent of encouraging physician training for rural tracks to remain permanent as
central question is whether the hospital and practice in rural areas. If rural long as the rural track training programs
is rural at the time it adds the new hospitals had believed that new CBSAs continue, even if the once-rural tracks
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00138 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23443
are now urban due to new labor market located in a rural location. A hospital published a number of Federal Register
area boundaries. Congress clearly treated as rural under section documents as follows:
intended to encourage the training of 1886(d)(8)(E) of the Act may • In a proposed rule published in the
physicians in the rural tracks identified subsequently withdraw its election and Federal Register on September 8, 1998
by the statute. However, if the FTE cap return to its urban status under the (63 FR 47552), we proposed specific and
adjustments were merely temporary, regulations at § 412.103. We are comprehensive criteria for determining
and hospitals could not rely on proposing that, effective with discharges whether a facility or organization is
retaining the adjustments relating to the occurring on or after October 1, 2005, a provider-based. In the preamble to the
rural training programs in which they different policy should apply for proposed rule, we explained why we
invested, then Congress’ wishes to hospitals that reclassify under section believed meeting each criterion would
encourage rural training programs might 1886(d)(8)(E) of the Act than the policy be necessary to a finding that a facility
not have been realized. Hospitals would that applies to rural hospitals or organization qualifies for provider-
always need to speculate as to whether redesignated as urban due to changes in based status. After considering public
the FTE cap adjustments relating to the labor market areas, as discussed in comments on the September 8, 1998
rural track programs they established section IV.F.3 of this preamble. proposed rule and making appropriate
would be lost each time new labor revisions, on April 7, 2000 (65 FR
market areas were adopted (which 5. Technical Changes: Cross References 18504), we published a final rule setting
normally occurs once every 10 years). • In the FY 2005 IPPS final rule (69 forth the provider-based regulations at
Thus, we believe the statutory language FR 49234), we redesignated the contents 42 CFR 413.65.
should be interpreted as allowing an of § 413.86 as §§ 413.75 through 413.83. • Before the regulations that were
urban hospital to retain its FTE cap We also updated cross-references to issued on April 7, 2000 could be
adjustment for rural track programs as § 413.86 that were located in various implemented, Congress enacted the
long as the tracks were actually located sections under 42 CFR Parts 400 Medicare, Medicaid, and SCHIP
in rural areas at the time the urban through 499. We inadvertently did not Benefits Improvement and Protection
hospital received its adjustment. capture all of the needed cross-reference Act of 2000 (BIPA), Pub. L. 106–544.
However, if the urban hospital wants to changes. In this proposed rule, we are Section 404 of BIPA delayed
receive a cap adjustment for a new rural proposing to correct the additional implementation of the April 7, 2000
track residency program, the rural track cross-references in 42 CFR Parts 405, provider-based rules with respect to
must involve rural hospitals that are 412, 413, 415, 419, and 422 that were many providers, and mandated changes
located in rural areas based on the most not made in the August 11, 2004 final in the criteria at § 413.65 for
recent OMB labor market designations rule. determining provider-based status.
as specified in the FY 2005 IPPS final • In order to conform our regulations
• When we redesignated § 413.86 as to the requirements of section 404 of
rule. We are proposing to add a new §§ 413.75 through 413.83 in the FY 2005
paragraph (k)(7) to § 413.79 to BIPA and to codify certain clarifications
IPPS final rule, we also made a of provider-based policy that had
incorporate this proposal. corresponding redesignation of § 413.80 previously been posted on the CMS Web
b. Section 1886(d)(8)(E) Hospitals as § 413.89. We are proposing to correct site, we published another proposed
As stated above, a second situation cross-references to § 413.80 in 42 CFR rule on August 24, 2001 (66 FR 44672).
exists where a hospital that is treated as Parts 412, 413, 417, and 419 to reflect After considering public comments on
rural returns to being urban under the redesignation of this section as the August 24, 2001 proposed rule and
section 1886(d)(8)(E) of the Act § 413.89. making appropriate revisions, we
(§ 412.103 of the regulations). Under J. Provider-Based Status of Facilities published a final rule on November 30,
this provision, an urban hospital may and Organizations Under Medicare 2001 setting forth the provider-based
file an application to be treated as being regulations (66 FR 59909).
located in a rural area. A hospital’s (If you choose to comment on issues • On May 9, 2002, we proposed
reclassification as located in a rural area in this section, please include the further significant revisions to the
under this provision affects only caption ‘‘Provider-Based Entities’’ at the provider-based regulations at § 413.65
payments under section 1886(d) of the beginning of your comment.) (67 FR 31480). After considering public
Act. Accordingly, a hospital that is 1. Background comments on the May 9, 2002 proposed
treated as rural under this provision can rule and making appropriate revisions,
receive the FTE cap adjustments that Since the beginning of the Medicare on August 1, 2002, we published a final
any other rural hospital receives, but program, some providers, which we rule specifying the criteria that must be
only to the FTE cap that applies for refer to as ‘‘main providers,’’ have met to qualify for provider-based status
purposes of IME payments, which are functioned as a single entity while (67 FR 50078). These regulations remain
made under section 1886(d) of the Act. owning and operating multiple in effect and continue to be codified at
The hospital could not receive provider-based departments, locations, § 413.65.
adjustments to its direct GME FTE cap and facilities that were treated as part of Following is a discussion of the major
because payments for direct GME are the main provider for Medicare provisions of the provider-based
made under section 1886(h) of the Act purposes. Having clear criteria for regulations: Section 413.65(a) of the
and the section 1886(d)(8)(E) provider-based status is important regulations describes the scope of that
reclassifications affect only the because this designation can result in section and provides definitions of key
payments that are made under that additional Medicare payments for terms used in the regulations. Paragraph
section 1886(d) of the Act. Therefore, a services furnished at the provider-based (b) describes the procedure for making
hospital that reclassifies as rural under facility, and may also increase the provider-based determinations, and
section 1886(d)(8)(E) of the Act may coinsurance liability of Medicare paragraph (c) imposes requirements for
receive the 130-percent adjustment to its beneficiaries for those services. reporting material changes in
IME FTE cap and its IME FTE cap may To set forth Medicare policies with relationships between main providers
be adjusted for any new programs, regard to the provider-based status of and provider-based facilities or
similar to hospitals that are actually facilities and organizations, we have organizations. In paragraph (d), we
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00139 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23444 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
specify the requirements that are costs using the hospital’s cost report a Medicaid State plan).
applicable to all facilities or rather than by filing a separate rural (§ 413.65(e)(3)(i))
organizations seeking provider-based health clinic cost report, and that • The facility or organization
status, and in paragraph (e), we describe whether or not a rural health clinic is demonstrates a high level of integration
the additional requirements applicable hospital-affiliated will affect the with the main provider by showing that
to off-campus facilities or organizations selection of a fiscal intermediary for the it meets all of the other provider-based
(generally, those located more than 250 clinic. However, we do not believe these criteria and demonstrates that it serves
yards from the provider’s main administrative differences provide a the same patient population as the main
buildings). Paragraphs (f) through (o) set sufficient reason to make provider-based provider, by submitting records showing
forth policies regarding joint ventures, determinations for such rural health that, during the 12-month period
obligations of provider-based facilities, clinics. immediately preceding the first day of
facilities operated under management the month in which the application for
3. Location Requirement for Off-Campus
contracts or providing all services under provider-based status is filed with CMS,
Facilities: Application to Certain
arrangements, procedures in connection and for each subsequent 12-month
Neonatal Intensive Care Units
with certain provider-based period—
determinations, and specific types of As we stated in the preamble to May
9, 2002 proposed rule for changes in the —At least 75 percent of the patients
facilities such as Indian Health Service served by the facility or organization
(IHS) and Tribal facilities and Federally provider-based rules (67 FR 31485), we
recognize that provider-based status is reside in the same zip code areas as
qualified health centers (FQHCs). at least 75 percent of the patients
not limited to on-campus facilities or
2. Limits on the Scope of the Provider- organizations and that facilities or served by the main provider
Based Regulations—Facilities for Which organizations located off the main (§ 413.65(e)(3)(ii)(A)); or
Provider-Based Determinations Will Not —At least 75 percent of the patients
provider campus may also be
Be Made sufficiently integrated with the main served by the facility or organization
In § 413.65(a) (1)(ii), we list specific provider to justify a provider-based who required the type of care
types of facilities and organizations for designation. However, the off-campus furnished by the main provider
which determinations of provider-based location of the facilities or organizations received that care from that provider
status will not be made. We previously may make such integration harder to (for example, at least 75 percent of the
concluded that provider-based achieve, and such integration should patients of a rural health clinic
determinations should not be made for not simply be presumed to exist. seeking provider-based status
these facilities because the outcome of Therefore, to ensure that off-campus received inpatient hospital services
the determination (that is, whether a facilities or organizations seeking from the hospital that is the main
facility, unit, or department is found to provider-based status are appropriately provider (§ 413.65(e)(3)(ii)(B)).
be freestanding or provider-based) integrated, we have adopted certain Section 413.65(e)(3)(ii)(C) of the
would not affect the methodology used requirements regarding the location of regulations allows new facilities or
to make Medicare or Medicaid payment, off-campus facilities or organizations. organizations to qualify as provider-
the scope of benefits available to a These requirements are set forth in based entities. Under this section, if a
Medicare beneficiary in or at the § 413.65(e)(3). Section 413.65(e)(3) facility or organization is unable to meet
facility, or the deductible or coinsurance specifies that a facility or organization the criteria in § 413.65(e)(3)(ii)(A) or
liability of a Medicare beneficiary in or not located on the main campus of the (e)(3)(ii)(B) because it was not in
at the facility. potential main provider can qualify for operation during all of the 12-month
We have now concluded that, under provider-based status only if it is period before the start of the period for
the principle stated above, rural health located within a 35-mile radius of the which provider-based status is sought,
clinics affiliated with hospitals having campus of the hospital or CAH that is the facility or organization may
50 or more beds should be added to the the potential main provider, or meets nevertheless meet the location
list of facilities for which provider- any one of the following requirements. requirement of paragraph (e)(3) of
based status determinations are not • The facility or organization is § 413.65 if it is located in a zip code area
made. Therefore, we are proposing to owned and operated by a hospital or included among those that, during all of
revise § 413.65(a)(1)(ii) to add rural CAH that has a disproportionate share the 12-month period before the start of
health clinics with hospitals having 50 adjustment (as determined under the period for which provider-based
or more beds to the listing of the types § 412.106) greater than 11.75 percent or status is sought, accounted for at least
of facilities for which a provider-based is described in § 412.106(c)(2) of the 75 percent of the patients served by the
status determination will not be made. regulations which implement section main provider.
We believe this proposed revision to 1886(e)(5)(F)(i)(II) of the Act and is— CMS has been advised that, in some
§ 413.65(a)(1)(ii) is appropriate because —Owned or operated by a unit of State cases, the location requirements in
all rural health clinics affiliated with or local government; current regulations may inadvertently
hospitals having 50 or more beds are —A public or nonprofit corporation that impede the delivery of intensive care
paid on the same basis as rural health is formally granted governmental services to newborn infants in areas
clinics not affiliated with any hospital, powers by a unit of State or local where there is no nearby children’s
and the scope of Medicare Part B government; or hospital with a neonatal intensive care
benefits and beneficiary liability for —A private hospital that has a contract unit (NICU). According to those who
Medicare Part B deductible and with a State or local government that expressed this concern, hospitals
coinsurance amounts would be the includes the operation of clinics participating in the Medicare program
same, regardless of whether the rural located off the main campus of the as children’s hospitals establish off-site
health clinic was found to be provider- hospital to assure access in a well- neonatal intensive care units (NICUs)
based or freestanding. defined service area to health care which they operate and staff but which
In setting forth this proposal, we services for low-income individuals are located in space leased from other
recognize that rural health clinics who are not entitled to benefits under hospitals. The hospitals in which the
affiliated with hospitals report their Medicare (or medical assistance under offsite NICUs are housed typically are
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00140 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23445
short-term, acute care hospitals located comment on which of the following and financial control of the main
in rural areas. According to comments approaches would be most effective in provider, in accordance with the
that CMS has received, the nearest resolving it. The proposed approaches provisions of § 413.65. In recognition of
children’s hospital in a rural area is on which we are soliciting specific the fact that provider-based entities,
usually located a considerable distance comments are: unlike departments of a provider, offer
from individual rural communities, ■ A change in the Medicare provider- a type of services different from those of
which prevents infants in these rural based regulations to create an exception the main provider and participate
communities from having ready access to the location requirements for NICUs separately in Medicare, we are
to the specialized care offered by NICUs. located in community hospitals that are proposing to revise this requirement by
We have received a suggestion that more than 35 miles from the children’s deleting the word ‘‘name’’ from this
this configuration (that of a hospital hospital that is the potential main definition. This change would simplify
participating in the Medicare program provider. The exception might take the compliance with the provider-based
as a hospital whose inpatients are form of a more generous mileage criteria since entities that do not now
predominantly individuals under 18 allowance (such as being within 50 operate under the potential main
years of age under section miles of the potential main provider) or provider’s name will not be obligated to
1886(d)(1)(B)(iii) of the Act, establishing could require other criteria to be met. change their names in order to be
an offsite NICU which it operates and However, the exception would be treated as provider-based.
staffs but which is located in space available only if there is no other NICU b. Provider-based determinations. In
leased from another hospital) can be within 35 miles of the community paragraph (b)(3)(ii) of § 413.65, we state
very helpful in making neonatal hospital. that, in the case of a facility not located
intensive care more quickly available in ■ A change in the national Medicaid on the campus of the potential main
areas where community hospitals are regulations to allow off-campus NICUs provider, the provider seeking a
located. In addition, this configuration that meet other provider-based determination would be required to
can offer relief to families who requirements under § 413.65 to qualify submit an attestation stating that the
otherwise would be required to travel as provider-based for purposes of facility meets the criteria in paragraphs
long distances to obtain this care for payment under Medicaid, even though (d) and (e) of § 413.65, and if the facility
their infants. However, offsite NICUs those facilities would not qualify as is operated as a joint venture or under
would not be able to qualify for provider-based under Medicare. (We a management contract, the
provider-based status under the location note that under 42 CFR 440.10(a)(3)(iii), requirements of paragraph (f) or
criteria in our current regulations if they services are considered to be ‘‘inpatient paragraph (h) of § 413.65, as applicable.
are located more than 35 miles from the hospital services’’ under the Medicaid However, paragraph (f), which sets forth
children’s hospital that would be the program only if they are furnished in an rules regarding provider-based status for
main provider, are not owned and institution that meets the requirements joint ventures, states clearly that a
operated by a hospital meeting the for participation in Medicare as a facility or organization operated as a
requirements of § 413.65(e)(3)(i), and hospital. Because of the age of the joint venture may qualify for provider-
cannot meet either of the ‘‘75 percent patients they serve, NICUs typically based status only if it is located on the
tests’’ for service to the same patient have no Medicare utilization but a main campus of the potential main
population as the potential main substantial proportion of their patients provider. To avoid any
provider that are specified in existing may be Medicaid patients.) misunderstanding regarding the content
§ 413.65(e)(3)(ii)(A) and ■ A change in individual State’s of attestations for off-campus facilities,
§ 413.65(e)(3)(ii)(B). Medicaid plans that would provide we are proposing to revise paragraph
We understand the concern that enhanced financial incentives for (b)(3)(ii) by removing the reference to
requiring a patient to be transported to community hospitals to establish compliance with requirements in
an NICU located on the campus of a NICUs, possibly in collaboration with paragraph (f) for joint ventures. We also
distant children’s hospital could create children’s hospitals. are proposing to add a sentence to
an unacceptable medical risk to the life ■ The establishment of children’s paragraph (b)(3)(i), regarding
of a newborn at a most critical time. To hospitals that meet the requirements for attestations for on-campus facilities, to
help us better understand this issue and being hospitals-within-hospitals under state that if the facility is operated as a
determine what action, if any, CMS 42 CFR 412.22(e). (We note that this joint venture, the attestation by the
should take on it, we are soliciting option, unlike the three above, would potential main provider regarding that
specific public comment on the not require any revision of Medicare or facility would also have to include a
following question: Medicaid regulations or individual State statement that the provider will comply
• Is the problem as described above Medicaid plans). with the requirements of paragraph (f) of
actually occurring and, if so, in what We also welcome suggestions for § 413.65.
locations? We are particularly interested specific options other than those listed c. Additional requirements applicable
in learning which areas of which States above. to off-campus facilities or
are experiencing such a problem, and in organizations—Operation under the
receiving specific information, such as 4. Technical and Clarifying Changes to ownership and control of the main
the rates of transfer of newborns from § 413.65 provider. In paragraph (e)(1)(i),
community hospitals to children’s a. Definitions. In paragraph (a)(2) of regarding 100 percent ownership by the
hospital on-campus NICUs relative to § 413.65, we state that the term main provider of the business enterprise
adult or non-neonatal pediatric transfers ‘‘Provider-based entity’’ means a that constitutes the facility or
for intensive care services, which provider of health care services, or an organization seeking provider-bases
describe the problem objectively. Such RHC as defined in § 405.2401(b), that is status, we are proposing to add the word
objective information will be much either created by, or acquired by, a main ‘‘main’’ before the word ‘‘provider’’, to
more useful than expressions of opinion provider for the purpose of furnishing clarify that the main provider must own
or anecdotes. health care services of a different type and control the facility or organization
We also wish to ask those who believe from those of the main provider under seeking provider-based status. We are
such a problem is currently occurring to the name, ownership and administrative also proposing, for purposes of
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23446 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
clarifying the requirements in paragraph K. Rural Community Hospital factor (as defined in section
(e)(1), to add the word ‘‘main’’ before the Demonstration Program 1886(b)(3)(B) of the Act) for that
word ‘‘provider’’ in paragraphs (e)(1)(ii) (If you choose to comment on issues particular cost reporting period. The
and (e)(1)(iii). in this section, please include the target amount in subsequent cost
caption ‘‘Rural Community Hospital reporting periods is defined as the
d. Additional requirements applicable
Demonstration Program’’ at the preceding cost reporting period’s target
to off-campus facilities or
beginning of your comments.) amount, increased by the inpatient
organizations—Location. We are
In accordance with the requirements prospective payment update factor (as
proposing several clarifying changes to defined in section 1886(b)(3)(B) of the
this paragraph, as follows: of section 410A(a) of Pub. L. 108–173,
the Secretary has established a 5-year Act) for that particular cost reporting
Currently, the opening sentence of period.
demonstration (beginning with selected
§ 413.65(e)(3) states that a facility or Covered inpatient hospital services
hospitals’ first cost reporting period
organization for which provider-based means inpatient hospital services
beginning on or after October 1, 2004)
status is sought must be located within (defined in section 1861(b) of the Act)
to test the feasibility and advisability of and includes extended care services
a 35-mile radius of the campus of the establishing ‘‘rural community
hospital or CAH that is the potential furnished under an agreement under
hospitals’’ for Medicare payment section 1883 of the Act.
main provider, except when the purposes for covered inpatient hospital
requirements in paragraph (e)(3)(i), Section 410A of Pub. L. 108–173
services furnished to Medicare requires that ‘‘in conducting the
(e)(3)(ii), or (e)(3)(iii) of that section are beneficiaries. A rural community demonstration program under this
met. However, the regulation text that hospital, as defined in section section, the Secretary shall ensure that
follows does not contain a paragraph 410A(f)(1), is a hospital that— the aggregate payments made by the
designation as paragraph (e)(3)(iii). We • Is located in a rural area (as defined Secretary do not exceed the amount
are proposing to correct this error by in section 1886(d)(2)(D) of the Act) or which the Secretary would have paid if
redesignating existing paragraph treated as being so located under section the demonstration program under this
(e)(3)(ii)(C) as paragraph (e)(3)(iv). We 1886(d)(8)(E) of the Act; section was not implemented.’’
are also proposing to revise this • Has fewer than 51 beds (excluding Generally, when CMS implements a
sentence to state that the facility or beds in a distinct part psychiatric or demonstration on a budget neutral basis,
organization must meet the rehabilitation unit) as reported in its the demonstration is budget neutral in
requirements in paragraph (e)(3)(i), most recent cost report; its own terms; in other words, aggregate
(e)(3)(ii), (e)(3)(iii), (e)(3)(iv) or, in the • Provides 24-hour emergency care payments to the participating providers
case of an RHC, paragraph (e)(3)(v) of services; and do not exceed the amount that would be
§ 413.65 and the requirements in • Is not designated or eligible for paid to those same providers in the
paragraph (e)(3)(vi) of § 413.65. designation as a CAH. absence of the demonstration. This form
As we indicated in the FY 2005 IPPS of budget neutrality is viable when, by
We are proposing to revise the final rule (69 FR 49078), in accordance
opening sentence of § 413.65(e)(3) to changing payments or aligning
with sections 410A(a)(2) and (4) of Pub. incentives to improve overall efficiency,
reflect the changes in the coding of this L. 108–173 and using 2002 data from
paragraph as described above. or both, a demonstration may reduce the
the U.S. Census Bureau, we identified use of some services or eliminate the
We are also proposing to redesignate 10 States with the lowest population need for others, resulting in reduced
paragraph (v) of § 413.65(e)(3) as density from which to select hospitals: expenditures for the demonstration
paragraph (e)(3)(vi) and correct a Alaska, Idaho, Montana, Nebraska, participants. These reduced
drafting error by adding the word ‘‘that’’ Nevada, New Mexico, North Dakota, expenditures offset increased payments
before ‘‘has fewer than 50 beds’’. This South Dakota, Utah, and Wyoming. elsewhere under the demonstration,
proposed addition is a grammatical (Source: U.S. Census Bureau Statistical thus ensuring that the demonstration as
change that is intended only to clarify Abstract of the United States: 2003) a whole is budget neutral or yields
the size of the hospital with which a Thirteen rural community hospitals savings. However, the small scale of this
rural health clinic must have a provider- located within these States are demonstration, in conjunction with the
based relationship in order to qualify participating in the demonstration. payment methodology, makes it
under the special location requirement Under the demonstration, extremely unlikely that this
in that paragraph. participating hospitals are paid the demonstration could be viable under the
reasonable costs of providing covered usual form of budget neutrality.
e. Paragraph (g)—Obligations of inpatient hospital services (other than Specifically, cost-based payments to 13
hospital outpatient departments and services furnished by a psychiatric or small rural hospitals are likely to
hospital-based entities. We are rehabilitation unit of a hospital that is increase Medicare outlays without
proposing to revise the first sentence of a distinct part), applicable for producing any offsetting reduction in
paragraph (g)(7), regarding beneficiary discharges occurring in the first cost Medicare expenditures elsewhere.
notices of coinsurance liability, to reporting period beginning on or after Therefore, a rural community hospital’s
clarify that notice must be given only if the October 1, 2004 implementation participation in this demonstration is
the service is one for which the date of the demonstration program. unlikely to yield benefits to the
beneficiary will incur a coinsurance Payment will be the lesser amount of participant if budget neutrality were to
liability for both an outpatient visit to reasonable cost or a target amount in be implemented by reducing other
the hospital and the physician service. subsequent cost reporting periods. The payments for these providers.
This should help to make it clear that target amount in the second cost In order to achieve budget neutrality
notice is not required for visits that do reporting period is defined as the for this demonstration, we are proposing
not result in additional coinsurance reasonable costs of providing covered to adjust national inpatient PPS rates by
liability. In addition, we are proposing inpatient hospital services in the first an amount sufficient to account for the
to reorganize the subsequent paragraphs cost reporting period, increased by the added costs of this demonstration. In
of that section for clarity. inpatient prospective payment update other words, we apply budget neutrality
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00142 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23447
across the payment system as a whole including observation and post- were to determine such entity is not
rather than merely across the anesthesia care, and only 2 inpatient primarily engaged in inpatient care at
participants of this demonstration. As beds. Emergency treatment by nature the time it seeks certification to
we discussed in the FY 2005 IPPS final does not usually involve overnight participate in the Medicare program, its
rule (69 FR 49183), we believe that the stays. Second, the issue has also arisen application for a provider agreement as
language of the statutory budget in the area of ‘‘specialty hospitals.’’ (For a hospital would will be denied and it
neutrality requirements permits the purposes of this discussion, ‘‘specialty would not be eligible for the whole
agency to implement the budget hospitals’’ are those hospitals hospital exception to the prohibition on
neutrality provision in this manner. For specifically defined as such in section physician self-referrals. Further, if we
FY 2006, using the most recent cost 507 of Pub. L. 108–173 (MMA), that is, were to determine that a specialty
report data (that is, data for FY 2003), those hospitals that are primarily or hospital that is operating under an
adjusted for increased estimated cost for exclusively engaged in the care and existing Medicare provider agreement
the 13 participating hospitals, we are treatment of: but is not, or is no longer, primarily
proposing that the estimated adjusted (i) Patients with a cardiac condition; engaged in treating inpatients, the
amount would be $12,706,334. This (ii) patients with an orthopedic hospital is subject to having its provider
adjusted amount reflects the estimated condition; or (iii) patients receiving a agreement terminated; in this event, it
difference between cost and IPPS surgical procedure.) could no longer take advantage of and
payment based on data from hospitals’ ‘‘Specialty hospitals’’ are of interest lose the protection of the whole hospital
cost reports. We discuss the proposed partly because of section 507 of Pub. L. exception.
payment rate adjustment that would be 108–173, which amended the hospital
ownership exception to the physician VI. PPS for Capital-Related Costs
required to ensure the budget neutrality
of the demonstration in section II.A.4. of self-referral prohibition statute, section (If you choose to comment on issues
the Addendum to this proposed rule. 1877 of the Act. Prior to the enactment in this section, please include the
The data collection instrument for the of Pub. L. 108–173, the ‘‘whole hospital’’ caption ‘‘Capital-Related Costs’’ at the
demonstration has been approved by exception contained in section beginning of your comment.)
OMB under the title ‘‘Medicare Waiver 1877(d)(3) of the Act allowed a In this proposed rule, we are not
Demonstration Application,’’ under physician to refer Medicare patients to proposing any changes in the policies
OMB approval number 0938–0880, with a hospital in which the physician (or an governing the determination of the
a current expiration date of July 30, immediate family member of the payment rates for capital-related costs
2006. physician) had an ownership or for short-term acute care hospitals under
investment interest, if the physician was the IPPS. However, for the readers’
L. Definition of a Hospital in authorized to perform services at the benefit, we are providing a summary of
Connection With Specialty Hospitals hospital and the ownership or the statutory basis for the PPS for
(If you choose to comment on issues investment interest was in the entire hospital capital-related costs and the
in this section, please include the hospital and not a subdivision of the methodology used to determine capital-
caption ‘‘Specialty Hospitals’’ at the hospital. Section 507 of Pub. L. 108–173 related payments to hospitals. A
beginning of your comment.) added an additional criterion to the discussion of the proposed rates and
Section 1861(e) of the Act provides a whole hospital exception, specifying factors for FY 2006 (determined under
definition for a ‘‘hospital’’ for purposes that for the 18-month period beginning our established methodology) can be
of participating in the Medicare on December 8, 2003 and ending on found in section III. of the Addendum
program. In order to be a Medicare- June 8, 2005, physician ownership and of this proposed rule.
participating hospital, an institution investment interests in ‘‘specialty Section 1886(g) of the Act requires the
must, among other things, be primarily hospitals’’ would not qualify for the Secretary to pay for the capital-related
engaged in furnishing services to whole hospital exception. The term costs of inpatient acute hospital services
inpatients. This requirement is ‘‘specialty hospital’’ does not include ‘‘in accordance with a PPS established
incorporated in our regulations on any hospital determined by the by the Secretary.’’ Under the statute, the
conditions of participation for hospitals Secretary to be in operation or ‘‘under Secretary has broad authority in
at 42 CFR 482.1. An institution that development’’ as of November 18, 2003. establishing and implementing the PPS
applies for a Medicare provider In our advisory opinions that we issue for hospital inpatient capital-related
agreement as a hospital but is unable to as to whether a requesting entity is costs. We initially implemented the PPS
meet this requirement will have its subject to the 18-month moratorium for capital-related costs in the August
application denied in accordance with described above, we inform the 30, 1991 IPPS final rule (56 FR 43358),
our authority at 42 CFR 489.12. In requesting entity that, among other in which we established a 10-year
addition, institutions that have a things, it must meet the definition of a transition period to change the payment
Medicare hospital provider agreement hospital that is contained in section methodology for Medicare hospital
but are no longer primarily engaging in 1861(e) of the Act. It has come to our inpatient capital-related costs from a
furnishing services to inpatients are attention that some institutions entities reasonable cost-based methodology to a
subject to having their provider that describe themselves as surgical or prospective methodology (based fully
agreements terminated pursuant to 42 orthopedic specialty hospitals may be on the Federal rate).
CFR 489.53. Although compliance with primarily primarily engaged in Federal fiscal year (FY) 2001 was the
this requirement is not problematic for furnishing services to outpatients, and last year of the 10-year transition period
most hospitals, the issue of whether an thus would might not meet the established to phase in the PPS for
institution is primarily engaged in definition of a hospital as contained in hospital inpatient capital-related costs.
providing care to inpatients has recently section 1861(e) of the Act. Therefore, For cost reporting periods beginning in
come to our attention in two arisen two although an institution entity may FY 2002, capital PPS payments are
contexts. First, an institution has satisfy the ‘‘under development’’ criteria based solely on the Federal rate for most
applied to be certified as an ‘‘emergency for purposes of being excepted from the acute care hospitals (other than certain
hospital,’’ yet the institution has 29 moratorium on physician-owner new hospitals and hospitals receiving
outpatient beds for emergency patients, referrals to specialty hospitals, if we certain exception payments). The basic
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23448 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
methodology for determining capital hospital’s cost reporting period Rico rate and the applicable capital PPS
prospective payments using the Federal beginning before October 1, 2001. Thus, Federal rate.
rate is set forth in § 412.312. For the an eligible hospital may receive special Prior to FY 1998, hospitals in Puerto
purpose of calculating payments for exceptions payments for up to 10 years Rico were paid a blended capital PPS
each discharge, the standard Federal beyond the end of the capital PPS rate that consisted of 75 percent of the
rate is adjusted as follows: transition period. Hospitals eligible for applicable capital PPS Puerto Rico
(Standard Federal Rate) × (DRG special exceptions payments were specific rate and 25 percent of the
Weight) × (Geographic Adjustment required to submit documentation to the applicable capital PPS Federal rate.
Factor (GAF)) × (Large Urban Add-on, if intermediary indicating the completion However, effective October 1, 1997 (FY
applicable) × (COLA Adjustment for date of their project. (For more detailed 1998), in conjunction with the change to
hospitals located in Alaska and Hawaii) information regarding the special the operating PPS blend percentage for
× (1 + Capital DSH Adjustment Factor + exceptions policy under § 412.348(g), Puerto Rico hospitals required by
Capital IME Adjustment Factor, if refer to the August 1, 2001 IPPS final section 4406 of Pub. L. 105–33, we
applicable) rule (66 FR 39911 through 39914) and revised the methodology for computing
Hospitals also may receive outlier the August 1, 2002 IPPS final rule (67 capital PPS payments to hospitals in
payments for those cases that qualify FR 50102).) Puerto Rico to be based on a blend of
under the thresholds established for Under the PPS for capital-related 50 percent of the Puerto Rico rate and
each fiscal year as specified in costs, § 412.300(b) of the regulations 50 percent of the Federal rate. Similarly,
§ 412.312(c) of the regulations. defines a new hospital as a hospital that effective beginning in FY 2005, in
The regulations at § 412.348(f) conjunction with the change in
has operated (under current or previous
provide that a hospital may request an operating PPS payments to hospitals in
ownership) for less than 2 years. (For
additional payment if the hospital Puerto Rico for FY 2005 required by
more detailed information see the
incurs unanticipated capital section 504 of Pub. L. 108–173, we again
August 30, 1991 final rule (56 FR
expenditures in excess of $5 million due revised the methodology for computing
43418).) During the 10-year transition
to extraordinary circumstances beyond capital PPS payments to hospitals in
the hospital’s control. This policy was period, a new hospital was exempt from
the capital PPS for its first 2 years of Puerto Rico to be based on a blend of
originally established for hospitals 25 percent of the Puerto Rico rate and
during the 10-year transition period, but operation and was paid 85 percent of its
reasonable costs during that period. 75 percent of the Federal rate for
as we discussed in the August 1, 2002 discharges occurring on or after October
IPPS final rule (67 FR 50102), we Originally, this provision was effective
only through the transition period and, 1, 2004.
revised the regulations at § 412.312 to
specify that payments for extraordinary therefore, ended with cost reporting VII. Proposed Changes for Hospitals
circumstances are also made for cost periods beginning in FY 2002. Because and Hospital Units Excluded From the
reporting periods after the transition we believe that special protection to IPPS
period (that is, cost reporting periods new hospitals is also appropriate even
after the transition period, as discussed (If you choose to comment on issues
beginning on or after October 1, 2001). in this section, please include the
Additional information on the in the August 1, 2002 IPPS final rule (67
FR 50101), we revised the regulations at caption ‘‘Excluded Hospitals and Units’’
exceptions payment for extraordinary at the beginning of your comment.)
circumstances in § 412.348(f) can be § 412.304(c)(2) to provide that, for cost
found in the FY 2005 IPPS final rule (69 reporting periods beginning on or after A. Payments to Existing Hospitals and
FR 49185 through 49186). October 1, 2002, a new hospital (defined Hospital Units (§§ 413.40(c), (d), and (f))
During the transition period, under under § 412.300(b)) is paid 85 percent of
its allowable Medicare inpatient 1. Payments to Existing Excluded
§§ 412.348(b) through (e), eligible
hospital capital-related costs through its Hospitals and Hospital Units
hospitals could receive regular
exception payments. These exception first 2 years of operation, unless the new Section 1886(b)(3)(H) of the Act (as
payments guaranteed a hospital a hospital elects to receive fully- amended by section 4414 of Pub. L.
minimum payment percentage of its prospective payment based on 100 105–33) established caps on the target
Medicare allowable capital-related costs percent of the Federal rate. (Refer to the amounts for cost reporting periods
depending on the class of hospital August 1, 2001 IPPS final rule (66 FR beginning on or after October 1, 1997
(§ 412.348(c)), but were available only 39910) for a detailed discussion of the through September 30, 2002, for certain
during the 10-year transition period. statutory basis for the system, the existing hospitals and hospital units
After the end of the transition period, development and evolution of the excluded from the IPPS. Section
eligible hospitals can no longer receive system, the methodology used to 413.40(c)(4)(iii) of the implementing
this exception payment. However, even determine capital-related payments to regulations states that ‘‘In the case of a
after the transition period, eligible hospitals both during and after the psychiatric hospital or unit,
hospitals receive additional payments transition period, and the policy for rehabilitation hospital or unit, or long-
under the special exceptions provisions providing exception payments.) term care hospital, the target amount is
at § 412.348(g), which guarantees all Section 412.374 provides for the use the lower of amounts specified in
eligible hospitals a minimum payment of a blended payment amount for paragraph (c)(4)(iii)(A) or (c)(4)(iii)(B) of
of 70 percent of its Medicare allowable prospective payments for capital-related this section.’’ Accordingly, in general,
capital-related costs provided that costs to hospitals located in Puerto Rico. for hospitals and units within these
special exceptions payments do not Accordingly, under the capital PPS, we three classes of providers for the
exceed 10 percent of total capital IPPS compute a separate payment rate applicable 5-year period, the target
payments. Special exceptions payments specific to Puerto Rico hospitals using amount is the lower of either: the
may be made only for the 10 years from the same methodology used to compute hospital-specific target amount
the cost reporting year in which the the national Federal rate for capital- (§ 413.40(c)(4)(iii)(A)) or the 75th
hospital completes its qualifying related costs. In general, hospitals percentile cap (§ 413.40(c)(4)(iii)(B)).
project, and the hospital must have located in Puerto Rico are paid a blend (We note that, in the case of LTCHs, for
completed the project no later than the of the applicable capital PPS Puerto cost reporting periods beginning during
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00144 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23449
FY 2001, the hospital-specific target to the provisions of § 413.40(c)(4)(iii), transition methodology with the
amount is the net allowable cost in a which are applicable only for cost reasonable cost portion of the payment
base period increased by the applicable reporting periods beginning on or after subject to § 413.40(f)(2)(ii). Finally,
update factors multiplied by 1.25.) October 1, 1997 through September 30, LTCHs that existed prior to October 1,
Questions have been raised as to 2002, the target amount for FY 2003 is 1997, may also be paid under the LTCH
whether § 413.40(c)(4)(iii) (specifically determined by updating the target PPS transition methodology with the
paragraph (c)(4)(iii)(A)) continues to amount for FY 2002 (the target amount reasonable cost portion of the payment
apply beyond FY 2002. In order to from the previous period) by the subject to § 413.40(c)(4)(ii). (The last
clarify the policy for periods after FY applicable update factor. Accordingly, LTCHs that were subject to the payment
2002, we note that § 413.40(c)(4)(iii) we are proposing to make a change to amount limitation for ‘‘new’’ LTCHs
applies only to cost reporting periods the language in § 413.40(c)(4)(iii) to were new LTCHs that had their first cost
beginning on or after October 1, 1997 clarify that the provisions of this reporting period beginning on
through September 30, 2002, for paragraph relating to the caps on target September 30, 2002. In that case, the
psychiatric hospitals and units, amounts are for a specific period of time payment amount limitation remained
rehabilitation hospitals and units, and only, that is, cost reporting periods applicable for the next 2 years—
LTCHs. We discussed this applicable beginning on or after October 1, 1997, September 30, 2002 through September
time period in the May 12, 1998 Federal and before October 1, 2002. 29, 2003, and September 30, 2003
Register (63 FR 26344) when we The inpatient operating costs of through September 29, 2004. This is
discussed implementing the caps. children’s hospitals and cancer because, under existing regulations at
Specifically, we clarified our regulations hospitals that are excluded from the § 413.40(f)(2)(ii), a ‘‘new hospital’’
to indicate that the target amount for IPPS are subject to the rate-of-increase would be subject to the same payment
FYs 1998 through 2002 is equal to the limits established under the authority of (target amount) in its second cost
lower of the hospital-specific target section 1886(b) of the Act and reporting period that was applicable to
amount or the 75th percentile of target implemented in the regulations at the LTCH in its first cost reporting
amounts for hospitals in the same class § 413.40. Under these limits, an annual period. Accordingly, for these hospitals,
for cost reporting periods ending during target amount (expressed in terms of the the updated payment amount limitation
FY 1996, increased by the applicable inpatient operating cost per discharge) that we published in the FY 2003 IPPS
market basket percentage for the subject is set for each hospital, based on the final rule (67 FR 50103) applied through
period. We did not intend for the hospital’s own historical cost September 29, 2004. Consequently,
provisions of § 413.40(c)(4)(iii) to apply experience, trended forward by the there is no longer a need to publish
beyond FY 2002, as we specifically applicable percentage increase. This updated payment amounts for new
included an ending date; that is, we target amount is applied as a ceiling on (§ 413.40(f)(2)(ii)) LTCHs. A discussion
stated that the target amount calculation the allowable costs per discharge for the of how the payment limitations were
provisions were for FYs 1998 through hospital’s cost reporting period. (We calculated can be found in the August
2002. More recently, in the FY 2003 note that, in accordance with 29, 1997 final rule with comment period
IPPS final rule (67 FR 50103), we § 403.752(a) of the regulations, RNHCIs (62 FR 46019); the May 12, 1998 final
clarified again how the target amount are also subject to the rate-of-increase rule (63 FR 26344); the July 31, 1998
for FY 2003 was to be determined by limits established under § 413.40 of the final rule (63 FR 41000); and the July 30,
stating that: ‘‘* * * for cost reporting regulations.) 1999 final rule (64 FR 41529).
periods beginning in FY 2003, the A freestanding inpatient rehabilitation
2. Updated Caps for New Excluded
hospital or unit should use its previous hospital, an inpatient rehabilitation unit
Hospitals and Units
year’s target amount, updated by the of an acute care hospital, and an
appropriate rate-of-increase Section 1886(b)(7) of the Act inpatient rehabilitation unit of a CAH
percentage.’’ Thus, the time-limited established the method for determining are referred to as IRFs. Effective for cost
provision of § 413.40(c)(4)(iii) is neither the payment amount for new reporting periods beginning on or after
a new policy nor a change in policy. rehabilitation hospitals and units, October 1, 2002, this payment limitation
For cost reporting periods beginning psychiatric hospitals and units, and is also no longer applicable to new
on or after October 1, 2002, to the extent LTCHs that first received payment as a rehabilitation hospitals and units
one of the above-mentioned excluded hospital or unit excluded from the IPPS because they are paid 100 percent of the
hospitals or units has all or a portion of on or after October 1, 1997. However, Federal prospective rate under the IRF
its payment determined under effective for cost reporting periods PPS. Therefore, it is also no longer
reasonable cost principles, the target beginning on or after October 1, 2002, necessary to update the payment
amounts for the reasonable cost-based this payment amount (or ‘‘new provider limitation for new rehabilitation
portion of the payment are determined cap’’) no longer applies to any new hospitals or units.
in accordance with section rehabilitation hospital or unit because For psychiatric hospitals and units,
1886(b)(3)(A)(ii) of the Act and the they now are paid 100 percent of the under the IPF PPS, there is a 3-year
regulations at § 413.40(c)(4)(ii). Section Federal prospective rate under the IRF transition period during which existing
413.40(c)(4)(ii) states, ‘‘Subject to the PPS. IPFs will receive a blended payment of
provisions of [§ 413.40] paragraph In addition, LTCHs that meet the the Federal per diem payment amount
(c)(4)(iii) of this section, for subsequent definition of a new LTCH under and the payment amount that IPFs
cost reporting periods, the target amount § 412.23(e)(4) are also paid 100 percent would receive under the reasonable
equals the hospital’s target amount for of the fully Federal prospective payment cost-based payment (TEFRA)
the previous cost reporting period rate under the LTCH PPS. In contrast, methodology. However, new IPFs (those
increased by the update factor for the those ‘‘new’’ LTCHs that meet the facilities that under present or previous
subject cost reporting period unless the criteria under § 413.40(f)(2)(ii) (that is, ownership (or both) have their first cost
provisions of [§ 413.40] paragraph that were not paid as an excluded reporting period as an IPF begin on or
(c)(5)(ii) of this section apply.’’ Thus, hospital prior to October 1, 1997), but after January 1, 2005, are paid the fully
since § 413.40(c)(4)(ii) indicates that the were paid as a LTCH before October 1, Federal per diem payment amount
provisions of that paragraph are subject 2002, may be paid under the LTCH PPS rather than a blended payment amount.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23450 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
(See section VII.A.5. of the preamble of October 1, 2000, and before October 1, Federal prospective payment rate.
this proposed rule for further discussion 2002, with payments based entirely on Moreover, LTCHs as defined in
of the IPF PPS.) Thus, the payment the adjusted Federal prospective § 412.23(e)(4) are paid under 100
limitations under the TEFRA payment payment for cost reporting periods percent of the adjusted Federal
system are not applicable for new IPFs beginning on or after October 1, 2002. prospective payment rate.
that meet the definition in § 412.426(c). Section 1886(j) of the Act was amended
However, ‘‘new’’ IPFs that meet the by section 125 of Pub. L. 106–113 to 5. Implementation of a PPS for IPFs
criteria under § 413.40(f)(2)(ii) (that is, require the Secretary to use a discharge In accordance with section 124 of the
that were not paid as an excluded as the payment unit under the PPS for BBRA and section 405(g)(2) of Pub. L.
hospital prior to October 1, 1997), but inpatient hospital services furnished by 108–173, we established a PPS for
were paid as an IPF before January 1, rehabilitation facilities and to establish
inpatient hospital services furnished in
2005, are paid under the IPF PPS classes of patient discharges by
transition methodology with the psychiatric hospitals and psychiatric
functional-related groups. Section 305
reasonable cost portion of the payment units of acute care hospitals and CAHs
of Pub. L. 106–554 further amended
determined according to (inpatient psychiatric facilities (IPFs)).
section 1886(j) of the Act to allow
§ 413.40(f)(2)(ii), that is, subject to the rehabilitation facilities, subject to the On November 15, 2004, we issued in the
payment amount limitation. The last blend methodology, to elect to be paid Federal Register a final rule (69 FR
‘‘new’’ IPFs that were subject to the the full Federal prospective payment 66922) that established the IPF PPS,
payment amount limitation were IPFs rather than the transitional period effective for IPF cost reporting periods
that had their first cost reporting period payments specified in the Act. beginning on or after January 1, 2005.
beginning on December 31, 2004. For On August 7, 2001, we issued a final Under the final rule, we compute a
these hospitals, the payment amount rule in the Federal Register (66 FR Federal per diem base rate to be paid to
limitation that was published in the FY 41316) establishing the PPS for all IPFs for inpatient psychiatric
2005 IPPS final rule (69 FR 49189) for inpatient rehabilitation facilities, services based on the sum of the average
cost reporting periods beginning on or effective for cost reporting periods routine operating, ancillary, and capital
after October 1, 2004, and before beginning on or after January 1, 2002. costs for each patient day of psychiatric
January 1, 2005, remains applicable for There was a transition period for cost care in an IPF, adjusted for budget
the IPF’s first two cost reporting reporting periods beginning on or after neutrality. The Federal per diem base
periods. IPFs with a first cost reporting January 1, 2002 and ending before rate is adjusted to reflect certain patient
period beginning on or after January 1, October 1, 2002. For cost reporting characteristics, including age, specified
2005, are paid 100 percent of the periods beginning on or after October 1, DRGs, selected high-cost comorbidities,
Federal rate and are not subject to the 2002, payments are based entirely on and day of the stay, and certain facility
payment amount limitation. Therefore, the Federal prospective payment rate characteristics, including a wage index
since the last IPFs eligible for a blended determined under the IRF PPS. adjustment, rural location, indirect
payment have a cost reporting period teaching costs, the presence of a full-
4. Implementation of a PPS for LTCHs
beginning on December 31, 2004, the service emergency department, and
payment limitation published for FY In accordance with the requirements cost-of-living adjustments for IPFs
2005 remains applicable for these IPFs, of section 123 of Pub. L. 106–113, as located in Alaska and Hawaii. We have
and publication of the updated payment modified by section 307(b) of Pub. L. established a 3-year transition period
amount limitation is no longer needed. 106–554, we established a per during which IPFs will be paid based on
We note that IPFs that existed prior to discharge, DRG-based PPS for LTCHs as a blend of reasonable cost-based
October 1, 1997, may also be paid under described in section 1886(d)(1)(B)(iv) of payment and IPF PPS payments. For
the IPF transition methodology with the the Act for cost reporting periods cost reporting periods beginning on or
reasonable cost portion of the payment beginning on or after October 1, 2002, in after January 1, 2008, IPFs will be paid
subject to § 413.40(c)(4)(ii). a final rule issued on August 30, 2002 100 percent of the Federal per diem
The payment limitations for new (67 FR 55954). The LTCH PPS uses payment amount.
hospitals under TEFRA do not apply to information from LTCH hospital patient
new LTCHs, IRFs, or IPFs, that is, these records to classify patients into distinct B. Critical Access Hospitals (CAHs)
hospitals with their first cost reporting LTC-DRGs based on clinical
characteristics and expected resource (If you choose to comment on issues
period beginning on or after the date
needs. Separate payments are calculated in this section, please include the
that the particular class of hospitals
for each LTC-DRG with additional caption ‘‘Critical Access Hospitals’’ at
implemented their respective PPS.
adjustments applied. the beginning of your comment.)
Therefore, for the reasons noted above,
we are proposing to discontinue We published in the Federal Register 1. Background
publishing Tables 4G and 4H (Pre- on May 7, 2004, a final rule (69 FR
Reclassified Wage Index for Urban and 25673) that updated the payment rates Section 1820 of the Act provides for
Rural Areas, respectively) in the annual for the upcoming rate year LTCH PPS the establishment of Medicare Rural
proposed and final IPPS rules. and made policy changes effective as of Hospital Flexibility Programs
July 1, 2004. The 5-year transition (MRHFPs), under which individual
3. Implementation of a PPS for IRFs period to the fully Federal prospective States may designate certain facilities as
Section 1886(j) of the Act, as added by rate will end with cost reporting periods critical access hospitals (CAHs).
section 4421(a) of Pub. L. 105–33, beginning on or after October 1, 2005 Facilities that are so designated and
provided for the phase-in of a case-mix and before October 1, 2006. For cost meet the CAH conditions of
adjusted PPS for inpatient hospital reporting periods beginning on or after participation (CoPs) under 42 CFR Part
services furnished by a rehabilitation October 1, 2006, payment is based 485, Subpart F, will be certified as
hospital or a rehabilitation hospital unit entirely on the adjusted Federal CAHs by CMS. Regulations governing
(referred to in the statute as prospective payment rate. However, payments to CAHs for services to
rehabilitation facilities) for cost existing hospitals can elect payment Medicare beneficiaries are located in 42
reporting periods beginning on or after under 100 percent of the adjusted CFR Part 413.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00146 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23451
2. Proposed Policy Change Relating to counties are now unable to meet the time to seek reclassification as rural
Continued Participation by CAHs in rural location requirements described facilities under the current regulations
Lugar Counties above, even though they were in full at § 412.103. In other words, after
Criteria for the designation of a CAH compliance with the location October 1, 2006, these facilities must
under the MRHFP at section requirements in effect at the time they meet at least one of the criteria in
1820(c)(2)(b)(i) of the Act require that a converted from short-term acute care § 412.103(a)(1) through (a)(3) to be
hospital be located in a rural area as hospital to CAH status. eligible to reclassify from urban to rural
defined in section 1886(d)(2)(D) of the We have received comments that status. Once the § 412.103
Act or be treated as being located in a suggest that it would be inappropriate reclassification is approved, the
rural area in accordance with section for a facility to be required to terminate facilities would meet the CAH rural
1886(d)(8)(E) of the Act. The regulations participation as a CAH and resume location requirements in § 485.610(b)(2).
at § 485.610 further define ‘‘rural area’’ participating as a short-term acute care In addition, consistent with the
hospital because of a change in county clarification of the policy, we are
for purposes of being a CAH. Under
classification that did not result from proposing to amend the regulations at
§ 485.610(b), a CAH must meet any one
any change in functioning by the CAH. § 412.103(a)(4) to reflect the proposed
of the following three location
After consideration of these comments, change in the text of the CAH location
requirements. First, a CAH must not be
we are clarifying our policy with respect regulations at § 485.610(b)(3).
located in an MSA as defined by the In addition, we are making a technical
Office of Management and Budget, not to facilities located in Lugar counties.
amendment to § 485.610(b)(1)(ii) by
be deemed to be located in an urban As we noted in the FY 2005 IPPS final
replacing the reference to 42 CFR
area under 42 CFR 412.63(b), and not be rule, we believe it is appropriate to
412.63(b) with 42 CFR 412.64(b). This
reclassified by CMS or the MGCRB as allow facilities located in counties that
proposed technical amendment would
urban for purposes of the standardized began to be considered part of MSAs
conform the regulations to reflect the
payment amount, nor be a member of a effective October 1, 2004, as a result of
rules governing geographic
group of hospitals reclassified to an data from the 2000 census and
reclassification (found at § 412.64) that
urban area under 42 CFR 412.232. implementation of the new labor market
are already in place for fiscal years
Second, if a CAH does not meet the first area definitions announced by OMB on
beginning on or after October 1, 2004
criterion, if located in an MSA, a CAH June 6, 2003, an opportunity to obtain
(69 FR 49242).
will be treated as rural if it has rural designations under applicable
reclassified under 42 CFR 412.103. State law or regulations from their State 3. Proposed Policy Change Relating to
Third, as we stated in the FY 2005 IPPS legislatures or regulatory agencies. Designation of CAHs as Necessary
final rule, if the CAH cannot meet either Similarly, we believe that when a CAH’s Providers
of the first two requirements and is status as being located in a Lugar county Section 405(h) of Pub. L. 108–173
located in a revised labor market area occurs as a result of changes that the amended section 1820(c)(2)(B)(i)(II) of
(CBSA) under the standards announced CAH did not originate and that were the Act by adding language that
by OMB on June 6, 2003 and adopted beyond its control, such as a change in terminated a State’s authority to waive
by CMS effective October 1, 2004, it has the OMB standards for labor market area the location requirement for a CAH by
until September 30, 2006, to meet one definitions, it is appropriate for the CAH designating the CAH as a necessary
of the other classification requirements to be allowed a reasonable opportunity provider, effective January 1, 2006.
without losing its CAH status. to reclassify to rural status. Thus, we are Currently, a CAH is required to be
Under section 1886(d)(8)(B) of the clarifying our policy to note that CAHs located more than a 35-mile drive (or in
Act, hospitals that are located in a rural in counties that were designated as the case of mountainous terrain or
county that is adjacent to one or more Lugar counties effective October 1, secondary roads, a 15-mile drive) from
urban counties are considered to be 2004, because of implementation of the a hospital or another CAH, unless the
located in the urban MSA to which the new labor market area definitions CAH is certified by the State as a
greatest number of workers in the announced by OMB on June 6, 2003, are necessary provider of health care
county commute, if certain conditions, to be given the same reclassification services to residents in the area. Under
specified in section 1886(d)(8)(B) of the opportunity. Of course, the opportunity this provision, after January 1, 2006,
Act, are met. Regulations implementing to reclassify would not be available to States will no longer be able to
this provision are set forth in 42 CFR a CAH if the CAH itself were to initiate designate a CAH based upon a
412.62(f)(1) (for FY 1984), 42 CFR some change, such as a redesignation as determination that it is a necessary
412.63(b)(3) (for FYs 1985 through urban rather than rural under State law provider of health care. In addition,
2004), and at 42 CFR 412.64(b)(3) (for or regulations, which would invalidate section 405(h) of Pub. L. 108–173
FY 2005 and subsequent fiscal years). a prior § 412.103 reclassification. As a amended section 1820(h) of the Act to
The provision (section 1886(d)(8)(B) of result, we are proposing to make include a grandfathering provision for
the Act) is referred to as the ‘‘Lugar changes to § 485.610(b) of the CAHs that are certified as necessary
provision’’ and the counties described regulations that would permit CAHs providers prior to January 1, 2006. In
by it are referred to as the ‘‘Lugar located in a county that, in FY 2004, the FY 2005 IPPS final rule (69 FR
counties.’’ was not part of a Lugar county, but as 49220), we incorporated these
As explained more fully in the FY of FY 2005 was included in such a amendments in our regulations at
2005 IPPS final rule (69 FR 48916), county as a result of the new labor § 485.610 (c). Under that regulation, any
certain counties that previously were market area definitions, to maintain CAH that is designated as a necessary
not considered Lugar counties were, their CAH status until September 30, provider in its State rural health plan
effective October 1, 2004, redesignated 2006. These changes, if adopted in final prior to January 1, 2006, will be
as Lugar counties as a result of the most form, would permit CAHs in newly permitted to maintain its necessary
recent census data and the new labor designated Lugar counties to continue provider designation. However, the
market area definitions announced by participating in Medicare as CAHs until regulations are limited to CAHs that
OMB on June 6, 2003. Some CAHs September 30, 2006. We expect that this were necessary providers as of January
located in these newly designated Lugar will provide these CAHs with sufficient 1, 2006, and does not address the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00147 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23452 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
situation where the CAH is no longer same location under the criteria in the Part 489. If the proposed move
the same facility due to relocation, preceding paragraph, we would need to constitutes a cessation of business, the
cessation of business, or a substitute determine if this building would be a CMS Regional Office may assist the
facility. Currently, CMS Regional relocation of the current provider or a provider in obtaining an agreement to
Offices make the decision for continued cessation of business at one location and participate under a new provider
certification following relocation of a establishment of a new business at number. Furthermore, in such a
certified facility on a case-by-case basis. another location. In the event of situation, the regulations require the
The criteria used to qualify a CAH as relocation, the CAH must ensure that provider to give advanced notice to
a necessary provider were established the provider is functioning as CMS and the public regarding its intent
by each State in its MRHFP. The State’s essentially the same provider in order to to stop providing medical services to the
MRHFP defined those CAHs that operate under the same provider community. There is no appeals process
provide necessary services to a agreement. A provider that is changing for a voluntary termination. Under our
particular patient community in the location is considered to have closed the current policies, the cessation of
event that the facility did not meet the old facility if the original community or business by a CAH automatically
required 35-mile (or 15-mile with stated service area can no longer be expected terminates the CAH designation,
exceptions) distance requirement from to be served at the new location. The regardless of whether the designation
the nearest hospital or CAH. Each distance of the moved CAH from its old was obtained through a necessary
State’s criteria are different, but the location will be considered, but it will provider determination.
criteria share certain similarities and all not be the sole determining factor in
define a necessary provider related to b. Relocation of a CAH Using a
granting the relocation of a CAH under
the facility location. Therefore, it Necessary Provider Designation To Meet
the same provider agreement. For
becomes crucial to define whether the the CoP for Distance
example, a specialty hospital may move
necessary provider designation remains a considerable distance and still care for Once it has been determined that
pertinent in the event the certified CAH generally the same inpatient population, constructing a new facility will cause
builds in a different location. while the relocation of a CAH at a the CAH to relocate, the second step is
Accordingly, the first step of this relatively short distance within a rural to determine if the CAH that has a
process is to determine whether area may greatly affect the community necessary provider designation can
building a new CAH facility in a served. maintain this designation after
different location is a replacement of an In the event that CMS determines the relocating.
existing facility in essentially the same rebuilding of the CAH in a different We recognize that § 485.610(c)
location, a relocation of the facility in a location to be a relocation, the provider relating to location relative to other
new location, or a cessation of business agreement would continue to apply to facilities or necessary provider
at one location and establishment of the CAH at the new location. In addition certification states that, after January 1,
new business at another location. to the relocation being within the same 2006, the ‘‘necessary provider’’
service area, serving the same designation will no longer be used to
a. Determination of the Relocation waive the mileage requirements. In
population, the CAH would need to be
Status of a CAH addition, CMS policy regarding a
providing essentially the same services
(1) Replacement in the same location. with the same staff; that is, at least 75 change of size or location of a provider
Under this approach, we are proposing percent of the same staff and 75 percent states that there may be situations where
that, if the CAH is constructing of the range of services are maintained the facility relocation is so far removed
renovation of the same building in the in the new location as the same provider from the originally approved site that
same location, the renovation is of services. We are proposing the use of we would conclude that this is a
considered to be a replacement of the a 75-percent threshold because we different provider or supplier, for
same provider and not relocation. We believe it indicates that the CAH that is example, it has different employees,
would consider a construction of the relocating demonstrates that it will services, and patients. Furthermore, the
CAH to be a replacement if construction maintain a high level of involvement, as language of section 1820(c)(2)(i) of the
was undertaken within 250 yards of the opposed to just a majority involvement, Act allows a State to waive the mileage
current building, as set by prior in the current community. We note that requirement and designate a facility as
precedence in defining a hospital CMS has also used a 75-percent a necessary provider of health care
campus. In addition, if the replacement threshold in other provider designation services to residents in the area. We
is constructed on land that is contiguous policies such as the provider-based have interpreted ‘‘services to residents
to the current CAH, and that land was policies at § 413.65(e)(3)(ii). in the area’’ to mean that the necessary
owned by the CAH prior to enactment In all cases of relocation, the CAH provider designation does not
of Pub. L. 108–173, and the CAH is must continue to meet all of the CoPs automatically follow the provider if the
operating under a State-issued necessary found at 42 CFR Part 485, Subpart F, facility relocates to a different location
provider waiver that is grandfathered by including location in a rural area as because it is no longer furnishing
Pub. L. 108–173, we would consider provided for at § 485.610. ‘‘services to patients’’ in the area
that construction to be a replacement of (3) Cessation of business at one determined to need a necessary
the existing provider and the provisions location. Under existing CMS policy, if provider.
of the grandfathered necessary provider the CAH relocation results in the We do not intend to change this
designation would continue to apply cessation of furnishing services to the policy. Our proposal, noted below, is
regardless of when the construction or same community, we would not intended to establish a methodology to
renovation work commenced and was consider this to be a relocation, but be used by all CMS Regional Offices in
completed. instead would consider such a scenario making such a decision consistent with
(2) Relocation of a CAH. Under our a cessation of business at one location the statutory provisions concerning
proposed approach, if the CAH is and establishment of a new business at necessary provider designation.
constructing a new facility in a location another location. Cessation of business In this proposed rule, we are
that does not qualify the construction as is a basis for voluntary termination of proposing to amend the regulations at
replacement of an existing facility in the the provider agreement under 42 CFR § 485.610 to set forth the criteria by
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00148 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23453
which those relocated CAHs designated full survey in the new location to Accordingly, we are proposing to
as necessary providers that embarked on include the Life Safety Code and would revise § 485.610 of the regulations by
a replacement facility project before the include any off-site locations and adding a new paragraph (d) to
sunset provision was enacted on rehabilitation or psychiatric distinct incorporate this proposal. Specifically,
December 8, 2003, but find that they part units. the proposed new paragraph (d) would
cannot be operational in the • A demonstration that construction specify that a CAH may maintain its
replacement facility by January 1, 2006, plans were ‘‘under development’’ prior necessary provider certification
can retain their necessary provider to the effective date of Pub. L. 108–173 provided for under § 485.610(c) if the
status. As required by statute, no (December 8, 2003) in the application new facility meets the requirements for
additional CAHs will be certified as a the CAH submits to continue using a either a replacement facility that is
necessary provider on or after January 1, necessary provider designation. constructed within 250 yards of the
2006. We recognize that the statute Supporting documentation could current building or contiguous to the
refers to a facility designated as a CAH include the drafting of architectural current CAH on land owned by the CAH
while relocation of a facility may result specifications, the letting of bids for prior to December 8, 2003; or as a
in a different building. However, to construction, the purchase of land and relocated CAH if, at the relocated site,
provide flexibility for a facility building supplies, documented efforts to the CAH provides essentially (75
designated as a CAH whose location secure financing for construction, percent) the same services to the same
may change, but is essentially the same expenditure of funds for construction, service area with essentially the same
facility in a different location, we are and compliance with state requirements staff. The CAH that plans to relocate
proposing to amend the regulations to for construction such as zoning must provide documentation
account for this scenario. Essentially, requirements, application for a demonstrating that its plans to rebuild
we recognize that the necessary certificate of need, and architectural in the relocated area were undertaken
provider designation may need to be review. However, we recognize that it prior to December 8, 2003. We are also
applied to certain relocated CAHs. To may not have been feasible for a CAH proposing that if a CAH that has a
this end, we are proposing to use the to have completed all of these activities necessary provider certification from the
specified relocation criteria as the initial noted above as examples prior to State places a new facility in service on
step to determine continuing necessary December 8, 2003. Thus, we expect the or after January 1, 2006, and does not
provider status. Specifically, in this CMS Regional Offices to consider all of meet either the requirements for a
proposed rule, we are proposing that, the criteria and make case-by-case replacement facility or a relocated
when a CAH is determined to have determinations of whether a relocated facility, as specified in the regulations,
relocated, it may nonetheless continue CAH continues to warrant necessary the action will be considered a cessation
to operate under its necessary provider provider status. We note that we have of business.
designation that exempts the distance also used the above documentation
guidelines in Publication 100–20 for VIII. Payment for Blood Clotting Factor
from other providers only if the
grandfathered specialty hospitals to Administered to Hemophilia Inpatients
following conditions are met:
(1) The relocated CAH has submitted determine if construction plans were (If you choose to comment on issues
an application to the State agency for ‘‘under development.’’ in this section, please include the
relocation prior to the January 1, 2006, In proposing these criteria, our intent caption ‘‘Blood Clotting Factor’’ at the
sunset date. If the CAH is applying in clarifying the sunset of the necessary beginning of your comment.)
under a grandfathered status under provider designation provision is to Section 1886(a)(4) of the Act excludes
section 1820(h)(3) of the Act, the allow CAHs to complete construction the costs of administering blood clotting
following items would need to be projects that were initiated prior to the factors to individuals with hemophilia
included in the application: enactment of Pub. L. 108–173, which we from the definition of ‘‘operating costs of
• A demonstration that the CAH will believe is consistent with the statutory inpatient hospital services.’’ Section
meet the same State criteria for the language of section 405(h) of Pub. L. 6011(b) of Pub. L. 101–239 (the
necessary provider designation that 108–173. Omnibus Budget Reconciliation Act of
were established when the waiver was (2) In the application, the CAH 1989) states that the Secretary of Health
originally issued. For example, if the demonstrates that the replacement will and Human Services shall determine the
location waiver was granted because the facilitate the access to care and improve payment amount made to hospitals
CAH was located in a health the delivery of services to Medicare under Part A of Title XVIII of the Act
professional shortage area (HPSA), the beneficiaries. We are soliciting for the costs of administering blood
CAH must remain in that HPSA. comments on how a necessary provider clotting factors to individuals with
• Assurance that, after the relocation, CAH should demonstrate that the hemophilia by multiplying a
the CAH will be servicing the same replacement will improve access to care. predetermined price per unit of blood
community and will be operating These guidelines are meant to be clotting factor by the number of units
essentially the same services with applied to the relocated CAH that meets provided to the individual. The
essentially the same staff (that is, a the CoP in the new location and wishes regulations governing payment for blood
demonstration that it is serving at least to maintain a necessary provider clotting factor furnished to hospital
75 percent of the same service area, with designation in order to meet the inpatients are located in §§ 412.2(f)(8)
75 percent of the same services offered, distance requirement at § 485.610(c). and 412.115(b).
and staffed by 75 percent of the same They are not meant to preclude a CAH Consistent with the rates paid under
staff, including medical staff, contracted from relocating at any time if the CAH section 1842(o) of the Act for Medicare
staff, and employees). This is essentially does not seek to maintain the necessary Part B drugs (including blood clotting
the same criteria used in determining provider designation. Any CAH may factor furnished to individuals who are
whether the CAH has relocated. relocate at any time if the CAH meets not inpatients), in FY 2005, we made
• Assurance that the CAH will remain the definition of relocation and can payments for blood clotting factors
in compliance with all of the CoPs at 42 meet all the CoPs at 42 CFR part 485, furnished to inpatients at 95 percent of
CFR Part 485 in the new location. subpart F, as determined by the CMS average wholesale price (AWP). Section
Compliance will be established with a Regional Offices on a case-by-case basis. 303 of Pub. L. 108–173 established
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00149 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23454 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
section 1847A of the Act which requires for hospitals and distinct-part hospital We are planning a comprehensive and
that almost all Medicare Part B drugs units excluded from the IPPS is systematic review of the CC list for the
not paid on a cost or prospective basis discussed in Appendix B to this IPPS rule for FY 2007. As part of this
be paid at 106 percent of average sales proposed rule. process, we will consider revising the
price (ASP) and provided for payment Recommendation 4A: The Congress standard for determining when a
of a furnishing fee for blood clotting should establish a quality incentive condition is a CC. For instance, we
factor, effective January 1, 2005. On payment policy for hospitals in expect to use an alternative to the
November 15, 2004, we issued Medicare. current method of classifying a
regulations in the Federal Register (69 Response: We are exploring provider condition as a CC based on how it
FR 66299) that implemented the payment policies that link quality to affects the length of stay of a case.
provisions of section 1847A for payment Medicare reimbursement in a cost Similar to other aspects of the DRG
for Medicare Part B drugs using the 106 neutral manner under our system, we expect to consider the effect
percent of ASP payment methodology demonstration authority. We currently of a specific secondary diagnosis on the
and for payment of the furnishing fee. have demonstrations underway that will charges or costs of a case to evaluate
These regulations are codified at 42 CFR identify and examine the components of whether to include the condition on the
410.63 and subpart K of Part 414. such a policy. CC list.
To ensure consistency in payment for Another option we are considering is
Medicare Part A and Medicare Part B B. Physician-Owned Specialty Hospitals a selective review of the specific DRGs,
drugs, we are proposing to revise Recommendation 1: The Secretary such as cardiac, orthopedic, and
§§ 412.2(f)(8) and 412.115(b) of the should improve payment accuracy in surgical DRGs, that are alleged to be
regulations governing the IPPS to the hospital inpatient PPS by: overpaid and that create incentives for
specify that, for discharges occurring on • Refining the current DRGs to more physicians to form specialty hospitals.
or after October 1, 2005, the additional fully capture differences in severity of We expect to selectively review
payment for the blood clotting factor illness among patients. particular DRGs based on statistical
administered to hemophilia inpatients • Basing the DRG relative weights on criteria such as the range or standard
is made based on the average sales price the estimated cost of providing care deviation among charges for cases
methodology specified in subpart K of rather than on charges. included within the DRG. It is possible
42 CFR part 414 and the furnishing fee specific DRGs have high variation in
• Basing the weights on the national
specified in § 410.63. resource costs and that a better
average of hospitals’ relative values in
The proposed payment amount per recognition of severity would reduce
each DRG.
unit and the unit payment for the incentives for hospitals to select the
In making this recommendation, least costly and most profitable patients
furnishing fee for blood clotting factor
MedPAC recognized several within these DRGs. Any analysis we
administered to hospital inpatients who
implementation issues regarding perform would balance the goal of
have hemophilia that we are proposing
potential low volume DRGs and making payment based on an accurate
to apply under the IPPS for FY 2006 are
potential changes in hospital coding and coding system that recognizes severity
specified in section V. of the Addendum
reporting behavior. In particular, of illness with the premise that the IPPS
to this proposed rule.
MedPAC recommended that the is a system of payment based on
IX. MedPAC Recommendations Secretary project the likely effect of averages. We agree with MedPAC that,
(If you choose to comment on issues reporting improvements on total in refining the DRGs, we must continue
in this section, please include the payments and make an offsetting to be mindful of issues such as the
caption ‘‘MedPAC Recommendations’’ at adjustment to the standardized instability of small volume DRGs and
the beginning of your comment.) amounts. the potential impact of changes in
We are required by section Response: We expect to make changes hospital coding and reporting behavior.
1886(e)(4)(B) of the Act to respond to to the DRGs to better reflect severity of As MedPAC noted, previous
MedPAC’s IPPS recommendations in illness. The following discussion briefly refinements to DRG definitions have led
our annual proposed IPPS rule. In describes some of the options we are to unanticipated increases in payment
March 2005, MedPAC released the considering. As we discussed in section because of more complete reporting of
following two reports to Congress, II.B. of this preamble, there is a standard patients’ diagnoses and procedures. As
which included IPPS recommendations: list of diagnoses that are considered part of our analysis of possible
‘‘Report to Congress: Medicare Payment complications or comorbidities (CC). refinements to the DRGs, we have
Policy’’ and ‘‘Report to Congress: These conditions, when present as a concerns with our ability to account for
Physician-Owned Specialty Hospitals.’’ secondary diagnosis, may result in the effect of changes in coding behavior
We have reviewed each of these reports payment using a higher weighted DRG. on payment.
and have given them careful Currently, 3,285 diagnosis codes on this We are also considering the use of
consideration in conjunction with the list, and 121-paired DRGs are alternative DRG systems such as the all
policies set forth in this document. differentiated based on the presence or patient refined diagnosis related groups
These recommendations and our absence of a CC. Our analysis indicates (APR–DRGs) in place of Medicare’s
responses are set forth below. For that the majority of cases assigned to current DRG system. The APR–DRGs
further information relating specifically these DRGs fall into the ‘‘with CC’’ have a greater number of DRGs that
to the MedPAC reports or to obtain a DRGs. We believe that it is possible that could relate payment rates more closely
copy of the reports, contact MedPAC at the CC distinction has lost much of its to patient resource needs, and thus
(202) 653–7220, or visit MedPAC’s Web ability to differentiate the resource reduce the advantages of selection of
site at: http://www.medpac.gov. needs of patients, given the long period desirable patients within DRGs by
of time since the original CC list was specialty hospitals. However, any large
A. Medicare Payment Policy developed and the incremental nature of change to the DRGs could have
MedPAC’s Recommendation 2A–1 subsequent changes in an environment substantial effects across all hospitals.
concerning the update factor for of major changes in the way inpatient Therefore, we believe we must
inpatient hospital operating costs and care is delivered. thoroughly analyze such options and
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00150 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23455
their impacts on the various types of based DRG weights to cost-based DRG charges would become the basis for
hospitals before making any proposal. In weights. We note that such a change is determining the relative weights for the
addition, as noted above, we are complex and would require further DRGs for that hospital. These relative
concerned about our ability to account analysis. With this in mind, CMS will weights would be adjusted by the
for the effect of changes in coding consider the following issues in hospital’s case-mix index when
behavior on payment if we were to performing this analysis: combining each hospital’s relative
significantly expand the number of • The effect of using cost-to-charge weights to determine a national relative
DRGs. Therefore, in light of the above, ratio data, which is frequently older weight for all hospitals. This adjustment
we must consider how to mitigate the than the claims data we use to set the is designed to reduce the influence that
risk of paying significantly more for the charge-based weights, and the impact on a single hospital’s charge structure
alternatives discussed above while these data of any changes in hospitals’ could have on determining the relative
measuring the benefit for Medicare charging behavior that resulted from the weight when it provides a high
beneficiaries. recent modifications to the outlier proportion of the total, nationwide
In response to MedPAC’s payment methodology (68 FR 34494; number of discharges in a particular
recommendation that we improve June 9, 2003); DRG.
payment accuracy by basing the DRG • Whether using this method has We will analyze the possibility of
relative weights on the estimated cost of different effects on DRGs that have moving to hospital specific relative
providing care rather than on charges, experienced substantial technological values while conducting the analysis
we note that we do not have access to change compared to DRGs with more outlined above in response to the
any information that would provide a stable procedures for care; recommendations regarding improved
direct measure of the costs of individual • The effect of using a routine cost-to- severity adjustment and using charges
discharges. Claims filed by hospitals do charge ratio and department-level adjusted to estimated cost using cost-to-
provide information on the charges for ancillary cost-to-charge data as charge ratios to set the relative weights.
individual cases. At present, we use this compared to either an overall hospital We note that we use this method at
information to set the relative weights cost-to-charge ratio or a routine cost-to- present to set weights for the LTCH PPS.
for the DRGs. We obtain information on charge ratio and an overall ancillary We use this method for LTCHs because
costs from the hospital cost reports, but cost-to-charge ratio, particularly in of the small volume of providers and the
this information is at best at the considering earlier studies performed possibility that only a few providers
department level; it does not include for the Prospective Payment Assessment provide care for certain DRGs. The
information about the costs of Commission, the predecessor to charges of one or a few hospitals could
individual cases. Consequently, the MedPAC, indicating that an overall thus materially affect the relative
most straightforward way to estimate ancillary cost-to-charge ratio led to more weights for these DRGs. In this event,
costs of an individual case is to accurate estimates of case level costs; 5 looking at relative values within
calculate a cost-to-charge ratio for some • Whether developing relative hospitals first can smooth out the
body of claims (for example, for a weights by estimating costs from hospital-specific effects on DRG
hospital’s radiology department), and charges multiplied by cost-to-charge weights. A 1993 Rand Report on
then apply this ratio to the charges for ratios versus whether the sole use of hospital specific relative values noted
that department. charges improves payment accuracy; the possibility of DRG compression (or
However, this procedure is not and the undervaluing of high-cost cases and
without disadvantages because • How payments to hospitals would the overvaluing of low-cost cases) if we
assignment of costs to departments is be affected by MedPAC’s suggestion were to shift to a hospital-specific
not uniform from hospital to hospital, intended to simplify recalibration, to relative value method from the current
given the variability of hospital recalibrate weights based on costs every method for determining DRG weights.
accounting systems, and because cost few years, and to calculate an We will need to consider whether the
information is not available until a year adjustment to charge-based weights for resultant level of compression is
or more after claims information. In appropriate.
the intervening periods.
addition, the application of a cost-to- In response to the recommendation
Recommendation 2: The Congress
charge ratio that is uniform across any should amend the law to give the
that the Secretary should improve
body of claims may result in biased Secretary authority to adjust the DRG
payment accuracy in the IPPS by basing
estimates of individual costs if hospital relative weights to account for
the weights on the national average of
charging behavior is not uniform. Thus, differences in the prevalence of high-
hospitals’ relative values in each DRG,
it is alleged that hospitals mark up cost outlier cases.
we note that presently we set the Response: While MedPAC’s language
lower cost services less than higher cost
relative weights using standardized suggests that the law would need to be
services, and to the extent they do so,
charges (adjusted to remove the effects amended for us to adopt this suggestion,
application of a uniform cost-to-charge
of differences in area wage costs and in we believe the statute may give the
ratio will result in underestimates of the
IME and DSH payments). In contrast, Secretary broad discretion to consider
costs of higher cost services and vice
versa. We use estimated costs, based on MedPAC proposes that Medicare set the all factors that change the relative use of
hospital-specific, department-level cost- DRG relative weights using hospital resources in calculating the
to-charge ratios, in the hospital unstandardized, hospital-specific DRG relative weights. We believe that
outpatient prospective payment system. charges. Each hospital’s unstandardized MedPAC’s recommendation springs
The accuracy of this procedure has 5 Cost Accounting for Health Care Organizations,
from a concern that including high-
generated some concern, and without Technical Report Series, 1–93–01, ProPAC, March
charge outlier cases in the relative-
further analysis, the extent to which 1993, page 6. Using a cost report package, the weight calculation results in
accuracy of inpatient payments would contractor simulated single and multiple ancillary overvaluing DRGs that have a high
be improved by adopting this method is cost-to-charge ratios and found that inpatient prevalence of outlier cases. However,
ancillary costs were 2.5 percent understated relative
not obvious. to what hospitals thought their costs were with the
we believe that excluding outlier cases
We will closely analyze the impact of single cost-to-charge ratio, and 4.9 percent completely in calculating the relative
such a change from the current charge- understated with the multiple cost-to-charge ratios. weights would be inappropriate. Doing
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00151 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23456 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
so would undervalue the relative weight longer provide a significant impetus to between physicians and hospitals and to
for a DRG with a high percentage of further development of specialty regulate those arrangements to protect
outliers by not including that portion of hospitals. the quality of care and minimize
hospital charges that is above the Recommendation 3: The Congress and financial incentives that could affect
median but below the outlier threshold. the Secretary should implement the physician referrals.
We believe it would be preferable to case-mix measurement and outlier
adjust the charges used for calculating policies over a transitional period. X. Other Required Information
the relative weights to exclude the Response: Before proposing any A. Requests for Data From the Public
portion of charges above the outlier changes to the DRGs, we would need to
threshold but to include the charges up model the impact of any specific In order to respond promptly to
to the outlier threshold. At this time, we proposal and our authority under the public requests for data related to the
expect to further analyze these ideas as statute to determine whether any prospective payment system, we have
we consider the other changes changes should be implemented established a process under which
recommended by MedPAC and immediately or over a period of time. commenters can gain access to raw data
welcome public comments on this issue. We do note that with regard to revising on an expedited basis. Generally, the
the existing DRG system with a new data are available in computer tape or
Finally, we believe that the
DRG system that fully captures cartridge format; however, some files are
recommendations made by MedPAC, or
differences in severity, there would available on diskette as well as on the
some variants of them, have significant likely be unique complexities in
promise in improving the accuracy of Internet at http://www.cms.hhs.gov/
creating a transition from one DRG providers/hipps. Data files and the cost
rates in the inpatient payment system to another. Our payment would
prospective payment system. We agree for each file, if applicable, are listed
be a blend of two different relative below. Anyone wishing to purchase
with MedPAC that they should be weights that would have to be
pursued even in the absence of concerns data tapes, cartridges, or diskettes
determined using two different systems should submit a written request along
about the proliferation of specialty of DRGs. The systems and legal
hospitals. However, until we have with a company check or money order
implications of such a transition or any (payable to CMS–PUF) to cover the cost
completed further analysis of these other major change to the DRGs could
options and their effects, we cannot to the following address: Centers for
be significant. Medicare & Medicaid Services, Public
predict the extent to which they will
provide payment equity between C. Other MedPAC Recommendations Use Files, Accounting Division, P.O.
specialty and general hospitals. In fact, Box 7520, Baltimore, MD 21207–0520,
MedPAC also made the following
we must caution that any system that (410) 786–3691. Files on the Internet
recommendations that we will address
groups cases and provides a standard may be downloaded without charge.
in our Report to Congress on Specialty
payment for cases in the group (that is, Hospitals: 1. CMS Wage Data
the IPPS among other Medicare Recommendation 4: The Congress
payment systems) will always present should extend the current [Pub. L. 108– This file contains the hospital hours
some opportunities for providers to 173] moratorium on physician-owned and salaries for FY 2002 used to create
specialize in cases where they believe single specialty hospitals until January the FY 2006 prospective payment
margins may be better. Improving 1, 2007. system wage index. The file will be
payment accuracy should reduce these Recommendation 5: The Congress available by the beginning of February
opportunities, and it may do so to the should grant the Secretary the authority for the NPRM and the beginning of May
extent that Medicare payments no to allow gainsharing arrangements for the final rule.
EP04MY05.060</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00152 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23457
These files support the following: 4. FY 2006 Proposed Rule Occupational 7. Reclassified Hospitals New Wage
• NPRM published in the Federal Mix Adjusted and Unadjusted AHW and Index (Formerly: Reclassified Hospitals
Register. Pre-Reclassified Wage Index by CBSA by Provider Only)
• Final Rule published in the Federal This file includes each CBSA’s This file contains a list of hospitals
Register. adjusted and unadjusted average hourly that were reclassified for the purpose of
Media: Diskette/most recent year on wage. assigning a new wage index. Two
the Internet. Media: Internet. versions of these files are created each
File Cost: $165.00 per year. Periods Available: FY 2006 PPS year. They support the following:
Update. • NPRM published in the Federal
Periods Available: FY 2006 PPS
Update. 5. Provider Occupational Mix Register.
Adjustment Factors for Each • Final Rule published in the Federal
2. CMS Hospital Wages Indices Register.
Occupational Category
(Formerly: Urban and Rural Wage Index Media: Diskette/Internet.
Values Only) This file contains each hospital’s
File Cost: $165.00 per year.
occupational mix adjustment factors by
This file contains a history of all wage Periods Available: FY 2006 PPS
occupational category.
indices since October 1, 1983. Media: Internet. Update.
Media: Diskette/most recent year on Periods Available: FY 2006 PPS 8. PPS–IV to PPS–XII Minimum Data
the Internet. Update. Set
File Cost: $165.00 per year. 6. PPS SSA/FIPS MSA State and County The Minimum Data Set contains cost,
Periods Available: FY 2006 PPS Crosswalk. statistical, financial, and other
Update. information from Medicare hospital cost
This file contains a crosswalk of State
3. FY 2006 Proposed Rule Occupational and county codes used by the Social reports. The data set includes only the
Mix Adjusted and Unadjusted AHW by Security Administration (SSA) and the most current cost report (as submitted,
Provider Federal Information Processing final settled, or reopened) submitted for
Standards (FIPS), county name, and a a Medicare participating hospital by the
This file includes each hospital’s Medicare fiscal intermediary to CMS.
historical list of Metropolitan Statistical
adjusted and unadjusted average hourly This data set is updated at the end of
Areas (MSAs).
wage. Media: Diskette/Internet. each calendar quarter and is available
Media: Internet. File Cost: $165.00 per year. on the last day of the following month.
Periods Available: FY 2006 PPS Periods Available: FY 2006 PPS Media: Tape/Cartridge.
Update. Update. File Cost: $770.00 per year.
(Note: The PPS–XIII, PPS–XIV, PPS–XV, 9. PPS–IX to PPS–XII Capital Data Set reopened) submitted for Medicare
PPS–XVI, PPS–XVII, PPS–XVIII, and PPS– certified hospital by the Medicare fiscal
The Capital Data Set contains selected
XIX Minimum Data Sets are part of the PPS– intermediary to CMS. This data set is
data for capital-related costs, interest
XIII, PPS–XIV, PPS–XV, PPS–XVI, PPS–XVII, updated at the end of each calendar
expense and related information and
PPS–XVIII, PPS–XIX, and PPS–XX Hospital quarter and is available on the last day
complete balance sheet data from the
Data Set Files (refer to item 7 below).) of the following month.
Medicare hospital cost report. The data
set includes only the most current cost Media: Tape/Cartridge.
report (as submitted, final settled or Fine Cost: $770.00 per year.
EP04MY05.061</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00153 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23458 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
(Note: The PPS–XIII, PPS–XIV, PPS–XV, 10. PPS–XIII to PPS–XX Capital Data Set certified hospital by the Medicare fiscal
PPS–XVI, PPS–XVII, PPS–XVIII, and PPS– intermediary to CMS. This data set is
The file contains costs, statistical,
XIX Capital Data Sets are part of the PPS– updated at the end of each calendar
financial, and other data from the
XIII, PPS–XIV, PPS–XV, PPS–XVI, PPS–XVII, quarter and is available on the last day
Medicare Hospital Cost Report. The data
PPS–XVIII, PPS–XIX, and PPS–XX Hospital of the following month.
set includes only the most current cost
Data Set Files (refer to item 7 below).) Media: Diskette/Internet.
report (as submitted, final settled or
reopened) submitted for Medicare- Fine Cost: $2,500.00.
11. Provider-Specific File • NPRM published in the Federal impact files. The data set is abstracted
Register. from an internal file used for the impact
This file is a component of the • Final rule published in the Federal analysis of the changes to the
PRICER program used in the fiscal Register. prospective payment systems published
intermediary’s system to compute DRG Media: Diskette/most recent year on in the Federal Register. This file is
payments for individual bills. The file Internet. available for release 1 month after the
contains records for all prospective Price: $165.00 per year/per file. proposed and final rules are published
payment system eligible hospitals, Periods Available: FY 1985 through in the Federal Register.
including hospitals in waiver States, FY 2006. Media: Diskette/Internet.
and data elements used in the
13. DRG Relative Weights (Formerly File Cost: $165.00.
prospective payment system
Table 5 DRG) Periods Available: FY 2006 PPS
recalibration processes and related
Update.
activities. Beginning with December This file contains a listing of DRGs,
1988, the individual records were DRG narrative description, relative 15. AOR/BOR Tables
enlarged to include pass-through per weights, and geometric and arithmetic This file contains data used to
diems and other elements. mean lengths of stay as published in the develop the DRG relative weights. It
Media: Diskette/Internet. Federal Register. The hard copy image contains mean, maximum, minimum,
File Cost: $265.00. has been copied to diskette. There are standard deviation, and coefficient of
two versions of this file as published in variation statistics by DRG for length of
Periods Available: FY 2006 PPS the Federal Register:
Update. stay and standardized charges. The BOR
• NPRM. tables are ‘‘Before Outliers Removed’’
12. CMS Medicare Case-Mix Index File • Final rule.
and the AOR is ‘‘After Outliers
Media: Diskette/Internet.
This file contains the Medicare case- File Cost: $165.00. Removed.’’ (Outliers refers to statistical
mix index by provider number as Periods Available: FY 2006 PPS outliers, not payment outliers.)
published in each year’s update of the Update. Two versions of this file are created
Medicare hospital inpatient prospective each year. They support the following:
payment system. The case-mix index is 14. PPS Payment Impact File • NPRM published in the Federal
a measure of the costliness of cases This file contains data used to Register.
treated by a hospital relative to the cost estimate payments under Medicare’s • Final rule published in the Federal
EP04MY05.062</GPH> EP04MY05.063</GPH>
of the national average of all Medicare hospital inpatient prospective payment Register.
hospital cases, using DRG weights as a systems for operating and capital-related Media: Diskette/Internet.
measure of relative costliness of cases. costs. The data are taken from various File Cost: $165.00.
Two versions of this file are created sources, including the Provider-Specific Periods Available: FY 2006 PPS
each year. They support the following: File, Minimum Data Sets, and prior Update.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00154 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23459
16. Prospective Payment System (PPS) quarterly basis to CMS, as specified by Section 413.65 Requirements for a
Standardizing File CMS. In this document, we are setting Determination That a Facility or an
This file contains information that out the specific requirements related to Organization Has Provider-Based Status
standardizes the charges used to the data that must be submitted. The Proposed § 413.65(b)(3)(i) requires
calculate relative weights to determine burden associated with this section is potential main providers seeking a
payments under the prospective the time and effort associated with determination of provider-based status
payment system. Variables include wage collecting, copying and submitting this for a facility that is located on the
index, cost-of-living adjustment (COLA), data. We estimate that there will be campus of the potential main provider
case-mix index, disproportionate share, approximately 4,000 respondents per to submit an attestation stating that the
and the Metropolitan Statistical Area year. Of this number, approximately facility meets the criteria in paragraph
(MSA). The file supports the following: 3,600 hospitals are JCAHO accredited (d) of § 413.65 and, if it is a hospital, to
• NPRM published in the Federal and are currently collecting measures also attest that it will fulfill the
Register. and submitting data to the JCAHO on a obligations of hospital outpatient
• Final rule published in the Federal quarterly basis. Of the JCAHO departments and hospital-based entities
Register. accredited hospitals, approximately described in paragraph (g) of § 413.65.
Media: Internet. 3,300 are collecting the same measures We are also proposing to amend this
File Cost: No charge. CMS will be collecting for public paragraph to require that in the case of
Periods Available: FY 2006 PPS reporting. Therefore, there will be no a facility that is operated as a joint
Update. additional burden for these hospitals. venture, the potential main provider
For further information concerning Only approximately 300 of the JCAHO attest that it will comply with the
these data tapes, contact the CMS Public requirements of paragraph (f) of
accredited hospitals will need to collect
Use Files Hotline at (410) 786–3691. § 413.65.
an additional topic in addition to the Proposed § 413.65(b)(3)(ii) provides
Commenters interested in obtaining or
data already collected for maintaining that, if a facility is not located on the
discussing any other data used in
JCAHO accreditation. In addition, there campus of the potential main provider,
constructing this rule should contact
Mark Hartstein at (410) 786–4548. are approximately 400 hospitals that do the potential main provider must submit
not participate in the JCAHO an attestation stating that the facility
B. Collection of Information accreditation process. These hospitals meets the criteria in paragraph (d) and
Requirements will have the additional burden of (e) of § 413.65 and, if it is a hospital, to
Under the Paperwork Reduction Act collecting data on all three topics. also attest that it will fulfill the
of 1995 (PRA), we are required to For JCAHO accredited hospitals that obligations of hospital outpatient
provide 60-day notice in the Federal are not already collecting all of the departments and hospital-based entities
Register and solicit public comment required measures, we estimate it will described in paragraph (g) of § 413.65. If
before a collection of information take 25 hours per month per topic for the facility is operated under a
requirement is submitted to the Office of collection. We expect the burden for all management contract, the potential
Management and Budget (OMB) for of these hospitals to total 102,000 hours main provider also attest that the facility
review and approval. In order to per year, including time allotted for meets the requirements of paragraph (h)
evaluate fairly whether an information of § 413.65.
overhead. For non-JCAHO accredited
collection should be approved by OMB, Proposed § 413.65(e)(3) requires that a
hospitals, we estimate the burden to be facility or organization for which
section 3506(c)(2)(A) of the Paperwork
136,000 hours per year. This estimate provider-based status is sought that is
Reduction Act of 1995 requires that we
also includes overhead. The total not located on the campus of a potential
solicit comment on the following issues:
• The need for the information number of burden hours for all hospitals main provider must (i) be located within
collection and its usefulness in carrying combined is 238,000. The number of a 35-mile radius of the campus of the
out the proper functions of our agency. responders will vary according to the hospital or CAH that is the potential
• The accuracy of our estimate of the level of voluntary participation. One main provider, or (ii) be owned and
information collection burden. hundred percent of the data may be operated by a hospital or CAH that has
• The quality, utility, and clarity of collected electronically. a disproportionate share adjustment (as
the information to be collected. In the preamble to this proposed rule, determined under § 412.106 of this
• Recommendations to minimize the we are proposing additional validation chapter) greater than 11.75 percent and
information collection burden on the criteria to ensure that the quality data is described in § 412.106(c)(2) of this
affected public, including automated being sent to CMS are accurate. Our chapter implementing section
collection techniques. validation process requires participating 1886(e)(5)(F)(i)(II) of the Act and is (A)
Therefore, we are soliciting public hospitals to submit five charts per owned or operated by a unit of State or
comments on each of these issues for quarter. The burden associated with this local government, (B) a public or
the information collection requirements nonprofit corporation formally granted
requirement is the time and effort
discussed below. governmental powers by a unit of State
associated with collecting, copying, and
The following information collection or local government; or (C) a private
submitting these charts. It will take hospital having a contract with a State
requirements included in this proposed
approximately 2 hours per hospital to or local government that includes the
rule and their associated burdens are
submit the 5 charts per quarter. There operation of clinics located off the main
subject to the PRA.
will be a total of approximately 19,000 campus of the hospital to assure access
Section 412.64 Federal Rates for charts (3,800 hospitals × charts per in a well-defined service area to health
Inpatient Operating Costs for Federal hospital) submitted by the hospitals to care services for low-income individuals
Fiscal Year 2005 and Subsequent Fiscal CMS per quarter for a total burden of who are not entitled to benefits under
Years 7,600 hours per quarter and a total Medicare (or medical assistance under a
Section 412.64(d)(2) requires annual burden of 30,400 hours. Medicaid State plan), or (iii)
hospitals to submit quality data on a demonstrate a high level of integration
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00155 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23460 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
with the main provider by showing that area were undertaken prior to December Puerto Rico, Reporting and
it meets all of the other provider-based 8, 2003. This requirement does impose recordkeeping requirements.
criteria and demonstrate that it serves an information collection requirement.
42 CFR Part 413
the same patient population as the main However, because this burden would be
provider, by submitting certain records imposed on less than 10 CAHs, under 5 Health facilities, Kidney diseases,
showing the information contained in CFR 1320.2(c), these requirements are Medicare, Puerto Rico, Reporting and
paragraphs (e)(3)(iii)(A) and (e)(3)(iii)(B) exempt from the PRA. recordkeeping requirements.
of this section or (iv) if the facility or We have submitted a copy of this 42 CFR Part 415
organization is unable to meet the proposed rule to OMB for its review of
criteria in paragraph (e)(3)(iii)(A) or the information collection requirements Health facilities, Health professions,
paragraph (e)(3)(iii)(B) because it was described above. Medicare, and reporting and
not in operation during all of the 12- If you have any comments on the recordkeeping requirements.
month period described in paragraph information collection and 42 CFR Part 419
(e)(3)(iii), be located in a zip code area recordkeeping requirements, please mail
Hospitals, Medicare, Reporting and
included among those that, during all of the copies directly to the following: recordkeeping requirements.
the 12-month period described in Centers for Medicare & Medicaid
paragraph (e)(3)(iii), accounted for at Services, Office of Strategic 42 CFR Part 422
least 75 percent of the patients served Operations and Regulatory Affairs, Health maintenance organizations
by the main provider, or (v) in the case Security and Standards Group, (HMO), Medicare+Choice, Provider
of an RHC, (A) be an RHC that is Regulations Development and sponsored organizations (PSO).
otherwise qualified as a provider-based Issuances Group, Room C4–24–02,
entity of a hospital that has fewer than 7500 Security Boulevard, Baltimore, 42 CFR Part 485
50 beds, and (B) the hospital with which MD 21244–1850, Attn.: James Grant programs-health, Health
the facility or organization has a Wickliffe, CMS–1500–P. facilities, Medicaid, Medicare,
provider-based relationship be located Office of Information and Regulatory Reporting and recordkeeping
in a rural area, and (vi) be located in the Affairs, Office of Management and requirements.
same State as the main provider or, Budget, Room 3001, New Executive For the reasons stated in the preamble
when consistent with the laws of both Office Building, Washington, DC of this proposed rule, the Centers for
States, in adjacent States. 20503, Attn: Christopher Martin, CMS Medicare & Medicaid Services is
Section 413.65(g)(7) provides that Desk Officer. proposing to amend 42 CFR chapter IV
when a Medicare beneficiary is treated as follows:
Comments submitted to OMB may
in a hospital outpatient department that
also be e-mailed to the following
is not located on the main provider’s PART 405—FEDERAL HEALTH
address:
campus, the treatment is not required to INSURANCE FOR THE AGED AND
be provided by the antidumping rules of Christopher_Martin@omb.eop.gov; or
faxed to OMB at (202) 395–6974 or (202) DISABLED
section 489.24, and the beneficiary will
incur a coinsurance liability for an 395–5167. Attn.: CMS–1500–P. A. Part 405 is amended as follows:
outpatient visit to the hospital, as well 1. The authority citation for Part 405
C. Public Comments
as for the physician service the hospital continues to read as follows:
Because of the large number of items Authority: Secs. 1102, 1861, 1862(a), 1871,
must provide written notice to the
of correspondence we normally receive 1874, 1881, and 1886(k) of the Social
beneficiary, before delivery of services
on a proposed rule, we are not able to Security Act (42 U.S.C. 1302, 1395x,
of the amount of the beneficiary’s
acknowledge or respond to them 1395y(a), 1395hh, 1395kk, 1395rr, and
potential financial liability. If the exact
individually. However, in preparing the 1395ww(k)), and sec. 353 of the Public
type and extent of care is not known, Health Service Act (42 U.S.C. 263a).
final rule, we will consider all
the hospital must provide written notice
comments concerning the provisions of
to the beneficiary that explains that the § 405.2468 [Amended]
this proposed rule that we receive by
beneficiary will incur a coinsurance 2. In § 405.2468(f)(1), the reference
the date and time specified in the DATES
liability to the hospital that he or she ‘‘§ 413.86(b)’’ is removed and the
section of this preamble and respond to
would not incur if the facility were not reference ‘‘§ 413.75(b)’’ is added in its
those comments in the preamble to that
provider-based, an estimate based on place.
rule. We emphasize that section
typical or average charges for visits to
1886(e)(5) of the Act requires the final PART 412—PROSPECTIVE PAYMENT
the facility, and a statement that the
rule for FY 2006 to be published by SYSTEMS FOR INPATIENT HOSPITAL
patient’s actual liability will depend
August 1, 2005, and we will consider SERVICES
upon the actual services furnished by
only those comments that deal
the hospital. B. Part 412 is amended as follows:
While the information collection specifically with the matters discussed
in this proposed rule. 1. The authority citation for Part 412
requirements contained in this section continues to read as follows:
are subject to the PRA, the burden List of Subjects
associated with this requirement is Authority: Secs. 1102 and 1871 of the
42 CFR Part 405 Social Security Act (42 U.S.C. 1302 and
currently approved under OMB 1395hh).
approval no. 0938–0798. Administrative practice and
procedure, Health facilities, Health § 412.1 [Amended]
Section 485.610 Condition of
professions, Kidney diseases, Medicare, 2. In § 412.1(a)(1), the reference
Participation: Status and Location
Reporting and recordkeeping ‘‘§ 413.86’’ is removed and the reference
In order to be considered a relocation, requirements, Rural area, X-rays. ‘‘§§ 413.75 through 413.83’’ is added in
we are proposing under its place.
§ 485.610(d)(2)(ii) to require a CAH to 42 CFR Part 412
provide documentation demonstrating Administrative practice and § 412.2 [Amended]
that its plans to rebuild in a relocated procedure, Health facilities, Medicare, 3. In § 412.2—
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00156 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23461
a. In paragraph (f)(7), remove the 6. Section 412.75 is amended by b. Revising paragraph (d)(1)(i).
reference ‘‘§ 413.86’’ and add in its place adding a new paragraph (i) to read as c. Revising paragraph (d)(3).
the reference ‘‘§§ 413.75 through follows: The revisions and addition read as
413.83’’. follows:
b. At the end of paragraph (f)(8), add § 412.75 Determination of the hospital-
the following sentence: ‘‘For discharges specific rate for inpatient operating costs § 412.92 Special treatment: Sole
based on a Federal fiscal year 1987 base community hospitals.
occurring on or after October 1, 2005, period.
the additional payment is made based * * * * *
on the average sales price methodology * * * * * (d) Determining prospective payment
specified in Subpart K, Part 414 of this (i) Maintaining budget neutrality. rates for inpatient operating costs for
subchapter and the furnishing fee CMS makes an adjustment to the sole community hospitals. (1) * * *
specified in § 410.63 of this hospital-specific rate to ensure that (i) The Federal payment rate
subchapter.’’ changes to the DRG classifications and applicable to the hospitals as
4. Section 412.64 is amended by recalibrations of the DRG relative determined under subpart D of this part.
revising paragraph (k)(2) to read as weights are made in a manner so that * * * * *
follows: aggregate payments to section 1886(d) (3) Adjustment to payments. A sole
hospitals are not affected. community hospital may receive an
§ 412.64 Federal rates for inpatient 7. Section 412.77 is amended by— adjustment to its payments to take into
operating costs for Federal fiscal year 2005 a. Revising paragraph (a)(1).
and subsequent fiscal years. account a significant decrease in the
b. Adding a new paragraph (j). number of discharges, as described in
* * * * * The revision and addition read as paragraph (e) of this section.
(k) Midyear corrections to the wage follows:
index. * * * * *
§ 412.77 Determination of the hospital- 10. Section 412.96 is amended by—
* * * * *
(2)(i) Except as provided in paragraph specific rate for inpatient operating costs a. Revising paragraph (b)(1)
(k)(2)(ii) of this section, a midyear for sole community hospitals based on a introductory text.
Federal fiscal year 1996 base period. b. Revising paragraph (c) introductory
correction to the wage index is effective
prospectively from the date the change (a) Applicability. (1) This section text.
applies to a hospital that has been c. In paragraph (c)(1) introductory
is made to the wage index.
(ii) Effective October 1, 2005, a change designated as a sole community text, removing the reference ‘‘paragraph
to the wage index may be made hospital, as described in § 412.92. If the (g)’’ and adding in its place the
retroactively to the beginning of the 1996 hospital-specific rate exceeds the reference ‘‘paragraph (h)’’.
Federal fiscal year, if, for the fiscal year rate that would otherwise apply, that is, d. In paragraph (c)(2)(i), removing the
in question, CMS determines all of the either the Federal rate under § 412.64 reference ‘‘paragraph (h)’’ and adding in
following— (or under § 412.63 for periods prior to its place the reference ‘‘paragraph (i)’’.
(A) The fiscal intermediary or CMS FY 2005) or the hospital-specific rates e. Revising paragraph (g)(1).
made an error in tabulating data used for either FY 1982 under § 412.73 or FY f. In the introductory text of paragraph
for the wage index calculation; 1987 under § 412.75, this 1996 rate will (h), removing the phrase ‘‘paragraphs
(B) The hospital knew about the error be used in the payment formula set forth (g)(1) through (g)(4)’’ and adding in its
in its wage data and requested the fiscal in § 412.92(d)(1). place the phrase ‘‘paragraphs (h)(1)
intermediary and CMS to correct the through (h)(4)’’.
* * * * * g. In paragraph (h)(2), removing the
error both within the established (j) Maintaining budget neutrality.
schedule for requesting corrections to reference ‘‘(g)(1)’’ and adding in its place
CMS makes an adjustment to the the reference ‘‘(h)(1)’’.
the wage data (which is at least before hospital-specific rate to ensure that
the beginning of the fiscal year for the h. Removing paragraph (h)(4).
changes to the DRG classifications and i. In paragraph (i)(2), removing the
applicable update to the hospital recalibrations of the DRG relative
inpatient prospective payment system) reference ‘‘(h)(1)’’ and adding in its
weights are made in a manner so that place the reference ‘‘(i)(1)’’.
and using the established process; and aggregate payments to section 1886(d)
(C) CMS agreed before October 1 that j. Removing paragraph (i)(4).
hospitals are not affected. The revisions read as follows:
the fiscal intermediary or CMS made an
8. Section 412.90 is amended by
error in tabulating the hospital’s wage § 412.96 Special treatment: Referral
revising paragraph (e)(1) to read as
data and the wage index should be centers.
follows:
corrected. * * * * *
* * * * * § 412.90 General rules. (b) Criteria for cost reporting periods
5. Section 412.73 is amended by * * * * * beginning on or after October 1,
adding a new paragraph (f) to read as (e) Hospitals located in areas that are 1983.* * *
follows: reclassified from urban to rural. (1) CMS (1) The hospital is located in a rural
§ 412.73 Determination of the hospital- adjusts the rural Federal payment area (as defined in subpart D of this
specific rate based on a Federal fiscal year amounts for inpatient operating costs for part) and has the following number of
1982 base period. hospitals located in geographic areas beds, as determined under the
* * * * * that are reclassified from urban to rural provisions of § 412.105(b) available for
(f) Maintaining budget neutrality. as defined in subpart D of this part. This use:
CMS makes an adjustment to the adjustment is set forth in § 412.102. * * * * *
hospital-specific rate to ensure that * * * * * (c) Alternative criteria. For cost
changes to the DRG classifications and 9. Section 412.92 is amended by— reporting periods beginning on or after
recalibrations of the DRG relative a. In paragraph (a) introductory text, October 1, 1985, a hospital that does not
weights are made in a manner so that removing the reference ‘‘§ 412.83(b)’’ meet the criteria of paragraph (b) of this
aggregate payments to section 1886(d) and adding in its place the reference section is classified as a referral center
hospitals are not affected. ‘‘§ 412.64’’. if it is located in a rural area (as defined
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00157 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23462 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
in subpart D of this part) and meets the § 412.105 Special treatment: Hospitals that § 412.109 Special treatment: Essential
criteria specified in paragraphs (c)(1) incur indirect costs for graduate medical access community hospitals (EACHs).
and (c)(2) of this section and at least one education programs. * * * * *
of the three criteria specified in * * * * * (b) Location in a rural area. * * *
paragraphs (c)(3), (c)(4), and (c)(5) of (f) Determining the total number of (2) Is not deemed to be located in an
this section. full-time equivalent residents for cost urban area under subpart D of this part.
* * * * * reporting periods beginning on or after * * * * *
July 1, 1991. (1) * * *
(g) Hospital cancellation of referral (iv) * * * § 412.113 [Amended]
center status. (1) A hospital may at any (D) A rural hospital redesignated as
time request cancellation of its status as 15. In § 412.113—
urban after September 30, 2004, as a a. In paragraph (b)(2), the reference
a referral center and be paid prospective result of the most recent census data
payments per discharge based on the ‘‘§ 413.86 of this chapter.’’ is removed
and implementation of the new labor and the reference ‘‘§§ 413.75 through
applicable rural rate, as determined in market area definitions announced by
accordance with subpart D of this part. 413.83 of this subchapter.’’ is added in
OMB on June 6, 2003, may retain the its place.
* * * * * increases to its full-time equivalent b. In paragraph (b)(3), the reference
11. Section 412.103 is amended by resident cap that it received under ‘‘§ 413.86(c) of this chapter,’’ is removed
revising paragraphs (a)(1) and (a)(4) to paragraphs (f)(1)(iv)(A) and (f)(1)(vii) of and the reference ‘‘§ 413.75(c) of this
read as follows: this section while it was located in a subchapter,’’ is added in its place.
rural area.
§ 412.103 Special treatment: Hospitals § 412.115 [Amended]
located in urban areas and that apply for * * * * *
reclassification as rural. (xiii) For a hospital that was excluded 16. In § 412.115—
from the hospital inpatient prospective a. In paragraph (a), the reference
(a) * * * payment system under Part 413 of this ‘‘§ 413.80’’ is removed and the reference
(1) The hospital is located in a rural chapter and that subsequently changed ‘‘§ 413.89’’ is added in its place.
census tract of a Metropolitan Statistical to a hospital subject to the hospital b. At the end of paragraph (b), add the
Area (MSA) as determined under the inpatient prospective payment system following sentence: ‘‘For discharges
most recent version of the Goldsmith for cost reporting periods ending on or occurring on or after October 1, 2005,
Modification, the Rural-Urban before December 31, 1996, the total the additional payment is made based
Commuting Area codes, as determined number of full-time equivalent residents on the average sales price methodology
by the Office of Rural Health Policy for payment purposes is determined in specified in subpart K, part 414 of this
(ORHP) of the Health Resources and accordance with the provisions of this chapter and the furnishing fee specified
Services Administration, which is paragraph (f). In the case of a merger of in § 410.63 of this subchapter.’’
available via the ORHP Web site at: two or more hospitals, for purposes of 17. Section 412.230 is amended by—
http://www.ruralhealth.hrsa.gov or from this paragraph, the surviving hospital’s a. Redesignating paragraph (d)(2)(iii)
the U.S. Department of Health and number of full-time equivalent residents as paragraph (d)(2)(v).
Human Services, Health Resources and for payment purposes is equal to the b. Adding new paragraphs (d)(2)(iii)
Services Administration, Office of Rural aggregate number of the full-time and (d)(2)(iv).
Health Policy, 5600 Fishers Lane, Room equivalent resident count of each of the The additions read as follows:
9A–55, Rockville, MD 20857. merged hospitals as determined in
* * * * * § 412.230 Criteria for an individual hospital
accordance with the provisions of this seeking redesignation to another rural area
(4) For any period after September 30, paragraph (f). or an urban area.
2004 and before October 1, 2006, a CAH (xiv) Effective for discharges
occurring on or after October 1, 2005, an * * * * *
in a county that, in FY 2004, was not
urban hospital that reclassifies to a rural (d) Use of urban or other rural area’s
part of an MSA as defined by the Office
area under § 412.103 and then wage index.—* * *
of Management and Budget and was not
subsequently elects to revert back to (2) Appropriate wage data. * * *
considered to be urban under
urban classification will not be allowed (iii) For applications submitted for
§ 412.64(b)(3) of this chapter, but as of
to retain the adjustment to its IME FTE reclassifications effective in FY 2006, a
FY 2005 was included as part of an
resident cap that it received as a result campus of a multicampus hospital
MSA or was considered to be urban
of being reclassified as rural. system may seek reclassification to
under § 412.64(b)(3) of this chapter as a
another CBSA. As part of its
result of the most recent census data * * * * * reclassification request, the requesting
and implementation of the new MSA 13. Section 412.108 is amended by
entity may submit the composite wage
definitions announced by OMB on June revising paragraph (c)(1) to read as
data for the entire multicampus hospital
6, 2003, may be reclassified as being follows:
system as its hospital-specific data.
located in a rural area for purposes of (iv) For applications submitted for
§ 412.108 Special treatment: Medicare-
meeting the rural location requirement reclassifications effective in FY 2007
dependent, small rural hospitals.
under § 485.610(b) of this chapter if it and subsequent years, a campus of a
meets any of the requirements in * * * * *
(c) Payment methodology. * * * multicampus hospital system may seek
paragraphs (a)(1), (a)(2), or (a)(3) of this reclassification to another CBSA. As
(1) The Federal payment rate
section. part of its reclassification request, the
applicable to the hospital, as
* * * * * determined under subpart D of this part, requesting entity must submit campus-
12. Section 412.105 is amended by— subject to the regional floor defined in specific wage data for purposes of the
a. Adding a new paragraph § 412.70(c)(6). wage index comparison.
(f)(1)(iv)(D). * * * * * * * * * *
b. Adding a new paragraph (f)(1)(xiii). 14. Section 412.109 is amended by 18. Section 412.234 is amended by—
c. Adding a new paragraph (f)(1)(xiv). revising paragraph (b)(2) to read as a. In paragraph (a)(3)(ii), removing the
The additions read as follows: follows: phrase ‘‘fiscal years 2006 and thereafter’’
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00158 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23463
and adding in its place the phrase ‘‘fiscal 1. The authority citation for Part 413 Provider-based entity means a
year 2006’’. continued to read as follows: provider of health care services, or an
b. Adding a new paragraph (a)(3)(iii). Authority: Secs. 1102, 1812(d), 1814(b), RHC as defined in § 405.2401(b) of this
c. In paragraph (b)(1), removing the 1815, 1833(a), (i), and (n), 1871, 1881, 1883, chapter, that is either created by, or
phrase ‘‘or NECMA’’. and 1886 of the Social Security Act (42 acquired by, a main provider for the
The addition reads as follows: U.S.C. 1302, 1395d(d), 1395f(b), 1395g, purpose of furnishing health care
1395l(a), (i), and (n), 1395hh, 1395rr, 1395tt, services of a different type from those of
§ 412.234 Criteria for all hospitals in an
and 1395ww). the main provider under the ownership
urban county seeking redesignation to
another urban area. § 413.13 [Amended]
and administrative and financial control
(a) * * * of the main provider, in accordance
2. In § 413.13 (d)(1), the reference with the provisions of this section. A
(3) * * * ‘‘§ 413.80’’ is removed and the reference provider-based entity comprises both
(iii) For Federal fiscal year 2007 and
‘‘§ 413.89’’ is added in its place. the specific physical facility that serves
thereafter, hospitals located in counties
3. Section 413.40 is amended by— as the site of services of a type for which
that are in the same Consolidated
a. In paragraph(a)(3), under the
Statistical Area (CSA) (under the MSA payment could be claimed under the
definition of ‘‘Net inpatient operating
definitions announced by the OMB on Medicare or Medicaid program, and the
costs’’, removing the reference
June 6, 2003) as the urban area to which personnel and equipment needed to
‘‘§§ 413.85 and 413.86’’ and adding in its
they seek redesignation qualify as deliver the services at that facility. A
meeting the proximity requirement for place the reference ‘‘§§ 413.75 through
provider-based entity may, by itself, be
reclassification to the urban area to 413.83 and 413.85’’.
qualified to participate in Medicare as a
which they seek redesignation. b. Revising paragraph (c)(4)(iii).
provider under § 489.2 of this chapter,
* * * * * § 413.40 Ceiling on the rate of increase in and the Medicare conditions of
hospital inpatient costs. participation do apply to a provider-
§ 412.278 [Amended] based entity as an independent entity.
* * * * *
19. In § 412.278(b)(1), the phrase (c) Costs subject to the ceiling—* * * * * * * *
‘‘Office of Payment Policy’’ is removed (4) Target amounts. * * * (b) Provider-based determinations.—
and the phrase ‘‘Hospital and (iii) For cost reporting periods * * *
Ambulatory Policy Group’’ is added in beginning on or after October 1, 1997 (3)(i) Except as specified in
its place. through September 30, 2002, in the case paragraphs (b)(2) and (b)(5) of this
20. Section 412.304 is amended by of a psychiatric hospital or unit, section, if a potential main provider
revising paragraph (a) to read as follows: rehabilitation hospital or unit, or long- seeks a determination of provider-based
§ 412.304 Implementation of the capital term care hospital, the target amount is status for a facility that is located on the
prospective payment system. the lower of the amounts specified in campus of the potential main provider,
(a) General rule. As described in paragraph (c)(4)(iii)(A) or paragraph the provider would be required to
§§ 412.312 through 412.370, effective (c)(4)(iii)(B) of this section. submit an attestation stating that the
with cost reporting periods beginning * * * * * facility meets the criteria in paragraph
on or after October 1, 1991, CMS pays 4. Section 413.65 is amended by— (d) of this section and, if it is a hospital,
an amount determined under the capital a. Reprinting the introductory text of also attest that it will fulfill the
prospective payment system for each paragraph (a)(1)(ii) and adding a new obligations of hospital outpatient
inpatient hospital discharge as defined paragraph (a)(1)(ii)(L). departments and hospital-based entities
in § 412.4. This amount is in addition to b. Revising the definition of described in paragraph (g) of this
the amount payable under the ‘‘Provider-based entity’’ under paragraph section. The provider seeking such a
prospective payment system for (a)(2). determination would also be required to
inpatient hospital operating costs as c. Revising paragraphs (b)(3)(i) and maintain documentation of the basis for
determined under subpart D of this part. (b)(3)(ii). its attestations and to make that
* * * * * d. Revising paragraphs (e)(1) documentation available to CMS and to
introductory text and (e)(1)(i). CMS contractors upon request. If the
§ 412.521 [Amended] e. Revising paragraph (e)(3). facility is operated as a joint venture,
21. In § 412.521— f. Revising paragraph (g)(7). the provider would also have to attest
a. Under paragraph (b)(2)(i), the The addition and revision read as that it will comply with the
reference ‘‘§§ 413.85, 413.86, and 413.87 follows: requirements of paragraph (f) of this
of this subchapter.’’ is removed and the section.
reference ‘‘§§ 413.75 through 413.83, § 413.65 Requirements for a determination (ii) If the facility is not located on the
413.85, and 413.87 of this subchapter.’’ that a facility or an organization has
campus of the potential main provider,
is added in its place. provider-based status.
the provider seeking a determination
b. Under paragraph (b)(2)(ii), the (a) Scope and definitions. * * * would be required to submit an
reference ‘‘§ 413.80’’ is removed and the (1) * * * attestation stating that the facility meets
reference ‘‘§ 413.89’’ is added in its (ii) The determinations of provider- the criteria in paragraphs (d) and (e) of
place. based status for payment purposes this section, and if the facility is
described in this section are not made operated under a management contract,
PART 413—PRINCIPLES OF as to whether the following facilities are the requirements of paragraph (h) of this
REASONABLE COST provider-based: section. If the potential main provider is
REIMBURSEMENT; PAYMENT FOR * * * * * a hospital, the hospital also would be
END-STAGE RENAL DISEASE (L) Rural health clinics (RHCs) required to attest that it will fulfill the
SERVICES; PROSPECTIVELY affiliated with hospitals having 50 or obligations of hospital outpatient
DETERMINED PAYMENT RATES FOR more beds. departments and hospital-based entities
SKILLED NURSING FACILITIES
* * * * * described in paragraph (g) of this
C. Part 413 is amended as follows: (2) Definitions. * * * section. The provider would be required
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00159 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23464 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
to supply documentation of the basis for least 75 percent of the patients served visits to the facility, and a statement that
its attestations to CMS at the time it by the main provider; or the patient’s actual liability will depend
submits its attestations. (B) At least 75 percent of the patients upon the actual services furnished by
* * * * * served by the facility or organization the hospital.
(e) * * * who required the type of care furnished (ii) The notice must be one that the
(1) Operation under the ownership by the main provider received that care beneficiary can read and understand.
and control of the main provider. The from that provider (for example, at least (iii) If the beneficiary is unconscious,
facility or organization seeking 75 percent of the patients of an RHC under great duress, or for any other
provider-based status is operated under seeking provider-based status received reason unable to read a written notice
the ownership and control of the main inpatient hospital services from the and understand and act on his or her
provider, as evidenced by the following: hospital that is the main provider). own rights, the notice must be provided,
(i) The business enterprise that (iv) If the facility or organization is before the delivery of services, to the
constitutes the facility or organization is unable to meet the criteria in paragraph beneficiary’s authorized representative.
100 percent owned by the main (e)(3)(iii)(A) or paragraph (e)(3)(iii)(B) of (iv) In cases where a hospital
provider. this section because it was not in outpatient department provides
* * * * * operation during all of the 12-month examination or treatment that is
(3) Location. The facility or period described in paragraph (e)(3)(iii) required to be provided by the
organization meets the requirements in of this section, the facility or antidumping rules of § 489.24 of this
paragraph (e)(3)(i), (e)(3)(ii), (e)(3)(iii), organization is located in a zip code chapter, notice, as described in this
(e)(3)(iv), or, in the case of an RHC, area included among those that, during paragraph (g)(7), must be given as soon
paragraph (e)(3)(v) of this section, and all of the 12-month period described in as possible after the existence of an
the requirements in paragraph (e)(3)(vi) paragraph (e)(3)(iii) of this section, emergency has been ruled out or the
of this section. accounted for at least 75 percent of the emergency condition has been
(i) The facility or organization is patients served by the main provider. stabilized.
located within a 35-mile radius of the (v) Both of the following criteria are * * * * *
campus of the hospital or CAH that is met: 5. Section 413.75 is amended in
the potential main provider. (A) The facility or organization is an paragraph (b) by revising paragraph (1)
(ii) The facility or organization is RHC that is otherwise qualified as a under the definition of ‘‘Medicare GME
owned and operated by a hospital or provider-based entity of a hospital that affiliated group’’ to read as follows:
CAH that has a disproportionate share has fewer than 50 beds, as determined
under § 412.105(b) of this chapter; and § 413.75 Direct GME payments: General
adjustment (as determined under requirements.
§ 412.106 of this chapter) greater than (B) The hospital with which the
facility or organization has a provider- * * * * *
11.75 percent and is described in
based relationship is located in a rural (b) * * *
§ 412.106(c)(2) of this chapter
area, as defined in Subpart D of Part 412 Medicare GME affiliated group
implementing section 1886(e)(5)(F)(i)(II)
of this subchapter. means—
of the Act and is—
(vi) A facility or organization may (1) Two or more hospitals that are
(A) Owned or operated by a unit of
qualify for provider-based status under located in the same urban or rural area
State or local government;
this section only if the facility or (as those terms are defined in subpart D
(B) A public or nonprofit corporation
organization and the main provider are of part 412 of this subchapter.
that is formally granted governmental
powers by a unit of State or local located in the same State or, when * * * * *
government; or consistent with the laws of both States,
§ 413.77 [Amended]
(C) A private hospital that has a in adjacent States.
6. In § 413.77, under paragraph
contract with a State or local * * * * *
(e)(1)(iii), the reference ‘‘§ 412.62(f)(1)(i)
government that includes the operation (g) Obligations. * * *
of this chapter.’’ is removed and the
of clinics located off the main campus (7) When a Medicare beneficiary is
reference ‘‘subpart D of part 412 of this
of the hospital to assure access in a treated in a hospital outpatient
subchapter’’. is added in its place.
well-defined service area to health care department that is not located on the
7. Section 413.79 is amended by—
services for low-income individuals main provider’s campus, the treatment
a. Revising paragraph (a)(10).
who are not entitled to benefits under is not required to be provided by the
b. Revising the introductory text of
Medicare (or medical assistance under a antidumping rules in § 489.24 of this
paragraph (c)(2).
Medicaid State plan). chapter, and the beneficiary will incur
c. In paragraph (c)(3)(i), removing the
(iii) The facility or organization a coinsurance liability for an outpatient
reference ‘‘§ 412.62(f)(iii)’’ and adding in
demonstrates a high level of integration visit to the hospital as well as for the
its place the reference ‘‘subpart D of part
with the main provider by showing that physician service, the following
412 of this subchapter’’.
it meets all of the other provider-based requirements must be met: d. Adding a new paragraph (c)(6).
criteria and demonstrates that it serves (i) The hospital must provide written e. Revising paragraph (e)(1)(iv).
the same patient population as the main notice to the beneficiary, before the f. In the introductory text of paragraph
provider, by submitting records showing delivery of services, of— (k), removing the reference ‘‘(k)(6)’’ and
that, during the 12-month period (A) The amount of the beneficiary’s adding in its place the reference ‘‘(k)(7)’’.
immediately preceding the first day of potential financial liability; or g. Adding a new paragraph (k)(7).
the month in which the application for (B) If the exact type and extent of care The revisions and additions read as
provider-based status is filed with CMS, needed are not known, an explanation follows:
and for each subsequent 12-month that the beneficiary will incur a
period— coinsurance liability to the hospital that § 413.79 Direct GME payments:
(A) At least 75 percent of the patients he or she would not incur if the facility Determination of the weighted number of
served by the facility or organization were not provider-based, an estimate FTE residents.
reside in the same zip code areas as at based on typical or average charges for * * * * *
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00160 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23465
(a) * * * paragraph (k) with a hospital located in ‘‘§§ 413.75 through 413.83’’ is added in
(10) Effective for portions of cost a rural area and that rural area its place.
reporting periods beginning on or after subsequently becomes an urban area
October 1, 2004, if a hospital can due to the most recent census data and § 415.152 [Amended]
document that a resident implementation of the new labor market 6. In § 415.152—
simultaneously matched for one year of area definitions announced by OMB on a. In paragraph (2) of the definition of
training in a particular specialty June 6, 2003, the urban hospital may ‘‘Approved graduate medical education
program, and for a subsequent year(s) of continue to adjust its FTE resident limit (GME) program’’, the reference
training in a different specialty program, in accordance with this paragraph (k) ‘‘§ 413.86(b)’’ is removed and the
the resident’s initial residency period for the rural track programs established reference ‘‘§ 413.75(b)’’ is added in its
will be determined based on the period prior to the adoption of such new labor place.
of board eligibility for the specialty market area definitions. In order to b. In the definition of ‘‘Teaching
associated with the program for which receive an adjustment to its FTE setting’’, the reference ‘‘§ 413.86,’’ is
the resident matched for the subsequent resident cap for a new rural track removed and the reference ‘‘§§ 413.75
year(s) of training. Effective for cost residency program, the urban hospital through 413.83,’’ is added in its place.
reporting periods beginning on or after must establish a rural track program § 415.160 [Amended]
October 1, 2005, if a hospital can with hospitals that are designated rural
7. In § 415.160—
document that a particular resident, based on the most recent geographical
a. In paragraph (c)(2), the reference
prior to beginning the first year of location designations adopted by CMS.
‘‘§ 413.86’’ is removed and the reference
residency training, matched in a * * * * * ‘‘§ 413.78’’ is added in its place.
specialty program for which training b. In paragraph (d)(2), the reference
would begin at the conclusion of the § 413.87 [Amended]
‘‘§ 413.86’’ is removed and the reference
first year of training, that resident’s 8. In § 413.87(d) introductory text, the
‘‘§§ 413.75 through 413.83’’ is added in
initial residency period will be reference ‘‘§ 413.86(d)(4)’’ is removed
and the reference ‘‘§ 413.76(d)(4)’’ is its place.
determined in the resident’s first year of
training based on the period of board added in its place. § 415.174 [Amended]
eligibility associated with the specialty § 413.178 [Amended] 8. In § 415.174(a)(1), the reference
program for which the resident matched 9. In § 413.178— ‘‘§ 413.86.’’ is removed and the phrase
for subsequent training year(s). a. In paragraph (a), the reference ‘‘§§ 413.75 through 413.83.’’ is added in
* * * * * ‘‘§ 413.80(b)’’ is removed and the its place.
(c) Unweighted FTE counts. * * * reference ‘‘§ 413.89(b)’’ is added in its § 415.200 [Amended]
(2) Determination of the FTE resident place.
cap. Subject to the provisions of 9. In § 415.200(a), the reference
b. In paragraph (b), the reference
paragraphs (c)(3) through (c)(6) of this ‘‘§ 413.80’’ is removed and the reference ‘‘§ 413.86’’ is removed and the reference
section and § 413.81, for purposes of ‘‘§ 413.89’’ is added in its place. ‘‘§§ 413.75 through 413.83’’ is added in
determining direct GME payment— its place.
* * * * * PART 415—SERVICES FURNISHED BY § 415.204 [Amended]
(6) FTE resident caps for rural PHYSICIANS IN PROVIDERS,
10. In § 415.204(a)(2), the reference
hospitals that are reclassified as urban. SUPERVISING PHYSICIANS IN
‘‘§ 413.86’’ is removed and the reference
A rural hospital redesignated as urban TEACHING SETTINGS, AND
‘‘§§ 413.75 through 413.83’’ is added in
after September 30, 2004, as a result of RESIDENTS IN CERTAIN SETTINGS
its place.
the most recent census data and D. Part 415 is amended as follows:
implementation of the new MSA 1. The authority citation for part 415 § 415.206 [Amended]
definitions announced by OMB on June continued to read as follows: 11. In § 415.206(a), the reference
6, 2003, may retain the increases to its ‘‘§ 413.86(f)(1)(iii)’’ is removed and the
Authority: Secs. 1102 and 1871 of the
FTE resident cap that it received under Social Security Act (42 U.S.C. 1302 and reference ‘‘§ 413.78’’ is added in its
paragraphs (c)(2)(i), (e)(1)(iii), and (e)(3) 1395hh). place.
of this section while it was located in a
rural area. § 415.55 [Amended] § 415.208 [Amended]
* * * * * 2. In § 415.55(a)(5), the reference 12. In § 415.208—
(e) New medical residency training ‘‘§ 413.86’’ is removed and the reference a. In paragraph (b)(1), the reference
programs. * * * ‘‘§§ 413.75 through 413.83’’ is added in ‘‘§ 413.86’’ is removed and the reference
(1) * * * its place. ‘‘§§ 413.75 through 413.83’’ is added in
(iv) An urban hospital that qualifies its place.
§ 415.70 [Amended] b. In paragraph (b)(4), the reference
for an adjustment to its FTE cap under
paragraph (e)(1) of this section is 3. In § 415.70(a)(2), the reference ‘‘§ 413.86’’ is removed and the reference
permitted to be part of a Medicare GME ‘‘§ 413.86’’ is removed and the reference ‘‘§§ 413.75 through 413. 83’’ is added in
affiliated group for purposes of ‘‘§§ 413.75 through 413.83’’ is added in its place.
establishing an aggregate FTE cap only its place.
PART 419—PROSPECTIVE PAYMENT
if the adjustment that results from the § 415.102 [Amended] SYSTEM FOR OUTPATIENT
affiliation is an increase to the urban 4. In § 415.102(c)(1), the reference DEPARTMENT SERVICES
hospital’s FTE cap. ‘‘§ 413.86’’ is removed and the reference
* * * * * ‘‘§§ 413.75 through 413.83’’ is added in F. Part 419 is amended as follows:
(k) Residents training in rural track its place. 1. The authority citation for part 419
programs. * * * continues to read as follows:
(7) If an urban hospital had § 415.150 [Amended] Authority: Secs. 1102, 1833(t), and 1871 of
established a rural track training 5. In § 415.150(b), the reference the Social Security Act (42 U.S.C. 1302,
program under the provisions of this ‘‘§ 413.86’’ is removed and the phrase 1395l(t), and 1395hh).
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00161 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23466 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
§ 419.2 [Amended] (b)(2) of this section and is located in a Dated: April 19, 2005.
2. In § 419.2— county that, in FY 2004, was not part of Mark B. McClellan,
a. In paragraph (c)(1), the reference a Metropolitan Statistical Area as Administrator, Centers for Medicare &
‘‘§ 413.86’’ is removed and the reference defined by the Office of Budget Medicaid Services.
‘‘§§ 413.75 through 413.83’’ is added in Management and was not considered to Dated: April 22, 2005.
its place. be urban under § 412.63(b)(3) of this Michael O. Leavitt,
b. In paragraph (c)(6), the reference chapter, but as of FY 2005 was included Secretary.
‘‘§ 413.80(b)’’ is removed and the as part of such an MSA or was
reference ‘‘§ 413.89(b)’’ is added in its [Editorial Note: The following Addendum
considered to be urban under and appendixes will not appear in the Code
place. § 412.64(b)(3) of this chapter, as a result of Federal Regulations.]
of the most recent census data and
PART 422—SPECIAL RULES FOR implementation of the new MSA Addendum—Proposed Schedule of
SERVICES FURNISHED BY Standardized Amount Effective With
definitions announced by OMB on June
NONCONTRACT PROVIDERS Discharges Occurring On or After
6, 2003.
G. Part 422 is amended as follows: October 1, 2005 and Update Factors
* * * * * and Rate-of-Increase Percentages
1. The authority citation of part 422
(d) Standard: Relocation of CAHs with Effective With Cost Reporting Periods
continues to read as follows:
a necessary provider designation. A Beginning On or After October 1, 2005
Authority: Secs. 1102 and 1871 of the CAH that has a necessary provider
Social Security Act (42 U.S.C. 1302 and (If you choose to comment on issues in this
certification from the State and places a section, please include the caption
1395hh).
new facility in service after January 1, ‘‘Operating Payment Rates’’ at the beginning
§ 422.214 [Amended] 2006, can continue to meet the location of your comment.)
2. In § 422.214— requirement of paragraph (c) of this I. Summary and Background
a. In paragraph (b), the phrase section based on the necessary provider
certification only if the new facility In this Addendum, we are setting forth the
‘‘§§ 412.105(g) and 413.86(d))’’ is proposed amounts and factors for
removed and the phrase ‘‘§§ 412.105(g) meets either the requirement for determining prospective payment rates for
and 413.76))’’ is added in its place. replacement in the same location in Medicare hospital inpatient operating costs
b. In paragraph (b), the phrase paragraph (d)(1) of this section or the and Medicare hospital inpatient capital-
‘‘Section 413.86 (d)’’ is removed and the requirement for a relocation of a CAH in related costs. We are also setting forth the
phrase ‘‘Section 413.76’’ is added in its paragraph (d)(2) of this section. proposed rate-of-increase percentages for
place. updating the target amounts for hospitals and
(1) A new construction of a CAH will hospital units excluded from the IPPS.
§ 422.216 [Amended] be considered as a replacement facility For discharges occurring on or after
if the construction is undertaken within October 1, 2005, except for SCHs, MDHs, and
3. In § 422.216(a)(4), the reference
250 yards of the current building or hospitals located in Puerto Rico, each
‘‘§§ 412.105(g) and 413.86(d)’’ is hospital’s payment per discharge under the
contiguous to the current CAH on land
removed and the reference IPPS will be based on 100 percent of the
owned by the CAH prior to December 8,
‘‘§§ 412.105(g) and 413.76’’ is added in Federal national rate, which will be based on
2003.
its place. the national adjusted standardized amount.
(2) A new facility CAH will be This amount reflects the national average
PART 485—CONDITIONS OF considered as a relocation of a CAH if, hospital costs per case from a base year,
PARTICIPATION: SPECIALIZED at the relocated site— updated for inflation.
PROVIDERS SCHs are paid based on whichever of the
(i) The CAH serves at least 75 percent following rates yields the greatest aggregate
G. Part 485 is amended as follows: of the same service area that it served payment: the Federal national rate; the
1. The authority citation for Part 485 prior to its relocation, provides at least updated hospital-specific rate based on FY
continues to read as follows: 75 percent of the same services that it 1982 costs per discharge; the updated
provided prior to the relocation, and is hospital-specific rate based on FY 1987 costs
Authority: Secs. 1102 and 1871 of the per discharge; or the updated hospital-
Social Security Act (42 U.S.C. 1302 and staffed by 75 percent of the same staff
specific rate based on FY 1996 costs per
1395(hh)). (including medical staff, contracted
discharge.
staff, and employees); and Under section 1886(d)(5)(G) of the Act,
2. Section 485.610 is amended by—
a. In paragraph (b)(1)(i), removing the (ii) The CAH provides documentation MDHs are paid based on the Federal national
reference ‘‘§ 412.62(f)’’ and adding in its demonstrating that its plans to rebuild rate or, if higher, the Federal national rate
in the relocated area were undertaken plus 50 percent of the difference between the
place the reference ‘‘§ 412.64(b)’’. Federal national rate and the updated
b. In paragraph (b)(1)(ii), removing the prior to December 8, 2003.
hospital-specific rate based on FY 1982 or FY
reference ‘‘§ 412.63(b)’’ and adding in its (3) If a CAH that has a necessary 1987 costs per discharge, whichever is
place the reference ‘‘§ 412.64(b)’’. provider certification from the State higher. MDHs do not have the option to use
c. Revising paragraph (b)(3). places a new facility in service on or their FY 1996 hospital-specific rate.
d. Adding a new paragraph (d). after January 1, 2006, and does not meet For hospitals in Puerto Rico, the payment
The revisions and additions read as per discharge is based on the sum of 25
either the requirements in paragraph percent of a Puerto Rico rate that reflects base
follows: (d)(1) or paragraph (d)(2) of this section, year average costs per case of Puerto Rico
§ 485.610 Condition of participation: the action will be considered a cessation hospitals and 75 percent of the Federal
Status and location. of business as described in national rate. (See section II.D.3. of this
* * * * * § 489.52(b)(3). Addendum for a complete description.)
As discussed below in section II. of this
(b) * * * (Catalog of Federal Domestic Assistance Addendum, we are proposing to make
(3) Effective only for October 1, 2004 Program No. 93.773, Medicare—Hospital changes in the determination of the
through September 30, 2006, the CAH Insurance; and Program No. 93.774, prospective payment rates for Medicare
does not meet the location requirements Medicare—Supplementary Medical inpatient operating costs for FY 2006. The
in either paragraph (b)(1) or paragraph Insurance Program) proposed changes, to be applied
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00162 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23467
prospectively effective with discharges • An adjustment to ensure the effects of section IV of the preamble to this proposed
occurring on or after October 1, 2005, affect geographic reclassification are budget rule. We are proposing to continue with our
the calculation of the Federal rates. In section neutral, as provided for in section previous methodology and round the labor-
III. of this Addendum, we discuss our 1886(d)(8)(D) of the Act, by removing the FY related share to 69.7 percent for purposes of
proposed changes for determining the 2005 budget neutrality factor and applying a establishing the labor-related and nonlabor-
prospective payment rates for Medicare revised factor; related portions of the standardized amount.
inpatient capital-related costs for FY 2006. • An adjustment to apply the new outlier As discussed in section IV. of the preamble
Section IV. of this Addendum sets forth our offset by removing the FY 2005 outlier offset to this proposed rule, we are also proposing
proposed changes for determining the rate-of- and applying a new offset; to rebase the current labor-related share for
increase limits for hospitals excluded from • An adjustment to ensure the effects of the Puerto Rico-specific amounts for FY
the IPPS for FY 2006. Section V. of this the rural community hospital demonstration 2006. Since the proposed rebased Puerto Rico
Addendum sets forth policies on payment for required under section 410A of Pub. L. 108– labor-related share has not yet been
blood clotting factors administered to 173 are budget neutral, as required under calculated, the proposed standardized
hemophilia patients. The tables to which we section 410A(c)(2) of Pub. L. 108–173. amounts that appear in Table 1C of this
refer in the preamble of this proposed rule Addendum for providers with a wage index
A. Calculation of the Adjusted Standardized
are presented in section VI. of this greater than 1.0000 reflect the current (FY
Amount
Addendum. 2005) labor-related share for the Puerto Rico-
1. Standardization of Base-Year Costs or specific amounts of 71.3 percent for FY 2006.
II. Proposed Changes to Prospective Payment Target Amounts
Rates for Hospital Inpatient Operating Costs However, in the final rule, if we adopt our
for FY 2006 The national standardized amount is based proposal to rebase the labor-related share for
on per discharge averages of adjusted Puerto Rico, these amounts would reflect this
The basic methodology for determining hospital costs from a base period (section revised labor-related share. We are proposing
prospective payment rates for hospital 1886(d)(2)(A) of the Act) or, for Puerto Rico, to adjust 62 percent of the national
inpatient operating costs for FY 2005 and adjusted target amounts from a base period standardized amount and 62 percent of the
subsequent fiscal years is set forth at (section 1886(d)(9)(B)(i) of the Act), updated Puerto Rico-specific amount by the wage
§ 412.64. The basic methodology for and otherwise adjusted in accordance with index for all hospitals whose wage indexes
determining the prospective payment rates the provisions of section 1886(d) of the Act. are less than or equal to 1.0000. For all
for hospital inpatient operating costs for The September 1, 1983 interim final rule (48 hospitals whose wage values are greater than
hospitals located in Puerto Rico for FY 2005 FR 39763) contained a detailed explanation 1.0000, we are proposing to adjust the
and subsequent fiscal years is set forth at of how base-year cost data (from cost national standardized amount by a labor-
§§ 412.211 and 412.212. Below we discuss reporting periods ending during FY 1981) related share of 69.7 percent.
the factors used for determining the were established in the initial development
prospective payment rates. 2. Computing the Average Standardized
of standardized amounts for the IPPS. The
In summary, the proposed standardized Amount
September 1, 1987 final rule (52 FR 33043
amounts set forth in Tables 1A, 1B, 1C, and and 33066) contains a detailed explanation of Sections 1886(d)(3)(A)(iv) of the Act
1D of section VI. of this Addendum reflect— how the target amounts were determined, previously required the Secretary to compute
• Equalization of the standardized and how they are used in computing the the following two average standardized
amounts for urban and other areas at the Puerto Rico rates. amounts for discharges occurring in a fiscal
level computed for large urban hospitals Sections 1886(d)(2)(B) and (d)(2)(C) of the year: One for hospitals located in large urban
during FY 2004 and onward, as provided for Act require us to update base-year per areas and one for hospitals located in other
under section 1886(d)(3)(A)(iv) of the Act, discharge costs for FY 1984 and then areas. In accordance with section
updated by the applicable percentage standardize the cost data in order to remove 1886(b)(3)(B)(i) of the Act, the large urban
increase required under sections the effects of certain sources of cost average standardized amount was 1.6 percent
1886(b)(3)(B)(i)(XIX) and 1886(b)(3)(B)(vii) of variations among hospitals. These effects higher than the other area average
the Act. include case-mix, differences in area wage standardized amount. In addition, under
• The two labor-related shares that are levels, cost-of-living adjustments for Alaska sections 1886(d)(9)(B)(iii) and
applicable to the standardized amounts, and Hawaii, indirect medical education 1886(d)(9)(C)(i) of the Act, the average
depending on whether the hospital’s costs, and costs to hospitals serving a standardized amounts per discharge were
payments would be higher with a lower (in disproportionate share of low-income determined for hospitals located in urban
the case of a wage index below 1.0000) or patients. and rural areas in Puerto Rico.
higher (in the case of a wage index above Under section 1886(d)(3)(E) of the Act, the Section 402(b) of Pub. L. 108–7 required
1.0000) labor share, as provided for under Secretary estimates, from time-to-time, the that, effective for discharges occurring on or
sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) proportion of hospitals’ costs that are after April 1, 2003, and before October 1,
of the Act; attributable to wages and wage-related costs. 2003, the Federal rate for all IPPS hospitals
• Updates of 3.2 percent for all areas (that The standardized amount is divided into would be based on the large urban
is, the full market basket percentage increase labor-related and nonlabor-related amounts; standardized amount. Subsequently, Pub. L.
of 3.2 percent, as required by section only the proportion considered the labor- 108–89 extended section 402(b) of Pub. L.
1886(b)(3)(B)(i)(XIX) of the Act, and related amount is adjusted by the wage 108–7 beginning with discharges on or after
reflecting the requirements of section index. Section 403 of Pub. L. 108–173 revises October 1, 2003 and before March 31, 2004.
1886(b)(3)(B)(vii) of the Act to reduce the the proportion of the standardized amount Finally, section 401(a) of Pub. L. 108–173
applicable percentage increase by 0.4 that is considered labor-related. Specifically, amended section 1886(d)(3)(A)(iv) of the Act
percentage points for hospitals that fail to section 1886(d)(3)(E) of the Act (as amended to require that, beginning with FY 2004 and
submit data, in a form and manner specified by section 403 of Pub. L. 108–173) requires thereafter, an equal standardized amount is
by the Secretary, relating to the quality of that 62 percent of the standardized amount to be computed for all hospitals at the level
inpatient care furnished by the hospital; be adjusted by the wage index, unless doing computed for large urban hospitals during FY
• An adjustment to ensure the proposed so would result in lower payments to a 2003, updated by the applicable percentage
DRG recalibration and wage index update hospital than would otherwise be made. update. This provision in effect makes
and changes are budget neutral, as provided (Section 403(b) of Pub. L. 108–173 extended permanent the equalization of the
for under sections 1886(d)(4)(C)(iii) and this provision to the Puerto Rico standardized amounts at the level of the
1886(d)(3)(E) of the Act, by applying new standardized amounts.) We are proposing to previous standardized amount for large urban
budget neutrality adjustment factors to the update the labor-related share to 69.7 percent hospitals. Section 401(c) of Pub. L. 108–173
standardized amount; for FY 2006, as discussed in section IV.B.3. also amended section 1886(d)(9)(A) of the
• An adjustment to ensure the effects of of the preamble to this proposed rule. We Act to equalize the Puerto Rico-specific
the special transition measures adopted in note that the revised labor-related share that urban and rural area rates. Accordingly, we
relation to the implementation of new labor we are proposing for FY 2006 was are providing in this proposed rule for a
market areas are budget neutral; determined to be 69.731, as discussed in single national standardized amount and a
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00163 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23468 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
single Puerto Rico standardized amount for Budget neutrality is determined by Section 4410 of Pub. L. 105–33 provides
FY 2006. comparing aggregate IPPS payments before that, for discharges on or after October 1,
3. Updating the Average Standardized and after making the changes that are 1997, the area wage index applicable to any
Amount required to be budget neutral (for example, hospital that is not located in a rural area
reclassifying and recalibrating the DRGs, may not be less than the area wage index
In accordance with section updating the wage data, and geographic applicable to hospitals located in rural areas
1886(d)(3)(A)(iv)(II) of the Act, we are reclassifications). We include outlier in that State. This provision is required by
proposing to update the equalized payments in the payment simulations section 4410(b) of Pub. L. 105–33 to be
standardized amount for FY 2006 by the full because outliers may be affected by changes budget neutral. Therefore, we include the
estimated market basket percentage increase in these payment parameters. effects of this provision in our calculation of
for hospitals in all areas, as specified in We are also proposing to adjust the the wage update budget neutrality factor. As
section 1886(b)(3)(B)(i)(XIX) of the Act, as standardized amount this year by an amount discussed in the FY 2005 IPPS final rule (69
amended by section 501 of Pub. L. 108–173. estimated to ensure that aggregate IPPS FR 49110), we are in the second year of the
The percentage change in the market basket payments do not exceed the amount of 3-year provision that uses an imputed wage
reflects the average change in the price of payments that would have been made in the index floor for States that have no rural areas
goods and services purchased by hospitals to absence of the rural community hospital and States that have geographic rural areas,
furnish inpatient care. The most recent demonstration required under section 410A but that have no hospitals actually classified
forecast of the hospital market basket of Pub. L. 108–173. This demonstration is as rural. We are also adjusting for the effects
increase for FY 2006 is 3.2 percent. Thus, for required to be budget neutral under section of this provision in our calculation of the
FY 2006, the proposed update to the average 410A(c)(2) of Pub. L. 108–173. wage update budget neutrality factor.
standardized amount is 3.2 percent for
a. Recalibration of DRG Weights and Updated To comply with the requirement that DRG
hospitals in all areas.
Wage Index—Budget Neutrality Adjustment reclassification and recalibration of the
Section 1886(b)(3)(B) of the Act specifies
relative weights be budget neutral, and the
the mechanism used to update the Section 1886(d)(4)(C)(iii) of the Act requirement that the updated wage index be
standardized amount for payment for specifies that, beginning in FY 1991, the budget neutral, we used FY 2004 discharge
inpatient hospital operating costs. Section annual DRG reclassification and recalibration data to simulate payments and compared
1886(b)(3)(B)(vii) of the Act, as amended by of the relative weights must be made in a aggregate payments using the FY 2005
section 501(b) of Pub. L. 108–173, provides manner that ensures that aggregate payments relative weights and wage index to aggregate
for a reduction of 0.4 percentage points to the to hospitals are not affected. As discussed in
update percentage increase (also known as payments using the proposed FY 2006
section II. of the preamble, we normalized relative weights and wage index. The same
the market basket update) for each of FYs the recalibrated DRG weights by an
2005 through 2007 for any ‘‘subsection (d) methodology was used for the FY 2005
adjustment factor, so that the average case budget neutrality adjustment.
hospital’’ that does not submit data on a set weight after recalibration is equal to the
of 10 quality indicators established by the Based on this comparison, we computed a
average case weight prior to recalibration. proposed budget neutrality adjustment factor
Secretary as of November 1, 2003. The statute However, equating the average case weight
also provides that any reduction will apply equal to 1.002494. We also are proposing to
after recalibration to the average case weight adjust the Puerto Rico-specific standardized
only to the fiscal year involved, and will not before recalibration does not necessarily
be taken into account in computing the amount for the effect of DRG reclassification
achieve budget neutrality with respect to and recalibration. We computed a proposed
applicable percentage increase for a aggregate payments to hospitals because
subsequent fiscal year. This measure budget neutrality adjustment factor for the
payments to hospitals are affected by factors Puerto Rico-specific standardized amount
establishes an incentive for hospitals to other than average case weight. Therefore, as
submit data on quality measures established equal to 0.999003. These proposed budget
we have done in past years, we are proposing neutrality adjustment factors are applied to
by the Secretary. The proposed standardized to make a budget neutrality adjustment to
amounts in Tables 1A through 1D of section the standardized amounts without removing
ensure that the requirement of section the effects of the FY 2005 budget neutrality
VI. of this Addendum reflect these 1886(d)(4)(C)(iii) of the Act is met.
differential amounts. adjustments. In addition, as discussed in
Section 1886(d)(3)(E) of the Act requires us section V.C.2. of the preamble to this
Although the update factors for FY 2006 to update the hospital wage index on an
are set by law, we are required by section proposed rule, we are proposing to apply the
annual basis beginning October 1, 1993. This same DRG reclassification and recalibration
1886(e)(3) of the Act to report to the Congress provision also requires us to make any
our initial recommendation of update factors budget neutrality factor of 0.999003 to the
updates or adjustments to the wage index in hospital-specific rates that are effective for
for FY 2006 for both IPPS hospitals and
a manner that ensures that aggregate cost reporting periods beginning on or after
hospitals and hospital units excluded from
payments to hospitals are not affected by the October 1, 2005.
the IPPS. Our recommendation on the update
change in the wage index. For FY 2006, we Using the same data, we calculated a
factors (which is required by sections
are proposing to continue to adjust 10 transition budget neutrality adjustment to
1886(e)(4)(A) and (e)(5)(A) of the Act) is set
percent of the wage index factor for account for the ‘‘hold harmless’’ policy under
forth as Appendix B of this proposed rule.
occupational mix. We describe the proposed which urban hospitals that became rural
4. Other Adjustments to the Average occupational mix adjustment in section III.C. under the new labor market area definitions
Standardized Amount of the preamble to this proposed rule. were assigned the wage index of the urban
As in the past, we are proposing to adjust Because section 1886(d)(3)(E) of the Act area in which they were located under the
the FY 2006 standardized amount to remove requires us to update the wage index on a previous labor market area definitions for a
the effects of the FY 2005 geographic budget neutral basis, we are including the 3-year period of FY 2005, FY 2006, and FY
reclassifications and outlier payments before effects of this proposed occupational mix 2007 (see Table 2 in section VI. of this
applying the FY 2006 updates. We then adjustment on the wage index in our budget Addendum). Using the prereclassified wage
apply the new offsets for outliers and neutrality calculations. index, we simulated payments under the new
geographic reclassifications to the In FY 2005, those urban hospitals that labor market area definitions and compared
standardized amount for FY 2006. became rural under the new labor market them to simulated payments under the ‘‘hold
We do not remove the prior year’s budget area definitions were assigned the wage harmless’’ policy. Based on this comparison,
neutrality adjustments for reclassification index of the urban area in which they were we computed a proposed transition budget
and recalibration of the DRG weights and for located under the previous labor market neutrality adjustment of 0.999529.
updated wage data because, in accordance definitions for a 3-year period of FY 2005, FY
with section 1886(d)(4)(C)(iii) of the Act, 2006, and FY 2007. Because we are in the b. Reclassified Hospitals—Budget Neutrality
estimated aggregate payments after the second year of this 3-year transition, we are Adjustment
changes in the DRG relative weights and proposing to adjust the standardized amounts Section 1886(d)(8)(B) of the Act provides
wage index should equal estimated aggregate for FY 2006 to ensure budget neutrality for that, effective with discharges occurring on
payments prior to the changes. If we removed this policy. We discuss this adjustment in or after October 1, 1988, certain rural
the prior year adjustment, we would not section III.B. of the preamble to this proposed hospitals are deemed urban. In addition,
satisfy this condition. rule. section 1886(d)(10) of the Act provides for
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00164 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23469
the reclassification of hospitals based on section 1886(d)(9)(B)(iv) of the Act requires established a fixed-loss cost outlier threshold
determinations by the MGCRB. Under section the Secretary to reduce the average for FY 2005 equal to the prospective payment
1886(d)(10) of the Act, a hospital may be standardized amounts applicable to hospitals rate for the DRG, plus any IME and DSH
reclassified for purposes of the wage index. in Puerto Rico to account for the estimated payment, and any add-on payment for new
Under section 1886(d)(8)(D) of the Act, the proportion of total DRG payments made to technology, plus $25,800.
Secretary is required to adjust the outlier cases. More information on outlier For FY 2006, we are proposing to use a
standardized amount to ensure that aggregate payments may be found on the CMS Web site new methodology to calculate the outlier
payments under the IPPS after at http://www.cms.hhs.gov/providers/hipps/ threshold that will take into account the
implementation of the provisions of sections ippsotlr.asp. lower inflation in hospital charges that is
1886(d)(8)(B) and (C) and 1886(d)(10) of the i. Proposed FY 2006 outlier fixed-loss occurring as a result of the June 9, 2003
Act are equal to the aggregate prospective threshold. For FY 2006, we are proposing a outlier final rule (68 FR 34505), which
payments that would have been made absent new methodology to calculate the outlier changed our methodology for determining
these provisions. (We note that neither the fixed-loss threshold. For FY 2004, we outlier payments by implementing the use of
wage index reclassifications provided under simulated outlier payments by applying FY more current and accurate cost-to-charge
section 508 of Pub. L. 108–173 nor the wage 2004 rates and policies using cases from the ratios when paying for outliers. As we have
index adjustments provided under section FY 2002 MedPAR file. In order to determine done in the past, to calculate the proposed
505 of Pub. L. 108–173 are budget neutral. the FY 2004 outlier fixed-loss threshold, it FY 2006 outlier thresholds, we simulated
Section 508(b) of Pub. L. 108–173 provides was necessary to inflate the charges on the payments by applying proposed FY 2006
that the wage index reclassifications MedPAR claims by 2 years, from FY 2002 to rates and policies using cases from the FY
approved under section 508(a) of Pub. L. FY 2004. In order to determine the FY 2004 2004 MedPAR files. Therefore, in order to
108–173 ‘‘shall not be effected in a budget threshold, we used the 2-year average annual determine the appropriate proposed FY 2006
neutral manner.’’ Section 505(a) of Pub. L. rate-of-change in charges per case to inflate outlier threshold, it was necessary to inflate
108–173 similarly provides that any increase FY 2002 charges to approximate FY 2004 the charges on the MedPAR claims by 2
in a wage index under that section shall not charges. (We refer the reader to the FY 2004 years, from FY 2004 to FY 2006.
be taken into account ‘‘in applying any IPPS final rule (67 FR 45476) for a complete However, we are not proposing to inflate
budget neutrality adjustment with respect to discussion of the FY 2004 methodology.) In charges using a 2-year average annual rate-of-
such index’’ under section 1886(d)(8)(D) of the IPPS proposed rule for FY 2005 (69 FR change in charges per case from FY 2002 to
the Act.) To calculate this proposed budget 28376), we proposed to use the same FY 2003 and FY 2003 to FY 2004 because of
neutrality factor, we used FY 2004 discharge methodology we used for determining the FY the distortion in FY 2002 and FY 2003 charge
data to simulate payments, and compared 2004 outlier fix-loss threshold to determine data caused by the exceptionally high rate of
total IPPS payments prior to any the FY 2005 outlier threshold. We further hospital charge inflation during those years.
reclassifications under sections 1886(d)(8)(B) Instead, we are proposing to use more recent
noted that the rate-of-increase in the 2-year
and (C) and 1886(d)(10) of the Act to total data that reflect changes under the new
average annual rate-of-change in charges
IPPS payments after such reclassifications. outlier policy. However, we will continue to
derived from the period before the changes
Based on these simulations, we are proposing consider other methodologies in the future
we made to the policy affecting the
to apply an adjustment factor of 0.992905 to when calculating the outlier threshold once
applicable cost-to-charge ratios (68 FR 34494)
ensure that the effects of this reclassification we have 2 complete years of charge data
and, therefore, they may have represented under the new outlier policy.
are budget neutral. rates-of-increase that could be higher than
The proposed adjustment factor is applied Specifically, we are proposing to establish
the rates-of-increase under our new policy. the proposed FY 2006 outlier threshold as
to the standardized amount after removing As a result, we welcomed comments on the
the effects of the FY 2005 budget neutrality follows: Using the latest data available, the 1-
data we were using to update charges for year average annualized rate-of-change in
adjustment factor. We note that the proposed purposes of the threshold and specifically
FY 2006 adjustment reflects FY 2006 wage charges per case from the last quarter of FY
encouraged commenters to provide 2003 in combination with the first quarter of
index reclassifications approved by the recommendations for data that might better
MGCRB or the Administrator, and the effects FY 2004 (July 1, 2003 through December 31,
reflect current trends in charge increases. 2003) to the last quarter of FY 2004 in
of MGCRB reclassifications approved in FY In response to the many comments we
2004 and FY 2005 (section 1886(d)(10)(D)(v) combination with the first quarter of FY 2005
received on this proposed FY 2005 (July 1, 2004 through December 31, 2004)
of the Act makes wage index reclassifications methodology, in the IPPS final rule for FY
effective for 3 years). was 8.65 percent (1.0865), or 18.04 percent
2005 (69 FR 49275), we revised that proposed (1.1804) over 2 years. As we have done in the
c. Outliers methodology and used the following past, we are proposing to use hospital cost-
Section 1886(d)(5)(A) of the Act provides methodology to calculate the final FY 2005 to-charge ratios from the most recent
for payments in addition to the basic outlier fixed-loss threshold. Instead of using Provider Specific File, in this case the
prospective payments for ‘‘outlier’’ cases the 2-year average annual rate-of-change in December 2004 update, in establishing the
involving extraordinarily high costs. To charges per case from FY 2001 to FY 2002 proposed FY 2006 outlier threshold. This file
qualify for outlier payments, a case must and FY 2002 to FY 2003, we used more includes cost-to-charge ratios that reflect
have costs above a fixed-loss cost threshold recent data to determine the annual rate-of- implementation of the changes to the policy
amount (a dollar amount by which the costs change in charges for the FY 2005 outlier for determining the applicable cost-to-charge
of a case must exceed payments in order to threshold. Specifically, we compared the ratios that became effective August 8, 2003
qualify for outlier payment). To determine rate-of-increase in charges from the first half- (68 FR 34494).
whether the costs of a case exceed the fixed- year of FY 2003 to the first half-year of FY Using this methodology, we are proposing
loss threshold, a hospital’s cost-to-charge 2004. We stated that we believed this to establish a fixed-loss cost outlier threshold
ratio is applied to the total covered charges methodology would result in a more accurate for FY 2006 equal to the prospective payment
for the case to convert the charges to costs. determination of the rate-of-change in rate for the DRG, plus any IME and DSH
Payments for eligible cases are then made charges per case between FY 2003 and FY payments, and any add-on payments for new
based on a marginal cost factor, which is a 2005. Although a full year of data was technology, plus $26,675. In addition, as
percentage of the costs above the threshold. available for FY 2003, we did not have a full stated in the June 9, 2003 outlier final rule
In accordance with section year of FY 2004 data at the time we set the (68 FR 34505), we believe the use of charge
1886(d)(5)(A)(iv) of the Act, outlier payments FY 2005 outlier threshold. Therefore, we inflation is more appropriate than our
for any year are projected to be not less than stated that we believed it was optimal to previous methodology of cost inflation
5 percent nor more than 6 percent of total employ comparable periods in determining because charges tend to increase at a much
operating DRG payments plus outlier the rate-of-change from one year to the next. faster rate than costs. Although charges have
payments. Section 1886(d)(3)(B) of the Act We also stated that we believed this increased at a slower rate since the
requires the Secretary to reduce the average methodology was the best methodology for implementation of changes to our outlier
standardized amount by a factor to account determining the rate-of-change in charges per payment methodology in 2003, we believe
for the estimated proportion of total DRG case because it used the most recent charge the use of charges is still appropriate because
payments made to outlier cases. Similarly, data available. Using this methodology, we this trend is still evident.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00165 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23470 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
As we did in establishing the FY 2005 cost reporting period are different than the payments, we found that using a common set
outlier threshold (69 FR 49278), we are not interim cost-to-charge ratios used to calculate of thresholds resulted in a lower percentage
including in the calculation of the outlier outlier payments when a bill is processed. of outlier payments for capital-related costs
threshold the possibility that hospitals’ cost- Our simulations assume cost-to-charge ratios than for operating costs. We project that the
to-charge ratios and outlier payments may be accurately measure hospital costs and, proposed thresholds for FY 2006 will result
reconciled upon cost report settlement. We therefore, are more reflective of post-
believe that, due to the policy implemented reconciliation than pre-reconciliation outlier in outlier payments equal to 5.1 percent of
in the June 9, 2003 outlier final rule, cost-to- payments. As a result, we omitted any operating DRG payments and 5.03 percent of
charge ratios will no longer fluctuate assumptions about the effects of capital payments based on the Federal rate.
significantly and, therefore, few hospitals, if reconciliation from the outlier threshold In accordance with section 1886(d)(3)(B) of
any, will actually have these ratios calculation. the Act, we reduced the proposed FY 2005
reconciled upon cost report settlement. In ii. Other changes concerning outliers. As standardized amount by the same percentage
addition, it is difficult to predict which stated in the September 1, 1993 final rule (58 to account for the projected proportion of
specific hospitals will have cost-to-charge FR 46348), we establish outlier thresholds payments paid to outliers.
ratios and outlier payments reconciled in that are applicable to both hospital inpatient
The proposed outlier adjustment factors
their cost reports in any given year. We also operating costs and hospital inpatient
note that reconciliation occurs because capital-related costs. When we modeled the that would be applied to the standardized
hospitals’ actual cost-to-charge ratios for the combined operating and capital outlier amount for FY 2006 are as follows:
We are proposing to apply the outlier proposed cost-to-charge ratios in Tables 8A 4.4 percent of actual total DRG payments, 0.7
adjustment factors to the FY 2006 rates after and 8B would be used during FY 2006 when percentage points lower than the 5.1 percent
removing the effects of the FY 2005 outlier hospital-specific cost-to-charge ratios based we projected in setting outlier policies for FY
adjustment factors on the standardized on the latest settled cost report are either not 2005. This estimate is based on simulations
amount. available or are outside the range noted using the FY 2004 MedPAR file (discharge
To determine whether a case qualifies for above. data for FY 2004 bills). We used these data
outlier payments, we apply hospital-specific iii. FY 2004 and FY 2005 outlier payments. to calculate an estimate of the actual outlier
cost-to-charge ratios to the total covered In the FY 2005 IPPS final rule, we stated that, percentage for FY 2005 by applying FY 2005
charges for the case. Operating and capital based on available data, we estimated that rates and policies, including an outlier
costs for the case are calculated separately by actual FY 2004 outlier payments would be threshold of $25,800 to available FY 2004
applying separate operating and capital cost- approximately 3.6 percent of actual total DRG bills.
to-charge ratios. These costs are then payments (69 FR 49278, as corrected at 69 FR d. Rural Community Hospital Demonstration
combined and compared with the fixed-loss 60252). This estimate was computed based
Program Adjustment (Section 410A of Pub. L.
outlier threshold. on simulations using the FY 2003 MedPAR
108–173)
The June 9, 2003 outlier final rule (68 FR file (discharge data for FY 2003 bills). That
34494) eliminated the application of the is, the estimate of actual outlier payments did Section 410A of Pub. L. 108–173 requires
statewide average for hospitals whose cost-to- not reflect actual FY 2004 bills, but instead the Secretary to establish a demonstration
charge ratios fall below 3 standard deviations reflected the application of FY 2004 rates and that will modify reimbursement for inpatient
from the national mean cost-to-charge ratio. policies to available FY 2003 bills. services for up to 15 small rural hospitals.
However, for those hospitals for which the Our current estimate, using available FY Section 410A(c)(2) of Pub. L. 108–173
fiscal intermediary computes operating cost- 2004 bills, is that actual outlier payments for requires that ‘‘in conducting the
to-charge ratios greater than 1.220 or capital FY 2004 were approximately 3.5 percent of demonstration program under this section,
cost-to-charge ratios greater than 0.169, or actual total DRG payments. Thus, the data the Secretary shall ensure that the aggregate
hospitals for whom the fiscal intermediary is indicate that, for FY 2004, the percentage of payments made by the Secretary do not
unable to calculate a cost-to-charge ratio (as actual outlier payments relative to actual exceed the amount which the Secretary
described at § 412.84(i)(3) of our regulations), total payments is lower than we projected would have paid if the demonstration
we are still using statewide average ratios to before FY 2004 (and, thus, is less than the program under this section was not
calculate costs to determine whether a percentage by which we reduced the implemented.’’ As discussed in section V.K.
hospital qualifies for outlier payments.6 standardized amounts for FY 2004). We note of the preamble to this proposed rule, we are
Table 8A in section VI. of this Addendum that, for FY 2005, the outlier threshold was proposing to satisfy this requirement by
contains the proposed statewide average lowered to $25,800 compared to $31,000 for adjusting national IPPS rates by a factor that
operating cost-to-charge ratios for urban FY 2004. The outlier threshold was lower in is sufficient to account for the added costs of
hospitals and for rural hospitals for which FY 2005 than FY 2004 as a result of slower this demonstration. We estimate that the
the fiscal intermediary is unable to compute growth in hospital charge inflation. We average additional annual payment that will
a hospital-specific cost-to-charge ratio within believe that this slower growth was due to be made to each participating hospital under
the above range. Effective for discharges changes in hospital charge practices the demonstration will be approximately
occurring on or after October 1, 2005, these following implementation of the outlier final $977,410. We based this estimate on the
proposed statewide average ratios would rule published on June 9, 2003. Nevertheless, recent historical experience of the difference
replace the ratios published in the IPPS final consistent with the policy and statutory between inpatient cost and payment for
rule for FY 2005 (69 FR 49687). Table 8B in interpretation we have maintained since the hospitals that are participating in the
section VI. of this Addendum contains the inception of the IPPS, we do not plan to demonstration. For 13 participating
proposed comparable statewide average make retroactive adjustments to outlier hospitals, the total annual impact of the
capital cost-to-charge ratios. Again, the payments to ensure that total outlier demonstration program is estimated to be
payments for FY 2004 are equal to 5.1 $12,706,334. The required adjustment to the
6 These figures represent 3.0 standard deviations percent of total DRG payments. Federal rate used in calculating Medicare
from the mean of the log distribution of cost-to- We currently estimate that actual outlier inpatient prospective payments as a result of
EP04my05.064</GPH>
charge ratios for all hospitals. payments for FY 2005 will be approximately the demonstration is 0.999863.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00166 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23471
In order to achieve budget neutrality, we Table 1A is 69.7 percent, and the labor- proposed standardized amounts for Puerto
are proposing to adjust national IPPS rates by related share applied to the standardized Rico for FY 2006, reflecting the different
an amount sufficient to account for the added amounts in Table 1B is 62 percent. In labor-related shares that apply, that is, 71.3
costs of this demonstration. In other words, accordance with sections 1886(d)(3)(E) and percent or 62 percent.)
we are proposing to apply budget neutrality 1886(d)(9)(C)(iv) of the Act, we are applying The following table illustrates the
across the payment system as a whole rather the labor-related share of 62 percent, unless proposed changes from the FY 2005 national
than merely across the participants of this the application of that percentage would average standardized amount. The first
demonstration. We believe that the language result in lower payments to a hospital than column shows the proposed changes from
of the statutory budget neutrality requirement would otherwise be made. The effect of this the FY 2005 standardized amounts for
permits the agency to implement the budget proposed application is that the labor-related hospitals that satisfy the quality data
neutrality provision in this manner. This is share of the standardized amount is 62 submission requirement for receiving the full
because the statutory language requires that percent for all hospitals whose wage indexes
update (3.2 percent). The second column
‘‘aggregate payments made by the Secretary are less than or equal to 1.0000.
shows the proposed changes for hospitals
do not exceed the amount which the As discussed in section IV.B.3. of the
receiving the reduced update (2.8 percent).
Secretary would have paid if the preamble to this proposed rule (reflecting the
Secretary’s current estimate of the proportion The first row of the table shows the proposed
demonstration * * * was not implemented,’’ updated (through FY 2005) average
but does not identify the range across which of costs that are attributable to wages and
wage-related costs), we are proposing to set standardized amount after restoring the FY
aggregate payments must be held equal.
the labor-related share of the standardized 2005 offsets for outlier payments,
5. Proposed FY 2006 Standardized Amount amount at 69.7 percent for hospitals whose demonstration budget neutrality, the wage
The adjusted standardized amount is wage indexes are greater than 1.0000. In index transition budget neutrality and
divided into labor-related and nonlabor- addition, Tables 1A and 1B include proposed geographic reclassification budget neutrality.
related portions. Tables 1A and 1B in section standardized amounts reflecting the full 3.2 The DRG reclassification and recalibration
VI. of this Addendum contain the national percent update for FY 2006, and proposed and wage index budget neutrality factor is
standardized amount that we are proposing standardized amounts reflecting the 0.4 cumulative. Therefore, the FY 2005 factor is
to apply to all hospitals, except hospitals in percentage point reduction to the update not removed from the amount in the table.
Puerto Rico. The amounts shown in the two applicable for hospitals that fail to submit We have added separate rows to this table to
tables differ only in that the labor-related quality data consistent with section 501(b) of reflect the different labor-related shares that
share applied to the standardized amounts in Pub. L. 108–173. (Tables 1C and 1D show the apply to hospitals.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00167 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23472 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Under section 1886(d)(9)(A)(ii) of the Act, forth in Table 1C of section VI. of this section 403(b) of Pub. L. 108–173, provides
the Federal portion of the Puerto Rico Addendum. This table also includes the that the labor-related share for hospitals in
payment rate is based on the discharge- Puerto Rico standardized amounts. The Puerto Rico will be 62 percent, unless the
weighted average of the national large urban labor-related share applied to the Puerto Rico application of that percentage would result in
standardized amount (as set forth in Table standardized amount is 71.3 percent, or 62 lower payments to the hospital.)
1A). The labor-related and nonlabor-related percent, depending on which is more
portions of the national average standardized advantageous to the hospital. (Section
EP04MY05.065</GPH>
amounts for Puerto Rico hospitals are set 1886(d)(9)(C)(iv) of the Act, as amended by
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00168 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23473
B. Adjustments for Area Wage Levels and make an adjustment to the labor-related unique circumstances of hospitals in Alaska
Cost-of-Living portion of the national and Puerto Rico and Hawaii. Higher labor-related costs for
Tables 1A through 1D, as set forth in prospective payment rates, respectively, to these two States are taken into account in the
account for area differences in hospital wage adjustment for area wages described above.
section VI. of this Addendum, contain the
levels. This adjustment is made by
labor-related and nonlabor-related shares that For FY 2006, we are proposing to adjust the
multiplying the labor-related portion of the
we are proposing to use to calculate the adjusted standardized amounts by the payments for hospitals in Alaska and Hawaii
prospective payment rates for hospitals appropriate wage index for the area in which by multiplying the nonlabor-related portion
located in the 50 States, the District of the hospital is located. In section III. of the of the standardized amount by the
Columbia, and Puerto Rico. This section preamble to this proposed rule, we discuss appropriate adjustment factor contained in
addresses two types of adjustments to the the data and methodology for the proposed the table below. If the Office of Personnel
standardized amounts that are made in FY 2006 wage index. The proposed FY 2006 Management releases revised cost-of-living
determining the proposed prospective wage indexes are set forth in Tables 4A, 4B, adjustment factors before July 1, 2005, we
payment rates as described in this 4C, and 4F of section VI. of this Addendum. will publish them in the final rule and use
Addendum. 2. Adjustment for Cost-of-Living in Alaska them in determining FY 2006 payments.
1. Adjustment for Area Wage Levels and Hawaii
Sections 1886(d)(3)(E) and Section 1886(d)(5)(H) of the Act authorizes
1886(d)(9)(C)(iv) of the Act require that we an adjustment to take into account the
C. DRG Relative Weights MDHs equals the higher of the Federal rate, the hospital is reclassified (see Tables 4A, 4B,
As discussed in section II. of the preamble, or the Federal rate plus 50 percent of the and 4C of section VI. of this Addendum).
we have developed a classification system for difference between the Federal rate and the Step 3—For hospitals in Alaska and
all hospital discharges, assigning them into hospital-specific rate as described below. The Hawaii, multiply the nonlabor-related
DRGs, and have developed relative weights proposed prospective payment rate for Puerto portion of the standardized amount by the
for each DRG that reflect the resource Rico equals 25 percent of the Puerto Rico rate appropriate cost-of-living adjustment factor.
utilization of cases in each DRG relative to plus 75 percent of the applicable national Step 4—Add the amount from Step 2 and
Medicare cases in other DRGs. Table 5 of rate from Table 1C or Table 1D in section VI. the nonlabor-related portion of the
section VI. of this Addendum contains the of this Addendum. standardized amount (adjusted, if
relative weights that we are proposing to use appropriate, under Step 3).
1. Federal Rate
for discharges occurring in FY 2006. These Step 5—Multiply the final amount from
factors have been recalibrated as explained in For discharges occurring on or after Step 4 by the relative weight corresponding
section II. of the preamble of this proposed October 1, 2005 and before October 1, 2006, to the appropriate DRG (see Table 5 of
rule. except for SCHs, MDHs, and hospitals in section VI. of this Addendum).
Puerto Rico, payment under the IPPS is based The Federal rate as determined in Step 5
D. Calculation of Proposed Prospective exclusively on the Federal rate. may then be further adjusted if the hospital
Payment Rates for FY 2006 The Federal rate is determined as follows: qualifies for either the IME or DSH
General Formula for Calculation of Step 1—Select the appropriate average adjustment.
Prospective Payment Rates for FY 2006 standardized amount considering the 2. Hospital-Specific Rate (Applicable Only to
The proposed operating prospective applicable wage index (Table 1A for wage SCHs and MDHs)
payment rate for all hospitals paid under the indexes greater than 1.0000 and Table 1B for
IPPS located outside of Puerto Rico, except wage indexes less than or equal to 1.0000) a. Calculation of Hospital-Specific Rate
SCHs and MDHs, equals the Federal rate and whether the hospital has submitted Section 1886(b)(3)(C) of the Act provides
based on the corresponding amounts in Table qualifying quality data (full update for that SCHs are paid based on whichever of the
1A or Table 1B in section VI. of this qualifying hospitals, update minus 0.4 following rates yields the greatest aggregate
Addendum. percentage points for nonqualifying payment: the Federal rate; the updated
The proposed prospective payment rate for hospitals). hospital-specific rate based on FY 1982 costs
SCHs equals the higher of the applicable Step 2—Multiply the labor-related portion per discharge; the updated hospital-specific
Federal rate (from Table 1A or Table 1B) or of the standardized amount by the applicable rate based on FY 1987 costs per discharge; or
the hospital-specific rate as described below. wage index for the geographic area in which the updated hospital-specific rate based on
EP04MY05.066</GPH>
The proposed prospective payment rate for the hospital is located or the area to which FY 1996 costs per discharge.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00169 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23474 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Section 1886(d)(5)(G) of the Act provides Step 3—Add the amount from Step 2 and equal to the estimated proportion of outlier
that MDHs are paid based on whichever of the nonlabor-related portion of the payments under the capital Federal rate to
the following rates yields the greatest standardized amount. total capital payments under the capital
aggregate payment: The Federal rate or the Step 4—Multiply the amount from Step 3 Federal rate. In addition, § 412.308(c)(3)
Federal rate plus 50 percent of the difference by the appropriate DRG relative weight. requires that the capital Federal rate be
between the Federal rate and the greater of Step 5—Multiply the result in Step 4 by 25 reduced by an adjustment factor equal to the
the updated hospital-specific rates based on percent (see Table 5 of section VI. of the estimated proportion of payments for (regular
either FY 1982 or FY 1987 costs per Addendum). and special) exceptions under § 412.348.
discharge. MDHs do not have the option to b. National Rate Section 412.308(c)(4)(ii) requires that the
use their FY 1996 hospital-specific rate. capital standard Federal rate be adjusted so
The national prospective payment rate is that the effects of the annual DRG
Hospital-specific rates have been determined as follows:
determined for each of these hospitals based reclassification and the recalibration of DRG
Step 1—Select the appropriate average weights and changes in the geographic
on the FY 1982 costs per discharge, the FY standardized amount considering the
1987 costs per discharge, or, for SCHs, the FY adjustment factor are budget neutral.
applicable wage index (see Table 1C). For FYs 1992 through 1995, § 412.352
1996 costs per discharge. For a more detailed Step 2—Add the amount from Step 1 and
discussion of the calculation of the hospital- required that the capital Federal rate also be
the nonlabor-related portion of the national adjusted by a budget neutrality factor so that
specific rates, we refer the reader to the average standardized amount.
September 1, 1983 interim final rule (48 FR aggregate payments for inpatient hospital
Step 3—Multiply the amount from Step 2 capital costs were projected to equal 90
39772); the April 20, 1990 final rule with by the appropriate DRG relative weight (see percent of the payments that would have
comment (55 FR 15150); the September 4, Table 5 of section VI. of the Addendum). been made for capital-related costs on a
1990 final rule (55 FR 35994); and the August Step 4—Multiply the result in Step 3 by 75 reasonable cost basis during the fiscal year.
1, 2000 final rule (65 FR 47082). In addition, percent. That provision expired in FY 1996. Section
for both SCHs and MDHs, the hospital- The sum of the Puerto Rico rate and the 412.308(b)(2) describes the 7.4 percent
specific rate is adjusted by the proposed national rate computed above equals the reduction to the capital rate that was made
budget neutrality adjustment factor (that is, prospective payment for a given discharge for in FY 1994, and § 412.308(b)(3) describes the
by the recalibration budget neutrality factor a hospital located in Puerto Rico. This rate 0.28 percent reduction to the capital rate
of 0.999003) as discussed in section V.C.2. of may then be further adjusted if the hospital made in FY 1996 as a result of the revised
the preamble to this proposed rule. The qualifies for either the IME or DSH policy of paying for transfers. In FY 1998, we
resulting rate would be used in determining adjustment. implemented section 4402 of Pub. L. 105–33,
the payment rate an SCH or MDH would which required that, for discharges occurring
III. Proposed Changes to Payment Rates for
receive for its discharges beginning on or on or after October 1, 1997, and before
Acute Care Hospital Inpatient Capital-
after October 1, 2005. October 1, 2002, the unadjusted capital
Related Costs for FY 2006
b. Updating the FY 1982, FY 1987, and FY standard Federal rate is reduced by 17.78
(If you choose to comment on issues in this
1996 Hospital-Specific Rates for FY 2005 percent. As we discussed in the FY 2003
section, please include the caption ‘‘Capital
We are proposing to increase the hospital- Payment Rate’’ at the beginning of your IPPS final rule (67 FR 50102) and
specific rates by 3.2 percent (the hospital comment.) implemented in § 412.308(b)(6)), a small part
market basket percentage increase) for SCHs The PPS for acute care hospital inpatient of that reduction was restored effective
and MDHs for FY 2006. Section capital-related costs was implemented for October 1, 2002.
1886(b)(3)(C)(iv) of the Act provides that the cost reporting periods beginning on or after To determine the appropriate budget
update factor applicable to the hospital- October 1, 1991. Effective with that cost neutrality adjustment factor and the regular
specific rates for SCHs is equal to the update reporting period, hospitals were paid during exceptions payment adjustment during the
factor provided under section a 10-year transition period (which extended 10-year transition period, we developed a
1886(b)(3)(B)(iv) of the Act, which, for SCHs through FY 2001) to change the payment dynamic model of Medicare inpatient
in FY 2006, is the market basket rate of methodology for Medicare acute care hospital capital-related costs; that is, a model that
increase. Section 1886(b)(3)(D) of the Act inpatient capital-related costs from a projected changes in Medicare inpatient
provides that the update factor applicable to reasonable cost-based methodology to a capital-related costs over time. With the
the hospital-specific rates for MDHs also prospective methodology (based fully on the expiration of the budget neutrality provision,
equals the update factor provided under Federal rate). the capital cost model was only used to
The basic methodology for determining estimate the regular exceptions payment
section 1886(b)(3)(B)(iv) of the Act, which,
Federal capital prospective rates is set forth adjustment and other factors during the
for FY 2006, is the market basket rate-of-
in regulations at §§ 412.308 through 412.352. transition period. As we explained in the FY
increase.
Below we discuss the factors that we are 2002 IPPS final rule (66 FR 39911), beginning
3. General Formula for Calculation of proposing to use to determine the capital in FY 2002, an adjustment for regular
Proposed Prospective Payment Rates for Federal rate for FY 2006, which would be exception payments is no longer necessary
Hospitals Located in Puerto Rico Beginning effective for discharges occurring on or after because regular exception payments were
On or After October 1, 2005 and Before October 1, 2005. The 10-year transition only made for cost reporting periods
October 1, 2006 period ended with hospital cost reporting beginning on or after October 1, 1991, and
Under section 504 of Pub. L. 108–173, periods beginning on or after October 1, 2001 before October 1, 2001 (see § 412.348(b)).
effective for discharges occurring on or after (FY 2002). Therefore, for cost reporting Because, effective with cost reporting periods
October 1, 2004, hospitals located in Puerto periods beginning in FY 2002, all hospitals beginning in FY 2002, payments are no
Rico are paid based on a blend of 75 percent (except ‘‘new’’ hospitals under longer being made under the regular
of the national prospective payment rate and § 412.304(c)(2)) are paid based on 100 exception policy, we no longer use the
25 percent of the Puerto Rico-specific rate. percent of the capital Federal rate. For FY capital cost model. The capital cost model
1992, we computed the standard Federal and its application during the transition
a. Puerto Rico Rate period are described in Appendix B of the FY
payment rate for capital-related costs under
The Puerto Rico prospective payment rate the IPPS by updating the FY 1989 Medicare 2002 IPPS final rule (66 FR 40099).
is determined as follows: inpatient capital cost per case by an actuarial Section 412.374 provides for the use of a
Step 1—Select the appropriate average estimate of the increase in Medicare inpatient blended payment system for payments to
standardized amount considering the capital costs per case. Each year after FY Puerto Rico hospitals under the PPS for acute
applicable wage index (see Table 1C). 1992, we update the capital standard Federal care hospital inpatient capital-related costs.
Step 2—Multiply the labor-related portion rate, as provided at § 412.308(c)(1), to Accordingly, under the capital PPS, we
of the standardized amount by the account for capital input price increases and compute a separate payment rate specific to
appropriate Puerto Rico-specific wage index other factors. The regulations at Puerto Rico hospitals using the same
(see Table 4F of section VI. of the § 412.308(c)(2) provide that the capital methodology used to compute the national
Addendum). Federal rate is adjusted annually by a factor Federal rate for capital-related costs. In
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00170 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23475
accordance with section 1886(d)(9)(A) of the percent during this same period. This • Changes in hospital coding of patient
Act, under the IPPS for acute care hospital decrease is due to several factors, including records result in higher weight DRG
operating costs, hospitals located in Puerto a projected decrease in the number of assignments (‘‘coding effects’’); and
Rico are paid for operating costs under a Medicare fee-for-service hospital admissions, • The annual DRG reclassification and
special payment formula. Prior to FY 1998, and a decrease in the proposed geographic recalibration changes may not be budget
hospitals in Puerto Rico were paid a blended adjustment factor (GAF) values (which are neutral (‘‘reclassification effect’’).
operating rate that consisted of 75 percent of based on the proposed wage index values). We define real case-mix change as actual
the applicable standardized amount specific Our Office of the Actuary projects a decrease changes in the mix (and resource
to Puerto Rico hospitals and 25 percent of the in Medicare fee-for-service Part A requirements) of Medicare patients as
applicable national average standardized enrollment, in part, because of a projected opposed to changes in coding behavior that
amount. Similarly, prior to FY 1998, increase in Medicare managed care result in assignment of cases to higher
hospitals in Puerto Rico were paid a blended enrollment as a result of the implementation weighted DRGs but do not reflect higher
capital rate that consisted of 75 percent of the of several provisions of Pub. L. 108–173. We resource requirements. The capital update
applicable capital Puerto Rico specific rate are projecting a slight increase in the framework includes the same case-mix index
and 25 percent of the applicable capital proposed GAF values (based on the proposed adjustment used in the former operating IPPS
Federal rate. However, effective October 1, wage index) for some hospitals as a result of update framework (as discussed in the May
1997, in accordance with section 4406 of the completion of the transition to the CBSA- 18, 2005 IPPS proposed rule for FY 2005 (69
Pub. L. 105–33, operating payments to based labor market area definitions (as FR 28816)). (We are no longer using an
hospitals in Puerto Rico were revised to be discussed in section III. of the preamble of update framework in making a
based on a blend of 50 percent of the this proposed rule). Thus, we are projecting recommendation for updating the operating
applicable standardized amount specific to that capital PPS payments would remain IPPS standardized amounts as discussed in
Puerto Rico hospitals and 50 percent of the relatively unchanged from FY 2005 to FY section III. of Appendix B of this proposed
applicable national average standardized 2006. rule.)
amount. In conjunction with this change to Total payments to hospitals under the IPPS For FY 2006, we are projecting a 1.0
the operating blend percentage, effective with are relatively unaffected by changes in the percent total increase in the case-mix index.
discharges occurring on or after October 1, capital prospective payments. Since capital We estimate that the real case-mix increase
payments constitute about 10 percent of would also equal 1.0 percent in FY 2006. The
1997, we also revised the methodology for
hospital payments, a 1-percent change in the net adjustment for change in case-mix is the
computing capital payments to hospitals in
capital Federal rate yields only about 0.1 difference between the projected increase in
Puerto Rico to be based on a blend of 50
percent change in actual payments to real case-mix and the projected total increase
percent of the Puerto Rico capital rate and 50
hospitals. Aggregate payments under the
percent of the capital Federal rate. in real case-mix. Therefore, the net proposed
capital IPPS are estimated to decrease
As we discussed in the FY 2005 IPPS final adjustment for case-mix change in FY 2006
slightly in FY 2006 compared to FY 2005, as
rule (69 FR 49185), section 504 of Pub. L. is 0.0 percentage points.
discussed above.
108–173 increased the national portion of the The capital update framework also
operating IPPS payments for Puerto Rico 1. Projected Capital Standard Federal Rate contains an adjustment for the effects of DRG
hospitals from 50 percent to 62.5 percent and Update reclassification and recalibration. This
decreased the Puerto Rico portion of the a. Description of the Update Framework adjustment is intended to remove the effect
operating IPPS payments from 50 percent to on total payments of prior year changes to the
Under § 412.308(c)(1), the capital standard DRG classifications and relative weights, in
37.5 percent for discharges occurring on or
Federal rate is updated on the basis of an order to retain budget neutrality for all case-
after April 1, 2004 through September 30,
analytical framework that takes into account mix index-related changes other than those
2004 (see the March 26, 2004 One-Time
changes in a capital input price index (CIPI) due to patient severity. Due to the lag time
Notification (Change Request 3158)). In
and several other policy adjustment factors. in the availability of data, there is a 2-year
addition, section 504 of Pub. L. 108–173 Specifically, we have adjusted the projected
provided that the national portion of lag in data used to determine the adjustment
CIPI rate-of-increase as appropriate each year
operating IPPS payments for Puerto Rico for the effects of DRG reclassification and
for case-mix index-related changes, for
hospitals is equal to 75 percent and the recalibration. For example, we are adjusting
intensity, and for errors in previous CIPI
Puerto Rico portion of operating IPPS for the effects of the FY 2004 DRG
forecasts. The proposed update factor for FY
payments is equal to 25 percent for 2006 under that framework is 0.7 percent reclassification and recalibration as part of
discharges occurring on or after October 1, based on the best data available at this time. our proposed update for FY 2006. We
2004. Consistent with that change in The proposed update factor is based on a estimate that FY 2004 DRG reclassification
operating IPPS payments to hospitals in projected 0.7 percent increase in the CIPI, a and recalibration would result in a 0.0
Puerto Rico, for FY 2005 (as we discussed in 0.0 percent adjustment for intensity, a 0.0 percent change in the case-mix when
the FY 2005 IPPS final rule), we revised the percent adjustment for case-mix, a 0.0 compared with the case-mix index that
methodology for computing capital payments percent adjustment for the FY 2004 DRG would have resulted if we had not made the
to hospitals located in Puerto Rico to be reclassification and recalibration, and a reclassification and recalibration changes to
based on a blend of 25 percent of the Puerto forecast error correction of 0.0 percent. As the DRGs. Therefore, we are proposing to
Rico capital rate and 75 percent of the capital discussed below in section III.C. of this make a 0.0 percent adjustment for DRG
Federal rate for discharges occurring on or Addendum, we believe that the CIPI is the reclassification and recalibration in the
after October 1, 2004. most appropriate input price index for update for FY 2006 to maintain budget
capital costs to measure capital price changes neutrality.
A. Determination of Proposed Federal The capital update framework also
in a given year. We also explain the basis for
Hospital Inpatient Capital-Related contains an adjustment for forecast error. The
the FY 2006 CIPI projection in that same
Prospective Payment Rate Update input price index forecast is based on
section of this Addendum. Below we
In the FY 2005 IPPS final rule (69 FR describe the proposed policy adjustments historical trends and relationships
49283) and corrected in a December 30, 2004 that have been applied. ascertainable at the time the update factor is
correction notice (69 FR 78532), we The case-mix index is the measure of the established for the upcoming year. In any
established a capital Federal rate of $416.53 average DRG weight for cases paid under the given year, there may be unanticipated price
for FY 2005. IPPS. Because the DRG weight determines fluctuations that may result in differences
In the discussion that follows, we explain the prospective payment for each case, any between the actual increase in prices and the
the factors that were used to determine the percentage increase in the case-mix index forecast used in calculating the update
proposed FY 2006 capital Federal rate. In corresponds to an equal percentage increase factors. In setting a prospective payment rate
particular, we explain why the proposed FY in hospital payments. under the framework, we make an
2006 capital Federal rate would increase 0.7 The case-mix index can change for any of adjustment for forecast error only if our
percent compared to the FY 2005 capital several reasons: estimate of the change in the capital input
Federal rate. We also estimate aggregate • The average resource use of Medicare price index for any year is off by 0.25
capital payments would decrease by 0.1 patients changes (‘‘real’’ case-mix change); percentage points or more. There is a 2-year
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00171 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23476 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
lag between the forecast and the annual increase is due to each of these charges per admission, adjusted for price
measurement of the forecast error. A forecast factors. The capital update framework thus level changes (the CPI for hospital and
error of -0.1 percentage points was calculated provides an add-on to the input price index related services), and changes in real case-
for the FY 2004 update. That is, current rate of increase of one-half of the estimated mix for FYs 1999 through 2004. We found
historical data indicate that the forecasted FY annual increase in intensity, to allow for that, over this period and in particular the
2004 CIPI used in calculating the FY 2004 within-DRG severity increases and the last 4 years of this period (FYs 2000 through
update factor (0.7 percent) slightly overstated adoption of quality-enhancing technology. 2003), the charge data appear to be skewed.
the actual realized price increases (0.6 We have developed a Medicare-specific More specifically, we found a dramatic
percent) by 0.1 percentage points. This slight intensity measure based on a 5-year average. increase in hospital charges for FYs 2000
overprediction was mostly due to a Past studies of case-mix change by the RAND through 2004 without a corresponding
prediction of the cuts in the interest rate by Corporation (Has DRG Creep Crept Up? increase in the hospital case-mix index.
the Federal Reserve Board in 2004. However, Decomposing the Case Mix Index Change These findings are similar to the considerable
the Federal Reserve Board did not cut Between 1987 and 1988 by G.M. Carter, J.P. increase in hospitals’ charges, which we
interest rates during 2004, which impacted Newhouse, and D.A. Relles, R–4098–HCFA/ found when we were determining the
the interest component of the CIPI. However, ProPAC (1991)) suggest that real case-mix intensity factor in the FY 2004 and FY 2005
since this estimation of the change in the change was not dependent on total change, update recommendations as discussed in the
CIPI is less than 0.25 percentage points, it is but was usually a fairly steady 1.0 to 1.4
FY 2004 IPPS final rule (68 FR 45482) and
not reflected in the update recommended percent per year. We use 1.4 percent as the
the FY 2005 IPPS final rule (69 FR 49285),
under this framework. Therefore, we are upper bound because the RAND study did
respectively. If hospitals were treating new or
proposing to make a 0.0 percent adjustment not take into account that hospitals may have
different types of cases, which would result
for forecast error in the update for FY 2006. induced doctors to document medical
Under the capital IPPS system framework, records more completely in order to improve in an appropriate increase in charges per
we also make an adjustment for changes in payment. discharge, then we would expect hospitals’
intensity. We calculate this adjustment using We calculate case-mix constant intensity as case-mix to increase proportionally.
the same methodology and data that are used the change in total charges per admission, As we discussed in the FY 2005 IPPS final
in the framework for the operating PPS. The adjusted for price level changes (the CPI for rule (69 FR 49285), because our intensity
intensity factor for the operating update hospital and related services), and changes in calculation relies heavily upon charge data
framework reflects how hospital services are real case-mix. As we noted above, in and we believe that these charge data may be
utilized to produce the final product, that is, accordance with § 412.308(c)(1)(ii), we began inappropriately skewed, we established a 0.0
the discharge. This component accounts for updating the capital standard Federal rate in percent adjustment for intensity for FY 2005.
changes in the use of quality-enhancing FY 1996 using an update framework that We believed that it was appropriate to apply
services, for changes in within-DRG severity, takes into account, among other things, a zero intensity adjustment until we believe
and for expected modification of practice allowable changes in the intensity of hospital that any increase in charges can be tied to
patterns to remove noncost-effective services. services. For FYs 1996 through 2001, we intensity rather than to attempts to maximize
We calculate case-mix constant intensity as found that case-mix constant intensity was outlier payments. As discussed above, we
the change in total charges per admission, declining and we established a 0.0 percent believe that the most recently available
adjusted for price level changes (the CPI for adjustment for intensity in each of those charge data used to make this determination
hospital and related services) and changes in years. For FYs 2002 and 2003, we found that may still be inappropriately skewed.
real case-mix. The use of total charges in the case-mix constant intensity was increasing Therefore, we are proposing a 0.0 percent
calculation of the intensity factor makes it a and we established a 0.3 percent adjustment adjustment for intensity for FY 2006. In the
total intensity factor; that is, charges for and 1.0 percent adjustment for intensity, past (FYs 1996 through 2001) when we found
capital services are already built into the respectively. For FYs 2004 and 2005, we intensity to be declining, we believed a zero
calculation of the factor. Therefore, we have found that the charge data appeared to be (rather than negative) intensity adjustment
incorporated the intensity adjustment from skewed (as discussed in greater detail below) was appropriate. Similarly, we believe that it
the operating update framework into the and we established a 0.0 percent adjustment is appropriate to propose to apply a zero
capital update framework. Without reliable in each of those years. Furthermore, we intensity adjustment for FY 2006 until any
estimates of the proportions of the overall stated that we would continue to apply a 0.0 increase in charges can be tied to intensity
annual intensity increases that are due, percent adjustment for intensity until any rather than to attempts to maximize outlier
respectively, to ineffective practice patterns increase in charges can be tied to intensity payments.
and to the combination of quality-enhancing rather than attempts to maximize outlier Above we described the basis of the
new technologies and within-DRG payments. components used to develop the proposed
complexity, we assume, as in the operating Using the methodology described above, 0.7 percent capital update factor for FY 2006
update framework, that one-half of the for FY 2006 we examined the change in total as shown in the table below.
EP04MY05.067</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00172 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23477
b. Comparison of CMS and MedPAC Update determining the capital Federal rate. The the GAFs applied from October 2004 through
Recommendation proposed FY 2006 outlier adjustment of December 2004 and the GAFs applied from
In the past, MedPAC has included update 0.9497 is a ¥0.09 percent change from the January 2005 through September 2005) to
recommendations for capital PPS in a Report FY 2005 outlier adjustment of 0.9506. The estimated aggregate capital Federal rate
to Congress. In its March 2005 Report to net change in the proposed outlier payments based on the proposed FY 2006
Congress, MedPAC did not make an update adjustment to the capital Federal rate for FY relative weights and the proposed FY 2006
recommendation for capital PPS payments 2006 is 0.9991 (0.9497/0.9506). Thus, the GAF. As we established in the FY 2005 IPPS
for FY 2006. However, in that same report, proposed outlier adjustment decreases the FY final rule (69 FR 49287), the budget
MedPAC made an update recommendation 2006 capital Federal rate by 0.09 percent neutrality factors were 0.9914 for the national
for hospital inpatient and outpatient services compared with the FY 2005 outlier capital rate and 0.9895 for the Puerto Rico
(page 40). MedPAC reviews inpatient and adjustment. capital rate for discharges occurring on or
outpatient services together since they are so 3. Proposed Budget Neutrality Adjustment after October 1, 2004 through December 31,
closely interrelated. MedPAC recommended Factor for Changes in DRG Classifications 2004 (the first quarter of FY 2005). As a result
an increase in the payment rate for the and Weights and the GAF of the corrections to the FY 2005 GAF values
operating IPPS by the projected increase in established in the December 30, 2004
Section 412.308(c)(4)(ii) requires that the
the hospital market basket index, less 0.4 correction notice (69 FR 78531), effective for
capital Federal rate be adjusted so that
percent for FY 2006, based on their January 1, 2005 through September 30, 2005
aggregate payments for the fiscal year based
assessment of beneficiaries’ access to care, (the last three quarters of FY 2005), the
on the capital Federal rate after any changes
volume of services, access to capital, quality
resulting from the annual DRG budget neutrality factor for the national
of care, and the relationship of Medicare
reclassification and recalibration and changes capital rate is 0.9912 and the budget
payments and costs. In addition, the
Commission considered the efficient in the GAF are projected to equal aggregate neutrality factor for the Puerto Rico capital
provision of services in making its FY 2006 payments that would have been made on the rate remained unchanged (0.9895). For FY
update recommendations. (MedPAC’s Report basis of the capital Federal rate without such 2005, the weighted average budget neutrality
to the Congress: Medicare Payment Policy, changes. adjustment factors were 0.9912 (0.9914 × 1⁄4
March 2005, page 44.) Since we implemented a separate GAF for + 0.9912 × 3⁄4) for the national capital rate
Puerto Rico, we apply separate budget (calculations were done on unrounded
2. Proposed Outlier Payment Adjustment neutrality adjustments for the national GAF numbers) and 0.9895 for the Puerto Rico
Factor and the Puerto Rico GAF. We apply the same capital rate. In making the comparison, we
Section 412.312(c) establishes a unified budget neutrality factor for DRG set the regular and special exceptions
outlier methodology for inpatient operating reclassifications and recalibration nationally reduction factors to 1.00. To achieve budget
and inpatient capital-related costs. A single and for Puerto Rico. Separate adjustments neutrality for the changes in the national
set of thresholds is used to identify outlier were unnecessary for FY 1998 and earlier GAF, based on calculations using updated
cases for both inpatient operating and because the GAF for Puerto Rico was data, we are proposing to apply an
inpatient capital-related payments. Section implemented in FY 1998. incremental budget neutrality adjustment of
412.308(c)(2) provides that the standard In the past, we used the actuarial capital 1.0022 for FY 2006 to the weighted average
Federal rate for inpatient capital-related costs cost model (described in Appendix B of the
of the previous cumulative FY 2005
be reduced by an adjustment factor equal to FY 2002 IPPS final rule (66 FR 40099)) to
adjustments of 0.9912 (yielding a proposed
the estimated proportion of capital related estimate the aggregate payments that would
adjustment of 0.9934) through FY 2006
outlier payments to total inpatient capital- have been made on the basis of the capital
Federal rate with and without changes in the (calculations done on unrounded numbers).
related PPS payments. The outlier thresholds
DRG classifications and weights and in the For the Puerto Rico GAF, we are proposing
are set so that operating outlier payments are
GAF to compute the adjustment required to to apply an incremental budget neutrality
projected to be 5.1 percent of total operating
maintain budget neutrality for changes in adjustment of 1.0240 for FY 2006 to the
DRG payments.
In the FY 2005 IPPS final rule (69 FR DRG weights and in the GAF. During the previous cumulative FY 2005 adjustment of
49286), we estimate that outlier payments for transition period, the capital cost model was 0.9895, yielding a proposed cumulative
capital will equal 4.94 percent of inpatient also used to estimate the regular exception adjustment of 1.0132 through FY 2006.
capital-related payments based on the capital payment adjustment factor. As we explain in We then compared estimated aggregate
Federal rate in FY 2005. Based on the section III.A.4. of this Addendum, beginning capital Federal rate payments based on the
thresholds as set forth in section II.A.4.c. of in FY 2002, an adjustment for regular FY 2005 DRG relative weights and the
this Addendum, we estimate that outlier exception payments is no longer necessary. average FY 2005 GAF to estimated aggregate
payments for capital would equal 5.03 Therefore, we are no longer using the capital capital Federal rate payments based on the
percent for inpatient capital-related cost model. Instead, we are using historical proposed FY 2006 DRG relative weights and
payments based on the proposed Federal rate data based on hospitals’ actual cost the proposed FY 2006 GAF. The proposed
in FY 2006. Therefore, we are proposing to experiences to determine the exceptions incremental adjustment for DRG
apply an outlier adjustment factor of 0.9497 payment adjustment factor for special classifications and changes in relative
to the capital Federal rate. Thus, the exceptions payments. weights is 0.9998 both nationally and for
percentage of capital outlier payments to To determine the proposed factors for FY Puerto Rico. The proposed cumulative
total capital standard payments for FY 2006 2006, we compared (separately for the adjustments for DRG classifications and
would be higher than the percentages for FY national capital rate and the Puerto Rico changes in relative weights and for changes
2005. capital rate) estimated aggregate capital in the GAF through FY 2005 are 0.9931
The outlier reduction factors are not built Federal rate payments based on the FY 2005 nationally and 1.013 for Puerto Rico. The
permanently into the capital rates; that is, DRG relative weights and the average FY following table summarizes the adjustment
they are not applied cumulatively in 2005 GAF (that is, the weighted average of factors for each fiscal year:
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00173 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23478 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
The methodology used to determine the PPS, there is a single DRG/GAF budget In the FY 2005 IPPS final rule (69 FR
proposed recalibration and geographic (DRG/ neutrality adjustment factor (the national 49288), we calculated a GAF/DRG budget
GAF) budget neutrality adjustment factor for capital rate and the Puerto Rico capital rate neutrality factor of 1.0006 for FY 2005. As we
FY 2006 is similar to that used in are determined separately) for changes in the noted above, as a result of the revisions to the
establishing budget neutrality adjustments GAF (including geographic reclassification) GAF effective for discharges occurring on or
under the PPS for operating costs. One and the DRG relative weights. In addition, after January 1, 2005 established in the
difference is that, under the operating PPS, there is no adjustment for the effects that December 30, 2004 correction notice (69 FR
the budget neutrality adjustments for the geographic reclassification has on the other 78351), we calculated a GAF/DRG budget
effect of geographic reclassifications are payment parameters, such as the payments neutrality factor of 1.0004 for discharges
determined separately from the effects of for serving low-income patients, indirect occurring in the remainder of FY 2005. For
other changes in the hospital wage index and medical education payments, or the large FY 2006, we are proposing a GAF/DRG
EP04MY05.068</GPH>
the DRG relative weights. Under the capital urban add-on payments. budget neutrality factor of 1.0019. The GAF/
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00174 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23479
DRG budget neutrality factors are built adjustment used in calculating the proposed capital rates; that is, the factors are not
permanently into the capital rates; that is, FY 2006 capital Federal rate below. applied cumulatively in determining the
they are applied cumulatively in determining Under the special exceptions provision capital Federal rate. Therefore, the proposed
the capital Federal rate. This follows from the specified at § 412.348(g)(1), eligible hospitals net change in the exceptions adjustment
requirement that estimated aggregate include SCHs, urban hospitals with at least factor used in determining the proposed FY
payments each year be no more or less than 100 beds that have a disproportionate share 2006 capital Federal rate is 1.0001 (0.9997/
they would have been in the absence of the percentage of at least 20.2 percent or qualify 0.9996).
annual DRG reclassification and recalibration for DSH payments under § 412.106(c)(2), and
and changes in the GAF. The proposed hospitals with a combined Medicare and 5. Proposed Capital Standard Federal Rate for
incremental change in the adjustment from Medicaid inpatient utilization of at least 70 FY 2006
the average from FY 2005 to FY 2006 is percent. An eligible hospital may receive In the FY 2005 IPPS final rule (69 FR
1.0019. The proposed cumulative change in special exceptions payments if it meets (1) a 49283) and corrected in a December 30, 2004
the capital Federal rate due to this project need requirement as described at correction notice (69 FR 78532), we
adjustment is 0.9931 (the product of the § 412.348(g)(2), which, in the case of certain established a capital Federal rate of $416.53
incremental factors for FYs 1993 through urban hospitals, includes an excess capacity for FY 2005. In this proposed rule, we are
2005 and the proposed incremental factor of test as described at § 412.348(g)(4); (2) an age proposing to establish a capital Federal rate
1.0019 for FY 2006). (We note that averages of assets test as described at § 412.348(g)(3); of $419.90 for FY 2006. The proposed capital
of the incremental factors that were in effect and (3) a project size requirement as Federal rate for FY 2006 was calculated as
during FYs 2004 and 2005, respectively, were described at § 412.348(g)(5). follows:
used in the calculation of the proposed Based on information compiled from our • The proposed FY 2006 update factor is
cumulative adjustment of 0.9931 for FY fiscal intermediaries, six hospitals have
1.0070; that is, the update is 0.7 percent.
2006.) qualified for special exceptions payments
• The proposed FY 2006 budget neutrality
This proposed factor accounts for DRG under § 412.348(g). Since we have cost
adjustment factor that is applied to the
reclassifications and recalibration and for reports ending in FY 2004 for all of these
hospitals, we calculated the proposed capital standard Federal payment rate for
changes in the GAF. It also incorporates the
adjustment based on actual cost experience. changes in the DRG relative weights and in
effects on the GAF of FY 2006 geographic
Using data from cost reports ending in FY the GAF is 1.0019.
reclassification decisions made by the
2004 from the December 2004 update of the • The proposed FY 2006 outlier
MGCRB compared to FY 2005 decisions.
However, it does not account for changes in HCRIS data, we divided the capital special adjustment factor is 0.9497.
payments due to changes in the DSH and exceptions payment amounts for the six • The proposed FY 2006 (special)
IME adjustment factors or in the large urban hospitals that qualified for special exceptions exceptions payment adjustment factor is
add-on. by the total capital PPS payment amounts 0.9997.
(including special exception payments) for Because the proposed capital Federal rate
4. Proposed Exceptions Payment Adjustment has already been adjusted for differences in
all hospitals. Based on the data from cost
Factor case-mix, wages, cost-of-living, indirect
reports ending in FY 2004, this ratio is
Section 412.308(c)(3) requires that the rounded to 0.0003. Because we have not medical education costs, and payments to
capital standard Federal rate be reduced by received all cost reports ending in FY 2004, hospitals serving a disproportionate share of
an adjustment factor equal to the estimated we also divided the FY 2004 special low-income patients, we are proposing to
proportion of additional payments for both exceptions payments by the total capital PPS make no additional adjustments in the
regular exceptions and special exceptions payment amounts for all hospitals with cost capital standard Federal rate for these factors,
under § 412.348 relative to total capital PPS reports ending in FY 2003. This ratio also other than the budget neutrality factor for
payments. In estimating the proportion of rounds to 0.0003. Because special exceptions changes in the DRG relative weights and the
regular exception payments to total capital are budget neutral, we are proposing to offset GAF.
PPS payments during the transition period, the capital Federal rate by 0.03 percent for We are providing a chart that shows how
we used the actuarial capital cost model special exceptions payments for FY 2006. each of the proposed factors and adjustments
originally developed for determining budget Therefore, the proposed exceptions for FY 2006 affected the computation of the
neutrality (described in Appendix B of the adjustment factor is equal to 0.9997 proposed FY 2006 capital Federal rate in
FY 2002 IPPS final rule (66 FR 40099)) to (1¥0.0003) to account for special exceptions comparison to the average FY 2005 capital
determine the exceptions payment payments in FY 2006. Federal rate. The proposed FY 2006 update
adjustment factor, which was applied to both In the FY 2005 IPPS final rule (69 FR
the Federal and hospital-specific capital factor has the effect of increasing the capital
49288), we estimated that total (special) Federal rate by 0.70 percent compared to the
rates. exceptions payments for FY 2005 would
An adjustment for regular exception average FY 2005 Federal rate. The proposed
equal 0.04 percent of aggregate payments
payments is no longer necessary in GAF/DRG budget neutrality factor has the
based on the capital Federal rate. Therefore,
determining the proposed FY 2006 capital effect of increasing the capital Federal rate by
we applied an exceptions adjustment factor
Federal rate because, in accordance with of 0.9996 (1¥0.0004) in determining the FY 0.19 percent. The proposed FY 2006 outlier
§ 412.348(b), regular exception payments 2005 capital Federal rate. As we stated above, adjustment factor has the effect of decreasing
were only made for cost reporting periods we estimate that exceptions payments in FY the capital Federal rate by 0.09 percent
beginning on or after October 1, 1991 and 2006 would equal 0.03 percent of aggregate compared to the average FY 2005 capital
before October 1, 2001. Accordingly, as we payments based on the proposed FY 2006 Federal rate, and the proposed FY 2006
explained in the FY 2002 IPPS final rule (66 capital Federal rate. Therefore, we are exceptions payment adjustment factor has
FR 39949), in FY 2002 and subsequent fiscal proposing to apply an exceptions payment the effect of increasing the capital Federal
years, no payments will be made under the adjustment factor of 0.9997 to the capital rate by 0.01 percent compared to the
regular exceptions provision. However, in Federal rate for FY 2006. The proposed exceptions payment adjustment factor for the
accordance with § 412.308(c), we still need to exceptions adjustment factor for FY 2006 is FY 2005 capital Federal rate. The combined
compute a budget neutrality adjustment for 0.01 percent higher than the factor for FY effect of all the proposed changes is to
special exception payments under 2005 published in the FY 2005 IPPS final increase the capital Federal rate by 0.81
§ 412.348(g). We describe our methodology rule (69 FR 49288). The exceptions reduction percent compared to the average FY 2005
for determining the special exceptions factors are not built permanently into the capital Federal rate.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00175 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23480 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
6. Proposed Special Capital Rate for Puerto the proposed DRG adjustment is 0.9998, for (Standard Federal Rate) × (DRG weight) ×
Rico Hospitals a combined cumulative adjustment of 1.0130. (GAF) × (Large Urban Add-on, if applicable)
Section 412.374 provides for the use of a In computing the payment for a particular × (COLA adjustment for hospitals located in
blended payment system for payments to Puerto Rico hospital, the Puerto Rico portion Alaska and Hawaii) × (1 + Disproportionate
of the capital rate (25 percent) is multiplied Share Adjustment Factor + IME Adjustment
Puerto Rico hospitals under the PPS for acute
by the Puerto Rico-specific GAF for the labor Factor, if applicable). The result is the
care hospital inpatient capital-related costs.
market area in which the hospital is located, adjusted capital Federal rate.
Accordingly, under the capital PPS, we and the national portion of the capital rate Hospitals also may receive outlier
compute a separate payment rate specific to (75 percent) is multiplied by the national payments for those cases that qualify under
Puerto Rico hospitals using the same GAF for the labor market area in which the the thresholds established for each fiscal
methodology used to compute the national hospital is located (which is computed from year. Section 412.312(c) provides for a single
Federal rate for capital-related costs. Under national data for all hospitals in the United set of thresholds to identify outlier cases for
the broad authority of section 1886(g) of the States and Puerto Rico). In FY 1998, we both inpatient operating and inpatient
Act, as discussed in section VI. of the implemented a 17.78 percent reduction to the capital-related payments. The proposed
preamble of this proposed rule, beginning Puerto Rico capital rate as a result of Pub. L. outlier thresholds for FY 2006 are in section
with discharges occurring on or after 105–33. In FY 2003, a small part of that II.A.4.c. of this Addendum. For FY 2006, a
October 1, 2004, capital payments to reduction was restored. case qualifies as a cost outlier if the cost for
hospitals in Puerto Rico are based on a blend For FY 2005, before application of the the case plus the IME and DSH payments is
of 25 percent of the Puerto Rico capital rate GAF, the special capital rate for Puerto Rico greater than the prospective payment rate for
and 75 percent of the capital Federal rate. hospitals was $199.01 for discharges the DRG plus $26,675.
The Puerto Rico capital rate is derived from occurring on or after October 1, 2004 through An eligible hospital may also qualify for a
the costs of Puerto Rico hospitals only, while September 30, 2005. With the changes we are
special exceptions payment under
the capital Federal rate is derived from the proposing to the factors used to determine
§ 412.348(g) for up through the 10th year
costs of all acute care hospitals participating the capital rate, the proposed FY 2006 special
beyond the end of the capital transition
in the IPPS (including Puerto Rico). capital rate for Puerto Rico is $205.64.
period if it meets: (1) A project need
To adjust hospitals’ capital payments for B. Calculation of Proposed Inpatient Capital- requirement described at § 412.348(g)(2),
geographic variations in capital costs, we Related Prospective Payments for FY 2006 which in the case of certain urban hospitals
apply a GAF to both portions of the blended includes an excess capacity test as described
Because the 10-year capital PPS transition
capital rate. The GAF is calculated using the at § 412.348(g)(4); and (2) a project size
period ended in FY 2001, all hospitals
operating IPPS wage index and varies, requirement as described at § 412.348(g)(5).
(except ‘‘new’’ hospitals under § 412.324(b)
depending on the labor market area or rural and under § 412.304(c)(2)) are paid based on Eligible hospitals include SCHs, urban
area in which the hospital is located. We use 100 percent of the capital Federal rate in FY hospitals with at least 100 beds that have a
the Puerto Rico wage index to determine the 2006. The applicable proposed capital DSH patient percentage of at least 20.2
GAF for the Puerto Rico part of the capital- Federal rate was determined by making percent or qualify for DSH payments under
blended rate and the national wage index to adjustments as follows: § 412.106(c)(2), and hospitals that have a
determine the GAF for the national part of • For outliers, by dividing the proposed combined Medicare and Medicaid inpatient
the blended capital rate. capital standard Federal rate by the proposed utilization of at least 70 percent. Under
Because we implemented a separate GAF outlier reduction factor for that fiscal year; § 412.348(g)(8), the amount of a special
for Puerto Rico in FY 1998, we also apply and exceptions payment is determined by
separate budget neutrality adjustments for • For the payment adjustments applicable comparing the cumulative payments made to
the national GAF and for the Puerto Rico to the hospital, by multiplying the hospital’s the hospital under the capital PPS to the
GAF. However, we apply the same budget proposed GAF, disproportionate share cumulative minimum payment level. This
neutrality factor for DRG reclassifications and adjustment factor, and IME adjustment factor, amount is offset by: (1) Any amount by
recalibration nationally and for Puerto Rico. when appropriate. which a hospital’s cumulative capital
As we stated above in section III.A.4. of this For purposes of calculating payments for payments exceed its cumulative minimum
Addendum, for Puerto Rico, the proposed each discharge during FY 2006, the capital payment levels applicable under the regular
EP04MY05.069</GPH>
GAF budget neutrality factor is 1.0240, while standard Federal rate is adjusted as follows: exceptions process for cost reporting periods
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00176 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23481
beginning during which the hospital has factors produces the 0.7 percent increase for methodology will have the reasonable cost-
been subject to the capital PPS; and (2) any the CIPI as a whole in FY 2006. based portion of their payment subject to a
amount by which a hospital’s current year hospital target amount and, if applicable, the
operating and capital payments (excluding 75 IV. Proposed Changes to Payment Rates for payment amount limitation.
percent of operating DSH payments) exceed Excluded Hospitals and Hospital Units:
its operating and capital costs. Under Rate-of-Increase Percentages B. Updated Caps for New Excluded Hospitals
§ 412.348(g)(6), the minimum payment level (If you choose to comment on issues in this and Units
is 70 percent for all eligible hospitals. section, please include the caption ‘‘Excluded Section 1886(b)(7) of the Act established
During the transition period, new hospitals Hospitals Rate-of-Increase’’ at the beginning the method for determining the payment
(as defined under § 412.300) were exempt of your comment.) amount for new rehabilitation hospitals and
from the capital PPS for their first 2 years of units, psychiatric hospitals and units, and
operation and were paid 85 percent of their A. Payments to Existing Excluded Hospitals LTCHs that first received payment as a
reasonable costs during that period. Effective and Units hospital or unit excluded from the IPPS on
with the third year of operation through the As discussed in section VII. of the or after October 1, 1997. However, due to the
remainder of the transition period, under preamble of this proposed rule, in implementation of the IRF PPS, effective for
§ 412.324(b), we paid the hospitals under the accordance with section 1886(b)(3)(H)(i) of cost reporting periods beginning on or after
appropriate transition methodology. If the the Act and effective for cost reporting October 1, 2002, this payment amount (or
hold-harmless methodology were applicable, periods beginning on or after October 1, ‘‘new provider cap’’) no longer applies to any
the hold-harmless payment for assets in use 2002, payments to existing psychiatric new rehabilitation hospital or unit because
during the base period would extend for 8 hospitals and units, rehabilitation hospitals they now are paid 100 percent of the Federal
years, even if the hold-harmless payments and units, and long-term care hospitals prospective rate under the IRF PPS. In
extend beyond the normal transition period. (LTCHs) excluded from the IPPS are no addition, LTCHs that meet the definition of
Under § 412.304(c)(2), for cost reporting longer subject to a cap on a hospital-specific a new LTCH under § 412.23(e)(4) are paid
periods beginning on or after October 1, target amount (expressed in terms of the 100 percent of the fully Federal prospective
2002, we pay a new hospital 85 percent of inpatient operating cost per discharge under payment rate. In contrast, those ‘‘new’’
its reasonable costs during the first 2 years TEFRA) that is set for each hospital, based on LTCHs that meet the criteria under
of operation unless it elects to receive the hospital’s own historical cost experience § 413.40(f)(2)(ii) (that is, that were not paid
payment based on 100 percent of the capital trended forward by the applicable percentage as an excluded hospital prior to October 1,
Federal rate. Effective with the third year of increase. However, the inpatient operating 1997, but were paid as a LTCH before
operation, we pay the hospital based on 100 costs of children’s hospitals and cancer October 1, 2002), may be paid under the
percent of the capital Federal rate (that is, the hospitals that are excluded from the IPPS LTCH PPS transition methodology, with the
same methodology used to pay all other continue to be subject to the rate-of-increase reasonable cost portion of the payment
hospitals subject to the capital PPS). limits established under the authority of subject to § 413.40(f)(2)(ii). Finally, LTCHs
section 1886(b) of the Act and § 413.40 of the that existed prior to October 1, 1997, may
C. Capital Input Price Index regulations. This target amount is applied as also be paid under the LTCH PPS transition
1. Background a ceiling on the allowable costs per discharge methodology, with the reasonable cost
Like the operating input price index, the for the hospital’s cost reporting period. portion subject to § 413.40(c)(4)(ii). (The last
capital input price index (CIPI) is a fixed- Effective for cost reporting periods LTCHs that were subject to the payment
weight price index that measures the price beginning on or after October 1, 2002, amount limitation for ‘‘new’’ LTCHs were
changes associated with capital costs during rehabilitation hospitals and units are paid new LTCHs that had their first cost reporting
a given year. The CIPI differs from the 100 percent of the adjusted Federal period beginning on September 30, 2002. In
operating input price index in one important prospective payment rate under the IRP PPS. that case, the payment amount limitation
aspect—the CIPI reflects the vintage nature of Effective for cost reporting periods beginning remained applicable for the next 2 years—
capital, which is the acquisition and use of on or after October 1, 2002, LTCHs also are September 30, 2002 through September 29,
capital over time. Capital expenses in any no longer paid on a reasonable cost basis, but 2003, and September 30, 2003 through
given year are determined by the stock of are paid under a LTCH DRG-based PPS. In September 29, 2004. This is because, under
capital in that year (that is, capital that implementing the LTCH PPS for existing existing regulations at § 413.40(f)(2)(ii), the
remains on hand from all current and prior LTCHs, we established a 5-year transition ‘‘new hospital’’ would be subject to the same
capital acquisitions). An index measuring period from reasonable cost-based payments payment (target amount) in its second cost
capital price changes needs to reflect this (subject to the TEFRA limit) to fully Federal reporting period that was applicable to the
vintage nature of capital. Therefore, the CIPI prospective payment amounts during which LTCH in its first cost reporting period.
was developed to capture the vintage nature a LTCH may receive a blended payment Accordingly, for this hospital, the updated
of capital by using a weighted-average of past consisting of two payment components—one payment amount limitation that we
capital purchase prices up to and including based on reasonable cost under the TEFRA published in the FY 2003 IPPS final rule (67
the current year. payment system, and the other based on the FR 50103) applied through September 29,
We periodically update the base year for standard Federal prospective payment rate. 2004. Consequently, there is no longer a need
the operating and capital input prices to However, an existing LTCH may elect to be to publish updated payment amounts for new
reflect the changing composition of inputs for paid based on 100 percent of the standard (§ 413.40(f)(2)(ii)) LTCHs. A discussion of
operating and capital expenses. The CIPI was Federal prospective payment rate during the how the payment limitations were calculated
last rebased to FY 1997 in the FY 2003 IPPS transition period. can be found in the August 29, 1997 final
final rule (67 FR 50044). (We note that we are IPFs that have their first cost reporting rule with comment period (62 FR 46019); the
proposing a rebasing to FY 2002 in section period beginning on or after January 1, 2005, May 12, 1998 final rule (63 FR 26344); the
IV. of the preamble of this proposed rule.) are not paid on a reasonable cost basis but July 31, 1998 final rule (63 FR 41000); and
paid under a prospective per diem payment the July 30, 1999 final rule (64 FR 41529).
2. Forecast of the CIPI for FY 2006 system. As part of the PPS for existing IPFs, With the implementation of the LTCH PPS,
Based on the latest forecast by Global we have established a 3-year transition payment limitations do not apply to any new
Insight, Inc. (first quarter of 2005), we are period during which IPFs will be paid based LTCHs that meet the definition at
forecasting the CIPI to increase 0.7 percent in on a blend of reasonable cost-based payment § 412.23(e)(4) because they are paid 100
FY 2006. This reflects a projected 1.3 percent (subject to the TEFRA limit) and the percent of the Federal prospective payment
increase in vintage-weighted depreciation prospective per diem payment rate. For cost rate.
prices (building and fixed equipment, and reporting periods beginning on or after A freestanding inpatient rehabilitation
movable equipment) and a 2.7 percent January l, 2008, IPFs will be paid 100 percent hospital, an inpatient rehabilitation unit of
increase in other capital expense prices in FY of the Federal prospective per diem payment an acute care hospital, and an inpatient
2006, partially offset by a 2.3 percent decline amount. rehabilitation unit of a CAH are referred to
in vintage-weighted interest expenses in FY Excluded psychiatric hospitals and units as as IRFs. Effective for cost reporting periods
2006. The weighted average of these three well as LTCHs that are paid under a blended beginning on or after October 1, 2002, this
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00177 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23482 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
payment limitation is also no longer hospitals under Part A of Title XVIII of the Year 2004; Hospital Average Hourly
applicable to new rehabilitation hospitals Act for the costs of administering blood Wage for Federal Fiscal Years 2004 (2000
and units because they are paid 100 percent clotting factors to individuals with Wage Data), 2005 (2001 Wage Data), and
of the Federal prospective rate under the IRF hemophilia by multiplying a predetermined 2006 (2002 Wage Data) Wage Indexes
PPS. Therefore, it is also no longer necessary price per unit of blood clotting factor by the and 3-Year Average of Hospital Average
to update the payment limitation for new number of units provided to the individual. Hourly Wages;
rehabilitation hospitals or units. Currently, we use the average wholesale Table 3A—FY 2006 3-Year Average Hourly
Under the IPF PPS, there is a 3-year price (AWP) methodology used to determine Wage for Urban Areas by CBSA;
transition period during which existing IPFs rates paid for Medicare Part B drugs to price Table 3B—FY 2006 and 3-Year Average
will receive a blended payment of the blood clotting factors administered to
Hourly Wage for Rural Areas by CBSA;
Federal per diem payment amount and the inpatients who have hemophilia under
Medicare Part A. Section 303 of Pub. L. 108– Table 4A—Wage Index and Capital
payment amount that IPFs would receive
173 amended the Act by adding section Geographic Adjustment Factor (GAF) for
under the reasonable cost-based payment
1847A, which changed the drug pricing Urban Areas by CBSA;
(TEFRA) methodology. IPFs that were ‘‘new’’
under § 413.40(f)(2)(ii) (that is, that were not system under Medicare Part B. Effective Table 4B—Wage Index and Capital
paid as an excluded hospital prior to October January 1, 2005, section 1847A of the Act Geographic Adjustment Factor (GAF) for
1, 1997, but were paid as an IPF prior to established a payment methodology based on Rural Areas by CBSA;
January 1, 2005), would have the reasonable average sales price (ASP) under which almost Table 4C—Wage Index and Capital
cost portion of the transition period payment all Medicare Part B drugs and biologicals not Geographic Adjustment Factor (GAF) for
subject to the payment amount limitation as paid on a cost or prospective basis are paid Hospitals That Are Reclassified by
determined according to § 413.40(f)(2)(ii). at 106 percent of the ASP. CBSA;
The last ‘‘new’’ IPFs that were subject to the In the FY 2005 IPPS final rule (69 FR Table 4F—Puerto Rico Wage Index and
payment amount limitation were IPFs that 49292), we had instructed the fiscal Capital Geographic Adjustment Factor
had their first cost reporting period beginning intermediaries for FY 2005 to continue to use (GAF) by CBSA;
on December 31, 2004. For these hospitals, the Single Drug Pricer (SDP) to establish the Table 4J—Out-Migration Adjustment—FY
the payment amount limitation that was pricing limits for the blood clotting factor 2006;
published in the FY 2005 IPPS final rule (69 administered to hemophilia inpatients at 95 Table 5—List of Diagnosis Related Groups
FR 49189) for cost reporting periods percent of the AWP. We did not use the new
(DRGs), Relative Weighting Factors,
beginning on or after October 1, 2004, and ASP pricing methodology for Part A blood
Geometric and Arithmetic Mean Length
before January 1, 2005, remains applicable clotting factor in FY 2005 because the IPPS
final rule was published in advance of final of Stay;
for the IPF’s first two cost reporting periods. Table 6A—New Diagnosis Codes;
IPFs with a first cost reporting period regulations implementing the ASP payment
methodology for Part B drugs and biologicals. Table 6B—New Procedure Codes;
beginning on or after January 1, 2005, are Table 6C—Invalid Diagnosis Codes;
paid 100 percent of the Federal rate and are Final regulations establishing the ASP
methodology and the furnishing fee for blood Table 6D—Invalid Procedure Codes;
not subject to the payment amount
clotting factor under Medicare Part B were Table 6E—Revised Diagnosis Code Titles;
limitation. Therefore, since the last IPFs
published on November 15, 2004 (69 FR Table 6F—Revised Procedure Code Titles;
eligible for a blended payment have a cost
reporting period beginning on December 31, 66299). Therefore, we believe that a Table 6G—Additions to the CC Exclusions
2004, the payment limitation published for consistent methodology should be used to List;
FY 2005 remains applicable for these IPFs, pay for blood clotting factor administered Table 6H—Deletions from the CC Exclusions
and publication of the updated payment under both Medicare Part A and Part B. For List;
amount limitation is no longer needed. We this reason, we are proposing for FY 2006 Table 7A—Medicare Prospective Payment
note that IPFs that existed prior to October that the fiscal intermediaries make payment System Selected Percentile Lengths of
1, 1997, may also be paid under the IPF for blood clotting factor using 106 percent of Stay FY 2004 MedPAR Update December
transition methodology with the reasonable ASP and make payment for the furnishing fee 2004 GROUPER V22.0;
cost portion of the payment subject to at $0.14 per individual unit (I.U.) that is Table 7B—Medicare Prospective Payment
§ 413.40(c)(4)(ii). currently used for Medicare Part B drugs. The System Selected Percentile Lengths of
The payment limitations for new hospitals ASP will be updated quarterly. The Stay FY 2004 MedPAR Update December
under TEFRA do not apply to new LTCHs, furnishing fee will be updated annually
2004 GROUPER V23.0;
IRFs, or IPFs, that is, these hospitals with based on the consumer price index.
Table 8A—Statewide Average Operating
their first cost reporting period beginning on VI. Tables Cost-to-Charge Ratios—March 2005;
or after the date that the particular class of Table 8B—Statewide Average Capital Cost-to-
This section contains the tables referred to
hospitals implemented the respective PPS. Charge Ratios—March 2005;
throughout the preamble to this proposed
Therefore, for the reasons noted above, we Table 9A—Hospital Reclassifications and
rule and in this Addendum. Tables 1A, 1B,
are proposing to discontinue publishing Redesignations by Individual Hospital
1C, 1D, 2, 3A, 3B, 4A, 4B, 4C, 4F, 4J, 5, 6A,
Tables 4G and 4H (Pre-Reclassified Wage and CBSA—FY 2006;
6B, 6C, 6D, 6E, 6F, 6G, 6H, 7A, 7B, 8A, 8B,
Index for Urban and Rural Areas, Table 9B—Hospital Reclassifications and
9A, 9B, 9C, 10, and 11 are presented below.
respectively) in the annual proposed and Redesignations by Individual Hospital
The tables presented below are as follows:
final IPPS rules. Under Section 508 of Pub. L. 108–173—
Table 1A—National Adjusted Operating
V. Payment for Blood Clotting Factor FY 2006;
Standardized Amounts, Labor/Nonlabor
Administered to Hemophilia Inpatients Table 9C—Hospitals Redesignated as Rural
(69.7 Percent Labor Share/30.3 Percent
(If you choose to comment on issues in this Nonlabor Share If Wage Index Is Greater under Section 1886(s)(8)(E) of the Act—
section, please include the caption ‘‘Payment Than 1); FY 2006;
for Blood Clotting Factor’’ at the beginning of Table 1B—National Adjusted Operating Table 10—Geometric Mean Plus the Lesser of
your comments.) Standardized Amounts, Labor/Nonlabor .75 of the National Adjusted Operating
As discussed in section VIII. of the (62 Percent Labor Share/38 Percent Standardized Payment Amount
preamble to this proposed rule, section Nonlabor Share If Wage Index Is Less (Increased to Reflect the Difference
1886(a)(4) of the Act excludes the costs of Than or Equal To 1); Between Costs and Charges) or .75 of
administering blood clotting factors to Table 1C—Adjusted Operating Standardized One Standard Deviation of Mean Charges
individuals with hemophilia from the Amounts for Puerto Rico, Labor/ by Diagnosis-Related Groups (DRGs)—
definition of ‘‘operating costs of inpatient Nonlabor; March 2005;
hospital services.’’ Section 6011(b) of Pub. L. Table 1D—Capital Standard Federal Payment Table 11—Proposed FY 2006 LTC-DRGs,
101–239 (the Omnibus Budget Reconciliation Rate; Relative Weights, Geometric Average
Act of 1989) provides that the Secretary shall Table 2—Hospital Case-Mix Indexes for Length of Stay, and 5/6ths of the
determine the payment amount made to Discharges Occurring in Federal Fiscal Geometric Average Length of Stay.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00178 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23483
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00179 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23484 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00180 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23485
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00181 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23486 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00182 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23487
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00183 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23488 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00184 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23489
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00185 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23490 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00186 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23491
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00187 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23492 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00188 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23493
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00189 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23494 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00190 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23495
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00191 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23496 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00192 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23497
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00193 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23498 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00194 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23499
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00195 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23500 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00196 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23501
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00197 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23502 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00198 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23503
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00199 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23504 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00200 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23505
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00201 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23506 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00202 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23507
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00203 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23508 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00204 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23509
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00205 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23510 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00206 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23511
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00207 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23512 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00208 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23513
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00209 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23514 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00210 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23515
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00211 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23516 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00212 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23517
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00213 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23518 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00214 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23519
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00215 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23520 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00216 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23521
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00217 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23522 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00218 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23523
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00219 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23524 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00220 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23525
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00221 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23526 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00222 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23527
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00223 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23528 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00224 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23529
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00225 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23530 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00226 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23531
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00227 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23532 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00228 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23533
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00229 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23534 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00230 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23535
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00231 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23536 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00232 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23537
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00233 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23538 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00234 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23539
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00235 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23540 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00236 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23541
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00237 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23542 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00238 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23543
TABLE 2.—HOSPITAL CASE-MIX INDEXES FOR DISCHARGES OCCURRING IN FEDERAL FISCAL YEAR 2004; HOSPITAL AVER-
AGE HOURLY WAGE FOR FEDERAL FISCAL YEARS 2004 (2000 WAGE DATA), 2005 (2001 WAGE DATA), AND 2006
(2002 WAGE DATA) WAGE INDEXES AND 3-YEAR AVERAGE OF HOSPITAL AVERAGE HOURLY WAGES—Continued
Average
Average Average Average
Case-mix Wage index hourly
Provider number hourly wage hourly wage hourly wage
index FY 2006 wage **
FY 2004 FY 2005 FY 2006 (3 years)
*Denotes wage data not available for the provider for that year.
**Based on the sum of the salaries and hours computed for Federal FYs 2004, 2005, and 2006.
***Denotes MedPAR data not available for the provider for FY 2004.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00239 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23544 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 3A.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR URBAN AREAS BY CBSA
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00240 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23545
TABLE 3A.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR URBAN AREAS BY CBSA—Continued
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00241 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23546 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 3A.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR URBAN AREAS BY CBSA—Continued
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00242 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23547
TABLE 3A.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR URBAN AREAS BY CBSA—Continued
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00243 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23548 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 3A.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR URBAN AREAS BY CBSA—Continued
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00244 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23549
TABLE 3A.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR URBAN AREAS BY CBSA—Continued
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
TABLE 3B.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR RURAL AREAS BY CBSA
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
3-Year
CBSA FY 2006 av- Average
Nonurban area erage hourly
code Hourly
wage Wage
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00245 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23550 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 3B.—FY 2006 AND 3-YEAR* AVERAGE HOURLY WAGE FOR RURAL AREAS BY CBSA—Continued
[*Based on the sum of the salaries and hours computed for Federal fiscal years 2004, 2005, and 2006]
3-Year
FY 2006 av-
CBSA Average
Nonurban area erage hourly
code Hourly
wage Wage
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00246 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23551
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00247 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23552 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00248 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23553
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00249 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23554 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00250 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23555
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00251 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23556 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00252 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23557
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00253 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23558 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00254 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23559
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00255 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23560 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00256 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23561
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00257 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23562 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00258 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23563
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00259 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23564 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00260 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23565
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00261 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23566 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00262 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23567
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00263 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23568 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00264 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23569
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00265 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23570 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00266 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23571
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00267 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23572 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00268 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23573
TABLE 4A.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR URBAN AREAS BY CBSA—
Continued
Wage
CBSA code Urban area (constituent counties) GAF
index
TABLE 4B.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR RURAL AREAS BY CBSA
CBSA Wage
Nonurban area GAF
code index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00269 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23574 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4B.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR RURAL AREAS BY CBSA—
Continued
CBSA Wage
Nonurban area GAF
code index
TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR HOSPITALS THAT ARE
RECLASSIFIED BY CBSA
CBSA Wage
Area GAF
code index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00270 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23575
TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR HOSPITALS THAT ARE
RECLASSIFIED BY CBSA—Continued
CBSA Wage
Area GAF
code index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00271 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23576 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR HOSPITALS THAT ARE
RECLASSIFIED BY CBSA—Continued
CBSA Wage
Area GAF
code index
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00272 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23577
TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) FOR HOSPITALS THAT ARE
RECLASSIFIED BY CBSA—Continued
CBSA Wage
Area GAF
code index
TABLE 4F.—PUERTO RICO WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF) BY CBSA
Wage Index GAF -Re-
-Reclassi-
CBSA Code Area Wage Index GAF classified
fied Hos- Hospitals
pitals
The following list represents all Hospitals cannot receive the out- 1886(d)(8)(B) of the Act. Hospitals that
hospitals that are eligible to have their migration adjustment if they are have already been reclassified under
wage index increased by the out- reclassified under section 1886(d)(10) of section 1886(d)(10) of the Act or
migration adjustment listed in this table. the Act or redesignated under section redesignated under section
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00273 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23578 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00274 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23579
070034 ..... 0.0047 FAIRFIELD 150034 ..... 0.0241 LAKE 210057 ..... 0.0040 MONTGOMERY
080001 ..... 0.0059 NEW CASTLE 150035 ..... 0.0083 PORTER 220001* ... 0.0056 WORCESTER
080003 ..... 0.0059 NEW CASTLE 150045 ..... 0.0416 DE KALB 220002* ... 0.0249 MIDDLESEX
100014 ..... 0.0118 VOLUSIA 150060 ..... 0.0052 VERMILLION 220003* ... 0.0056 WORCESTER
100017 ..... 0.0118 VOLUSIA 150062 ..... 0.0153 DECATUR 220006 ..... 0.0306 ESSEX
100023* ... 0.0069 CITRUS 150065* ... 0.0139 JACKSON 220010* ... 0.0306 ESSEX
100045* ... 0.0118 VOLUSIA 150076* ... 0.0189 MARSHALL 220011* ... 0.0249 MIDDLESEX
100047 ..... 0.0021 CHARLOTTE 150088* ... 0.0196 MADISON 220019* ... 0.0056 WORCESTER
100062 ..... 0.0060 MARION 150090* ... 0.0241 LAKE 220025* ... 0.0056 WORCESTER
100068 ..... 0.0118 VOLUSIA 150091 ..... 0.0573 HUNTINGTON 220028* ... 0.0056 WORCESTER
100072 ..... 0.0118 VOLUSIA 150102* ... 0.0160 STARKE 220029* ... 0.0306 ESSEX
100077 ..... 0.0021 CHARLOTTE 150113* ... 0.0196 MADISON 220033* ... 0.0306 ESSEX
100102 ..... 0.0133 COLUMBIA 150122 ..... 0.0199 RIPLEY 220035* ... 0.0306 ESSEX
100118* ... 0.0398 FLAGLER 150125* ... 0.0241 LAKE 220049* ... 0.0249 MIDDLESEX
100156 ..... 0.0133 COLUMBIA 150126* ... 0.0241 LAKE 220058* ... 0.0056 WORCESTER
100175 ..... 0.0231 DE SOTO 150132* ... 0.0241 LAKE 220062* ... 0.0056 WORCESTER
100212 ..... 0.0060 MARION 150147* ... 0.0241 LAKE 220063* ... 0.0249 MIDDLESEX
100232* ... 0.0347 PUTNAM 150156 ..... 0.0241 LAKE 220070* ... 0.0249 MIDDLESEX
100236 ..... 0.0021 CHARLOTTE 160013 ..... 0.0218 MUSCATINE 220076 ..... 0.0249 MIDDLESEX
100249* ... 0.0069 CITRUS 160026* ... 0.0496 BOONE 220080* ... 0.0306 ESSEX
100252* ... 0.0233 OKEECHOBEE 160030 ..... 0.0032 STORY 220082* ... 0.0249 MIDDLESEX
110023* ... 0.0500 GORDON 160032 ..... 0.0272 JASPER 220084* ... 0.0249 MIDDLESEX
110026 ..... 0.0220 ELBERT 160080* ... 0.0049 CLINTON 220089* ... 0.0249 MIDDLESEX
110027 ..... 0.0387 FRANKLIN 160140 ..... 0.0364 PLYMOUTH 220090* ... 0.0056 WORCESTER
110029* ... 0.0063 HALL 170137* ... 0.0331 DOUGLAS 220095* ... 0.0056 WORCESTER
110041* ... 0.0777 HABERSHAM 180012* ... 0.0083 HARDIN 220098* ... 0.0249 MIDDLESEX
110063 ..... 0.0290 LIBERTY 180049 ..... 0.0532 MADISON 220101* ... 0.0249 MIDDLESEX
110069* ... 0.0474 HOUSTON 180055 ..... 0.0532 MADISON 220105* ... 0.0249 MIDDLESEX
110120 ..... 0.0873 POLK 180066* ... 0.0567 LOGAN 220163* ... 0.0056 WORCESTER
110124 ..... 0.0428 WAYNE 180127* ... 0.0352 FRANKLIN 220171* ... 0.0249 MIDDLESEX
110136 ..... 0.0261 BALDWIN 180128 ..... 0.0282 LAWRENCE 220174* ... 0.0306 ESSEX
110146 ..... 0.0642 CAMDEN 190001* ... 0.0645 WASHINGTON 230003 ..... 0.0035 OTTAWA
110150* ... 0.0261 BALDWIN 190003* ... 0.0107 IBERIA 230005 ..... 0.0598 LENAWEE
110153* ... 0.0474 HOUSTON 190010 ..... 0.0401 TANGIPAHOA 230013 ..... 0.0091 OAKLAND
110187* ... 0.1172 LUMPKIN 190015* ... 0.0401 TANGIPAHOA 230015 ..... 0.0359 ST. JOSEPH
110189* ... 0.0031 FANNIN 190017 ..... 0.0235 ST. LANDRY 230019 ..... 0.0091 OAKLAND
110190 ..... 0.0182 MACON 190049 ..... 0.0645 WASHINGTON 230021 ..... 0.0136 BERRIEN
110205* ... 0.0779 GILMER 190054 ..... 0.0107 IBERIA 230022* ... 0.0113 BRANCH
130003* ... 0.0095 NEZ PERCE 190078 ..... 0.0235 ST. LANDRY 230029 ..... 0.0091 OAKLAND
130011 ..... 0.0218 LATAH 190086* ... 0.0129 LINCOLN 230037* ... 0.0178 HILLSDALE
130024 ..... 0.0275 BONNER 190088 ..... 0.0705 WEBSTER 230041 ..... 0.0099 BAY
130049* ... 0.0349 KOOTENAI 190099* ... 0.039 AVOYELLES 230042* ... 0.0685 ALLEGAN
140001 ..... 0.0199 FULTON 190106* ... 0.0238 ALLEN 230047* ... 0.0082 MACOMB
140012* ... 0.022 LEE 190116 ..... 0.0179 MOREHOUSE 230069* ... 0.0487 LIVINGSTON
140026 ..... 0.0346 LA SALLE 190133 ..... 0.0238 ALLEN 230071 ..... 0.0091 OAKLAND
140033 ..... 0.0147 LAKE 190144 ..... 0.0705 WEBSTER 230072 ..... 0.0035 OTTAWA
140043* ... 0.0046 WHITESIDE 190147 ..... 0.0401 TANGIPAHOA 230075 ..... 0.0145 CALHOUN
140058* ... 0.0081 MORGAN 190148 ..... 0.039 AVOYELLES 230078* ... 0.0136 BERRIEN
140084 ..... 0.0147 LAKE 190191* ... 0.0235 ST. LANDRY 230092 ..... 0.0389 JACKSON
140100 ..... 0.0147 LAKE 200002* ... 0.0129 LINCOLN 230093* ... 0.0079 MECOSTA
140110* ... 0.0346 LA SALLE 200013 ..... 0.0186 WALDO 230096* ... 0.0359 ST. JOSEPH
140129 ..... 0.0096 WABASH 200019 ..... 0.0067 YORK 230099* ... 0.0339 MONROE
140130 ..... 0.0147 LAKE 200020* ... 0.0067 YORK 230106 ..... 0.0030 NEWAYGO
140155 ..... 0.0027 KANKAKEE 200024* ... 0.0071 ANDROSCOGGI- 230120 ..... 0.0598 LENAWEE
140160* ... 0.0286 STEPHENSON N 230121* ... 0.0691 SHIAWASSEE
140161* ... 0.0138 LIVINGSTON 200032 ..... 0.046 OXFORD 230130 ..... 0.0091 OAKLAND
140167* ... 0.0937 IROQUOIS 200034* ... 0.0071 ANDROSCOGGI- 230151 ..... 0.0091 OAKLAND
140173 ..... 0.0046 WHITESIDE N 230174 ..... 0.0035 OTTAWA
140186 ..... 0.0027 KANKAKEE 200040 ..... 0.0067 YORK 230184 ..... 0.0389 JACKSON
140199 ..... 0.0109 MONTGOMERY 200050* ... 0.0140 HANCOCK 230195* ... 0.0082 MACOMB
140202 ..... 0.0147 LAKE 210001 ..... 0.0129 WASHINGTON 230204* ... 0.0082 MACOMB
140205 ..... 0.0163 BOONE 210004 ..... 0.0040 MONTGOMERY 230207 ..... 0.0091 OAKLAND
140234* ... 0.0346 LA SALLE 210016 ..... 0.0040 MONTGOMERY 230217* ... 0.0145 CALHOUN
140291* ... 0.0147 LAKE 210018 ..... 0.0040 MONTGOMERY 230222 ..... 0.0228 MIDLAND
150002* ... 0.0241 LAKE 210022 ..... 0.0040 MONTGOMERY 230223 ..... 0.0091 OAKLAND
150004* ... 0.0241 LAKE 210023 ..... 0.0209 ANNE ARUNDEL 230227* ... 0.0082 MACOMB
150008* ... 0.0241 LAKE 210028 ..... 0.0512 ST. MARYS 230254 ..... 0.0091 OAKLAND
150022 ..... 0.0249 MONTGOMERY 210043 ..... 0.0209 ANNE ARUNDEL 230257* ... 0.0082 MACOMB
150030* ... 0.0201 HENRY 210048 ..... 0.0287 HOWARD 230264* ... 0.0082 MACOMB
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00275 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23580 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
230269 ..... 0.0091 OAKLAND 310093* ... 0.0351 ESSEX 360070 ..... 0.0028 STARK
230277 ..... 0.0091 OAKLAND 310096* ... 0.0351 ESSEX 360078* ... 0.0159 PORTAGE
230279* ... 0.0487 LIVINGSTON 310108 ..... 0.0350 MIDDLESEX 360084 ..... 0.0028 STARK
230295* ... 0.0685 ALLEGAN 310110 ..... 0.0180 MERCER 360086* ... 0.0168 CLARK
240011 ..... 0.0506 MC LEOD 310119* ... 0.0351 ESSEX 360093 ..... 0.0120 DEFIANCE
240013* ... 0.0226 MORRISON 320003 ..... 0.0630 SAN MIGUEL 360095 ..... 0.0087 HANCOCK
240014 ..... 0.0454 RICE 320011 ..... 0.0442 RIO ARRIBA 360096* ... 0.0031 COLUMBIANA
240018* ... 0.1196 GOODHUE 320018 ..... 0.0063 DONA ANA 360099 ..... 0.0087 HANCOCK
240021 ..... 0.0897 LE SUEUR 320085 ..... 0.0063 DONA ANA 360100 ..... 0.0028 STARK
240044 ..... 0.0868 WINONA 330001* ... 0.0560 ORANGE 360107* ... 0.0213 SANDUSKY
240064* ... 0.0138 ITASCA 330004* ... 0.0959 ULSTER 360131 ..... 0.0028 STARK
240069* ... 0.0419 STEELE 330008* ... 0.0470 WYOMING 360151 ..... 0.0028 STARK
240071* ... 0.0454 RICE 330027* ... 0.0137 NASSAU 360156 ..... 0.0213 SANDUSKY
240089 ..... 0.1196 GOODHUE 330094* ... 0.0778 COLUMBIA 360175* ... 0.0159 CLINTON
240133 ..... 0.0319 MEEKER 330106 ..... 0.0137 NASSAU 360177 ..... 0.0212 FAYETTE
240152* ... 0.0735 KANABEC 330126 ..... 0.0560 ORANGE 360185* ... 0.0031 COLUMBIANA
240154 ..... 0.0138 ITASCA 330135 ..... 0.0560 ORANGE 360187* ... 0.0168 CLARK
240187* ... 0.0506 MC LEOD 330167 ..... 0.0137 NASSAU 360197* ... 0.0092 LOGAN
240205 ..... 0.0138 ITASCA 330175 ..... 0.0268 CORTLAND 370004* ... 0.0193 OTTAWA
240211* ... 0.0705 PINE 330181* ... 0.0137 NASSAU 370014* ... 0.0831 BRYAN
250030 ..... 0.0318 LEAKE 330182* ... 0.0137 NASSAU 370015* ... 0.0463 MAYES
250040* ... 0.0294 JACKSON 330191* ... 0.0026 WARREN 370023 ..... 0.0084 STEPHENS
250045 ..... 0.0042 HANCOCK 330198 ..... 0.0137 NASSAU 370043 ..... 0.0294 MARSHALL
250088 ..... 0.0122 WILKINSON 330205 ..... 0.0560 ORANGE 370065 ..... 0.0121 CRAIG
250154 ..... 0.0318 LEAKE 330209 ..... 0.0560 ORANGE 370113* ... 0.0205 DELAWARE
260011* ... 0.0007 COLE 330222 ..... 0.0003 SARATOGA 370138 ..... 0.0073 TEXAS
260025* ... 0.0078 MARION 330224 ..... 0.0959 ULSTER 370149 ..... 0.0356 POTTAWATOMIE
260047* ... 0.0007 COLE 330225 ..... 0.0137 NASSAU 370179* ... 0.0314 OKFUSKEE
260073 ..... 0.0197 BARTON 330235* ... 0.0270 CAYUGA 380002 ..... 0.0130 JOSEPHINE
260074* ... 0.0158 RANDOLPH 330259 ..... 0.0137 NASSAU 380008* ... 0.0201 LINN
260097 ..... 0.0425 JOHNSON 330264 ..... 0.0560 ORANGE 380022* ... 0.0201 LINN
260127 ..... 0.0158 PIKE 330276 ..... 0.0063 FULTON 380029 ..... 0.0073 MARION
280054 ..... 0.0137 GAGE 330331 ..... 0.0137 NASSAU 380051 ..... 0.0073 MARION
280077* ... 0.0089 DODGE 330332 ..... 0.0137 NASSAU 380056 ..... 0.0073 MARION
280123 ..... 0.0137 GAGE 330333 ..... 0.0137 NASSAU 390011 ..... 0.0012 CAMBRIA
290019* ... 0.0026 CARSON CITY 330372 ..... 0.0137 NASSAU 390030* ... 0.0274 SCHUYLKILL
290020 ..... 0.1013 NYE 330386* ... 0.1139 SULLIVAN 390031* ... 0.0274 SCHUYLKILL
300007* ... 0.0080 HILLSBOROUGH 330402 ..... 0.0959 ULSTER 390044 ..... 0.0200 BERKS
300011* ... 0.0080 HILLSBOROUGH 340003 ..... 0.0116 SURRY 390046 ..... 0.0098 YORK
300012* ... 0.0080 HILLSBOROUGH 340015 ..... 0.0267 ROWAN 390052* ... 0.0036 CLEARFIELD
300017* ... 0.0361 ROCKINGHAM 340016 ..... 0.1312 JACKSON 390056 ..... 0.0042 HUNTINGDON
300020* ... 0.0080 HILLSBOROUGH 340020 ..... 0.0207 LEE 390065* ... 0.0501 ADAMS
300023* ... 0.0361 ROCKINGHAM 340021* ... 0.0216 CLEVELAND 390066* ... 0.0259 LEBANON
300029* ... 0.0361 ROCKINGHAM 340027* ... 0.0126 LENOIR 390086* ... 0.0036 CLEARFIELD
300034* ... 0.0080 HILLSBOROUGH 340037 ..... 0.0216 CLEVELAND 390096 ..... 0.0200 BERKS
310002* ... 0.0351 ESSEX 340039* ... 0.0144 IREDELL 390101 ..... 0.0098 YORK
310009* ... 0.0351 ESSEX 340069* ... 0.0053 WAKE 390110* ... 0.0012 CAMBRIA
310010 ..... 0.0180 MERCER 340070 ..... 0.0448 ALAMANCE 390130 ..... 0.0012 CAMBRIA
310011 ..... 0.0181 CAPE MAY 340073* ... 0.0053 WAKE 390138* ... 0.0325 FRANKLIN
310013* ... 0.0351 ESSEX 340085 ..... 0.0377 DAVIDSON 390146 ..... 0.0053 WARREN
310014 ..... 0.0156 CAMDEN 340088 ..... 0.0115 TRANSYLVANIA 390150* ... 0.0206 GREENE
310018* ... 0.0351 ESSEX 340096 ..... 0.0377 DAVIDSON 390151* ... 0.0325 FRANKLIN
310021 ..... 0.0180 MERCER 340097 ..... 0.0116 SURRY 390162 ..... 0.0149 NORTHAMPTON
310022 ..... 0.0156 CAMDEN 340104 ..... 0.0216 CLEVELAND 390173 ..... 0.0074 INDIANA
310029 ..... 0.0156 CAMDEN 340114* ... 0.0053 WAKE 390181* ... 0.0274 SCHUYLKILL
310031* ... 0.0137 BURLINGTON 340126 ..... 0.0161 WILSON 390183* ... 0.0274 SCHUYLKILL
310032* ... 0.0065 CUMBERLAND 340127* ... 0.0961 GRANVILLE 390201* ... 0.1127 MONROE
310038* ... 0.0350 MIDDLESEX 340129* ... 0.0144 IREDELL 390233 ..... 0.0098 YORK
310039 ..... 0.0350 MIDDLESEX 340133 ..... 0.0302 MARTIN 420007 ..... 0.0001 SPARTANBURG
310044 ..... 0.0180 MERCER 340138* ... 0.0053 WAKE 420009* ... 0.0162 OCONEE
310054* ... 0.0351 ESSEX 340144* ... 0.0144 IREDELL 420020* ... 0.0035 GEORGETOWN
310057 ..... 0.0137 BURLINGTON 340145* ... 0.0563 LINCOLN 420027 ..... 0.0210 ANDERSON
310061 ..... 0.0137 BURLINGTON 340173* ... 0.0053 WAKE 420030* ... 0.0103 COLLETON
310070* ... 0.0350 MIDDLESEX 360013* ... 0.0166 SHELBY 420039* ... 0.0156 UNION
310076* ... 0.0351 ESSEX 360025* ... 0.0087 ERIE 420043 ..... 0.0177 CHEROKEE
310078* ... 0.0351 ESSEX 360034 ..... 0.0263 WAYNE 420062 ..... 0.0247 CHESTERFIELD
310083* ... 0.0351 ESSEX 360036* ... 0.0263 WAYNE 420068* ... 0.0097 ORANGEBURG
310086 ..... 0.0156 CAMDEN 360040 ..... 0.0327 KNOX 420070* ... 0.0101 SUMTER
310092 ..... 0.0180 MERCER 360065* ... 0.0141 HURON 420083 ..... 0.0001 SPARTANBURG
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00276 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23581
420093 ..... 0.0001 SPARTANBURG 450144* ... 0.0573 ANDREWS 490038 ..... 0.0022 SMYTH
420098 ..... 0.0035 GEORGETOWN 450151 ..... 0.0210 FAYETTE 490047* ... 0.0198 PAGE
430008 ..... 0.0504 BROOKINGS 450163 ..... 0.0134 KLEBERG 490084 ..... 0.0167 ESSEX
430048 ..... 0.0088 LAWRENCE 450187* ... 0.0264 WASHINGTON 490105* ... 0.0022 SMYTH
430094* ... 0.0088 LAWRENCE 450194* ... 0.0328 CHEROKEE 490110 ..... 0.0082 MONTGOMERY
440008* ... 0.0663 HENDERSON 450214* ... 0.0368 WHARTON 500003* ... 0.0208 SKAGIT
440016 ..... 0.0224 CARROLL 450224* ... 0.0411 WOOD 500007 ..... 0.0208 SKAGIT
440024 ..... 0.0387 BRADLEY 450347* ... 0.0427 WALKER 500019 ..... 0.0213 LEWIS
440025 ..... 0.0037 GREENE 450362 ..... 0.0486 BURNET 500021 ..... 0.0055 PIERCE
440033 ..... 0.0159 CAMPBELL 450370 ..... 0.0258 COLORADO 500024* ... 0.0023 THURSTON
440035* ... 0.0441 MONTGOMERY 450389* ... 0.0881 HENDERSON 500039* ... 0.0174 KITSAP
440047 ..... 0.0499 GIBSON 450395 ..... 0.0484 POLK 500041* ... 0.0118 COWLITZ
440050* ... 0.0037 GREENE 450419* ... 0.0097 TARRANT 500079 ..... 0.0055 PIERCE
440051 ..... 0.0110 MC NAIRY 450438* ... 0.0258 COLORADO 500108 ..... 0.0055 PIERCE
440056 ..... 0.0321 JEFFERSON 450447* ... 0.0358 NAVARRO 500118 ..... 0.0548 MASON
440060* ... 0.0499 GIBSON 450451* ... 0.0551 SOMERVELL 500122* ... 0.0459 ISLAND
440063 ..... 0.0011 WASHINGTON 450465 ..... 0.0435 MATAGORDA 500129 ..... 0.0055 PIERCE
440073* ... 0.0513 MAURY 450547* ... 0.0411 WOOD 500139* ... 0.0023 THURSTON
440105 ..... 0.0011 WASHINGTON 450563* ... 0.0097 TARRANT 500143* ... 0.0023 THURSTON
440114 ..... 0.0523 LAUDERDALE 450565 ..... 0.0492 PALO PINTO 510018* ... 0.0209 JACKSON
440115 ..... 0.0499 GIBSON 450596 ..... 10.0808 HOOD 510028* ... 0.0141 FAYETTE
440143 ..... 0.0448 MARSHALL 450597 ..... 0.0077 DE WITT 510039 ..... 0.0112 OHIO
440148* ... 0.0568 DE KALB 450623* ... 0.0492 FANNIN 510047* ... 0.0275 MARION
440153 ..... 0.0145 COCKE 450626 ..... 0.0294 JACKSON 510050 ..... 0.0112 OHIO
440174 ..... 0.0372 HAYWOOD 450639* ... 0.0097 TARRANT 510077* ... 0.0021 MINGO
440180* ... 0.0159 CAMPBELL 450672* ... 0.0097 TARRANT 510088 ..... 0.0141 FAYETTE
440181 ..... 0.0407 HARDEMAN 450675* ... 0.0097 TARRANT 520028* ... 0.0157 GREEN
440182 ..... 0.0224 CARROLL 450677* ... 0.0097 TARRANT 520035 ..... 0.0077 SHEBOYGAN
440184 ..... 0.0011 WASHINGTON 450694* ... 0.0368 WHARTON 520042 ..... 0.0118 SAUK
440185* ... 0.0387 BRADLEY 450747* ... 0.0195 ANDERSON 520044 ..... 0.0077 SHEBOYGAN
450032* ... 0.0416 HARRISON 450755* ... 0.0484 HOCKLEY 520057 ..... 0.0118 SAUK
450039* ... 0.0097 TARRANT 450763 ..... 0.0236 HUTCHINSON 520059* ... 0.0200 RACINE
450050 ..... 0.0750 WARD 450779* ... 0.0097 TARRANT 520071* ... 0.0239 JEFFERSON
450059* ... 0.0073 COMAL 450813 ..... 0.0195 ANDERSON 520076* ... 0.0181 DODGE
450064* ... 0.0097 TARRANT 450858* ... 0.0097 TARRANT 520094* ... 0.0200 RACINE
450087* ... 0.0097 TARRANT 460017 ..... 0.0392 BOX ELDER 520095* ... 0.0118 SAUK
450099* ... 0.0180 GRAY 460036* ... 0.0700 WASATCH 520096* ... 0.0200 RACINE
450113 ..... 0.0195 ANDERSON 460039* ... 0.0392 BOX ELDER 520102* ... 0.0298 WALWORTH
450121* ... 0.0097 TARRANT 470018 ..... 0.0287 WINDSOR 520116* ... 0.0239 JEFFERSON
450135* ... 0.0097 TARRANT 470023 ..... 0.0118 CALEDONIA 520132 ..... 0.0077 SHEBOYGAN
450137* ... 0.0097 TARRANT 490019 ..... 0.1240 CULPEPER
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
1 ............... 01 SURG ...... CRANIOTOMY AGE >17 W CC .......................................................... 3.4276 7.6 10.1
2 ............... 01 SURG ...... CRANIOTOMY AGE >17 W/O CC ...................................................... 1.9544 3.5 4.6
3 ............... 01 SURG * .... CRANIOTOMY AGE 0–17 ................................................................... 1.9830 12.7 12.7
4 ............... 01 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
5 ............... 01 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 0
6 ............... 01 SURG ...... CARPAL TUNNEL RELEASE ............................................................. .7868 2.2 3.1
7 ............... 01 SURG ...... PERIPH & CRANIAL NERVE & OTHER NERV SYST PROC W CC 2.6679 6.6 9.5
8 ............... 01 SURG ...... PERIPH & CRANIAL NERVE & OTHER NERV SYST PROC W/O 1.5008 2.0 2.9
CC.
9 ............... 01 MED ......... SPINAL DISORDERS & INJURIES ..................................................... 1.3993 4.5 6.3
10 ............. 01 MED ......... NERVOUS SYSTEM NEOPLASMS W CC ......................................... 1.2219 4.6 6.2
11 ............. 01 MED ......... NERVOUS SYSTEM NEOPLASMS W/O CC ..................................... .8704 2.9 3.8
12 ............. 01 MED ......... DEGENERATIVE NERVOUS SYSTEM DISORDERS ....................... .8972 4.3 5.5
13 ............. 01 MED ......... MULTIPLE SCLEROSIS & CEREBELLAR ATAXIA ........................... .8520 4.0 5.0
14 ............. 01 MED ......... INTRACRANIAL HEMORRHAGE OR STROKE WITH INFARCT ...... 1.2533 4.5 5.8
15 ............. 01 MED ......... NONSPECIFIC CVA & PRECEREBRAL OCCLUSION W/O IN- .9402 3.7 4.6
FARCT.
16 ............. 01 MED ......... NONSPECIFIC CEREBROVASCULAR DISORDERS W CC ............. 1.3315 5.0 6.5
17 ............. 01 MED ......... NONSPECIFIC CEREBROVASCULAR DISORDERS W/O CC ......... .7191 2.5 3.2
18 ............. 01 MED ......... CRANIAL & PERIPHERAL NERVE DISORDERS W CC ................... .9891 4.1 5.3
19 ............. 01 MED ......... CRANIAL & PERIPHERAL NERVE DISORDERS W/O CC ............... .7058 2.7 3.4
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00277 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23582 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
20 ............. 01 MED ......... NERVOUS SYSTEM INFECTION EXCEPT VIRAL MENINGITIS ..... 2.7787 8.0 10.4
21 ............. 01 MED ......... VIRAL MENINGITIS ............................................................................. 1.4424 4.9 6.4
22 ............. 01 MED ......... HYPERTENSIVE ENCEPHALOPATHY .............................................. 1.1269 4.0 5.2
23 ............. 01 MED ......... NONTRAUMATIC STUPOR & COMA ................................................ .7695 3.0 3.9
24 ............. 01 MED ......... SEIZURE & HEADACHE AGE >17 W CC .......................................... .9954 3.6 4.8
25 ............. 01 MED ......... SEIZURE & HEADACHE AGE >17 W/O CC ...................................... .6165 2.5 3.1
26 ............. 01 MED ......... SEIZURE & HEADACHE AGE 0–17 ................................................... 1.8098 3.4 6.3
27 ............. 01 MED ......... TRAUMATIC STUPOR & COMA, COMA >1 HR ................................ 1.3455 3.2 5.1
28 ............. 01 MED ......... TRAUMATIC STUPOR & COMA, COMA <1 HR AGE >17 W CC ..... 1.3324 4.4 5.9
29 ............. 01 MED ......... TRAUMATIC STUPOR & COMA, COMA <1 HR AGE >17 W/O CC .7210 2.6 3.4
30 ............. 01 MED * ...... TRAUMATIC STUPOR & COMA, COMA <1 HR AGE 0–17 .............. .3354 2.0 2.0
31 ............. 01 MED ......... CONCUSSION AGE >17 W CC .......................................................... .9529 3.0 4.0
32 ............. 01 MED ......... CONCUSSION AGE >17 W/O CC ...................................................... .6185 1.9 2.4
33 ............. 01 MED * ...... CONCUSSION AGE 0–17 ................................................................... .2106 1.6 1.6
34 ............. 01 MED ......... OTHER DISORDERS OF NERVOUS SYSTEM W CC ...................... 1.0047 3.7 4.8
35 ............. 01 MED ......... OTHER DISORDERS OF NERVOUS SYSTEM W/O CC .................. .6253 2.4 3.0
36 ............. 02 SURG ...... RETINAL PROCEDURES ................................................................... .7238 1.3 1.6
37 ............. 02 SURG ...... ORBITAL PROCEDURES ................................................................... 1.1761 2.7 4.1
38 ............. 02 SURG ...... PRIMARY IRIS PROCEDURES .......................................................... .6963 2.5 3.5
39 ............. 02 SURG ...... LENS PROCEDURES WITH OR WITHOUT VITRECTOMY ............. .7109 1.7 2.4
40 ............. 02 SURG ...... EXTRAOCULAR PROCEDURES EXCEPT ORBIT AGE >17 ............ .9624 3.0 4.1
41 ............. 02 SURG * .... EXTRAOCULAR PROCEDURES EXCEPT ORBIT AGE 0–17 .......... .3414 1.6 1.6
42 ............. 02 SURG ...... INTRAOCULAR PROCEDURES EXCEPT RETINA, IRIS & LENS ... .7865 2.0 2.8
43 ............. 02 MED ......... HYPHEMA ........................................................................................... .6146 2.4 3.1
44 ............. 02 MED ......... ACUTE MAJOR EYE INFECTIONS .................................................... .6811 3.9 4.8
45 ............. 02 MED ......... NEUROLOGICAL EYE DISORDERS .................................................. .7462 2.5 3.1
46 ............. 02 MED ......... OTHER DISORDERS OF THE EYE AGE >17 W CC ........................ .7471 3.2 4.2
47 ............. 02 MED ......... OTHER DISORDERS OF THE EYE AGE >17 W/O CC .................... .5189 2.3 2.9
48 ............. 02 MED * ...... OTHER DISORDERS OF THE EYE AGE 0–17 ................................. .3008 2.9 2.9
49 ............. 03 SURG ...... MAJOR HEAD & NECK PROCEDURES ............................................ 1.6375 3.2 4.4
50 ............. 03 SURG ...... SIALOADENECTOMY ......................................................................... .8661 1.5 1.8
51 ............. 03 SURG ...... SALIVARY GLAND PROCEDURES EXCEPT SIALOADENECTOMY .8829 1.9 2.8
52 ............. 03 SURG ...... CLEFT LIP & PALATE REPAIR .......................................................... .8428 1.5 2.0
53 ............. 03 SURG ...... SINUS & MASTOID PROCEDURES AGE >17 .................................. 1.3302 2.5 4.0
54 ............. 03 SURG * .... SINUS & MASTOID PROCEDURES AGE 0–17 ................................ .4874 3.2 3.2
55 ............. 03 SURG ...... MISCELLANEOUS EAR, NOSE, MOUTH & THROAT PROCE- .9577 2.1 3.1
DURES.
56 ............. 03 SURG ...... RHINOPLASTY .................................................................................... .8623 1.9 2.6
57 ............. 03 SURG ...... T&A PROC, EXCEPT TONSILLECTOMY &/OR ADENOIDECTOMY 1.1330 2.6 4.2
ONLY, AGE >17.
58 ............. 03 SURG * .... T&A PROC, EXCEPT TONSILLECTOMY &/OR ADENOIDECTOMY .2768 1.5 1.5
ONLY, AGE 0–17.
59 ............. 03 SURG ...... TONSILLECTOMY &/OR ADENOIDECTOMY ONLY, AGE >17 ........ .7950 1.8 2.5
60 ............. 03 SURG * .... TONSILLECTOMY &/OR ADENOIDECTOMY ONLY, AGE 0–17 ...... .2107 1.5 1.5
61 ............. 03 SURG ...... MYRINGOTOMY W TUBE INSERTION AGE >17 ............................. 1.2804 3.3 5.4
62 ............. 03 SURG * .... MYRINGOTOMY W TUBE INSERTION AGE 0–17 ........................... .2984 1.3 1.3
63 ............. 03 SURG ...... OTHER EAR, NOSE, MOUTH & THROAT O.R. PROCEDURES ..... 1.3908 3.0 4.5
64 ............. 03 MED ......... EAR, NOSE, MOUTH & THROAT MALIGNANCY ............................. 1.1606 4.1 6.1
65 ............. 03 MED ......... DYSEQUILIBRIUM .............................................................................. .5987 2.3 2.8
66 ............. 03 MED ......... EPISTAXIS ........................................................................................... .5940 2.4 3.1
67 ............. 03 MED ......... EPIGLOTTITIS ..................................................................................... .7724 2.9 3.7
68 ............. 03 MED ......... OTITIS MEDIA & URI AGE >17 W CC ............................................... .6646 3.2 4.0
69 ............. 03 MED ......... OTITIS MEDIA & URI AGE >17 W/O CC ........................................... .4860 2.5 3.0
70 ............. 03 MED ......... OTITIS MEDIA & URI AGE 0–17 ........................................................ .4062 2.1 2.4
71 ............. 03 MED ......... LARYNGOTRACHEITIS ...................................................................... .7509 3.2 4.0
72 ............. 03 MED ......... NASAL TRAUMA & DEFORMITY ....................................................... .7479 2.6 3.5
73 ............. 03 MED ......... OTHER EAR, NOSE, MOUTH & THROAT DIAGNOSES AGE >17 .. .8285 3.3 4.4
74 ............. 03 MED * ...... OTHER EAR, NOSE, MOUTH & THROAT DIAGNOSES AGE 0–17 .3393 2.1 2.1
75 ............. 04 SURG ...... MAJOR CHEST PROCEDURES ......................................................... 3.0699 7.6 9.9
76 ............. 04 SURG ...... OTHER RESP SYSTEM O.R. PROCEDURES W CC ....................... 2.8748 8.4 11.1
77 ............. 04 SURG ...... OTHER RESP SYSTEM O.R. PROCEDURES W/O CC .................... 1.1897 3.4 4.7
78 ............. 04 MED ......... PULMONARY EMBOLISM .................................................................. 1.2411 5.4 6.4
79 ............. 04 MED ......... RESPIRATORY INFECTIONS & INFLAMMATIONS AGE >17 W CC 1.6212 6.7 8.4
80 ............. 04 MED ......... RESPIRATORY INFECTIONS & INFLAMMATIONS AGE >17 W/O .8872 4.4 5.5
CC.
81 ............. 04 MED * ...... RESPIRATORY INFECTIONS & INFLAMMATIONS AGE 0–17 ........ 1.5360 6.1 6.1
82 ............. 04 MED ......... RESPIRATORY NEOPLASMS ............................................................ 1.3925 5.1 6.8
83 ............. 04 MED ......... MAJOR CHEST TRAUMA W CC ........................................................ .9818 4.2 5.3
84 ............. 04 MED ......... MAJOR CHEST TRAUMA W/O CC .................................................... .5736 2.6 3.2
85 ............. 04 MED ......... PLEURAL EFFUSION W CC .............................................................. 1.2401 4.8 6.4
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00278 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23583
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
86 ............. 04 MED ......... PLEURAL EFFUSION W/O CC ........................................................... .6943 2.8 3.6
87 ............. 04 MED ......... PULMONARY EDEMA & RESPIRATORY FAILURE ......................... 1.3592 4.9 6.4
88 ............. 04 MED ......... CHRONIC OBSTRUCTIVE PULMONARY DISEASE ......................... .8854 4.0 4.9
89 ............. 04 MED ......... SIMPLE PNEUMONIA & PLEURISY AGE >17 W CC ....................... 1.0317 4.7 5.7
90 ............. 04 MED ......... SIMPLE PNEUMONIA & PLEURISY AGE >17 W/O CC ................... .6085 3.2 3.8
91 ............. 04 MED ......... SIMPLE PNEUMONIA & PLEURISY AGE 0–17 ................................ .8173 3.4 4.4
92 ............. 04 MED ......... INTERSTITIAL LUNG DISEASE W CC .............................................. 1.1859 4.9 6.1
93 ............. 04 MED ......... INTERSTITIAL LUNG DISEASE W/O CC .......................................... .7022 3.1 3.8
94 ............. 04 MED ......... PNEUMOTHORAX W CC ................................................................... 1.1435 4.7 6.2
95 ............. 04 MED ......... PNEUMOTHORAX W/O CC ................................................................ .6039 2.9 3.7
96 ............. 04 MED ......... BRONCHITIS & ASTHMA AGE >17 W CC ........................................ .7356 3.6 4.4
97 ............. 04 MED ......... BRONCHITIS & ASTHMA AGE >17 W/O CC .................................... .5340 2.8 3.4
98 ............. 04 MED * ...... BRONCHITIS & ASTHMA AGE 0–17 ................................................. .5552 3.7 3.7
99 ............. 04 MED ......... RESPIRATORY SIGNS & SYMPTOMS W CC ................................... .7075 2.4 3.1
100 ........... 04 MED ......... RESPIRATORY SIGNS & SYMPTOMS W/O CC ............................... .5386 1.7 2.1
101 ........... 04 MED ......... OTHER RESPIRATORY SYSTEM DIAGNOSES W CC .................... .8715 3.3 4.3
102 ........... 04 MED ......... OTHER RESPIRATORY SYSTEM DIAGNOSES W/O CC ................ .5390 2.0 2.5
103 ........... PRE SURG ...... HEART TRANSPLANT OR IMPLANT OF HEART ASSIST SYSTEM 18.3069 23.5 37.5
104 ........... 05 SURG ...... CARDIAC VALVE & OTH MAJOR CARDIOTHORACIC PROC W 8.2206 12.7 14.9
CARD CATH.
105 ........... 05 SURG ...... CARDIAC VALVE & OTH MAJOR CARDIOTHORACIC PROC W/O 6.0149 8.5 10.2
CARD CATH.
106 ........... 05 SURG ...... CORONARY BYPASS W PTCA ......................................................... 7.0409 9.5 11.2
107 ........... 05 SURG ...... CORONARY BYPASS W CARDIAC CATH ........................................ 5.4802 9.4 10.7
108 ........... 05 SURG ...... OTHER CARDIOTHORACIC PROCEDURES .................................... 5.7861 8.6 10.9
109 ........... 05 SURG ...... CORONARY BYPASS W/O PTCA OR CARDIAC CATH ................... 4.0452 6.8 7.9
110 ........... 05 SURG ...... MAJOR CARDIOVASCULAR PROCEDURES W CC ........................ 3.8908 5.8 8.4
111 ........... 05 SURG ...... MAJOR CARDIOVASCULAR PROCEDURES W/O CC ..................... 2.4927 2.6 3.4
112 ........... 05 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
113 ........... 05 SURG ...... AMPUTATION FOR CIRC SYSTEM DISORDERS EXCEPT UPPER 3.1547 10.8 13.7
LIMB & TOE.
114 ........... 05 SURG ...... UPPER LIMB & TOE AMPUTATION FOR CIRC SYSTEM DIS- 1.7288 6.7 8.9
ORDERS.
115 ........... 05 SURG ...... PRM CARD PACEM IMPL W AMI/HR/SHOCK OR AICD LEAD OR 3.5839 4.5 6.8
GNRTR.
116 ........... 05 SURG ...... OTHER PERMANENT CARDIAC PACEMAKER IMPLANT ............... 2.2975 3.0 4.3
117 ........... 05 SURG ...... CARDIAC PACEMAKER REVISION EXCEPT DEVICE REPLACE- 1.3232 2.6 4.2
MENT.
118 ........... 05 SURG ...... CARDIAC PACEMAKER DEVICE REPLACEMENT .......................... 1.6347 2.1 3.0
119 ........... 05 SURG ...... VEIN LIGATION & STRIPPING ........................................................... 1.3473 3.3 5.5
120 ........... 05 SURG ...... OTHER CIRCULATORY SYSTEM O.R. PROCEDURES .................. 2.3814 5.9 9.2
121 ........... 05 MED ......... CIRCULATORY DISORDERS W AMI & MAJOR COMP, DIS- 1.6110 5.3 6.6
CHARGED ALIVE.
122 ........... 05 MED ......... CIRCULATORY DISORDERS W AMI W/O MAJOR COMP, DIS- .9818 2.8 3.5
CHARGED ALIVE.
123 ........... 05 MED ......... CIRCULATORY DISORDERS W AMI, EXPIRED ............................... 1.5321 2.9 4.8
124 ........... 05 MED ......... CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH & 1.4417 3.3 4.4
COMPLEX DIAG.
125 ........... 05 MED ......... CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH W/O 1.0932 2.1 2.7
COMPLEX DIAG.
126 ........... 05 MED ......... ACUTE & SUBACUTE ENDOCARDITIS ............................................ 2.7261 9.4 11.9
127 ........... 05 MED ......... HEART FAILURE & SHOCK ............................................................... 1.0330 4.1 5.2
128 ........... 05 MED ......... DEEP VEIN THROMBOPHLEBITIS .................................................... .6919 4.4 5.2
129 ........... 05 MED ......... CARDIAC ARREST, UNEXPLAINED .................................................. 1.0365 1.7 2.6
130 ........... 05 MED ......... PERIPHERAL VASCULAR DISORDERS W CC ................................ .9412 4.4 5.5
131 ........... 05 MED ......... PERIPHERAL VASCULAR DISORDERS W/O CC ............................ .5555 3.2 3.9
132 ........... 05 MED ......... ATHEROSCLEROSIS W CC ............................................................... .6252 2.2 2.8
133 ........... 05 MED ......... ATHEROSCLEROSIS W/O CC ........................................................... .5323 1.8 2.2
134 ........... 05 MED ......... HYPERTENSION ................................................................................. .6057 2.5 3.1
135 ........... 05 MED ......... CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W .8969 3.3 4.4
CC.
136 ........... 05 MED ......... CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W/ .6228 2.2 2.8
O CC.
137 ........... 05 MED * ...... CARDIAC CONGENITAL & VALVULAR DISORDERS AGE 0–17 .... .8275 3.3 3.3
138 ........... 05 MED ......... CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W CC ..... .8313 3.1 3.9
139 ........... 05 MED ......... CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W/O CC .5222 2.0 2.4
140 ........... 05 MED ......... ANGINA PECTORIS ............................................................................ .5076 2.0 2.4
141 ........... 05 MED ......... SYNCOPE & COLLAPSE W CC ......................................................... .7513 2.7 3.5
142 ........... 05 MED ......... SYNCOPE & COLLAPSE W/O CC ..................................................... .5848 2.0 2.5
143 ........... 05 MED ......... CHEST PAIN ....................................................................................... .5655 1.7 2.1
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00279 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23584 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
144 ........... 05 MED ......... OTHER CIRCULATORY SYSTEM DIAGNOSES W CC .................... 1.2734 4.1 5.8
145 ........... 05 MED ......... OTHER CIRCULATORY SYSTEM DIAGNOSES W/O CC ................ .5843 2.1 2.6
146 ........... 06 SURG ...... RECTAL RESECTION W CC .............................................................. 2.6565 8.6 10.0
147 ........... 06 SURG ...... RECTAL RESECTION W/O CC .......................................................... 1.4778 5.2 5.8
148 ........... 06 SURG ...... MAJOR SMALL & LARGE BOWEL PROCEDURES W CC ............... 3.4400 10.0 12.3
149 ........... 06 SURG ...... MAJOR SMALL & LARGE BOWEL PROCEDURES W/O CC ........... 1.4304 5.4 6.0
150 ........... 06 SURG ...... PERITONEAL ADHESIOLYSIS W CC ................................................ 2.7986 8.9 11.0
151 ........... 06 SURG ...... PERITONEAL ADHESIOLYSIS W/O CC ............................................ 1.2620 4.0 5.1
152 ........... 06 SURG ...... MINOR SMALL & LARGE BOWEL PROCEDURES W CC ............... 1.8768 6.7 8.0
153 ........... 06 SURG ...... MINOR SMALL & LARGE BOWEL PROCEDURES W/O CC ............ 1.0833 4.5 5.0
154 ........... 06 SURG ...... STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE 4.0333 9.9 13.2
>17 W CC.
155 ........... 06 SURG ...... STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE 1.2855 3.1 4.1
>17 W/O CC.
156 ........... 06 SURG * .... STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE 0– .8522 6.0 6.0
17.
157 ........... 06 SURG ...... ANAL & STOMAL PROCEDURES W CC ........................................... 1.3317 4.1 5.8
158 ........... 06 SURG ...... ANAL & STOMAL PROCEDURES W/O CC ....................................... .6634 2.1 2.6
159 ........... 06 SURG ...... HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE 1.4163 3.8 5.1
>17 W CC.
160 ........... 06 SURG ...... HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE .8423 2.2 2.7
>17 W/O CC.
161 ........... 06 SURG ...... INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W CC .. 1.1998 3.1 4.4
162 ........... 06 SURG ...... INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W/O .6763 1.7 2.1
CC.
163 ........... 06 SURG ...... HERNIA PROCEDURES AGE 0–17 ................................................... .6711 2.2 2.9
164 ........... 06 SURG ...... APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W CC ...... 2.2488 6.6 8.0
165 ........... 06 SURG ...... APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W/O CC .. 1.1833 3.6 4.2
166 ........... 06 SURG ...... APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W CC .. 1.4517 3.3 4.5
167 ........... 06 SURG ...... APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W/O CC .8918 1.9 2.2
168 ........... 03 SURG ...... MOUTH PROCEDURES W CC .......................................................... 1.2650 3.3 4.9
169 ........... 03 SURG ...... MOUTH PROCEDURES W/O CC ....................................................... .7251 1.8 2.3
170 ........... 06 SURG ...... OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W CC .............. 2.9522 7.8 11.0
171 ........... 06 SURG ...... OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W/O CC .......... 1.1837 3.1 4.1
172 ........... 06 MED ......... DIGESTIVE MALIGNANCY W CC ...................................................... 1.4115 5.1 7.0
173 ........... 06 MED ......... DIGESTIVE MALIGNANCY W/O CC .................................................. .7442 2.7 3.6
174 ........... 06 MED ......... G.I. HEMORRHAGE W CC ................................................................. 1.0138 3.8 4.7
175 ........... 06 MED ......... G.I. HEMORRHAGE W/O CC ............................................................. .5644 2.4 2.9
176 ........... 06 MED ......... COMPLICATED PEPTIC ULCER ........................................................ 1.1228 4.1 5.2
177 ........... 06 MED ......... UNCOMPLICATED PEPTIC ULCER W CC ....................................... .9158 3.6 4.4
178 ........... 06 MED ......... UNCOMPLICATED PEPTIC ULCER W/O CC .................................... .7014 2.6 3.1
179 ........... 06 MED ......... INFLAMMATORY BOWEL DISEASE .................................................. 1.0877 4.5 5.9
180 ........... 06 MED ......... G.I. OBSTRUCTION W CC ................................................................. .9769 4.2 5.4
181 ........... 06 MED ......... G.I. OBSTRUCTION W/O CC ............................................................. .5609 2.8 3.3
182 ........... 06 MED ......... ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE .8463 3.4 4.5
>17 W CC.
183 ........... 06 MED ......... ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE .5846 2.3 2.9
>17 W/O CC.
184 ........... 06 MED ......... ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE .5700 2.5 3.3
0–17.
185 ........... 03 MED ......... DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORA- .8689 3.3 4.5
TIONS, AGE >17.
186 ........... 03 MED * ...... DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORA- .3248 2.9 2.9
TIONS, AGE 0–17.
187 ........... 03 MED ......... DENTAL EXTRACTIONS & RESTORATIONS ................................... .8435 3.1 4.2
188 ........... 06 MED ......... OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W CC .......... 1.1257 4.2 5.6
189 ........... 06 MED ......... OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W/O CC ....... .6052 2.4 3.1
190 ........... 06 MED ......... OTHER DIGESTIVE SYSTEM DIAGNOSES AGE 0–17 .................... .6258 3.2 4.4
191 ........... 07 SURG ...... PANCREAS, LIVER & SHUNT PROCEDURES W CC ...................... 3.9443 9.0 12.8
192 ........... 07 SURG ...... PANCREAS, LIVER & SHUNT PROCEDURES W/O CC .................. 1.6802 4.3 5.7
193 ........... 07 SURG ...... BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O 3.2837 9.9 12.1
C.D.E. W CC.
194 ........... 07 SURG ...... BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O 1.5786 5.6 6.7
C.D.E. W/O CC.
195 ........... 07 SURG ...... CHOLECYSTECTOMY W C.D.E. W CC ............................................ 3.0503 8.8 10.6
196 ........... 07 SURG ...... CHOLECYSTECTOMY W C.D.E. W/O CC ......................................... 1.6011 4.9 5.7
197 ........... 07 SURG ...... CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E. 2.5397 7.5 9.2
W CC.
198 ........... 07 SURG ...... CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E. 1.1571 3.7 4.3
W/O CC.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00280 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23585
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
199 ........... 07 SURG ...... HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR MALIGNANCY 2.4077 6.8 9.5
200 ........... 07 SURG ...... HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR NON-MALIG- 2.7777 6.4 9.8
NANCY.
201 ........... 07 SURG ...... OTHER HEPATOBILIARY OR PANCREAS O.R. PROCEDURES .... 3.7156 9.9 13.8
202 ........... 07 MED ......... CIRRHOSIS & ALCOHOLIC HEPATITIS ............................................ 1.3463 4.7 6.3
203 ........... 07 MED ......... MALIGNANCY OF HEPATOBILIARY SYSTEM OR PANCREAS ...... 1.3719 4.9 6.6
204 ........... 07 MED ......... DISORDERS OF PANCREAS EXCEPT MALIGNANCY .................... 1.1216 4.2 5.6
205 ........... 07 MED ......... DISORDERS OF LIVER EXCEPT MALIG, CIRR, ALC HEPA W CC 1.2026 4.4 6.0
206 ........... 07 MED ......... DISORDERS OF LIVER EXCEPT MALIG, CIRR, ALC HEPA W/O .7289 3.0 3.9
CC.
207 ........... 07 MED ......... DISORDERS OF THE BILIARY TRACT W CC .................................. 1.1730 4.1 5.3
208 ........... 07 MED ......... DISORDERS OF THE BILIARY TRACT W/O CC .............................. .6880 2.3 2.9
209 ........... 08 SURG ...... NO LONGER VALID ............................................................................ .0000 17.1 17.1
210 ........... 08 SURG ...... HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17 1.9035 6.1 6.9
W CC.
211 ........... 08 SURG ...... HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17 1.2676 4.4 4.7
W/O CC.
212 ........... 08 SURG ...... HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE 0–17 1.2786 2.4 2.9
213 ........... 08 SURG ...... AMPUTATION FOR MUSCULOSKELETAL SYSTEM & CONN TIS- 2.0393 7.2 9.7
SUE DISORDERS.
214 ........... 08 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
215 ........... 08 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
216 ........... 08 SURG ...... BIOPSIES OF MUSCULOSKELETAL SYSTEM & CONNECTIVE 1.9099 3.3 5.8
TISSUE.
217 ........... 08 SURG ...... WND DEBRID & SKN GRFT EXCEPT HAND, FOR MUSCSKELET 3.0414 9.3 13.2
& CONN TISS DIS.
218 ........... 08 SURG ...... LOWER EXTREM & HUMER PROC EXCEPT HIP, FOOT, FEMUR 1.6068 4.3 5.5
AGE >17 W CC.
219 ........... 08 SURG ...... LOWER EXTREM & HUMER PROC EXCEPT HIP, FOOT, FEMUR 1.0427 2.6 3.1
AGE >17 W/O CC.
220 ........... 08 SURG * .... LOWER EXTREM & HUMER PROC EXCEPT HIP, FOOT, FEMUR .5904 5.3 5.3
AGE 0–17.
221 ........... 08 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
222 ........... 08 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
223 ........... 08 SURG ...... MAJOR SHOULDER/ELBOW PROC, OR OTHER UPPER EX- 1.1119 2.3 3.2
TREMITY PROC W CC.
224 ........... 08 SURG ...... SHOULDER, ELBOW OR FOREARM PROC, EXC MAJOR JOINT .8172 1.6 1.9
PROC, W/O CC.
225 ........... 08 SURG ...... FOOT PROCEDURES ......................................................................... 1.2189 3.7 5.2
226 ........... 08 SURG ...... SOFT TISSUE PROCEDURES W CC ................................................ 1.5839 4.5 6.5
227 ........... 08 SURG ...... SOFT TISSUE PROCEDURES W/O CC ............................................ .8338 2.1 2.6
228 ........... 08 SURG ...... MAJOR THUMB OR JOINT PROC, OR OTH HAND OR WRIST 1.1414 2.8 4.1
PROC W CC.
229 ........... 08 SURG ...... HAND OR WRIST PROC, EXCEPT MAJOR JOINT PROC, W/O CC .6957 1.9 2.5
230 ........... 08 SURG ...... LOCAL EXCISION & REMOVAL OF INT FIX DEVICES OF HIP & 1.3137 3.7 5.6
FEMUR.
231 ........... 08 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
232 ........... 08 SURG ...... ARTHROSCOPY ................................................................................. .9699 1.8 2.8
233 ........... 08 SURG ...... OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W CC 1.9137 4.6 6.8
234 ........... 08 SURG ...... OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W/O 1.2204 2.0 2.8
CC.
235 ........... 08 MED ......... FRACTURES OF FEMUR ................................................................... .7770 3.8 4.8
236 ........... 08 MED ......... FRACTURES OF HIP & PELVIS ........................................................ .7393 3.8 4.6
237 ........... 08 MED ......... SPRAINS, STRAINS, & DISLOCATIONS OF HIP, PELVIS & THIGH .6084 3.0 3.7
238 ........... 08 MED ......... OSTEOMYELITIS ................................................................................ 1.4237 6.7 8.6
239 ........... 08 MED ......... PATHOLOGICAL FRACTURES & MUSCULOSKELETAL & CONN 1.0758 5.0 6.2
TISS MALIGNANCY.
240 ........... 08 MED ......... CONNECTIVE TISSUE DISORDERS W CC ...................................... 1.4024 5.0 6.7
241 ........... 08 MED ......... CONNECTIVE TISSUE DISORDERS W/O CC .................................. .6613 3.0 3.7
242 ........... 08 MED ......... SEPTIC ARTHRITIS ............................................................................ 1.1452 5.1 6.7
243 ........... 08 MED ......... MEDICAL BACK PROBLEMS ............................................................. .7752 3.6 4.6
244 ........... 08 MED ......... BONE DISEASES & SPECIFIC ARTHROPATHIES W CC ................ .7098 3.6 4.5
245 ........... 08 MED ......... BONE DISEASES & SPECIFIC ARTHROPATHIES W/O CC ............ .4555 2.5 3.1
246 ........... 08 MED ......... NON-SPECIFIC ARTHROPATHIES .................................................... .5910 2.8 3.6
247 ........... 08 MED ......... SIGNS & SYMPTOMS OF MUSCULOSKELETAL SYSTEM & .5787 2.6 3.3
CONN TISSUE.
248 ........... 08 MED ......... TENDONITIS, MYOSITIS & BURSITIS ............................................... .8556 3.8 4.8
249 ........... 08 MED ......... AFTERCARE, MUSCULOSKELETAL SYSTEM & CONNECTIVE .7025 2.7 3.8
TISSUE.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00281 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23586 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
250 ........... 08 MED ......... FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17 .6949 3.2 3.9
W CC.
251 ........... 08 MED ......... FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17 .4752 2.3 2.8
W/O CC.
252 ........... 08 MED * ...... FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE 0–17 .2563 1.8 1.8
253 ........... 08 MED ......... FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE .7734 3.8 4.6
>17 W CC.
254 ........... 08 MED ......... FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE .4588 2.6 3.1
>17 W/O CC.
255 ........... 08 MED * ...... FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE 0– .2985 2.9 2.9
17.
256 ........... 08 MED ......... OTHER MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE .8459 3.9 5.1
DIAGNOSES.
257 ........... 09 SURG ...... TOTAL MASTECTOMY FOR MALIGNANCY W CC .......................... .8958 2.0 2.6
258 ........... 09 SURG ...... TOTAL MASTECTOMY FOR MALIGNANCY W/O CC ...................... .7129 1.5 1.7
259 ........... 09 SURG ...... SUBTOTAL MASTECTOMY FOR MALIGNANCY W CC ................... .9650 1.8 2.8
260 ........... 09 SURG ...... SUBTOTAL MASTECTOMY FOR MALIGNANCY W/O CC ............... .7028 1.2 1.4
261 ........... 09 SURG ...... BREAST PROC FOR NON-MALIGNANCY EXCEPT BIOPSY & .9710 1.6 2.2
LOCAL EXCISION.
262 ........... 09 SURG ...... BREAST BIOPSY & LOCAL EXCISION FOR NON-MALIGNANCY .. .9783 3.4 4.8
263 ........... 09 SURG ...... SKIN GRAFT &/OR DEBRID FOR SKN ULCER OR CELLULITIS W 2.1033 8.5 11.4
CC.
264 ........... 09 SURG ...... SKIN GRAFT &/OR DEBRID FOR SKN ULCER OR CELLULITIS 1.0576 5.0 6.5
W/O CC.
265 ........... 09 SURG ...... SKIN GRAFT &/OR DEBRID EXCEPT FOR SKIN ULCER OR 1.6577 4.4 6.7
CELLULITIS W CC.
266 ........... 09 SURG ...... SKIN GRAFT &/OR DEBRID EXCEPT FOR SKIN ULCER OR .8664 2.3 3.2
CELLULITIS W/O CC.
267 ........... 09 SURG ...... PERIANAL & PILONIDAL PROCEDURES ......................................... .8946 2.8 4.2
268 ........... 09 SURG ...... SKIN, SUBCUTANEOUS TISSUE & BREAST PLASTIC PROCE- 1.1389 2.4 3.5
DURES.
269 ........... 09 SURG ...... OTHER SKIN, SUBCUT TISS & BREAST PROC W CC ................... 1.8291 6.2 8.6
270 ........... 09 SURG ...... OTHER SKIN, SUBCUT TISS & BREAST PROC W/O CC ............... .8270 2.7 3.8
271 ........... 09 MED ......... SKIN ULCERS ..................................................................................... 1.0072 5.5 7.0
272 ........... 09 MED ......... MAJOR SKIN DISORDERS W CC ..................................................... .9814 4.5 5.9
273 ........... 09 MED ......... MAJOR SKIN DISORDERS W/O CC .................................................. .5536 2.9 3.7
274 ........... 09 MED ......... MALIGNANT BREAST DISORDERS W CC ....................................... 1.1223 4.7 6.3
275 ........... 09 MED ......... MALIGNANT BREAST DISORDERS W/O CC ................................... .5302 2.4 3.2
276 ........... 09 MED ......... NON-MALIGANT BREAST DISORDERS ........................................... .6879 3.5 4.5
277 ........... 09 MED ......... CELLULITIS AGE >17 W CC .............................................................. .8652 4.6 5.6
278 ........... 09 MED ......... CELLULITIS AGE >17 W/O CC .......................................................... .5371 3.4 4.1
279 ........... 09 MED * ...... CELLULITIS AGE 0–17 ....................................................................... .7810 4.2 4.2
280 ........... 09 MED ......... TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W .7309 3.2 4.1
CC.
281 ........... 09 MED ......... TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W/O .4897 2.3 2.9
CC.
282 ........... 09 MED * ...... TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE 0–17 ...... .2596 2.2 2.2
283 ........... 09 MED ......... MINOR SKIN DISORDERS W CC ...................................................... .7398 3.5 4.6
284 ........... 09 MED ......... MINOR SKIN DISORDERS W/O CC .................................................. .4563 2.4 3.0
285 ........... 10 SURG ...... AMPUTAT OF LOWER LIMB FOR ENDOCRINE, NUTRIT,& 2.1793 8.2 10.5
METABOL DISORDERS.
286 ........... 10 SURG ...... ADRENAL & PITUITARY PROCEDURES .......................................... 1.9353 4.0 5.5
287 ........... 10 SURG ...... SKIN GRAFTS & WOUND DEBRID FOR ENDOC, NUTRIT & 1.9237 7.8 10.3
METAB DISORDERS.
288 ........... 10 SURG ...... O.R. PROCEDURES FOR OBESITY .................................................. 2.0358 3.2 4.1
289 ........... 10 SURG ...... PARATHYROID PROCEDURES ......................................................... .9314 1.7 2.6
290 ........... 10 SURG ...... THYROID PROCEDURES .................................................................. .8875 1.6 2.1
291 ........... 10 SURG ...... THYROGLOSSAL PROCEDURES ..................................................... 1.1155 1.5 2.8
292 ........... 10 SURG ...... OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W CC .......... 2.6316 7.3 10.3
293 ........... 10 SURG ...... OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W/O CC ...... 1.3434 3.2 4.5
294 ........... 10 MED ......... DIABETES AGE >35 ........................................................................... .7642 3.3 4.3
295 ........... 10 MED ......... DIABETES AGE 0–35 ......................................................................... .7250 2.9 3.7
296 ........... 10 MED ......... NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W CC .8175 3.7 4.8
297 ........... 10 MED ......... NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W/O .4845 2.5 3.1
CC.
298 ........... 10 MED ......... NUTRITIONAL & MISC METABOLIC DISORDERS AGE 0–17 ......... .5246 2.5 4.0
299 ........... 10 MED ......... INBORN ERRORS OF METABOLISM ................................................ 1.0293 3.7 5.2
300 ........... 10 MED ......... ENDOCRINE DISORDERS W CC ...................................................... 1.0918 4.6 6.0
301 ........... 10 MED ......... ENDOCRINE DISORDERS W/O CC .................................................. .6113 2.7 3.4
302 ........... 11 SURG ...... KIDNEY TRANSPLANT ....................................................................... 3.1542 7.0 8.2
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00282 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23587
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
303 ........... 11 SURG ...... KIDNEY, URETER & MAJOR BLADDER PROCEDURES FOR 2.2358 5.9 7.4
NEOPLASM.
304 ........... 11 SURG ...... KIDNEY, URETER & MAJOR BLADDER PROC FOR NON-NEOPL 2.3647 6.1 8.6
W CC.
305 ........... 11 SURG ...... KIDNEY, URETER & MAJOR BLADDER PROC FOR NON-NEOPL 1.1580 2.6 3.2
W/O CC.
306 ........... 11 SURG ...... PROSTATECTOMY W CC .................................................................. 1.2674 3.6 5.5
307 ........... 11 SURG ...... PROSTATECTOMY W/O CC .............................................................. .6192 1.7 2.1
308 ........... 11 SURG ...... MINOR BLADDER PROCEDURES W CC ......................................... 1.6518 4.0 6.2
309 ........... 11 SURG ...... MINOR BLADDER PROCEDURES W/O CC ...................................... .9082 1.6 2.0
310 ........... 11 SURG ...... TRANSURETHRAL PROCEDURES W CC ........................................ 1.1948 3.1 4.5
311 ........... 11 SURG ...... TRANSURETHRAL PROCEDURES W/O CC .................................... .6425 1.5 1.9
312 ........... 11 SURG ...... URETHRAL PROCEDURES, AGE >17 W CC ................................... 1.1170 3.2 4.8
313 ........... 11 SURG ...... URETHRAL PROCEDURES, AGE >17 W/O CC ............................... .6756 1.8 2.2
314 ........... 11 SURG * .... URETHRAL PROCEDURES, AGE 0–17 ............................................ .5004 2.3 2.3
315 ........... 11 SURG ...... OTHER KIDNEY & URINARY TRACT O.R. PROCEDURES ............. 2.0801 3.6 6.8
316 ........... 11 MED ......... RENAL FAILURE ................................................................................. 1.2673 4.9 6.4
317 ........... 11 MED ......... ADMIT FOR RENAL DIALYSIS ........................................................... .7965 2.4 3.5
318 ........... 11 MED ......... KIDNEY & URINARY TRACT NEOPLASMS W CC ........................... 1.1535 4.2 5.8
319 ........... 11 MED ......... KIDNEY & URINARY TRACT NEOPLASMS W/O CC ....................... .6388 2.1 2.8
320 ........... 11 MED ......... KIDNEY & URINARY TRACT INFECTIONS AGE >17 W CC ........... .8644 4.2 5.2
321 ........... 11 MED ......... KIDNEY & URINARY TRACT INFECTIONS AGE >17 W/O CC ........ .5644 3.0 3.6
322 ........... 11 MED ......... KIDNEY & URINARY TRACT INFECTIONS AGE 0–17 ..................... .5569 2.9 3.5
323 ........... 11 MED ......... URINARY STONES W CC, &/OR ESW LITHOTRIPSY ..................... .8200 2.3 3.1
324 ........... 11 MED ......... URINARY STONES W/O CC .............................................................. .5045 1.6 1.9
325 ........... 11 MED ......... KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE >17 W .6417 2.9 3.7
CC.
326 ........... 11 MED ......... KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE >17 W/O .4385 2.1 2.6
CC.
327 ........... 11 MED * ...... KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE 0–17 ...... .3742 3.1 3.1
328 ........... 11 MED ......... URETHRAL STRICTURE AGE >17 W CC ......................................... .7085 2.6 3.5
329 ........... 11 MED ......... URETHRAL STRICTURE AGE >17 W/O CC ..................................... .4712 1.5 1.8
330 ........... 11 MED * ...... URETHRAL STRICTURE AGE 0–17 .................................................. .3222 1.6 1.6
331 ........... 11 MED ......... OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE >17 W 1.0606 4.1 5.5
CC.
332 ........... 11 MED ......... OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE >17 W/O .6119 2.4 3.1
CC.
333 ........... 11 MED ......... OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE 0–17 ....... .9788 3.6 5.4
334 ........... 12 SURG ...... MAJOR MALE PELVIC PROCEDURES W CC .................................. 1.4366 3.5 4.3
335 ........... 12 SURG ...... MAJOR MALE PELVIC PROCEDURES W/O CC .............................. 1.0980 2.4 2.7
336 ........... 12 SURG ...... TRANSURETHRAL PROSTATECTOMY W CC ................................. .8409 2.5 3.3
337 ........... 12 SURG ...... TRANSURETHRAL PROSTATECTOMY W/O CC ............................. .5737 1.7 1.9
338 ........... 12 SURG ...... TESTES PROCEDURES, FOR MALIGNANCY .................................. 1.3738 3.9 6.2
339 ........... 12 SURG ...... TESTES PROCEDURES, NON-MALIGNANCY AGE >17 ................. 1.1809 3.2 5.1
340 ........... 12 SURG * .... TESTES PROCEDURES, NON-MALIGNANCY AGE 0–17 ............... .2864 2.4 2.4
341 ........... 12 SURG ...... PENIS PROCEDURES ........................................................................ 1.2585 1.9 3.2
342 ........... 12 SURG ...... CIRCUMCISION AGE >17 .................................................................. .8721 2.5 3.4
343 ........... 12 SURG * .... CIRCUMCISION AGE 0–17 ................................................................ .1557 1.7 1.7
344 ........... 12 SURG ...... OTHER MALE REPRODUCTIVE SYSTEM O.R. PROCEDURES 1.2458 1.7 2.7
FOR MALIGNANCY.
345 ........... 12 SURG ...... OTHER MALE REPRODUCTIVE SYSTEM O.R. PROC EXCEPT 1.1474 3.1 4.8
FOR MALIGNANCY.
346 ........... 12 MED ......... MALIGNANCY, MALE REPRODUCTIVE SYSTEM, W CC ................ 1.0439 4.2 5.7
347 ........... 12 MED ......... MALIGNANCY, MALE REPRODUCTIVE SYSTEM, W/O CC ............ .6080 2.2 3.0
348 ........... 12 MED ......... BENIGN PROSTATIC HYPERTROPHY W CC .................................. .7191 3.2 4.1
349 ........... 12 MED ......... BENIGN PROSTATIC HYPERTROPHY W/O CC .............................. .4223 1.9 2.4
350 ........... 12 MED ......... INFLAMMATION OF THE MALE REPRODUCTIVE SYSTEM ........... .7274 3.5 4.5
351 ........... 12 MED * ...... STERILIZATION, MALE ...................................................................... .2389 1.3 1.3
352 ........... 12 MED ......... OTHER MALE REPRODUCTIVE SYSTEM DIAGNOSES ................. .7388 2.9 4.0
353 ........... 13 SURG ...... PELVIC EVISCERATION, RADICAL HYSTERECTOMY & RADICAL 1.8474 4.7 6.3
VULVECTOMY.
354 ........... 13 SURG ...... UTERINE, ADNEXA PROC FOR NON-OVARIAN/ADNEXAL MALIG 1.5238 4.6 5.7
W CC.
355 ........... 13 SURG ...... UTERINE, ADNEXA PROC FOR NON-OVARIAN/ADNEXAL MALIG .8834 2.8 3.1
W/O CC.
356 ........... 13 SURG ...... FEMALE REPRODUCTIVE SYSTEM RECONSTRUCTIVE PROCE- .7429 1.7 1.9
DURES.
357 ........... 13 SURG ...... UTERINE & ADNEXA PROC FOR OVARIAN OR ADNEXAL MA- 2.2212 6.5 8.1
LIGNANCY.
358 ........... 13 SURG ...... UTERINE & ADNEXA PROC FOR NON-MALIGNANCY W CC ........ 1.1428 3.2 4.0
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00283 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23588 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
359 ........... 13 SURG ...... UTERINE & ADNEXA PROC FOR NON-MALIGNANCY W/O CC .... .7936 2.2 2.4
360 ........... 13 SURG ...... VAGINA, CERVIX & VULVA PROCEDURES ..................................... .8559 2.0 2.6
361 ........... 13 SURG ...... LAPAROSCOPY & INCISIONAL TUBAL INTERRUPTION ................ 1.0844 2.2 3.0
362 ........... 13 SURG * .... ENDOSCOPIC TUBAL INTERRUPTION ............................................ .3053 1.4 1.4
363 ........... 13 SURG ...... D&C, CONIZATION & RADIO-IMPLANT, FOR MALIGNANCY ......... .9742 2.7 3.8
364 ........... 13 SURG ...... D&C, CONIZATION EXCEPT FOR MALIGNANCY ............................ .8710 3.0 4.2
365 ........... 13 SURG ...... OTHER FEMALE REPRODUCTIVE SYSTEM O.R. PROCEDURES 2.0317 5.3 7.7
366 ........... 13 MED ......... MALIGNANCY, FEMALE REPRODUCTIVE SYSTEM W CC ............ 1.2296 4.8 6.5
367 ........... 13 MED ......... MALIGNANCY, FEMALE REPRODUCTIVE SYSTEM W/O CC ........ .5734 2.3 3.0
368 ........... 13 MED ......... INFECTIONS, FEMALE REPRODUCTIVE SYSTEM ......................... 1.1668 5.2 6.7
369 ........... 13 MED ......... MENSTRUAL & OTHER FEMALE REPRODUCTIVE SYSTEM DIS- .6297 2.4 3.2
ORDERS.
370 ........... 14 SURG ...... CESAREAN SECTION W CC ............................................................. .8956 4.1 5.2
371 ........... 14 SURG ...... CESAREAN SECTION W/O CC ......................................................... .6037 3.1 3.4
372 ........... 14 MED ......... VAGINAL DELIVERY W COMPLICATING DIAGNOSES ................... .5047 2.6 3.2
373 ........... 14 MED ......... VAGINAL DELIVERY W/O COMPLICATING DIAGNOSES ............... .3562 2.0 2.2
374 ........... 14 SURG ...... VAGINAL DELIVERY W STERILIZATION &/OR D&C ....................... .6762 2.4 2.7
375 ........... 14 SURG * .... VAGINAL DELIVERY W O.R. PROC EXCEPT STERIL &/OR D&C .. .5829 4.4 4.4
376 ........... 14 MED ......... POSTPARTUM & POST ABORTION DIAGNOSES W/O O.R. PRO- .5215 2.6 3.4
CEDURE.
377 ........... 14 SURG ...... POSTPARTUM & POST ABORTION DIAGNOSES W O.R. PROCE- 1.6547 2.9 4.5
DURE.
378 ........... 14 MED ......... ECTOPIC PREGNANCY ..................................................................... .7508 1.9 2.3
379 ........... 14 MED ......... THREATENED ABORTION ................................................................. .3590 2.0 2.8
380 ........... 14 MED ......... ABORTION W/O D&C ......................................................................... .3913 1.6 2.1
381 ........... 14 SURG ...... ABORTION W D&C, ASPIRATION CURETTAGE OR .6059 1.7 2.3
HYSTEROTOMY.
382 ........... 14 MED ......... FALSE LABOR .................................................................................... .2071 1.3 1.4
383 ........... 14 MED ......... OTHER ANTEPARTUM DIAGNOSES W MEDICAL COMPLICA- .5053 2.6 3.7
TIONS.
384 ........... 14 MED ......... OTHER ANTEPARTUM DIAGNOSES W/O MEDICAL COMPLICA- .3187 1.8 2.6
TIONS.
385 ........... 15 MED * ...... NEONATES, DIED OR TRANSFERRED TO ANOTHER ACUTE 1.3909 1.8 1.8
CARE FACILITY.
386 ........... 15 MED * ...... EXTREME IMMATURITY OR RESPIRATORY DISTRESS SYN- 4.5865 17.9 17.9
DROME, NEONATE.
387 ........... 15 MED * ...... PREMATURITY W MAJOR PROBLEMS ............................................ 3.1325 13.3 13.3
388 ........... 15 MED * ...... PREMATURITY W/O MAJOR PROBLEMS ........................................ 1.8900 8.6 8.6
389 ........... 15 MED * ...... FULL TERM NEONATE W MAJOR PROBLEMS ............................... 3.2177 4.7 4.7
390 ........... 15 MED * ...... NEONATE W OTHER SIGNIFICANT PROBLEMS ............................ 1.1388 3.4 3.4
391 ........... 15 MED * ...... NORMAL NEWBORN .......................................................................... .1542 3.1 3.1
392 ........... 16 SURG ...... SPLENECTOMY AGE >17 .................................................................. 3.0278 6.5 9.2
393 ........... 16 SURG * .... SPLENECTOMY AGE 0–17 ................................................................ 1.3624 9.1 9.1
394 ........... 16 SURG ...... OTHER O.R. PROCEDURES OF THE BLOOD AND BLOOD 1.9019 4.5 7.4
FORMING ORGANS.
395 ........... 16 MED ......... RED BLOOD CELL DISORDERS AGE >17 ....................................... .8303 3.2 4.3
396 ........... 16 MED * ...... RED BLOOD CELL DISORDERS AGE 0–17 ..................................... 2.5374 4.1 4.1
397 ........... 16 MED ......... COAGULATION DISORDERS ............................................................ 1.3113 3.8 5.2
398 ........... 16 MED ......... RETICULOENDOTHELIAL & IMMUNITY DISORDERS W CC .......... 1.2212 4.5 5.8
399 ........... 16 MED ......... RETICULOENDOTHELIAL & IMMUNITY DISORDERS W/O CC ...... .6665 2.7 3.3
400 ........... 17 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
401 ........... 17 SURG ...... LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W 2.9643 8.0 11.3
CC.
402 ........... 17 SURG ...... LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W/ 1.1793 2.8 4.1
O CC.
403 ........... 17 MED ......... LYMPHOMA & NON-ACUTE LEUKEMIA W CC ................................ 1.8406 5.8 8.1
404 ........... 17 MED ......... LYMPHOMA & NON-ACUTE LEUKEMIA W/O CC ............................ .9244 3.0 4.2
405 ........... 17 MED * ...... ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE 0–17 ..... 1.9316 4.9 4.9
406 ........... 17 SURG ...... MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ 2.7989 7.0 9.9
O.R.PROC W CC.
407 ........... 17 SURG ...... MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ 1.2325 3.0 3.8
O.R.PROC W/O CC.
408 ........... 17 SURG ...... MYELOPROLIF DISORD OR POORLY DIFF NEOPL W OTHER 2.2303 4.8 8.2
O.R.PROC.
409 ........... 17 MED ......... RADIOTHERAPY ................................................................................. 1.2066 4.3 5.8
410 ........... 17 MED ......... CHEMOTHERAPY W/O ACUTE LEUKEMIA AS SECONDARY DI- 1.1022 3.0 3.8
AGNOSIS.
411 ........... 17 MED ......... HISTORY OF MALIGNANCY W/O ENDOSCOPY ............................. .3645 2.5 3.3
412 ........... 17 MED ......... HISTORY OF MALIGNANCY W ENDOSCOPY ................................. .8442 1.8 2.8
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00284 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23589
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
413 ........... 17 MED ......... OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W 1.3035 5.0 6.8
CC.
414 ........... 17 MED ......... OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W/O .7784 3.0 4.0
CC.
415 ........... 18 SURG ...... O.R. PROCEDURE FOR INFECTIOUS & PARASITIC DISEASES ... 3.9753 11.0 14.8
416 ........... 18 MED ......... SEPTICEMIA AGE >17 ....................................................................... 1.6705 5.6 7.5
417 ........... 18 MED ......... SEPTICEMIA AGE 0–17 ..................................................................... 1.2962 3.6 5.3
418 ........... 18 MED ......... POSTOPERATIVE & POST-TRAUMATIC INFECTIONS ................... 1.1035 4.9 6.4
419 ........... 18 MED ......... FEVER OF UNKNOWN ORIGIN AGE >17 W CC .............................. .8526 3.4 4.4
420 ........... 18 MED ......... FEVER OF UNKNOWN ORIGIN AGE >17 W/O CC .......................... .6088 2.7 3.4
421 ........... 18 MED ......... VIRAL ILLNESS AGE >17 ................................................................... .7680 3.1 4.1
422 ........... 18 MED ......... VIRAL ILLNESS & FEVER OF UNKNOWN ORIGIN AGE 0–17 ........ .6185 2.6 3.7
423 ........... 18 MED ......... OTHER INFECTIOUS & PARASITIC DISEASES DIAGNOSES ........ 1.9163 6.0 8.4
424 ........... 19 SURG ...... O.R. PROCEDURE W PRINCIPAL DIAGNOSES OF MENTAL ILL- 2.2400 7.3 11.7
NESS.
425 ........... 19 MED ......... ACUTE ADJUSTMENT REACTION & PSYCHOSOCIAL DYSFUNC- .6187 2.6 3.5
TION.
426 ........... 19 MED ......... DEPRESSIVE NEUROSES ................................................................. .4655 3.0 4.1
427 ........... 19 MED ......... NEUROSES EXCEPT DEPRESSIVE ................................................. .5159 3.2 4.7
428 ........... 19 MED ......... DISORDERS OF PERSONALITY & IMPULSE CONTROL ................ .6944 4.6 7.2
429 ........... 19 MED ......... ORGANIC DISTURBANCES & MENTAL RETARDATION ................. .7893 4.3 5.6
430 ........... 19 MED ......... PSYCHOSES ....................................................................................... .6306 5.6 7.7
431 ........... 19 MED ......... CHILDHOOD MENTAL DISORDERS ................................................. .5194 4.0 5.9
432 ........... 19 MED ......... OTHER MENTAL DISORDER DIAGNOSES ...................................... .6322 2.9 4.3
433 ........... 20 MED ......... ALCOHOL/DRUG ABUSE OR DEPENDENCE, LEFT AMA .............. .2774 2.2 3.0
434 ........... 20 MED ......... NO LONGER VALID ............................................................................ .0000 .0 .0
435 ........... 20 MED ......... NO LONGER VALID ............................................................................ .0000 .0 .0
436 ........... 20 MED ......... NO LONGER VALID ............................................................................ .0000 .0 .0
437 ........... 20 MED ......... NO LONGER VALID ............................................................................ .0000 .0 .0
438 ........... 20 .................. NO LONGER VALID ............................................................................ .0000 .0 .0
439 ........... 21 SURG ...... SKIN GRAFTS FOR INJURIES ........................................................... 1.9204 5.4 8.8
440 ........... 21 SURG ...... WOUND DEBRIDEMENTS FOR INJURIES ....................................... 1.9346 5.9 9.2
441 ........... 21 SURG ...... HAND PROCEDURES FOR INJURIES .............................................. .9334 2.3 3.4
442 ........... 21 SURG ...... OTHER O.R. PROCEDURES FOR INJURIES W CC ........................ 2.5647 6.0 8.9
443 ........... 21 SURG ...... OTHER O.R. PROCEDURES FOR INJURIES W/O CC .................... .9911 2.6 3.4
444 ........... 21 MED ......... TRAUMATIC INJURY AGE >17 W CC ............................................... .7540 3.2 4.1
445 ........... 21 MED ......... TRAUMATIC INJURY AGE >17 W/O CC ........................................... .5016 2.3 2.8
446 ........... 21 MED * ...... TRAUMATIC INJURY AGE 0–17 ........................................................ .2995 2.4 2.4
447 ........... 21 MED ......... ALLERGIC REACTIONS AGE >17 ..................................................... .5572 1.9 2.6
448 ........... 21 MED * ...... ALLERGIC REACTIONS AGE 0–17 ................................................... .0985 2.9 2.9
449 ........... 21 MED ......... POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W CC ........ .8509 2.6 3.7
450 ........... 21 MED ......... POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W/O CC .... .4288 1.6 2.0
451 ........... 21 MED * ...... POISONING & TOXIC EFFECTS OF DRUGS AGE 0–17 ................. .2658 2.1 2.1
452 ........... 21 MED ......... COMPLICATIONS OF TREATMENT W CC ....................................... 1.0388 3.5 4.9
453 ........... 21 MED ......... COMPLICATIONS OF TREATMENT W/O CC ................................... .5278 2.2 2.8
454 ........... 21 MED ......... OTHER INJURY, POISONING & TOXIC EFFECT DIAG W CC ........ .8128 2.9 4.1
455 ........... 21 MED ......... OTHER INJURY, POISONING & TOXIC EFFECT DIAG W/O CC .... .4700 1.7 2.2
456 ........... 22 .................. NO LONGER VALID ............................................................................ .0000 .0 .0
457 ........... 22 MED ......... NO LONGER VALID ............................................................................ .0000 .0 .0
458 ........... 22 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
459 ........... 22 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
460 ........... 22 MED ......... NO LONGER VALID ............................................................................ .0000 .0 .0
461 ........... 23 SURG ...... O.R. PROC W DIAGNOSES OF OTHER CONTACT W HEALTH 1.3957 3.0 5.1
SERVICES.
462 ........... 23 MED ......... REHABILITATION ................................................................................ .8496 8.8 10.7
463 ........... 23 MED ......... SIGNS & SYMPTOMS W CC .............................................................. .6946 3.1 3.9
464 ........... 23 MED ......... SIGNS & SYMPTOMS W/O CC .......................................................... .5057 2.4 2.9
465 ........... 23 MED ......... AFTERCARE W HISTORY OF MALIGNANCY AS SECONDARY DI- .6015 2.4 3.6
AGNOSIS.
466 ........... 23 MED ......... AFTERCARE W/O HISTORY OF MALIGNANCY AS SECONDARY .6922 2.7 4.7
DIAGNOSIS.
467 ........... 23 MED ......... OTHER FACTORS INFLUENCING HEALTH STATUS ...................... .4789 2.0 2.7
468 ........... .................. EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL DI- 3.9877 9.7 13.2
AGNOSIS.
469 ........... ** .............. PRINCIPAL DIAGNOSIS INVALID AS DISCHARGE DIAGNOSIS .... .0000 .0 .0
470 ........... ** .............. UNGROUPABLE .................................................................................. .0000 .0 .0
471 ........... 08 SURG ...... BILATERAL OR MULTIPLE MAJOR JOINT PROCS OF LOWER 3.1328 4.5 5.1
EXTREMITY.
472 ........... 22 SURG ...... NO LONGER VALID ............................................................................ .0000 .0 .0
473 ........... 17 MED ......... ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE >17 ...... 3.4949 7.6 12.9
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00285 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23590 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00286 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23591
TABLE 5.—LIST OF DIAGNOSIS-RELATED GROUPS (DRGS, RELATIVE WEIGHTING FACTORS, AND GEOMETRIC AND
ARITHMETIC MEAN LENGTH OF STAY (LOS)—Continued
Mean Mean
DRG MDC TYPE DRG Title Weights LOS LOS
528 ........... 01 SURG ...... INTRACRANIAL VASCULAR PROC W PDX HEMORRHAGE .......... 7.0396 13.8 17.2
529 ........... 01 SURG ...... VENTRICULAR SHUNT PROCEDURES W CC ................................. 2.3118 5.3 8.3
530 ........... 01 SURG ...... VENTRICULAR SHUNT PROCEDURES W/O CC ............................. 1.2020 2.4 3.1
531 ........... 01 SURG ...... SPINAL PROCEDURES W CC ........................................................... 3.1221 6.5 9.6
532 ........... 01 SURG ...... SPINAL PROCEDURES W/O CC ....................................................... 1.4172 2.8 3.7
533 ........... 01 SURG ...... EXTRACRANIAL PROCEDURES W CC ............................................ 1.5728 2.4 3.7
534 ........... 01 SURG ...... EXTRACRANIAL PROCEDURES W/O CC ........................................ 1.0198 1.5 1.8
535 ........... 05 SURG ...... CARDIAC DEFIB IMPLANT W CARDIAC CATH W AMI/HF/SHOCK 8.0777 8.0 10.4
536 ........... 05 SURG ...... CARDIAC DEFIB IMPLANT W CARDIAC CATH W/O AMI/HF/ 6.9110 5.9 7.7
SHOCK.
537 ........... 08 SURG ...... LOCAL EXCIS & REMOV OF INT FIX DEV EXCEPT HIP & FEMUR 1.8333 4.8 6.9
W CC.
538 ........... 08 SURG ...... LOCAL EXCIS & REMOV OF INT FIX DEV EXCEPT HIP & FEMUR .9815 2.1 2.8
W/O CC.
539 ........... 17 SURG ...... LYMPHOMA & LEUKEMIA W MAJOR OR PROCEDURE W CC ..... 3.2371 7.0 10.8
540 ........... 17 SURG ...... LYMPHOMA & LEUKEMIA W MAJOR OR PROCEDURE W/O CC .. 1.1892 2.6 3.6
541 ........... PRE SURG ...... ECMO OR TRACH W MV 96+HRS OR PDX EXC FACE, MTH, 19.6693 38.0 45.4
FACE&NECK DX W/MAJ OR.
542 ........... PRE SURG ...... TRACH W MV 96+HRS OR PDX EXC FACE, MTH, FACE&NECK 12.7797 29.0 34.9
DX W/O MJ OR.
543 ........... 01 SURG ...... CRANIOTOMY W/IMPLANT OF CHEMO AGENT OR ACUTE 4.4062 8.5 12.2
COMPLX CNS PDX.
544 ........... 08 SURG ...... MAJOR JOINT REPLACEMENT OR REATTACHMENT OF LOWER 1.9612 4.1 4.6
EXTREMITY.
545 ........... 08 SURG ...... REVISION OF HIP OR KNEE REPLACEMENT ................................. 2.4781 4.5 5.2
546 ........... 08 SURG ...... SPINAL FUSION EXC CERV WITH PDX OF CURVATURE OF THE 5.0779 7.2 9.1
SPINE OR MALIG.
547 ........... 05 SURG ...... PERCUTANEOUS CARDIOVASCULAR PROC W AMI W CC .......... 2.8246 4.4 5.6
548 ........... 05 SURG ...... PERCUTANEOUS CARDIOVASCULAR PROC W AMI W/O CC ...... 2.0984 2.7 3.0
549 ........... 05 SURG ...... PERCUTANEOUS CARDIOVASCULAR PROC W DRUG ELUTING 3.2154 4.1 5.2
STENT W AMI W CC.
550 ........... 05 SURG ...... PERCUTANEOUS CARDIOVASCULAR PROC W DRUG ELUTING 2.5116 2.5 2.9
STENT W AMI W/O CC.
*Medicare data has been supplemented by data from 19 States for low-volume DRGs.
**DRGs 469 and 470 contain cases which could not be assigned to valid DRGs.
Note: Geometric mean is used only to determine payment for transfer cases.
Note: Arithmetic means are presented for informational purposes only.
Note: Relative weights are based on Medicare patient data and may not be appropriate for other patients.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00287 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23592 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00288 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23593
585.4 ........ Chronic kidney disease, Stage IV (severe) ................................................................................... Y PRE 512, 513
11 315, 316
585.5 ........ Chronic kidney disease, Stage V .................................................................................................. Y PRE 512, 513
11 315, 316
585.6 ........ End stage renal disease ................................................................................................................ Y PRE 512, 513
11 315, 316
585.9 ........ Chronic kidney disease, unspecified ............................................................................................. Y PRE 512, 513
11 315, 316
599.60 ...... Urinary obstruction, unspecified .................................................................................................... Y 15 331, 332, 333
11 387,1 389 1
599.69 ...... Urinary obstruction, not elsewhere classified ................................................................................ Y 11 331, 332, 333
15 387,1 389 1
651.70 ...... Multiple gestation following (elective) fetal reduction, unspecified as to episode of care or not N 14 469
applicable.
651.71 ...... Multiple gestation following (elective) fetal reduction, delivered, with or without mention of N 14 370, 371, 372,
antepartum condition. 373, 374, 375
651.73 ...... Multiple gestation following (elective) fetal reduction, antepartum condition or complication ...... N 14 383, 384
760.77 ...... Anticonvulsants .............................................................................................................................. N 15 390
760.78 ...... Antimetabolic agents ..................................................................................................................... N 15 390
763.84 ...... Meconium passage during delivery ............................................................................................... N 15 390
770.10 ...... Fetal and newborn aspiration, unspecified .................................................................................... N 15 387,3 389 3
770.11 ...... Meconium aspiration without respiratory symptoms ..................................................................... N 15 387,3 389 3
770.12 ...... Meconium aspiration with respiratory symptoms .......................................................................... Y 15 387,3 389 3
770.17 ...... Other fetal and newborn aspiration without respiratory symptoms ............................................... N 15 387,3 389 3
770.18 ...... Other fetal and newborn aspiration with respiratory symptoms .................................................... Y 15 387,3 389 3
779.84 ...... Meconium staining ......................................................................................................................... N 15 390
780.95 ...... Other excessive crying .................................................................................................................. N 23 463, 464
799.01 ...... Asphyxia ........................................................................................................................................ Y 4 101, 102
799.02 ...... Hypoxemia ..................................................................................................................................... Y 4 101, 102
996.40 ...... Unspecified mechanical complication of internal orthopedic device, implant, and graft .............. Y 8 249
996.41 ...... Mechanical loosening of prosthetic joint ....................................................................................... Y 8 249
996.42 ...... Dislocation of prosthetic joint ......................................................................................................... Y 8 249
996.43 ...... Prosthetic joint implant failure ....................................................................................................... Y 8 249
996.44 ...... Peri-prosthetic fracture around prosthetic joint ............................................................................. Y 8 249
996.45 ...... Peri-prosthetic osteolysis ............................................................................................................... Y 8 249
996.46 ...... Articular bearing surface wear of prosthetic joint .......................................................................... Y 8 249
996.47 ...... Other mechanical complication of prosthetic joint implant ............................................................ Y 8 249
996.49 ...... Other mechanical complication of other internal orthopedic device, implant, and graft ............... Y 8 249
V12.42 ..... Person history, Infections of the central nervous system ............................................................. N 23 467
V12.60 ..... Person history, Unspecified disease of respiratory system .......................................................... N 23 467
V12.61 ..... Person history, Pneumonia (recurrent) ......................................................................................... N 23 467
V12.69 ..... Person history, Other diseases of respiratory system .................................................................. N 23 467
V13.02 ..... Person history, Urinary (tract) infection ......................................................................................... N 23 467
V13.03 ..... Person history, Nephrotic syndrome ............................................................................................. N 23 467
V15.88 ..... History of fall .................................................................................................................................. N 23 467
V17.81 ..... Family history, Osteoporosis ......................................................................................................... N 23 467
V17.89 ..... Family history, Other musculoskeletal diseases ........................................................................... N 23 467
V18.9 ....... Family history, Genetic disease carrier ......................................................................................... N 23 467
V26.31 ..... Testing for genetic disease carrier status ..................................................................................... N 23 467
V26.32 ..... Other genetic testing ..................................................................................................................... N 23 467
V26.33 ..... Genetic counseling ........................................................................................................................ N 23 467
V46.13 ..... Encounter for weaning from respirator [ventilator] ........................................................................ Y 23 467
V46.14 ..... Mechanical complication of respirator [ventilator] ......................................................................... Y 23 467
V49.84 ..... Bed confinement status ................................................................................................................. N 23 467
V59.70 ..... Egg (oocyte) (ovum) donor, unspecified ....................................................................................... N 23 467
V59.71 ..... Egg (oocyte) (ovum) donor, under age 35,anonymous recipient ................................................. N 23 467
V59.72 ..... Egg (oocyte) (ovum) donor, under age 35, designated recipient ................................................. N 23 467
V59.73 ..... Egg (oocyte) (ovum) donor, age 35 and over,anonymous recipient ............................................ N 23 467
V59.74 ..... Egg (oocyte) (ovum) donor, age 35 and over, designated recipient ............................................ N 23 467
V62.84 ..... Suicidal ideation ............................................................................................................................. N 19 425
V64.00 ..... Vaccination not carried out, unspecified reason ........................................................................... N 23 467
V64.01 ..... Vaccination not carried out because of acute illness .................................................................... N 23 467
V64.02 ..... Vaccination not carried out because of chronic illness or condition ............................................. N 23 467
V64.03 ..... Vaccination not carried out because of immune compromised state ........................................... N 23 467
V64.04 ..... Vaccination not carried out because of allergy to vaccine or component .................................... N 23 467
V64.05 ..... Vaccination not carried out because of caregiver refusal ............................................................. N 23 467
V64.06 ..... Vaccination not carried out because of patient refusal ................................................................. N 23 467
V64.07 ..... Vaccination not carried out for religious reasons .......................................................................... N 23 467
V64.08 ..... Vaccination not carried out because patient had disease being vaccinated against ................... N 23 467
V64.09 ..... Vaccination not carried out for other reason ................................................................................. N 23 467
V69.5 ....... Behavioral insomnia of childhood .................................................................................................. N 23 467
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00289 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23594 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00290 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23595
37.49 ........ Other repair of heart and pericardium ........................................................................................... Y 5 110, 111
21 442, 443
24 486
84.56 ........ Insertion of (cement) spacer .......................................................................................................... N
84.57 ........ Removal of (cement) spacer ......................................................................................................... N
86.97 ........ Insertion or replacement of single array rechargeable neurostimulator pulse generator ............. Y 1 7, 8
86.98 ........ Insertion or replacement of dual array rechargeable neurostimulator pulse generator ................ Y 1 7, 8
36.02 ........ Single vessel percutaneous transluminal coronary angioplasty [PTCA] or coronary Y 5 106, 516, 517,
atherectomy with mention of thrombolytic agent. 518, 526, 527
36.05 ........ Multiple vessel percutaneous transluminal coronary angioplasty [PTCA] or coronary Y 5 106, 516, 517,
atherectomy performed during the same operation, with or without mention of thrombolytic 518, 526, 527
agent.
37.4 .......... Repair of heart and pericardium .................................................................................................... Y 5 110, 111
21 442, 443
24 486
403.00 ...... Hypertensive kidney disease, malignant, without chronic kidney disease ................................... Y 11 331, 332, 333
403.01 ...... Hypertensive kidney disease, malignant, with chronic kidney disease ........................................ Y 11 315, 316
403.10 ...... Hypertensive kidney disease, benign, without chronic kidney disease ........................................ N 11 331, 332, 333
403.11 ...... Hypertensive kidney disease, benign, with chronic kidney disease ............................................. Y 11 315, 316
403.90 ...... Hypertensive kidney disease, unspecified, without chronic kidney disease ................................. N 11 331, 332, 333
403.91 ...... Hypertensive kidney disease, unspecified, with chronic kidney disease ...................................... Y 11 315, 316
404.00 ...... Hypertensive heart and kidney disease, malignant, without heart failure or chronic kidney dis- Y 5 134
ease.
404.01 ...... Hypertensive heart and kidney disease, malignant, with heart failure ......................................... Y 5 115, 121, 124,
127, 535
15 1387, 389 1
404.02 ...... Hypertensive heart and kidney disease, malignant, with chronic kidney disease ........................ Y 11 315, 316
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00291 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23596 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
404.03 ...... Hypertensive heart and kidney disease, malignant, with heart failure and chronic kidney dis- Y 5 115, 121, 124,
ease. 127, 535
15 387, 389 1
404.10 ...... Hypertensive heart and kidney disease, benign, without heart failure or chronic kidney disease N 5 134
404.11 ...... Hypertensive heart and kidney disease, benign, with heart failure .............................................. Y 5 115, 121, 124,
127, 535
15 387, 389 1
404.12 ...... Hypertensive heart and kidney disease, benign, with chronic kidney disease ............................. Y 11 315, 316
404.13 ...... Hypertensive heart and kidney disease, benign, with heart failure and chronic kidney disease Y 5 115, 121, 124,
127, 535
15 387, 3891
404.90 ...... Hypertensive heart and kidney disease, unspecified, without heart failure or chronic kidney N 5 34
disease.
404.91 ...... Hypertensive heart and kidney disease, unspecified, with heart failure ....................................... Y 5 115, 121, 124,
127, 535
15 387, 389 1
404.92 ...... Hypertensive heart and kidney disease, unspecified, with chronic kidney disease ..................... Y 11 315, 316
404.93 ...... Hypertensive heart and kidney disease, unspecified, with heart failure and chronic kidney dis- Y 5 115, 121, 124,
ease. 127, 535
15 387, 389 1
728.87 ...... Muscle weakness (generalized) .................................................................................................... N 8 247
780.51 ...... Insomnia with sleep apnea, unspecified ....................................................................................... N PRE 482
3 73, 74
780.52 ...... Insomnia, unspecified .................................................................................................................... N 19 432
780.53 ...... Hypersomnia with sleep apnea, unspecified ................................................................................. N PRE 482
3 73, 74
780.54 ...... Hypersomnia, unspecified ............................................................................................................. N 19 432
780.57 ...... Unspecified sleep apnea ............................................................................................................... N PRE 482
3 73, 74
1 Major problem in DRGs 387 and 389.
36.01 ........ Percutaneous transluminal coronary angioplasty [PTCA] or coronary atherectomy .................... Y 5 106, 516, 517,
518, 526, 527
37.79 ........ Revision or relocation of cardiac device pocket ............................................................................ Y 1 7, 8
5 117
9 269, 270
21 442, 443
24 486
81.53 ........ Revision of hip replacement, not otherwise specified ................................................................... Y 8 471, 545
10 292, 293
21 442, 443
24 485
81.55 ........ Revision of knee replacement, not otherwise specified ................................................................ Y 8 471, 545
21 442, 443
24 486
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00292 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23597
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00293 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23598 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00294 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23599
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00295 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23600 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00296 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23601
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00297 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23602 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00298 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23603
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00299 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23604 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00300 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23605
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00301 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23606 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00302 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23607
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00303 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23608 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00304 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23609
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00305 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23610 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00306 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23611
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00307 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23612 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00308 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23613
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00309 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23614 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
30 ............................................................. 1 19.0000 19 19 19 19 19
31 ............................................................. 5,090 3.9800 1 2 3 5 8
32 ............................................................. 1,982 2.4001 1 1 2 3 5
34 ............................................................. 27,872 4.7722 1 2 4 6 9
35 ............................................................. 7,895 3.0011 1 1 3 4 6
36 ............................................................. 1,472 1.6019 1 1 1 1 3
37 ............................................................. 1,241 4.1281 1 1 3 5 9
38 ............................................................. 56 3.5179 1 1 2 4 6
39 ............................................................. 448 2.3772 1 1 1 2 5
40 ............................................................. 1,383 4.1063 1 1 4 5 8
42 ............................................................. 1,145 2.7721 1 1 2 4 6
43 ............................................................. 125 3.1440 1 1 2 4 6
44 ............................................................. 1,160 4.7836 2 3 4 6 8
45 ............................................................. 2,803 3.0756 1 2 2 4 6
46 ............................................................. 3,819 4.1712 1 2 3 5 8
47 ............................................................. 1,335 2.8854 1 1 2 4 5
49 ............................................................. 2,478 4.3906 1 2 3 5 8
50 ............................................................. 2,170 1.8143 1 1 1 2 3
51 ............................................................. 190 2.7632 1 1 1 3 6
52 ............................................................. 165 1.9818 1 1 1 2 4
53 ............................................................. 2,225 3.9542 1 1 2 5 9
54 ............................................................. 1 7.0000 7 7 7 7 7
55 ............................................................. 1,354 3.1300 1 1 2 4 7
56 ............................................................. 435 2.5724 1 1 1 3 6
57 ............................................................. 698 4.1547 1 1 2 5 9
59 ............................................................. 102 2.5392 1 1 1 2 6
60 ............................................................. 8 3.2500 1 1 2 4 4
61 ............................................................. 219 5.4064 1 1 3 7 12
63 ............................................................. 2,842 4.4838 1 2 3 5 9
64 ............................................................. 3,343 6.0464 1 2 4 8 13
65 ............................................................. 41,424 2.7728 1 1 2 3 5
66 ............................................................. 8,007 3.1309 1 1 2 4 6
67 ............................................................. 419 3.6826 1 2 3 4 7
68 ............................................................. 17,328 3.9720 1 2 3 5 7
69 ............................................................. 4,816 3.0328 1 2 3 4 5
70 ............................................................. 25 2.3600 1 1 2 3 4
71 ............................................................. 68 4.0000 1 2 3 5 7
72 ............................................................. 1,066 3.4531 1 2 3 4 7
73 ............................................................. 7,935 4.3806 1 2 3 6 9
74 ............................................................. 4 2.5000 2 2 2 3 3
75 ............................................................. 45,034 9.8129 3 5 7 12 20
76 ............................................................. 47,341 10.8198 3 5 8 13 21
77 ............................................................. 2,153 4.6716 1 2 4 6 9
78 ............................................................. 45,631 6.2559 2 4 6 8 10
79 ............................................................. 170,684 8.1939 3 4 7 10 15
80 ............................................................. 7,724 5.3718 2 3 4 7 10
81 ............................................................. 4 11.5000 8 8 11 13 14
82 ............................................................. 65,161 6.6908 2 3 5 9 13
83 ............................................................. 6,950 5.2373 2 3 4 7 10
84 ............................................................. 1,472 3.1454 1 2 3 4 6
85 ............................................................. 21,878 6.2321 2 3 5 8 12
86 ............................................................. 1,861 3.6239 1 2 3 5 7
87 ............................................................. 82,727 6.4131 2 3 5 8 12
88 ............................................................. 413,844 4.9009 2 3 4 6 9
89 ............................................................. 550,707 5.6477 2 3 5 7 10
90 ............................................................. 45,868 3.8123 2 2 3 5 7
91 ............................................................. 45 4.3556 1 2 3 5 9
92 ............................................................. 16,495 5.9978 2 3 5 8 11
93 ............................................................. 1,598 3.8273 1 2 3 5 7
94 ............................................................. 13,338 6.1223 2 3 5 8 12
95 ............................................................. 1,612 3.6340 1 2 3 5 7
96 ............................................................. 59,134 4.3754 2 2 4 5 8
97 ............................................................. 27,017 3.3864 1 2 3 4 6
98 ............................................................. 8 2.5000 1 2 2 3 3
99 ............................................................. 21,547 3.1101 1 1 2 4 6
100 ........................................................... 6,953 2.1151 1 1 2 3 4
101 ........................................................... 23,105 4.2502 1 2 3 5 8
102 ........................................................... 5,237 2.4921 1 1 2 3 5
103 ........................................................... 724 37.3798 8 12 23 48 79
104 ........................................................... 20,953 14.4988 6 8 12 18 25
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00310 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23615
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23616 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00312 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23617
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00313 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23618 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00314 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23619
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00315 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23620 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
12,140,152
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00316 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23621
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00317 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23622 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00318 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23623
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00319 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23624 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00320 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23625
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00321 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23626 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00322 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23627
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00323 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23628 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
12,140,152
TABLE 8A.—STATEWIDE AVERAGE OP- TABLE 8A.—STATEWIDE AVERAGE OP- TABLE 8B.—STATEWIDE AVERAGE
ERATING COST-TO-CHARGE RA- ERATING COST-TO-CHARGE RA- CAPITAL COST-TO-CHARGE RA-
TIOS—MARCH 2005 TIOS—MARCH 2005—Continued TIOS—MARCH 2005—Continued
Alabama .................... 0.279 0.348 Pennsylvania ............ 0.299 0.472 Kansas .......................................... 0.033
Alaska ....................... 0.454 0.784 Puerto Rico ............... 0.443 ................ Kentucky ....................................... 0.033
Arizona ...................... 0.295 0.392 Rhode Island ............ 0.439 ................ Louisiana ...................................... 0.032
Arkansas ................... 0.359 0.383 South Carolina .......... 0.313 0.34 Maine ............................................ 0.036
California ................... 0.251 0.354 South Dakota ............ 0.385 0.498 Maryland ....................................... 0.016
Colorado ................... 0.328 0.483 Tennessee ................ 0.337 0.402 Massachusetts .............................. 0.036
Connecticut ............... 0.458 0.522 Texas ........................ 0.309 0.38 Michigan ....................................... 0.037
Delaware ................... 0.546 0.548 Utah .......................... 0.428 0.598 Minnesota ..................................... 0.034
District of Columbia .. 0.386 ................ Vermont .................... 0.577 0.635
Mississippi .................................... 0.032
Florida ....................... 0.257 0.304 Virginia ...................... 0.386 0.398
Washington ............... 0.454 0.497 Missouri ........................................ 0.029
Georgia ..................... 0.373 0.426
West Virginia ............ 0.492 0.472 Montana ........................................ 0.039
Hawaii ....................... 0.404 0.479
Wisconsin ................. 0.458 0.497 Nebraska ...................................... 0.039
Idaho ......................... 0.487 0.577
Illinois ........................ 0.337 0.442 Wyoming ................... 0.442 0.614 Nevada ......................................... 0.019
Indiana ...................... 0.439 0.47 New Hampshire ............................ 0.037
Iowa .......................... 0.407 0.505 New Jersey ................................... 0.015
Kansas ...................... 0.313 0.471 TABLE 8B.—STATEWIDE AVERAGE New Mexico .................................. 0.036
Kentucky ................... 0.401 0.404 CAPITAL COST-TO-CHARGE RA- New York ...................................... 0.033
Louisiana .................. 0.306 0.369 TIOS—MARCH 2005 North Carolina .............................. 0.039
Maine ........................ 0.504 0.489 North Dakota ................................ 0.041
Maryland ................... 0.762 0.827 State Ratio Ohio .............................................. 0.032
Massachusetts .......... 0.485 ................ Oklahoma ..................................... 0.031
Michigan ................... 0.396 0.496 Alabama ........................................ 0.027 Oregon .......................................... 0.038
Minnesota ................. 0.404 0.531 Alaska ........................................... 0.044 Pennsylvania ................................ 0.026
Mississippi ................ 0.354 0.391 Arizona .......................................... 0.029 Puerto Rico ................................... 0.033
Missouri .................... 0.346 0.408 Arkansas ....................................... 0.03 Rhode Island ................................ 0.022
Montana .................... 0.437 0.481 California ....................................... 0.019 South Carolina .............................. 0.03
Nebraska .................. 0.371 0.503 Colorado ....................................... 0.03 South Dakota ................................ 0.04
Nevada ..................... 0.245 0.558 Connecticut ................................... 0.035 Tennessee .................................... 0.034
New Hampshire ........ 0.467 0.508 Delaware ....................................... 0.047 Texas ............................................ 0.03
New Jersey ............... 0.196 ................ District of Columbia ...................... 0.029 Utah .............................................. 0.039
New Mexico .............. 0.428 0.414 Florida ........................................... 0.026 Vermont ........................................ 0.045
New York .................. 0.372 0.526 Georgia ......................................... 0.035 Virginia .......................................... 0.039
North Carolina .......... 0.454 0.439 Hawaii ........................................... 0.034 Washington ................................... 0.037
North Dakota ............ 0.418 0.467 Idaho ............................................. 0.041 West Virginia ................................ 0.033
Ohio .......................... 0.389 0.543 Illinois ............................................ 0.03 Wisconsin ..................................... 0.038
Oklahoma ................. 0.332 0.423 Indiana .......................................... 0.041 Wyoming ....................................... 0.046
Oregon ...................... 0.499 0.481 Iowa .............................................. 0.033
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00324 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23629
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00325 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23630 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00326 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23631
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00327 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23632 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00328 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23633
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00329 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23634 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00330 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23635
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00331 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23636 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00332 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23637
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00333 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23638 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00334 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23639
TABLE 9A.—HOSPITALS RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITALS AND CBSA—FY 2006—
Continued
Geographic Reclassified
Provider number Lugar
CBSA CBSA
TABLE 9B.—HOSPITAL RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITAL UNDER SECTION 508 OF PUB.
L. 108–173
Wage index
Geographic Own wage
Provider number CBSA 508
CBSA index
reclassification
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00335 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23640 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 9B.—HOSPITAL RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITAL UNDER SECTION 508 OF PUB.
L. 108–173—Continued
Wage index
Geographic Own wage
Provider number CBSA 508
CBSA index
reclassification
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00336 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23641
TABLE 9B.—HOSPITAL RECLASSIFICATIONS AND REDESIGNATIONS BY INDIVIDUAL HOSPITAL UNDER SECTION 508 OF PUB.
L. 108–173—Continued
Wage index
Geographic Own wage
Provider number CBSA 508
CBSA index
reclassification
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00337 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23642 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
140167 ..................................................................................................................................................................... 14 14
150051 ..................................................................................................................................................................... 14020 15
150078 ..................................................................................................................................................................... 23844 15
170137 ..................................................................................................................................................................... 29940 17
190048 ..................................................................................................................................................................... 26380 19
230078 ..................................................................................................................................................................... 35660 23
240037 ..................................................................................................................................................................... 33460 24
260006 ..................................................................................................................................................................... 41140 26
300009 ..................................................................................................................................................................... 31700 30
370054 ..................................................................................................................................................................... 36420 37
380040 ..................................................................................................................................................................... 13460 38
380084 ..................................................................................................................................................................... 41420 38
390181 ..................................................................................................................................................................... 39 39
390183 ..................................................................................................................................................................... 39 39
390201 ..................................................................................................................................................................... 39 39
450052 ..................................................................................................................................................................... 45 45
450078 ..................................................................................................................................................................... 10180 45
450243 ..................................................................................................................................................................... 10180 45
450276 ..................................................................................................................................................................... 48660 45
450348 ..................................................................................................................................................................... 45 45
500023 ..................................................................................................................................................................... 28420 50
500037 ..................................................................................................................................................................... 49420 50
500122 ..................................................................................................................................................................... 50 50
500147 ..................................................................................................................................................................... 42644 50
500148 ..................................................................................................................................................................... 48300 50
TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS
THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA-
TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING
STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT
(INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF-
FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND
CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND-
ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES
BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP
(DRG)—MARCH 2005 1 (DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued
DRG Cases Threshold DRG Cases Threshold DRG Cases Threshold
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00338 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23643
TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS
THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA-
TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING
STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT
(INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF-
FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND
CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND-
ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES
BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP
(DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued
DRG Cases Threshold DRG Cases Threshold DRG Cases Threshold
97 ...................... 26,996 $10,870 160 .................... 11,968 $17,182 226 .................... 6,656 $29,923
98 ...................... 8 $8,495 161 .................... 10,417 $23,781 227 .................... 5,068 $16,786
99 ...................... 21,531 $14,399 162 .................... 5,486 $13,865 228 .................... 2,639 $23,112
100 .................... 6,934 $11,081 163 .................... 10 $14,004 229 .................... 1,198 $14,205
101 .................... 23,083 $17,487 164 .................... 5,941 $39,874 230 .................... 2,564 $26,523
102 .................... 5,236 $11,147 165 .................... 2,518 $23,716 232 .................... 721 $19,464
103 .................... 724 $214,160 166 .................... 4,928 $28,877 233 .................... 15,107 $35,245
104 .................... 20,904 $117,844 167 .................... 4,623 $17,916 234 .................... 7,659 $25,357
105 .................... 31,499 $89,729 168 .................... 1,544 $25,383 235 .................... 4,964 $14,917
106 .................... 3,492 $108,656 169 .................... 754 $14,788 236 .................... 42,358 $14,238
107 .................... 69,982 $85,171 170 .................... 17,464 $44,402 237 .................... 2,019 $12,305
108 .................... 7,942 $85,326 171 .................... 1,483 $24,371 238 .................... 9,863 $27,442
109 .................... 50,600 $65,918 172 .................... 32,853 $27,512 239 .................... 42,910 $21,095
110 .................... 57,121 $59,055 173 .................... 2,388 $15,475 240 .................... 12,638 $25,924
111 .................... 10,070 $44,900 174 .................... 267,618 $20,328 241 .................... 2,693 $13,360
113 .................... 37,225 $44,754 175 .................... 32,616 $11,567 242 .................... 2,742 $22,347
114 .................... 8,509 $31,122 176 .................... 14,542 $22,357 243 .................... 101,378 $15,581
115 .................... 22,119 $58,803 177 .................... 8,545 $18,625 244 .................... 15,777 $14,369
116 .................... 118,448 $43,379 178 .................... 2,903 $14,386 245 .................... 5,832 $9,431
117 .................... 5,146 $26,461 179 .................... 14,417 $21,872 246 .................... 1,429 $12,106
118 .................... 7,591 $33,464 180 .................... 92,094 $19,340 247 .................... 21,645 $11,781
119 .................... 993 $26,580 181 .................... 25,878 $11,462 248 .................... 15,098 $17,268
120 .................... 36,272 $36,812 182 .................... 291,824 $16,956 249 .................... 14,017 $13,881
121 .................... 159,450 $30,813 183 .................... 86,469 $12,060 250 .................... 4,149 $13,866
122 .................... 61,715 $19,625 184 .................... 78 $10,539 251 .................... 2,146 $9,765
123 .................... 33,617 $27,218 185 .................... 5,678 $17,264 253 .................... 24,829 $15,141
124 .................... 130,598 $28,749 186 .................... 4 $6,213 254 .................... 10,404 $9,271
125 .................... 95,641 $22,067 187 .................... 621 $17,068 256 .................... 7,144 $16,671
126 .................... 5,822 $42,108 188 .................... 90,890 $22,183 257 .................... 13,494 $17,881
127 .................... 695,047 $20,505 189 .................... 13,170 $12,414 258 .................... 12,014 $14,270
128 .................... 5,170 $13,906 190 .................... 69 $12,679 259 .................... 2,898 $19,381
129 .................... 3,751 $20,637 191 .................... 10,395 $54,119 260 .................... 2,981 $14,202
130 .................... 89,029 $18,640 192 .................... 1,322 $33,415 261 .................... 1,603 $19,576
131 .................... 23,806 $11,216 193 .................... 4,505 $50,334 262 .................... 636 $19,862
132 .................... 117,219 $12,597 194 .................... 520 $32,038 263 .................... 23,791 $33,555
133 .................... 7,276 $10,986 195 .................... 3,247 $49,676 264 .................... 3,921 $20,803
134 .................... 42,382 $12,400 196 .................... 699 $32,386 265 .................... 4,304 $29,777
135 .................... 7,433 $17,747 197 .................... 17,294 $41,808 266 .................... 2,303 $17,605
136 .................... 1,133 $12,797 198 .................... 4,629 $24,029 267 .................... 272 $18,035
138 .................... 206,854 $16,622 199 .................... 1,422 $38,851 268 .................... 1,003 $23,142
139 .................... 78,506 $10,671 200 .................... 936 $39,812 269 .................... 10,670 $31,752
140 .................... 38,098 $10,335 201 .................... 2,664 $51,676 270 .................... 2,635 $16,856
141 .................... 121,790 $15,337 202 .................... 27,245 $26,568 271 .................... 21,019 $19,407
142 .................... 52,218 $12,040 203 .................... 31,633 $27,380 272 .................... 5,931 $19,148
143 .................... 249,138 $11,604 204 .................... 72,764 $22,089 273 .................... 1,348 $11,532
144 .................... 99,593 $25,098 205 .................... 31,436 $23,369 274 .................... 2,287 $23,181
145 .................... 6,178 $11,899 206 .................... 2,075 $14,944 275 .................... 228 $11,152
146 .................... 10,762 $44,908 207 .................... 35,719 $23,543 276 .................... 1,445 $13,974
147 .................... 2,627 $29,912 208 .................... 9,747 $14,208 277 .................... 112,171 $17,127
148 .................... 135,543 $51,340 210 .................... 128,257 $35,917 278 .................... 33,823 $10,861
149 .................... 19,884 $28,508 211 .................... 26,620 $24,559 279 .................... 6 $17,172
150 .................... 22,692 $45,073 212 .................... 10 $26,686 280 .................... 19,255 $14,562
151 .................... 5,351 $25,703 213 .................... 10,256 $34,143 281 .................... 7,092 $9,993
152 .................... 5,006 $34,651 216 .................... 17,645 $36,166 283 .................... 6,268 $14,563
153 .................... 2,089 $21,823 217 .................... 17,611 $42,611 284 .................... 1,829 $9,200
154 .................... 28,473 $55,952 218 .................... 28,683 $32,278 285 .................... 7,615 $35,872
155 .................... 6,159 $25,835 219 .................... 21,323 $20,929 286 .................... 2,702 $35,486
156 .................... 6 $52,265 220 .................... 4 $31,838 287 .................... 6,107 $32,104
157 .................... 8,254 $26,362 223 .................... 13,414 $22,467 288 .................... 10,432 $37,872
158 .................... 4,104 $13,493 224 .................... 10,864 $16,561 289 .................... 6,881 $18,298
159 .................... 19,160 $28,111 225 .................... 6,508 $24,064 290 .................... 10,827 $17,619
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00339 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23644 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS
THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA-
TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING
STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT
(INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF-
FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND
CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND-
ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES
BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP
(DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued
DRG Cases Threshold DRG Cases Threshold DRG Cases Threshold
291 .................... 64 $18,543 356 .................... 23,932 $14,960 427 .................... 1,504 $10,543
292 .................... 7,321 $41,142 357 .................... 5,563 $38,097 428 .................... 769 $13,558
293 .................... 367 $27,840 358 .................... 20,763 $22,658 429 .................... 25,454 $15,545
294 .................... 98,864 $15,044 359 .................... 28,654 $15,907 430 .................... 71,402 $12,774
295 .................... 4,096 $14,601 360 .................... 14,748 $17,209 431 .................... 304 $10,532
296 .................... 254,455 $16,168 361 .................... 272 $22,454 432 .................... 420 $12,850
297 .................... 45,318 $9,887 362 .................... 2 $11,608 433 .................... 5,189 $5,613
298 .................... 81 $9,998 363 .................... 2,127 $19,999 439 .................... 1,738 $30,816
299 .................... 1,478 $20,010 364 .................... 1,449 $17,758 440 .................... 5,606 $30,736
300 .................... 21,321 $21,770 365 .................... 1,620 $32,955 441 .................... 779 $18,744
301 .................... 3,896 $12,544 366 .................... 4,786 $24,830 442 .................... 18,000 $37,969
302 .................... 9,646 $52,723 367 .................... 455 $12,018 443 .................... 3,382 $20,255
303 .................... 23,740 $39,286 368 .................... 3,920 $23,343 444 .................... 5,891 $14,879
304 .................... 13,816 $38,375 369 .................... 3,610 $12,832 445 .................... 2,345 $10,336
305 .................... 3,084 $23,623 370 .................... 1,838 $17,389 447 .................... 6,258 $10,696
306 .................... 6,341 $25,247 371 .................... 2,236 $11,866 449 .................... 38,766 $16,579
307 .................... 2,061 $12,398 372 .................... 1,162 $9,834 450 .................... 7,787 $8,697
308 .................... 7,089 $30,158 373 .................... 4,860 $7,061 451 .................... 3 $5,847
309 .................... 3,555 $18,659 374 .................... 156 $13,290 452 .................... 27,610 $20,394
310 .................... 26,019 $23,711 375 .................... 6 $33,543 453 .................... 5,431 $10,730
311 .................... 6,468 $13,013 376 .................... 388 $10,147 454 .................... 3,835 $15,920
312 .................... 1,454 $22,529 377 .................... 77 $25,958 455 .................... 846 $9,717
313 .................... 507 $14,119 378 .................... 195 $15,828 461 .................... 2,722 $27,440
315 .................... 36,526 $35,138 379 .................... 507 $7,202 462 .................... 7,751 $16,591
316 .................... 180,759 $25,061 380 .................... 91 $7,834 463 .................... 31,026 $13,855
317 .................... 2,756 $16,124 381 .................... 212 $12,620 464 .................... 7,651 $10,292
318 .................... 5,923 $23,425 382 .................... 43 $4,126 465 .................... 219 $12,019
319 .................... 382 $13,277 383 .................... 2,472 $9,812 466 .................... 1,377 $12,550
320 .................... 218,425 $17,103 384 .................... 132 $6,300 467 .................... 1,013 $9,726
321 .................... 31,366 $11,424 392 .................... 2,202 $45,471 468 .................... 50,411 $55,817
322 .................... 61 $11,164 394 .................... 2,818 $31,480 470 .................... 32 $13,204
323 .................... 20,454 $16,793 395 .................... 115,973 $16,480 471 .................... 15,474 $55,297
324 .................... 5,414 $10,413 396 .................... 9 $15,832 473 .................... 8,761 $39,707
325 .................... 9,600 $13,014 397 .................... 18,425 $24,257 475 .................... 116,437 $51,182
326 .................... 2,574 $9,069 398 .................... 18,256 $24,100 476 .................... 3,018 $36,994
327 .................... 5 $5,743 399 .................... 1,634 $13,682 477 .................... 29,401 $33,866
328 .................... 606 $14,673 401 .................... 6,325 $43,589 478 .................... 113,571 $40,296
329 .................... 71 $10,155 402 .................... 1,401 $24,076 479 .................... 24,583 $29,518
331 .................... 54,748 $20,954 403 .................... 31,827 $30,787 480 .................... 800 $120,367
332 .................... 4,387 $12,467 404 .................... 3,799 $18,943 481 .................... 1,065 $86,015
333 .................... 251 $18,573 406 .................... 2,222 $42,772 482 .................... 5,070 $49,484
334 .................... 9,802 $28,443 407 .................... 583 $24,742 484 .................... 449 $74,694
335 .................... 11,919 $21,877 408 .................... 2,170 $33,802 485 .................... 3,412 $50,963
336 .................... 31,235 $16,658 409 .................... 1,807 $24,850 486 .................... 2,562 $66,540
337 .................... 25,130 $11,427 410 .................... 28,395 $22,712 487 .................... 4,640 $32,711
338 .................... 652 $27,712 411 .................... 12 $7,141 488 .................... 786 $58,001
339 .................... 1,253 $23,286 412 .................... 12 $16,545 489 .................... 13,453 $29,620
340 .................... 2 $18,734 413 .................... 5,193 $26,451 490 .................... 5,203 $21,034
341 .................... 3,183 $25,976 414 .................... 572 $16,081 491 .................... 19,730 $32,883
342 .................... 563 $17,354 415 .................... 50,799 $51,864 492 .................... 4,005 $44,873
344 .................... 2,691 $25,572 416 .................... 238,848 $29,646 493 .................... 61,564 $35,020
345 .................... 1,461 $22,328 417 .................... 23 $20,595 494 .................... 25,546 $20,780
346 .................... 3,962 $21,235 418 .................... 28,478 $21,320 495 .................... 303 $109,115
347 .................... 247 $12,515 419 .................... 16,269 $17,124 496 .................... 3,255 $92,679
348 .................... 4,171 $14,696 420 .................... 2,939 $12,324 497 .................... 27,777 $59,046
349 .................... 575 $8,797 421 .................... 11,866 $14,876 498 .................... 19,008 $49,170
350 .................... 7,134 $14,636 422 .................... 52 $10,935 499 .................... 35,640 $27,782
352 .................... 973 $14,967 423 .................... 8,631 $29,978 500 .................... 48,213 $18,126
353 .................... 2,725 $32,476 424 .................... 1,071 $36,011 501 .................... 3,120 $43,064
354 .................... 7,603 $29,914 425 .................... 14,758 $12,572 502 .................... 717 $28,008
355 .................... 4,922 $17,549 426 .................... 4,309 $9,562 503 .................... 5,905 $24,316
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00340 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23645
TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS
THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA-
TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING
STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT
(INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF-
FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND
CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND-
ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES
BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP BY DIAGNOSIS-RELATED GROUP
(DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued (DRG)—MARCH 2005 1—Continued
DRG Cases Threshold DRG Cases Threshold DRG Cases Threshold
504 .................... 187 $136,123 522 .................... 5,642 $9,515 539 .................... 5,014 $44,863
505 .................... 179 $27,684 523 .................... 15,863 $7,639 540 .................... 1,509 $23,964
506 .................... 1,004 $51,873 524 .................... 118,842 $14,823 541 .................... 22,410 $242,891
507 .................... 307 $32,100 525 .................... 313 $139,715 542 .................... 24,343 $155,852
508 .................... 641 $24,619 527 .................... 191,680 $44,147 543 .................... 5,403 $62,826
509 .................... 168 $14,897 528 .................... 1,767 $102,318 544 .................... 417,780 $37,604
510 .................... 1,755 $21,890 529 .................... 4,030 $37,957 545 .................... 42,280 $44,313
511 .................... 633 $12,748 530 .................... 2,362 $24,232 546 .................... 1,954 $77,955
512 .................... 513 $81,413 531 .................... 4,796 $45,158 547 .................... 26,756 $49,899
513 .................... 227 $97,844 532 .................... 2,622 $29,368 548 .................... 11,898 $41,613
515 .................... 44,389 $88,758 533 .................... 47,549 $31,277
549 .................... 35,640 $55,680
517 .................... 66,155 $40,225 534 .................... 45,166 $20,426
550 .................... 20,130 $47,573
518 .................... 42,015 $35,092 535 .................... 7,384 $123,742
519 .................... 11,497 $43,638 536 .................... 8,047 $108,821 1 Cases are taken from the FY 2004
520 .................... 15,218 $33,659 537 .................... 8,640 $33,393 MedPAR file; DRGs are from GROUPER
521 .................... 32,138 $13,596 538 .................... 5,598 $20,028 Version 23.0.
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00341 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23646 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00342 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23647
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
104 ........... 7 CARDIAC VALVE & OTH MAJOR CARDIOTHORACIC PROC W CARD CATH ......... 1.1679 29.6 24.7
105 ........... 7 CARDIAC VALVE & OTH MAJOR CARDIOTHORACIC PROC W/O CARD CATH ..... 1.1679 29.6 24.7
106 ........... 7 CORONARY BYPASS W PTCA ..................................................................................... 1.1679 29.6 24.7
107 ........... 7 CORONARY BYPASS W CARDIAC CATH ................................................................... 1.1679 29.6 24.7
108 ........... 7 OTHER CARDIOTHORACIC PROCEDURES ................................................................ 1.1679 29.6 24.7
109 ........... 7 CORONARY BYPASS W/O PTCA OR CARDIAC CATH .............................................. 1.1679 29.6 24.7
110 ........... 4 MAJOR CARDIOVASCULAR PROCEDURES W CC .................................................... 1.1679 29.6 24.7
111 ........... 7 MAJOR CARDIOVASCULAR PROCEDURES W/O CC ................................................ 1.1679 29.6 24.7
113 ........... AMPUTATION FOR CIRC SYSTEM DISORDERS EXCEPT UPPER LIMB & TOE ....... 1.4877 39.2 32.7
114 ........... UPPER LIMB & TOE AMPUTATION FOR CIRC SYSTEM DISORDERS ...................... 1.2453 33.2 27.7
115 ........... 5 PRM CARD PACEM IMPL W AMI,HRT FAIL OR SHK,OR AICD LEAD OR GNRTR 1.6862 38.0 31.7
P.
116 ........... 4 OTH PERM CARD PACEMAK IMPL OR PTCA W CORONARY ARTERY STENT 1.1679 29.6 24.7
IMPLNT.
117 ........... 5CARDIAC PACEMAKER REVISION EXCEPT DEVICE REPLACEMENT .................... 1.6862 38.0 31.7
118 ........... 4 CARDIAC PACEMAKER DEVICE REPLACEMENT ...................................................... 1.1679 29.6 24.7
119 ........... 3 VEIN LIGATION & STRIPPING ...................................................................................... 0.7586 24.5 20.4
120 ........... OTHER CIRCULATORY SYSTEM O.R. PROCEDURES ................................................ 1.1050 31.8 26.5
121 ........... CIRCULATORY DISORDERS W AMI & MAJOR COMP, DISCHARGED ALIVE ........... 0.8200 22.6 18.8
122 ........... 2 CIRCULATORY DISORDERS W AMI W/O MAJOR COMP, DISCHARGED ALIVE .... 0.5834 21.0 17.5
123 ........... CIRCULATORY DISORDERS W AMI, EXPIRED ............................................................ 0.8678 18.7 15.6
124 ........... 4 CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH & COMPLEX DIAG ..... 1.1679 29.6 24.7
125 ........... 3 CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH W/O COMPLEX DIAG 0.7586 24.5 20.4
126 ........... ACUTE & SUBACUTE ENDOCARDITIS .......................................................................... 0.8467 25.3 21.1
127 ........... HEART FAILURE & SHOCK ............................................................................................. 0.6890 21.1 17.6
128 ........... 2 DEEP VEIN THROMBOPHLEBITIS ............................................................................... 0.5834 21.0 17.5
129 ........... 7 CARDIAC ARREST, UNEXPLAINED ............................................................................. 1.1679 29.6 24.7
130 ........... PERIPHERAL VASCULAR DISORDERS W CC .............................................................. 0.6755 23.1 19.3
131 ........... PERIPHERAL VASCULAR DISORDERS W/O CC .......................................................... 0.4698 20.4 17
132 ........... ATHEROSCLEROSIS W CC ............................................................................................ 0.6639 21.8 18.2
133 ........... 1 ATHEROSCLEROSIS W/O CC ...................................................................................... 0.4502 18.8 15.7
134 ........... HYPERTENSION .............................................................................................................. 0.6388 24.7 20.6
135 ........... CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W CC ......................... 0.7272 23.7 19.8
136 ........... 2 CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W/O CC ................... 0.5834 21.0 17.5
137 ........... 7 CARDIAC CONGENITAL & VALVULAR DISORDERS AGE 0–17 ................................ 0.5834 21.0 17.5
138 ........... CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W CC ................................... 0.6183 20.4 17
139 ........... 2 CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W/O CC ............................. 0.5834 21.0 17.5
140 ........... 1 ANGINA PECTORIS ....................................................................................................... 0.4502 18.8 15.7
141 ........... SYNCOPE & COLLAPSE W CC ...................................................................................... 0.4356 18.3 15.3
142 ........... 1 SYNCOPE & COLLAPSE W/O CC ................................................................................ 0.4502 18.8 15.7
143 ........... 2 CHEST PAIN ................................................................................................................... 0.5834 21.0 17.5
144 ........... OTHER CIRCULATORY SYSTEM DIAGNOSES W CC .................................................. 0.7364 21.6 18
145 ........... OTHER CIRCULATORY SYSTEM DIAGNOSES W/O CC .............................................. 0.4544 18.0 15
146 ........... 7 RECTAL RESECTION W CC ......................................................................................... 1.6862 38.0 31.7
147 ........... 7 RECTAL RESECTION W/O CC ..................................................................................... 1.6862 38.0 31.7
148 ........... MAJOR SMALL & LARGE BOWEL PROCEDURES W CC ............................................ 1.8800 40.8 34
149 ........... 7 MAJOR SMALL & LARGE BOWEL PROCEDURES W/O CC ....................................... 0.7586 24.5 20.4
150 ........... 4 PERITONEAL ADHESIOLYSIS W CC ........................................................................... 1.1679 29.6 24.7
151 ........... 2 PERITONEAL ADHESIOLYSIS W/O CC ....................................................................... 0.5834 21.0 17.5
152 ........... 3 MINOR SMALL & LARGE BOWEL PROCEDURES W CC ........................................... 0.7586 24.5 20.4
153 ........... 7 MINOR SMALL & LARGE BOWEL PROCEDURES W/O CC ....................................... 0.7586 24.5 20.4
154 ........... 5 STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE >17 W CC ............. 1.6862 38.0 31.7
155 ........... 7 STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE >17 W/O CC .......... 1.6862 38.0 31.7
156 ........... 7 STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE 0–17 ....................... 1.6862 38.0 31.7
157 ........... 4 ANAL & STOMAL PROCEDURES W CC ...................................................................... 1.1679 29.6 24.7
158 ........... 7 ANAL & STOMAL PROCEDURES W/O CC .................................................................. 1.1679 29.6 24.7
159 ........... 7 HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE >17 W CC ............. 0.7586 24.5 20.4
160 ........... 7 HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE >17 W/O CC .......... 0.7586 24.5 20.4
161 ........... 5 INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W CC ............................. 1.6862 38.0 31.7
162 ........... 7 INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W/O CC ......................... 0.7586 24.5 20.4
163 ........... 7 HERNIA PROCEDURES AGE 0–17 .............................................................................. 0.7586 24.5 20.4
164 ........... 7 APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W CC .................................. 1.6862 38.0 31.7
165 ........... 7 APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W/O CC .............................. 1.6862 38.0 31.7
166 ........... 7 APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W CC .............................. 1.6862 38.0 31.7
167 ........... 7 APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W/O CC .......................... 1.6862 38.0 31.7
168 ........... 4 MOUTH PROCEDURES W CC ...................................................................................... 1.1679 29.6 24.7
169 ........... 7 MOUTH PROCEDURES W/O CC .................................................................................. 0.7586 24.5 20.4
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00343 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23648 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
170 ........... OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W CC ............................................ 1.6319 35.9 29.9
171 ........... 1 OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W/O CC ...................................... 0.4502 18.8 15.7
172 ........... DIGESTIVE MALIGNANCY W CC .................................................................................... 0.8568 21.8 18.2
173 ........... 2 DIGESTIVE MALIGNANCY W/O CC .............................................................................. 0.5834 21.0 17.5
174 ........... G.I. HEMORRHAGE W CC ............................................................................................... 0.6984 22.0 18.3
175 ........... 1 G.I. HEMORRHAGE W/O CC ......................................................................................... 0.4502 18.8 15.7
176 ........... COMPLICATED PEPTIC ULCER ..................................................................................... 0.8510 21.5 17.9
177 ........... 3 UNCOMPLICATED PEPTIC ULCER W CC ................................................................... 0.7586 24.5 20.4
178 ........... 3 UNCOMPLICATED PEPTIC ULCER W/O CC ............................................................... 0.7586 24.5 20.4
179 ........... INFLAMMATORY BOWEL DISEASE ............................................................................... 0.9834 24.1 20.1
180 ........... G.I. OBSTRUCTION W CC ............................................................................................... 0.9417 23.5 19.6
181 ........... 3 G.I. OBSTRUCTION W/O CC ......................................................................................... 0.7586 24.5 20.4
182 ........... ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE >17 W CC ............ 0.7753 22.6 18.8
183 ........... ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE >17 W/O CC ........ 0.3959 17.2 14.3
184 ........... 7 ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE 0–17 ................... 0.4502 18.8 15.7
185 ........... 3 DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORATIONS, AGE >17 ........ 0.7586 24.5 20.4
186 ........... 7 DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORATIONS, AGE 0–17 ...... 0.7586 24.5 20.4
187 ........... 7 DENTAL EXTRACTIONS & RESTORATIONS .............................................................. 0.7586 24.5 20.4
188 ........... OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W CC ........................................ 1.0009 24.0 20
189 ........... OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W/O CC .................................... 0.4730 18.2 15.2
190 ........... 7 OTHER DIGESTIVE SYSTEM DIAGNOSES AGE 0–17 ............................................... 0.4502 18.8 15.7
191 ........... 4 PANCREAS, LIVER & SHUNT PROCEDURES W CC .................................................. 1.1679 29.6 24.7
192 ........... 7 PANCREAS, LIVER & SHUNT PROCEDURES W/O CC .............................................. 1.1679 29.6 24.7
193 ........... 3 BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O C.D.E. W CC ...... 0.7586 24.5 20.4
194 ........... 7 BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O C.D.E. W/O CC .. 0.7586 24.5 20.4
195 ........... 4 CHOLECYSTECTOMY W C.D.E. W CC ........................................................................ 1.1679 29.6 24.7
196 ........... 7 CHOLECYSTECTOMY W C.D.E. W/O CC .................................................................... 0.7586 24.5 20.4
197 ........... 3 CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E. W CC .................. 0.7586 24.5 20.4
198 ........... 7 CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E. W/O CC .............. 0.7586 24.5 20.4
199 ........... 7 HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR MALIGNANCY ........................... 1.6862 38.0 31.7
200 ........... 5 HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR NON-MALIGNANCY ................. 1.6862 38.0 31.7
201 ........... OTHER HEPATOBILIARY OR PANCREAS O.R. PROCEDURES .................................. 2.0391 36.1 30.1
202 ........... CIRRHOSIS & ALCOHOLIC HEPATITIS ......................................................................... 0.6636 20.5 17.1
203 ........... MALIGNANCY OF HEPATOBILIARY SYSTEM OR PANCREAS ................................... 0.7939 19.5 16.3
204 ........... DISORDERS OF PANCREAS EXCEPT MALIGNANCY .................................................. 0.9564 22.9 19.1
205 ........... DISORDERS OF LIVER EXCEPT MALIG,CIRR,ALC HEPA W CC ................................ 0.6709 20.6 17.2
206 ........... 2 DISORDERS OF LIVER EXCEPT MALIG,CIRR,ALC HEPA W/O CC .......................... 0.5834 21.0 17.5
207 ........... DISORDERS OF THE BILIARY TRACT W CC ................................................................ 0.7600 21.5 17.9
208 ........... 2 DISORDERS OF THE BILIARY TRACT W/O CC .......................................................... 0.5834 21.0 17.5
210 ........... 5 HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17 W CC .................. 1.6862 38.0 31.7
211 ........... 4 HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17 W/O CC ............... 1.1679 29.6 24.7
212 ........... 7 HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE 0–17 ............................ 1.6862 38.0 31.7
213 ........... AMPUTATION FOR MUSCULOSKELETAL SYSTEM & CONN TISSUE DISORDERS 1.2016 33.9 28.3
216 ........... 4 BIOPSIES OF MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE .................. 1.1679 29.6 24.7
217 ........... WND DEBRID & SKN GRFT EXCEPT HAND,FOR MUSCSKELET & CONN TISS DIS 1.2917 38.0 31.7
218 ........... 5 LOWER EXTREM & HUMER PROC EXCEPT HIP,FOOT,FEMUR AGE >17 W CC ... 1.6862 38.0 31.7
219 ........... 1 LOWER EXTREM & HUMER PROC EXCEPT HIP,FOOT,FEMUR AGE >17 W/O CC 0.4502 18.8 15.7
220 ........... 7 LOWER EXTREM & HUMER PROC EXCEPT HIP,FOOT,FEMUR AGE 0–17 ............ 1.6862 38.0 31.7
223 ........... 3 MAJOR SHOULDER/ELBOW PROC, OR OTHER UPPER EXTREMITY PROC W 0.7586 24.5 20.4
CC.
224 ........... 7 SHOULDER,ELBOW OR FOREARM PROC,EXC MAJOR JOINT PROC, W/O CC .... 0.7586 24.5 20.4
225 ........... FOOT PROCEDURES ...................................................................................................... 0.9996 28.9 24.1
226 ........... SOFT TISSUE PROCEDURES W CC ............................................................................. 0.9487 30.0 25
227 ........... 3 SOFT TISSUE PROCEDURES W/O CC ....................................................................... 0.7586 24.5 20.4
228 ........... 4 MAJOR THUMB OR JOINT PROC,OR OTH HAND OR WRIST PROC W CC ............ 1.1679 29.6 24.7
229 ........... 7 HAND OR WRIST PROC, EXCEPT MAJOR JOINT PROC, W/O CC .......................... 0.4502 18.8 15.7
230 ........... 5 LOCAL EXCISION & REMOVAL OF INT FIX DEVICES OF HIP & FEMUR ................ 1.6862 38.0 31.7
232 ........... 7 ARTHROSCOPY ............................................................................................................. 0.4502 18.8 15.7
233 ........... OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W CC ............................. 1.2832 33.9 28.3
234 ........... 7 OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W/O CC ....................... 0.4502 18.8 15.7
235 ........... 3 FRACTURES OF FEMUR .............................................................................................. 0.7586 24.5 20.4
236 ........... FRACTURES OF HIP & PELVIS ...................................................................................... 0.6553 25.2 21
237 ........... 1 SPRAINS, STRAINS, & DISLOCATIONS OF HIP, PELVIS & THIGH .......................... 0.4502 18.8 15.7
238 ........... OSTEOMYELITIS .............................................................................................................. 0.8271 28.2 23.5
239 ........... PATHOLOGICAL FRACTURES & MUSCULOSKELETAL & CONN TISS MALIG- 0.6923 23.6 19.7
NANCY.
240 ........... CONNECTIVE TISSUE DISORDERS W CC ................................................................... 0.7320 24.5 20.4
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00344 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23649
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
241 ........... 1 CONNECTIVE TISSUE DISORDERS W/O CC .............................................................. 0.4502 18.8 15.7
242 ........... SEPTIC ARTHRITIS .......................................................................................................... 0.7931 26.6 22.2
243 ........... MEDICAL BACK PROBLEMS ........................................................................................... 0.6107 23.4 19.5
244 ........... BONE DISEASES & SPECIFIC ARTHROPATHIES W CC ............................................. 0.5280 22.2 18.5
245 ........... BONE DISEASES & SPECIFIC ARTHROPATHIES W/O CC ......................................... 0.4651 20.4 17
246 ........... 1 NON-SPECIFIC ARTHROPATHIES ............................................................................... 0.4502 18.8 15.7
247 ........... SIGNS & SYMPTOMS OF MUSCULOSKELETAL SYSTEM & CONN TISSUE ............. 0.5269 21.4 17.8
248 ........... TENDONITIS, MYOSITIS & BURSITIS ............................................................................ 0.6627 22.6 18.8
249 ........... AFTERCARE, MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE .................... 0.6614 24.7 20.6
250 ........... 2 FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17 W CC .................. 0.5834 21.0 17.5
251 ........... 1 FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17 W/O CC .............. 0.4502 18.8 15.7
252 ........... 7 FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE 0–17 ........................... 0.7586 24.5 20.4
253 ........... FX, SPRN, STRN & DISL OF UPARM,LOWLEG EX FOOT AGE >17 W CC ................ 0.6838 26.3 21.9
254 ........... 1 FX, SPRN, STRN & DISL OF UPARM,LOWLEG EX FOOT AGE >17 W/O CC .......... 0.4502 18.8 15.7
255 ........... 7 FX, SPRN, STRN & DISL OF UPARM,LOWLEG EX FOOT AGE 0–17 ....................... 0.7586 24.5 20.4
256 ........... OTHER MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE DIAGNOSES ........ 0.7953 25.3 21.1
257 ........... 7 TOTAL MASTECTOMY FOR MALIGNANCY W CC ...................................................... 0.7586 24.5 20.4
258 ........... 7 TOTAL MASTECTOMY FOR MALIGNANCY W/O CC .................................................. 0.7586 24.5 20.4
259 ........... 2 SUBTOTAL MASTECTOMY FOR MALIGNANCY W CC .............................................. 0.5834 21.0 17.5
260 ........... 7 SUBTOTAL MASTECTOMY FOR MALIGNANCY W/O CC ........................................... 0.7586 24.5 20.4
261 ........... 7 BREAST PROC FOR NON-MALIGNANCY EXCEPT BIOPSY & LOCAL EXCISION ... 0.7586 24.5 20.4
262 ........... 1 BREAST BIOPSY & LOCAL EXCISION FOR NON-MALIGNANCY .............................. 0.4502 18.8 15.7
263 ........... SKIN GRAFT &/OR DEBRID FOR SKN ULCER OR CELLULITIS W CC ...................... 1.3245 39.4 32.8
264 ........... SKIN GRAFT &/OR DEBRID FOR SKN ULCER OR CELLULITIS W/O CC ................... 0.9555 31.9 26.6
265 ........... SKIN GRAFT &/OR DEBRID EXCEPT FOR SKIN ULCER OR CELLULITIS W CC ...... 1.0426 33.1 27.6
266 ........... 3 SKIN GRAFT &/OR DEBRID EXCEPT FOR SKIN ULCER OR CELLULITIS W/O CC 0.7586 24.5 20.4
267 ........... 7 PERIANAL & PILONIDAL PROCEDURES ..................................................................... 0.7586 24.5 20.4
268 ........... 5 SKIN, SUBCUTANEOUS TISSUE & BREAST PLASTIC PROCEDURES .................... 1.6862 38.0 31.7
269 ........... OTHER SKIN, SUBCUT TISS & BREAST PROC W CC ................................................. 1.2945 35.9 29.9
270 ........... 3 OTHER SKIN, SUBCUT TISS & BREAST PROC W/O CC ........................................... 0.7586 24.5 20.4
271 ........... SKIN ULCERS ................................................................................................................... 0.8707 27.6 23
272 ........... MAJOR SKIN DISORDERS W CC ................................................................................... 0.7490 22.5 18.8
273 ........... 1 MAJOR SKIN DISORDERS W/O CC ............................................................................. 0.4502 18.8 15.7
274 ........... 3 MALIGNANT BREAST DISORDERS W CC .................................................................. 0.7586 24.5 20.4
275 ........... 7 MALIGNANT BREAST DISORDERS W/O CC ............................................................... 0.7586 24.5 20.4
276 ........... 2 NON-MALIGANT BREAST DISORDERS ....................................................................... 0.5834 21.0 17.5
277 ........... CELLULITIS AGE >17 W CC ............................................................................................ 0.6281 20.9 17.4
278 ........... CELLULITIS AGE >17 W/O CC ........................................................................................ 0.4440 17.8 14.8
279 ........... 7 CELLULITIS AGE 0–17 .................................................................................................. 0.4502 18.8 15.7
280 ........... TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W CC ........................... 0.6728 24.3 20.3
281 ........... 1 TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W/O CC ..................... 0.4502 18.8 15.7
282 ........... 7 TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE 0–17 .................................. 0.4502 18.8 15.7
283 ........... MINOR SKIN DISORDERS W CC .................................................................................... 0.6968 23.9 19.9
284 ........... 1 MINOR SKIN DISORDERS W/O CC .............................................................................. 0.4502 18.8 15.7
285 ........... AMPUTAT OF LOWER LIMB FOR ENDOCRINE,NUTRIT,& METABOL DISORDERS 1.3552 35.6 29.7
286 ........... 7 ADRENAL & PITUITARY PROCEDURES ..................................................................... 1.6862 38.0 31.7
287 ........... SKIN GRAFTS & WOUND DEBRID FOR ENDOC, NUTRIT & METAB DISORDERS ... 1.1270 33.6 28
288 ........... 4 O.R. PROCEDURES FOR OBESITY ............................................................................. 1.1679 29.6 24.7
289 ........... 7 PARATHYROID PROCEDURES .................................................................................... 1.1679 29.6 24.7
290 ........... 5 THYROID PROCEDURES .............................................................................................. 1.6862 38.0 31.7
291 ........... 7 THYROGLOSSAL PROCEDURES ................................................................................. 1.1679 29.6 24.7
292 ........... OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W CC ........................................ 1.3437 31.7 26.4
293 ........... 2 OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W/O CC .................................. 0.5834 21.0 17.5
294 ........... DIABETES AGE >35 ......................................................................................................... 0.7330 24.8 20.7
295 ........... 3 DIABETES AGE 0–35 ..................................................................................................... 0.7586 24.5 20.4
296 ........... NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W CC ............................. 0.7232 23.1 19.3
297 ........... NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W/O CC .......................... 0.5262 18.4 15.3
298 ........... 7 NUTRITIONAL & MISC METABOLIC DISORDERS AGE 0–17 .................................... 0.5834 21.0 17.5
299 ........... 4 INBORN ERRORS OF METABOLISM ........................................................................... 1.1679 29.6 24.7
300 ........... ENDOCRINE DISORDERS W CC .................................................................................... 0.6413 21.2 17.7
301 ........... 1 ENDOCRINE DISORDERS W/O CC .............................................................................. 0.4502 18.8 15.7
302 ........... 6 KIDNEY TRANSPLANT .................................................................................................. 0.0000 1.0 0.8
303 ........... 4 KIDNEY,URETER & MAJOR BLADDER PROCEDURES FOR NEOPLASM ............... 1.1679 29.6 24.7
304 ........... 5 KIDNEY,URETER & MAJOR BLADDER PROC FOR NON-NEOPL W CC .................. 1.6862 38.0 31.7
305 ........... 1 KIDNEY,URETER & MAJOR BLADDER PROC FOR NON-NEOPL W/O CC .............. 0.4502 18.8 15.7
306 ........... 2 PROSTATECTOMY W CC ............................................................................................. 0.5834 21.0 17.5
307 ........... 7 PROSTATECTOMY W/O CC ......................................................................................... 0.5834 21.0 17.5
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00345 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23650 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00346 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23651
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
374 ........... 7 VAGINAL DELIVERY W STERILIZATION &/OR D&C ................................................... 1.1679 29.6 24.7
375 ........... 7 VAGINAL DELIVERY W O.R. PROC EXCEPT STERIL &/OR D&C ............................. 1.1679 29.6 24.7
376 ........... 7 POSTPARTUM & POST ABORTION DIAGNOSES W/O O.R. PROCEDURE ............. 1.1679 29.6 24.7
377 ........... 7 POSTPARTUM & POST ABORTION DIAGNOSES W O.R. PROCEDURE ................. 1.1679 29.6 24.7
378 ........... 7 ECTOPIC PREGNANCY ................................................................................................. 0.7586 24.5 20.4
379 ........... 7 THREATENED ABORTION ............................................................................................ 1.1679 29.6 24.7
380 ........... 7 ABORTION W/O D&C ..................................................................................................... 1.1679 29.6 24.7
381 ........... 7 ABORTION W D&C, ASPIRATION CURETTAGE OR HYSTEROTOMY ...................... 1.1679 29.6 24.7
382 ........... 7 FALSE LABOR ................................................................................................................ 1.1679 29.6 24.7
383 ........... 7 OTHER ANTEPARTUM DIAGNOSES W MEDICAL COMPLICATIONS ....................... 1.1679 29.6 24.7
384 ........... 7 OTHER ANTEPARTUM DIAGNOSES W/O MEDICAL COMPLICATIONS ................... 1.1679 29.6 24.7
385 ........... 7 NEONATES, DIED OR TRANSFERRED TO ANOTHER ACUTE CARE FACILITY ..... 1.1679 29.6 24.7
386 ........... 7 EXTREME IMMATURITY OR RESPIRATORY DISTRESS SYNDROME, NEONATE 1.1679 29.6 24.7
387 ........... 7 PREMATURITY W MAJOR PROBLEMS ....................................................................... 1.1679 29.6 24.7
388 ........... 7 PREMATURITY W/O MAJOR PROBLEMS ................................................................... 1.1679 29.6 24.7
389 ........... 7 FULL TERM NEONATE W MAJOR PROBLEMS .......................................................... 1.1679 29.6 24.7
390 ........... 7 NEONATE W OTHER SIGNIFICANT PROBLEMS ........................................................ 1.1679 29.6 24.7
391 ........... 7 NORMAL NEWBORN ..................................................................................................... 1.1679 29.6 24.7
392 ........... 7 SPLENECTOMY AGE >17 ............................................................................................. 0.7586 24.5 20.4
393 ........... 7 SPLENECTOMY AGE 0–17 ........................................................................................... 0.7586 24.5 20.4
394 ........... 5 OTHER O.R. PROCEDURES OF THE BLOOD AND BLOOD FORMING ORGANS ... 1.6862 38.0 31.7
395 ........... RED BLOOD CELL DISORDERS AGE >17 ..................................................................... 0.6611 21.8 18.2
396 ........... 7 RED BLOOD CELL DISORDERS AGE 0–17 ................................................................ 0.5834 21.0 17.5
397 ........... COAGULATION DISORDERS .......................................................................................... 0.8665 22.5 18.8
398 ........... RETICULOENDOTHELIAL & IMMUNITY DISORDERS W CC ....................................... 0.8193 23.5 19.6
399 ........... 2 RETICULOENDOTHELIAL & IMMUNITY DISORDERS W/O CC .................................. 0.5834 21.0 17.5
401 ........... 5 LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W CC ..................... 1.6862 38.0 31.7
402 ........... 7 LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W/O CC ................. 0.5834 21.0 17.5
403 ........... LYMPHOMA & NON-ACUTE LEUKEMIA W CC .............................................................. 0.8844 21.3 17.8
404 ........... 2 LYMPHOMA & NON-ACUTE LEUKEMIA W/O CC ........................................................ 0.5834 21.0 17.5
405 ........... 7 ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE 0–17 ................................ 0.5834 21.0 17.5
406 ........... 4 MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ O.R.PROC W CC ........ 1.1679 29.6 24.7
407 ........... 7 MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ O.R.PROC W/O CC .... 1.1679 29.6 24.7
408 ........... 4 MYELOPROLIF DISORD OR POORLY DIFF NEOPL W OTHER O.R.PROC ............. 1.1679 29.6 24.7
409 ........... RADIOTHERAPY .............................................................................................................. 0.8567 23.4 19.5
410 ........... CHEMOTHERAPY W/O ACUTE LEUKEMIA AS SECONDARY DIAGNOSIS ................ 1.1719 26.4 22
411 ........... 7 HISTORY OF MALIGNANCY W/O ENDOSCOPY ......................................................... 1.1679 29.6 24.7
412 ........... 7 HISTORY OF MALIGNANCY W ENDOSCOPY ............................................................. 1.1679 29.6 24.7
413 ........... OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W CC .......................... 0.8990 20.5 17.1
414 ........... 7 OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W/O CC .................... 0.5834 21.0 17.5
415 ........... O.R. PROCEDURE FOR INFECTIOUS & PARASITIC DISEASES ................................ 1.4237 35.5 29.6
416 ........... SEPTICEMIA AGE >17 ..................................................................................................... 0.8255 23.4 19.5
417 ........... 7 SEPTICEMIA AGE 0–17 ................................................................................................. 0.7586 24.5 20.4
418 ........... POSTOPERATIVE & POST-TRAUMATIC INFECTIONS ................................................. 0.8296 24.7 20.6
419 ........... 3 FEVER OF UNKNOWN ORIGIN AGE >17 W CC ......................................................... 0.7586 24.5 20.4
420 ........... 7 FEVER OF UNKNOWN ORIGIN AGE >17 W/O CC ..................................................... 0.7586 24.5 20.4
421 ........... VIRAL ILLNESS AGE >17 ................................................................................................ 0.9474 27.3 22.8
422 ........... 7 VIRAL ILLNESS & FEVER OF UNKNOWN ORIGIN AGE 0–17 ................................... 0.4502 18.8 15.7
423 ........... OTHER INFECTIOUS & PARASITIC DISEASES DIAGNOSES ...................................... 0.9403 21.7 18.1
424 ........... 3 O.R. PROCEDURE W PRINCIPAL DIAGNOSES OF MENTAL ILLNESS .................... 0.7586 24.5 20.4
425 ........... 2 ACUTE ADJUSTMENT REACTION & PSYCHOLOGICAL DYSFUNCTION ................. 0.5834 21.0 17.5
426 ........... DEPRESSIVE NEUROSES .............................................................................................. 0.4131 20.7 17.3
427 ........... NEUROSES EXCEPT DEPRESSIVE ............................................................................... 0.4713 23.8 19.8
428 ........... 1 DISORDERS OF PERSONALITY & IMPULSE CONTROL ........................................... 0.4502 18.8 15.7
429 ........... ORGANIC DISTURBANCES & MENTAL RETARDATION .............................................. 0.5831 26.5 22.1
430 ........... PSYCHOSES .................................................................................................................... 0.4350 24.1 20.1
431 ........... 1 CHILDHOOD MENTAL DISORDERS ............................................................................. 0.4502 18.8 15.7
432 ........... 2 OTHER MENTAL DISORDER DIAGNOSES .................................................................. 0.5834 21.0 17.5
433 ........... 2 ALCOHOL/DRUG ABUSE OR DEPENDENCE, LEFT AMA .......................................... 0.5834 21.0 17.5
439 ........... SKIN GRAFTS FOR INJURIES ........................................................................................ 1.3758 35.6 29.7
440 ........... WOUND DEBRIDEMENTS FOR INJURIES ..................................................................... 1.3261 35.9 29.9
441 ........... 1 HAND PROCEDURES FOR INJURIES ......................................................................... 0.4502 18.8 15.7
442 ........... OTHER O.R. PROCEDURES FOR INJURIES W CC ...................................................... 1.4028 33.4 27.8
443 ........... 3 OTHER O.R. PROCEDURES FOR INJURIES W/O CC ................................................ 0.7586 24.5 20.4
444 ........... TRAUMATIC INJURY AGE >17 W CC ............................................................................. 0.7551 25.9 21.6
445 ........... 1 TRAUMATIC INJURY AGE >17 W/O CC ....................................................................... 0.4502 18.8 15.7
446 ........... 7 TRAUMATIC INJURY AGE 0–17 ................................................................................... 0.4502 18.8 15.7
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00347 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23652 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
447 ........... 2 ALLERGIC REACTIONS AGE >17 ................................................................................. 0.5834 21.0 17.5
448 ........... 7 ALLERGIC REACTIONS AGE 0–17 ............................................................................... 0.5834 21.0 17.5
449 ........... 3 POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W CC ................................... 0.7586 24.5 20.4
450 ........... 7 POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W/O CC ................................ 0.7586 24.5 20.4
451 ........... 7 POISONING & TOXIC EFFECTS OF DRUGS AGE 0–17 ............................................. 0.7586 24.5 20.4
452 ........... COMPLICATIONS OF TREATMENT W CC ..................................................................... 0.9139 25.2 21
453 ........... COMPLICATIONS OF TREATMENT W/O CC ................................................................. 0.5449 23.2 19.3
454 ........... 3 OTHER INJURY, POISONING & TOXIC EFFECT DIAG W CC ................................... 0.7586 24.5 20.4
455 ........... 7 OTHER INJURY, POISONING & TOXIC EFFECT DIAG W/O CC ................................ 0.7586 24.5 20.4
461 ........... O.R. PROC W DIAGNOSES OF OTHER CONTACT W HEALTH SERVICES ............... 1.2315 34.0 28.3
462 ........... REHABILITATION ............................................................................................................. 0.5815 22.4 18.7
463 ........... SIGNS & SYMPTOMS W CC ........................................................................................... 0.6234 23.7 19.8
464 ........... SIGNS & SYMPTOMS W/O CC ....................................................................................... 0.5565 24.1 20.1
465 ........... AFTERCARE W HISTORY OF MALIGNANCY AS SECONDARY DIAGNOSIS ............. 0.6959 21.8 18.2
466 ........... AFTERCARE W/O HISTORY OF MALIGNANCY AS SECONDARY DIAGNOSIS ......... 0.6713 21.9 18.3
467 ........... 3 OTHER FACTORS INFLUENCING HEALTH STATUS ................................................. 0.7586 24.5 20.4
468 ........... EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS ............... 2.1439 40.0 33.3
469 ........... 6 PRINCIPAL DIAGNOSIS INVALID AS DISCHARGE DIAGNOSIS ................................ 0.0000 1.0 0.8
470 ........... 6 UNGROUPABLE ............................................................................................................. 0.0000 1.0 0.8
471 ........... 5 BILATERAL OR MULTIPLE MAJOR JOINT PROCS OF LOWER EXTREMITY .......... 1.6862 38.0 31.7
473 ........... ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE >17 .................................... 0.8580 20.0 16.7
475 ........... RESPIRATORY SYSTEM DIAGNOSIS WITH VENTILATOR SUPPORT ....................... 2.0848 34.5 28.8
476 ........... 4 PROSTATIC O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS ............. 1.1679 29.6 24.7
477 ........... NON-EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS ...... 1.5867 35.2 29.3
478 ........... OTHER VASCULAR PROCEDURES W CC .................................................................... 1.3338 30.7 25.6
479 ........... 7 OTHER VASCULAR PROCEDURES W/O CC .............................................................. 1.1679 29.6 24.7
480 ........... 6 LIVER TRANSPLANT ..................................................................................................... 0.0000 1.0 0.8
481 ........... 7 BONE MARROW TRANSPLANT ................................................................................... 1.6862 38.0 31.7
482 ........... 3 TRACHEOSTOMY FOR FACE, MOUTH & NECK DIAGNOSES .................................. 0.7586 24.5 20.4
484 ........... 2 CRANIOTOMY FOR MULTIPLE SIGNIFICANT TRAUMA ............................................ 0.5834 21.0 17.5
485 ........... 7 LIMB REATTACHMENT, HIP AND FEMUR PROC FOR MULTIPLE SIGNIFICANT 0.7586 24.5 20.4
TR.
486 ........... 5 OTHER O.R. PROCEDURES FOR MULTIPLE SIGNIFICANT TRAUMA ..................... 1.6862 38.0 31.7
487 ........... OTHER MULTIPLE SIGNIFICANT TRAUMA ................................................................... 0.9046 26.0 21.7
488 ........... 5 HIV W EXTENSIVE O.R. PROCEDURE ........................................................................ 1.6862 38.0 31.7
489 ........... HIV W MAJOR RELATED CONDITION ........................................................................... 0.8348 21.1 17.6
490 ........... HIV W OR W/O OTHER RELATED CONDITION ............................................................ 0.5012 16.4 13.7
491 ........... 5 MAJOR JOINT & LIMB REATTACHMENT PROCEDURES OF UPPER EXTREMITY 1.6862 38.0 31.7
492 ........... 7 CHEMOTHERAPY W ACUTE LEUKEMIA OR W USE OF HI DOSE CHEMOAGENT 1.6862 38.0 31.7
493 ........... 4 LAPAROSCOPIC CHOLECYSTECTOMY W/O C.D.E. W CC ....................................... 1.1679 29.6 24.7
494 ........... 7 LAPAROSCOPIC CHOLECYSTECTOMY W/O C.D.E. W/O CC ................................... 1.1679 29.6 24.7
495 ........... 6 LUNG TRANSPLANT ...................................................................................................... 0.0000 1.0 0.8
496 ........... 7 COMBINED ANTERIOR/POSTERIOR SPINAL FUSION ............................................... 1.1679 29.6 24.7
497 ........... 4 SPINAL FUSION W CC .................................................................................................. 1.1679 29.6 24.7
498 ........... 7 SPINAL FUSION EXCEPT CERVICAL W/O CC ............................................................ 1.1679 29.6 24.7
499 ........... 5 BACK & NECK PROCEDURES EXCEPT SPINAL FUSION W CC .............................. 1.6862 38.0 31.7
500 ........... 4 BACK & NECK PROCEDURES EXCEPT SPINAL FUSION W/O CC .......................... 1.1679 29.6 24.7
501 ........... 5 KNEE PROCEDURES W PDX OF INFECTION W CC ................................................. 1.6862 38.0 31.7
502 ........... 4 KNEE PROCEDURES W PDX OF INFECTION W/O CC .............................................. 1.1679 29.6 24.7
503 ........... 2 KNEE PROCEDURES W/O PDX OF INFECTION ......................................................... 0.5834 21.0 17.5
504 ........... 7 EXTENSIVE BURNS OF FULL THICKNESS BURNS WITH MECH VENT 96+HRS 1.6862 38.0 31.7
WITH SKIN GRAFT.
505 ........... 4 EXTENSIVE BURN OR FULL THICKNESS BURNS WITH MECH VENT 96+ HOURS 1.1679 29.6 24.7
WITHOUT SKIN GRAFT.
506 ........... 4 FULL THICKNESS BURN W SKIN GRAFT OR INHAL INJ W CC OR SIG TRAUMA 1.1679 29.6 24.7
507 ........... 3 FULL THICKNESS BURN W SKIN GRFT OR INHAL INJ W/O CC OR SIG TRAUMA 0.7586 24.5 20.4
508 ........... FULL THICKNESS BURN W/O SKIN GRFT OR INHAL INJ W CC OR SIG TRAUMA .. 0.8403 29.4 24.5
509 ........... 1 FULL THICKNESS BURN W/O SKIN GRFT OR INH INJ W/O CC OR SIG TRAUMA 0.4502 18.8 15.7
510 ........... NON-EXTENSIVE BURNS W CC OR SIGNIFICANT TRAUMA ...................................... 0.7737 24.6 20.5
511 ........... 1 NON-EXTENSIVE BURNS W/O CC OR SIGNIFICANT TRAUMA ................................ 0.4502 18.8 15.7
512 ........... 6 SIMULTANEOUS PANCREAS/KIDNEY TRANSPLANT ................................................ 0.0000 1.0 0.8
513 ........... 6 PANCREAS TRANSPLANT ............................................................................................ 0.0000 1.0 0.8
515 ........... 5 CARDIAC DEFIBRILATOR IMPLANT W/O CARDIAC CATH ........................................ 1.6862 38.0 31.7
517 ........... 5 PERCUTANEOUS CARDIVASCULAR PROC W NON-DRUG ELUTING STENT W/O 1.6862 38.0 31.7
AMI.
518 ........... 3 PERCUTANEOUS CARDIVASCULAR PROC W/O CORONARY ARTERY STENT 0.7586 24.5 20.4
OR AMI.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00348 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23653
TABLE 11.—PROPOSED FY 2006 LTC–DRGS, RELATIVE WEIGHTS, GEOMETRIC AVERAGE LENGTH OF STAY, AND 5/6THS
OF THE GEOMETRIC AVERAGE LENGTH OF STAY—Continued
5/6ths of the
Geometric geometric
Relative average
LTC–DRG Description average
weight length of length of
stay stay
Appendix A—Regulatory Analysis of 354), section 1102(b) of the Social Security rules with economically significant effects
Impacts Act, the Unfunded Mandates Reform Act of ($100 million or more in any 1 year).
1995 (Pub. L. 104–4), and Executive Order We have determined that this proposed
(If you choose to comment on issues in this 13132. rule is a major rule as defined in 5 U.S.C.
section, please include the caption ‘‘Impact 804(2). We estimate that the total impact of
Executive Order 12866 directs agencies to
Analyses’’ at the beginning of your these proposed changes for FY 2006
assess all costs and benefits of available
comment.) payments compared to FY 2005 payments to
regulatory alternatives and, if regulation is
be approximately a $2.40 billion increase.
I. Background and Summary necessary, to select regulatory approaches
This amount does not reflect changes in
We have examined the impacts of this that maximize net benefits (including
hospital admissions or case-mix intensity,
proposed rule as required by Executive Order potential economic, environmental, public which would also affect overall payment
12866 (September 1993, Regulatory Planning health and safety effects, distributive changes.
and Review) and the Regulatory Flexibility impacts, and equity). A regulatory impact The RFA requires agencies to analyze
Act (RFA) (September 19, 1980, Pub. L. 96– analysis (RIA) must be prepared for major options for regulatory relief of small
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00349 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23654 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
businesses. For purposes of the RFA, small hospitals, and the effects on some hospitals The impacts of our proposed policy changes
entities include small businesses, nonprofit may be significant. on these hospitals are discussed below.
organizations, and government agencies.
Most hospitals and most other providers and II. Objectives V. Impact on Excluded Hospitals and
suppliers are small entities, either by The primary objective of the IPPS is to Hospital Units
nonprofit status or by having revenues of $5 create incentives for hospitals to operate As of March 2005, there were 1,138
million to $25 million in any 1 year. For efficiently and minimize unnecessary costs specialty hospitals excluded from the IPPS.
purposes of the RFA, all hospitals and other while at the same time ensuring that Of these 1,138 specialty hospitals, 467
providers and suppliers are considered to be payments are sufficient to adequately psychiatric hospitals, 80 children’s, 11
small entities. Individuals and States are not compensate hospitals for their legitimate cancer hospitals, and 21 LTCHs that are paid
included in the definition of a small entity. costs. In addition, we share national goals of under the LTCH PPS blend methodology are
In addition, section 1102(b) of the Act preserving the Medicare Trust Fund. being paid, in whole or in part, on a
requires us to prepare a regulatory impact We believe the proposed changes in this reasonable cost basis subject to the rate-of-
analysis for any proposed rule that may have proposed rule will further each of these goals increase ceiling under § 413.40. The
a significant impact on the operations of a while maintaining the financial viability of remaining providers—218 IRFs and 361
substantial number of small rural hospitals. the hospital industry and ensuring access to LTCHs are paid 100 percent of the Federal
This analysis must conform to the provisions high quality health care for Medicare prospective rate under the IRF PPS and the
of section 603 of the RFA. With the exception beneficiaries. We expect that these proposed LTCH PPS, respectively. In addition, there
of hospitals located in certain New England changes will ensure that the outcomes of this were 1,342 psychiatric units (paid on a blend
counties, for purposes of section 1102(b) of payment system are reasonable and equitable of the IPF PPS per diem payment and the
the Act, we previously defined a small rural while avoiding or minimizing unintended TEFRA reasonable cost-based payment) and
hospital as a hospital with fewer than 100 adverse consequences. 1,006 rehabilitation units (paid under the IRF
beds that is located outside of a Metropolitan PPS) in hospitals otherwise subject to the
Statistical Area (MSA) or New England III. Limitations of Our Analysis IPPS. Under § 413.40(a)(2)(i)(A), the rate-of-
County Metropolitan Area (NECMA). The following quantitative analysis increase ceiling is not applicable to the 46
However, under the new labor market presents the projected effects of our proposed specialty hospitals and units in Maryland
definitions, we no longer employ NECMAs to policy changes, as well as statutory changes that are paid in accordance with the waiver
define urban areas in New England. effective for FY 2006, on various hospital at section 1814(b)(3) of the Act.
Therefore, we now define a small rural groups. We estimate the effects of individual In the past, hospitals and units excluded
hospital as a hospital with fewer than 100 policy changes by estimating payments per from the IPPS have been paid based on their
beds that is located outside of a Metropolitan case while holding all other payment policies reasonable costs subject to limits as
Statistical Area (MSA). Section 601(g) of the constant. We use the best data available, but established by the Tax Equity and Fiscal
Social Security Amendments of 1983 (Pub. L. we do not attempt to predict behavioral Responsibility Act of 1982 (TEFRA).
98–21) designated hospitals in certain New responses to our policy changes, and we do Hospitals that continue to be paid based on
England counties as belonging to the adjacent not make adjustments for future changes in their reasonable costs are subject to TEFRA
NECMA. Thus, for purposes of the IPPS, we such variables as admissions, lengths of stay, limits for FY 2006. For these hospitals, the
continue to classify these hospitals as urban or case-mix. As we have done in the previous proposed update is the percentage increase in
hospitals. proposed rules, we are soliciting comments the excluded hospital market basket,
Section 202 of the Unfunded Mandates and information about the anticipated effects currently estimated at 3.4 percent.
Reform Act of 1995 (Pub. L. 104–4) also of these proposed changes on hospitals and Inpatient rehabilitation facilities (IRFs) are
requires that agencies assess anticipated costs our methodology for estimating them. Any paid under a prospective payment system
and benefits before issuing any proposed rule comments that we receive in response to this (IRF PPS) for cost reporting periods
(or a final rule that has been preceded by a proposed rule will be addressed in the final beginning on or after January 1, 2002. For
proposed rule) that may result in an rule. cost reporting periods beginning during FY
expenditure in any one year by State, local, 2005, the IRF PPS is based on 100 percent
or tribal governments, in the aggregate, or by IV. Hospitals Included In and Excluded of the adjusted Federal IRF prospective
the private sector, of $110 million. This From the IPPS payment amount, updated annually.
proposed rule will not mandate any The prospective payment systems for Therefore, these hospitals are not impacted
requirements for State, local, or tribal hospital inpatient operating and capital- by this proposed rule.
governments. related costs encompass nearly all general Effective for cost reporting periods
Executive Order 13132 establishes certain short-term, acute care hospitals that beginning on or after October 1, 2002, LTCHs
requirements that an agency must meet when participate in the Medicare program. There are paid under a LTCH PPS, based on a
it promulgates a proposed rule (and were 35 Indian Health Service hospitals in Federal prospective payment amount that is
subsequent final rule) that imposes our database, which we excluded from the updated annually. LTCHs will receive a
substantial direct requirement costs on State analysis due to the special characteristics of blended payment that consists of the Federal
and local governments, preempts State law, the prospective payment method for these prospective payment rate and a reasonable
or otherwise has Federalism implications. hospitals. Among other short-term, acute care cost-based payment rate over a 5-year
We have reviewed this proposed rule in light hospitals, only the 46 such hospitals in transition period. However, under the LTCH
of Executive Order 13132 and have Maryland remain excluded from the IPPS PPS, a LTCH may also elect to be paid at 100
determined that it would not have any under the waiver at section 1814(b)(3) of the percent of the Federal prospective rate at the
negative impact on the rights, roles, and Act. beginning of any of its cost reporting periods
responsibilities of State, local, or tribal As of March 2005, there are 3,693 IPPS during the 5-year transition period. For
governments. hospitals to be included in our analysis. This purposes of the update factor, the portion of
In accordance with the provisions of represents about 63 percent of all Medicare- the LTCH PPS transition blend payment
Executive Order 12866, this proposed rule participating hospitals. The majority of this based on reasonable costs for inpatient
was reviewed by the Office of Management impact analysis focuses on this set of operating services would be determined by
and Budget. hospitals. There are also approximately 974 updating the LTCH’s TEFRA limit by the
The following analysis, in conjunction critical access hospitals (CAHs). These small, estimate of the excluded hospital market
with the remainder of this document, limited service hospitals are paid on the basis basket (or 3.4 percent).
demonstrates that this proposed rule is of reasonable costs rather than under the Section 124 of the Medicare, Medicaid, and
consistent with the regulatory philosophy IPPS. There are also 1,138 specialty hospitals SCHIP Balanced Budget Refinement Act of
and principles identified in Executive Order and units that are excluded from the IPPS. 1999 (BBRA) required the development of a
12866, the RFA, and section 1102(b) of the These specialty hospitals include psychiatric per diem prospective payment system (PPS)
Act. The proposed rule will affect payments hospitals and units, rehabilitation hospitals for payment of inpatient hospital services
to a substantial number of small rural and units, long-term care hospitals, furnished in psychiatric hospitals and
hospitals, as well as other classes of children’s hospitals, and cancer hospitals. psychiatric units of acute care hospitals and
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00350 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23655
CAHs (inpatient psychiatric facilities (IPFs)). available that would allow us to estimate the hospital’s wage index if the hospital qualifies
We published a final rule to implement the payment impacts using this model. For those by meeting a threshold percentage of
IPF PPS on November 15, 2004 (69 FR proposed changes, we have attempted to residents of the county where the hospital is
66922). The final rule established a 3-year predict the payment impacts of those located who commute to work at hospitals in
transition to the IPF PPS during which some proposed changes based upon our experience counties with higher wage indexes.
providers will receive a blend of the IPF PPS and other more limited data. • The total change in payments based on
per diem payment and the TEFRA reasonable The data used in developing the proposed FY 2006 policies and MMA-
cost-based payment. For purposes of quantitative analyses of changes in payments imposed changes relative to payments based
determining what the TEFRA payment to the per case presented below are taken from the on FY 2005 policies.
IPF would be, we are proposing that the IPF’s FY 2004 MedPAR file and the most current To illustrate the impacts of the proposed
TEFRA limit will be updated by the estimate Provider-Specific File that is used for FY 2006 changes, our analysis begins with a
of the excluded hospital market basket (or 3.4 payment purposes. Although the analyses of FY 2006 baseline simulation model using:
percent). the changes to the operating PPS do not the proposed update of 3.2 percent; the FY
The impact on excluded hospitals and incorporate cost data, data from the most 2005 DRG GROUPER (version 22.0); the
hospital units of the update in the rate-of- recently available hospital cost report were CBSA designations for hospitals based on
increase limit depends on the cumulative used to categorize hospitals. Our analysis has OMB’s June 2003 MSA definitions; the FY
cost increases experienced by each excluded several qualifications. First, we do not make 2005 wage index; and no MGCRB
hospital or unit since its applicable base adjustments for behavioral changes that reclassifications. Outlier payments are set at
period. For excluded hospitals and units that hospitals may adopt in response to the 5.1 percent of total operating DRG and outlier
have maintained their cost increases at a proposed policy changes, and we do not payments.
level below the rate-of-increase limits since adjust for future changes in such variables as Section 1886(b)(3)(B)(vii) of the Act, as
their base period, the major effect is on the admissions, lengths of stay, or case-mix. added by section 501(b) of Pub. L. 108–173,
level of incentive payments these hospitals Second, due to the interdependent nature of provides that, for FYs 2005 through 2007, the
and hospital units receive. Conversely, for the IPPS payment components, it is very update factors will be reduced by 0.4
excluded hospitals and hospital units with difficult to precisely quantify the impact percentage points for any hospital that does
per-case cost increases above the cumulative associated with each proposed change. Third, not submit quality data. For purposes of the
update in their rate-of-increase limits, the we draw upon various sources for the data FY 2006 simulations in this proposed impact
major effect is the amount of excess costs that used to categorize hospitals in the tables. In analysis, we are assuming all hospitals will
will not be reimbursed. some cases, particularly the number of beds, qualify for the full update.
We note that, under § 413.40(d)(3), an there is a fair degree of variation in the data Each proposed and statutory policy change
excluded hospital or unit whose costs exceed from different sources. We have attempted to is then added incrementally to this baseline
110 percent of its rate-of-increase limit model, finally arriving at an FY 2006 model
construct these variables with the best
receives its rate-of-increase limit plus 50 incorporating all of the proposed changes.
available source overall. However, for
percent of the difference between its This allows us to isolate the effects of each
individual hospitals, some
reasonable costs and 110 percent of the limit, proposed change.
miscategorizations are possible.
not to exceed 110 percent of its limit. In Our final comparison illustrates the
Using cases in the FY 2004 MedPAR file,
addition, under the various provisions set percent change in payments per case from FY
we simulated payments under the operating 2005 to FY 2006. Three factors not discussed
forth in § 413.40, certain excluded hospitals IPPS given various combinations of payment
and hospital units can obtain payment separately have significant impacts here. The
parameters. Any short-term, acute care first is the update to the standardized
adjustments for justifiable increases in hospitals not paid under the IPPS (Indian
operating costs that exceed the limit. amount. In accordance with section
Health Service hospitals and hospitals in 1886(b)(3)(B)(i) of the Act, we have updated
However, at the same time, by generally Maryland) were excluded from the
limiting payment increases, we continue to standardized amounts for FY 2006 using the
simulations. The impact of payments under most recently forecasted hospital market
provide an incentive for excluded hospitals the capital IPPS, or the impact of payments
and hospital units to restrain the growth in basket increase for FY 2006 of 3.2 percent.
for costs other than inpatient operating costs, (Hospitals that fail to comply with the quality
their spending for patient services. are not analyzed in this section. Estimated data submission requirement to receive the
VI. Quantitative Impact Analysis of the payment impacts of proposed FY 2006 full update will receive an update reduced by
Policy Changes Under the IPPS for changes to the capital IPPS are discussed in 0.4 percentage points to 2.8 percent.) Under
Operating Costs section VIII of this Appendix. section 1886(b)(3)(B)(iv) of the Act, the
The proposed changes discussed separately updates to the hospital-specific amounts for
A. Basis and Methodology of Estimates below are the following: sole community hospitals (SCHs) and for
In this proposed rule, we are announcing • The effects of the annual reclassification Medicare-dependent small rural hospitals
policy changes and payment rate updates for of diagnoses and procedures and the (MDHs) are also equal to the market basket
the IPPS for operating costs. Changes to the recalibration of the DRG relative weights increase, or 3.2 percent.
capital payments are discussed in section required by section 1886(d)(4)(C) of the Act. A second significant factor that impacts
VIII. of this Appendix. Based on the overall • The effects of the proposed changes in changes in hospitals’ payments per case from
percentage change in payments per case hospitals’ wage index values reflecting wage FY 2005 to FY 2006 is the change in MGCRB
estimated using our payment simulation data from hospitals’ cost reporting periods status from one year to the next. That is,
model (a 2.5 percent increase), we estimate beginning during FY 2002, compared to the hospitals reclassified in FY 2005 that are no
the total impact of these proposed changes FY 2001 wage data. longer reclassified in FY 2006 may have a
for FY 2006 operating payments compared to • The effect of the proposed change in the negative payment impact going from FY 2005
FY 2005 operating payments to be way we use the wage data for hospitals that to FY 2006; conversely, hospitals not
approximately a $2.41 billion increase. This reclassify as rural under section 401 of the reclassified in FY 2005 that are reclassified
amount does not reflect changes in hospital BBRA to compute wage indexes. in FY 2006 may have a positive impact. In
admissions or case-mix intensity, which • The effect of the proposed wage and some cases, these impacts can be quite
would also affect overall payment changes. recalibration budget neutrality factors. substantial, so if a relatively small number of
We have prepared separate impact analyses • The effect of the remaining labor market hospitals in a particular category lose their
of the proposed changes to each system. This area transition for those hospitals that were reclassification status, the percentage change
section deals with proposed changes to the urban under the old labor market area in payments for the category may be below
operating prospective payment system. Our designations and are now considered rural the national mean. However, this effect is
payment simulation model relies on the most hospitals. alleviated by section 1886(d)(10)(D)(v) of the
recent available data to enable us to estimate • The effects of geographic Act, which provides that reclassifications for
the impacts on payments per case of certain reclassifications by the MGCRB that will be purposes of the wage index are for a 3-year
changes we are proposing in this rule. effective in FY 2006. period.
However, there are other changes we are • The effects of section 505 of Pub. L. 108– A third significant factor is that we
proposing for which we do not have data 173, which provides for an increase in a currently estimate that actual outlier
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00351 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23656 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
payments during FY 2005 will be 4.4 percent hospitals located in large urban areas category groups hospitals considered urban
of total DRG payments. When the FY 2005 (populations over 1 million), and 1,138 after geographic reclassification, in terms of
final rule was published, we projected FY hospitals in other urban areas (populations of whether they receive the IME adjustment, the
2005 outlier payments would be 5.1 percent 1 million or fewer). In addition, there are DSH adjustment, both, or neither.
of total DRG plus outlier payments; the 1,156 hospitals in rural areas. The next two The next five rows examine the impacts of
average standardized amounts were offset groupings are by bed-size categories, shown
the proposed changes on rural hospitals by
correspondingly. The effects of the lower separately for urban and rural hospitals. The
than expected outlier payments during FY final groupings by geographic location are by special payment groups (SCHs, rural referral
2005 (as discussed in the Addendum to this census divisions, also shown separately for centers (RRCs), and Medicare dependant
proposed rule) are reflected in the analyses urban and rural hospitals. hospitals (MDHs)), as well as rural hospitals
below comparing our current estimates of FY The second part of Table I shows hospital not receiving a special payment designation.
2005 payments per case to estimated FY 2006 groups based on hospitals’ FY 2006 payment There were 134 RRCs, 405 SCHs, 158 MDHs,
payments per case (with outlier payments classifications, including any and 73 hospitals that are both SCH and RRC.
projected to equal 5.1 percent of total DRG reclassifications under section 1886(d)(10) of The next two groupings are based on type
payments). the Act. For example, the rows labeled urban, of ownership and the hospital’s Medicare
large urban, other urban, and rural show that utilization expressed as a percent of total
B. Analysis of Table I the number of hospitals paid based on these patient days. These data are taken primarily
Table I displays the results of our analysis categorizations after consideration of from the FY 2002 Medicare cost report files,
of proposed changes for FY 2006. The table geographic reclassifications are 2,575, 1,410, if available (otherwise FY 2001 data are
categorizes hospitals by various geographic 1,165, and 1,118, respectively.
and special payment consideration groups to used).
The next three groupings examine the
illustrate the varying impacts on different impacts of the proposed changes on hospitals The next series of groupings concern the
types of hospitals. The top row of the table grouped by whether or not they have GME geographic reclassification status of
shows the overall impact on the 3,693 residency programs (teaching hospitals that hospitals. The first grouping displays all
hospitals included in the analysis. This receive an IME adjustment) or receive DSH hospitals that were reclassified by the
number is 204 fewer hospitals than were payments, or some combination of these two MGCRB for FY 2006. The next two groupings
included in the impact analysis in the FY adjustments. There are 2,615 nonteaching separate the hospitals in the first group by
2005 final rule (69 FR 49758 ). hospitals in our analysis, 841 teaching urban and rural status. The final two rows in
The next four rows of Table I contain hospitals with fewer than 100 residents, and Table I contain hospitals located in rural
hospitals categorized according to their 237 teaching hospitals with 100 or more counties but deemed to be urban under
geographic location: All urban, which is residents. section 1886(d)(8)(B) of the Act and hospitals
further divided into large urban and other In the DSH categories, hospitals are located in urban counties, but deemed to be
urban; and rural. There are 2,537 hospitals grouped according to their DSH payment
rural under section 1886(d)(8)(E) of the Act.
located in urban areas included in our status, and whether they are considered
analysis. Among these, there are 1,399 urban or rural for DSH purposes. The next BILLING CODE 4120–01–P
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00352 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23657
EP04MY05.070</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00353 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23658 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.071</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00354 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23659
EP04MY05.072</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00355 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23660 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.073</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00356 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23661
BILLING CODE 4120–01–C This proposed expansion of the policy, Fusion Except Cervical with PDX of
C. Impact of the Proposed Changes to the which represents a significant change from Curvature of the Spine or Malignancy);
Postacute Care Transfer Policy (Column 2) our prior policy, has a negative 1.1 percent splitting DRGs 516 and 526 into four new
payment impact overall among both urban DRGs based on the presence or absence of a
In Column 2 of Table I, we present the and rural hospitals. There is only small CC, DRG 547 (Percutaneous Cardiovascular
effects of Option 2 for the proposed variation among all of the hospital categories Procedure With AMI With CC), DRG 548
expansion of the postacute care transfer from this negative 1.1 percent impact. The (Percutaneous Cardiovascular Procedure
policy, as discussed in section V.A. of the areas that are most dramatically impacted are With AMI Without CC), DRG 549
preamble to this proposed rule. We compared urban areas, with urban New England (Percutaneous Cardiovascular Procedure
aggregate payments using the FY 2005 DRG experiencing a 1.9 percent decline in With Drug-Eluting Stent With AMI With CC),
relative weights (GROUPER version 22.0) and payments and the Middle Atlantic DRG 550 (Percutaneous Cardiovascular
Option 2 for the proposed expansion of the experiencing a 1.2 percent decline. Although Procedure With Drug-Eluting Stent With AMI
postacute care transfer policy to aggregate rural New England hospitals are losing 1.1 Without CC); reassigning procedure code
payments using the FY 2005 DRG relative percent, most of the other rural regions lose 39.65 (Extracorporeal membrane oxygenation
weights (GROUPER version 22.0) and the FY less than 1 percent from this policy change. [ECMO]) from DRGs 104 and 105 to DRG 541
2005 postacute care transfer policy. The Urban areas tend to have a greater (ECMO or Tracheostomy with Mechanical
changes we are proposing are estimated to
concentration of postacute care facilities to Ventilation 96+ Hours or Principal Diagnosis
result in a 1.1 percent decrease in payments
which to discharge patients than do rural Except Face, Mouth and Neck Diagnoses
to hospitals overall. We estimate the total
areas and are, therefore, more likely to be With Major Operating Room Procedure).
savings at approximately $880 million.
impacted by this policy proposal. In the aggregate, these proposed changes
To simulate the impact of this proposed
would result in a 0.1 percent increase in
policy, we calculated two sets of transfer- D. Impact of the Proposed Changes to the
overall payments to hospitals. On average,
adjusted discharges and case-mix index DRG Reclassifications and Recalibration of
the impacts of these changes on any
values for hospitals. The first set was based Relative Weights (Column 3)
particular hospital group are very small, with
on the FY 2005 transfer policy rules and the In Column 3 of Table I, we present the urban hospitals experiencing a 0.2 percent
second was based on Option 2 for the combined effects of the DRG reclassifications
proposed expanded transfer policy discussed increase and rural hospitals experiencing a
and recalibration, as discussed in section II. 0.1 percent decrease. The largest impact is a
in the preamble to this proposed rule.
of the preamble to this proposed rule. Section 0.4 percent increase among urban hospitals
Estimated payments were computed for both
1886(d)(4)(C)(i) of the Act requires us in New England. This is in part due to the
sets of data and were then compared. The
annually to make appropriate classification residual effects of the proposed change to the
transfer-adjusted discharge fraction is
changes and to recalibrate the DRG weights postacute care transfer policy on the relative
calculated in one of two ways, depending on
in order to reflect changes in treatment weights. Including a DRG in the postacute
the transfer payment methodology. Under the
patterns, technology, and any other factors care transfer group reduces the number of
transfer payment methodology in place in FY
that may change the relative use of hospital cases in the DRG (cases that qualify as
2005, for all but the three DRGs receiving
resources. transfers are only counted as a fraction of a
special payment consideration (DRGs 209,
210, and 211), this adjustment is made by We compared aggregate payments using case) which in turn increases the average
adding 1 to the length of stay and dividing the FY 2005 DRG relative weights (GROUPER charge for the DRG and the weight.
that amount by the geometric mean length of version 22.0) to aggregate payments using the
proposed FY 2006 DRG relative weights E. Impact of Proposed Wage Index Changes
stay for the DRG (with the resulting fraction (Column 4)
not to exceed 1.0). For example, a transfer (GROUPER version 23.0). We note that,
after 3 days from a DRG with a geometric consistent with section 1886(d)(4)(C)(iii) of Section 1886(d)(3)(E) of the Act requires
mean length of stay of 6 days would have a the Act, we have applied a budget neutrality that, beginning October 1, 1993, we annually
transfer-adjusted discharge fraction of 0.667 factor to ensure that the overall payment update the wage data used to calculate the
((3+1)/6). impact of the DRG changes (combined with wage index. In accordance with this
For transfers from any one of the three the wage index changes) is budget neutral. requirement, the proposed wage index for FY
DRGs receiving the alternative payment This proposed budget neutrality factor of 2006 is based on data submitted for hospital
methodology, the transfer-adjusted discharge 1.002494 is applied to payments in Column cost reporting periods beginning on or after
fraction is 0.5 (to reflect that these cases 6. Because this is a combined DRG October 1, 2001 and before October 1, 2002.
receive half the full DRG amount the first reclassification and recalibration and wage The impact of the new data on hospital
day), plus one half of the result of dividing index budget neutrality factor, it is not payments is isolated in Column 4 by holding
1 plus the length of stay prior to transfer by applied to payments in Column 3. the other payment parameters constant in
the geometric mean length of stay for the The major DRG classification changes we this simulation. That is, Column 4 shows the
DRG. There are 88 DRGs (including 210, 211) are proposing include: reassigning procedure percentage changes in payments when going
that would qualify to receive the special code 35.52 (Repair of atrial septal defect with from a model using the FY 2005 wage index,
payment consideration. DRG 209 which prosthesis, closed technique) from DRG 108 based on FY 2001 wage data, to a model
formerly received the special payment has to DRG 518 (Percutaneous Cardiovascular using the FY 2006 pre-reclassification wage
been split into two new DRGs 544 and 545. Procedure Without Coronary Artery Stent or index, based on FY 2002 wage data. The FY
Both DRG 544 and DRG 545 are included in AMI); reassigning procedure code 37.26 2005 wage index baseline incorporated a
the 88 special payment DRGs as they (Cardiac electrophysiologic stimulation and blended wage index of 50 percent of the MSA
continue to qualify to receive the alternative recording studies) from DRGs 535 and 536 to wage index and 50 percent of the CBSA wage
payment methodology. As with the above DRGs 515 (Cardiac Defibrillator Implant index in areas where the CBSA wage index
adjustment, the result is equal to the lesser Without Cardiac Catheterization); splitting was lower than the MSA wage index to
of the transfer adjusted discharge fraction or DRG 209 into two new DRGs based on the reflect the transition policy that was in effect
1. presence or absence of the procedure codes in FY 2005. The wage data collected on the
The transfer-adjusted case-mix index for major joint replacement or reattachment FY 2002 cost report is the same as the FY
values are calculated by summing the of lower extremity and revision of hip or 2001 wage data that were used to calculate
transfer-adjusted DRG weights and dividing knee replacement, DRG 545 (Revision of Hip the FY 2005 wage index.
by the transfer-adjusted discharges. The or Knee Replacement) and DRG 544 (Major Column 4 shows the impacts of updating
transfer-adjusted DRG weights are calculated Joint Replacement or Reattachment of Lower the wage data using FY 2002 cost reports.
by multiplying the DRG weight by the lesser Extremity); reassigning procedure code 26.12 Overall, the new wage data will lead to a 0.4
of 1 or the transfer-adjusted discharge (Open biopsy of salivary gland or duct) from percent decrease for all hospitals and for
fraction for the case, divided by the DRG 468 to DRG 477 (Non-Extensive O.R. hospitals in urban areas. This decrease is due
geometric mean length of stay for the DRG. Procedure Unrelated To Principal Diagnosis); to both fluctuations in the wage data itself
In this way, simulated payments per case can reassigning the principal diagnosis codes for and the fact that the transition blended wage
be compared before and after the proposed curvature of the spine or malignancy from index, which benefited areas that were
change to the transfer policy. DRGs 497 and 498 to new DRG 546 (Spinal negatively impacted by the labor market
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00357 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23662 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
transition is no longer in effect for FY 2006. the national 6.1 increase in average hourly percent. A total of 14 rural hospitals would
Among regions, the largest increase is in the wage. Of the 3,617 hospitals with wage index experience increases greater than 5 percent,
rural New England which is experiencing a values in both FYs 2005 and 2006, 1,642, or but none will experience increases of greater
1.0 percent increase. The largest decline from 45.4 percent, also experienced an average than 10 percent. On the negative side, 56
updating the wage data is seen in the urban hourly wage increase of 6.1 percent or more. urban hospitals will experience decreases in
New England region (a 1.1 percent decrease). The following chart compares the shifts in their wage index values of at least 5 percent,
In looking at the wage data itself, the wage index values for hospitals for FY 2006 but less than 10 percent. Fourteen urban
national average hourly wage increased 6.1 relative to FY 2005. Among urban hospitals, hospitals will experience decreases in their
percent compared to FY 2005. Therefore, the 58 will experience an increase of between 5 wage index values greater than 10 percent.
only manner in which to maintain or exceed percent and 10 percent and 24 will The following chart shows the projected
the previous year’s wage index was to match experience an increase of more than 10 impact for urban and rural hospitals.
F. Impact of Proposed Change in Treatment G. Combined Impact of Proposed DRG and H. Impact of Allowing Urban Hospitals That
of Section 1886(d)(8)(E) Wage Data (Column Wage Index Changes, Including Budget Were Converted to Rural as a Result of the
5) Neutrality Adjustment (Column 6) CBSA Designations To Maintain the Wage
The impact of the DRG reclassifications Index of the MSA Where They Are Located
For the FY 2006 wage index, we are
(Column 7)
proposing to leave the wage data for a and recalibration on aggregate payments is
hospital redesignated as rural under section required by section 1886(d)(4)(C)(iii) of the To help alleviate the decreased payments
Act to be budget neutral. In addition, section for urban hospitals that became rural under
1886(d)(8)(E) of the Act in the urban area in
the new labor market area definitions, for
which the hospital is geographically located 1886(d)(3)(E) of the Act specifies that any
purposes of the wage index, we adopted a
for purposes of calculating the wage index of updates or adjustments to the wage index are policy in FY 2005 to allow them to maintain
those areas. We are proposing to move the to be budget neutral. As noted in the the wage index assignment of the MSA where
wage data for these hospitals into the rural Addendum to this proposed rule compared they were located for the 3-year period FY
wage index only if it increases the wage simulated aggregate payments using the FY 2005, FY 2006, and FY 2007. Column 7
index in the rural area. In this way, the rural 2005 DRG relative weights and wage index to shows the impact of the remaining labor
floor is only affected by the wage data for simulated aggregate payments using the market area transition, for those hospitals
these redesignated hospitals if it would proposed FY 2006 DRG relative weights and that were urban under the old labor market
blended wage index. area designations and are now considered
increase the rural wage index and thus reset
rural hospitals. Section 1886(d)(3)(E) of the
the rural floor at a higher value. Previously, We computed a proposed wage and Act specifies that any updates or adjustments
the wage data for these redesignated recalibration budget neutrality factor of to the wage index are to be budget neutral.
hospitals was moved into the rural area wage 1.002494. The 0.0 percent impact for all Therefore, we applied an adjustment of
index calculations regardless of whether it hospitals demonstrates that these changes, in 0.999529 to ensure that the effects of
increased or decreased the rural wage index, combination with the budget neutrality reclassification are budget neutral as
and this caused the rural floor for several factor, are budget neutral. In Table I, the indicated by the zero effect on payments to
States to be lower than it would have been combined overall impacts of the effects of hospitals overall. The rural hospital row
had the redesignated providers’ data not been both the DRG reclassifications and shows a 0.3 percent benefit from this
recalibration and the updated wage index are provision as these hold harmless hospitals
included.
are now considered geographically rural.
Column 5 shows the impact of adopting shown in Column 6. The changes in this
this policy. In aggregate, this policy proposal column are the sum of the proposed changes I. Impact of MGCRB Reclassifications
has no effect on payments to providers. in Columns 3, 4, and 5, combined with the (Column 8)
Hospitals in the urban New England region budget neutrality factor and the wage index Our impact analysis to this point has
experience an increase in payments of 0.2 floor for urban areas required by section 4410 assumed hospitals are paid on the basis of
percent, which indicates that CBSAs in that of Pub. L. 105–33 to be budget neutral. There their actual geographic location (with the
region that receive the rural floor are now also may be some variation of plus or minus exception of ongoing policies that provide
receiving a higher wage index. Hospitals in 0.1 percentage point due to rounding. that certain hospitals receive payments on
Among urban regions, the largest impacts bases other than where they are
West North Central are shown to experience
are in the West North Central region and geographically located, such as hospitals in
a 0.2 decline. However, when the rural counties that are deemed urban under
redesignated data are added to the rural wage Puerto Rico, with 0.3 and 0.4 percent
section 1886(d)(8)(B) of the Act). The changes
index, their rural floor increases and they do declines, respectively. The Pacific region in Column 8 reflect the per case payment
not actually experience a loss from this experiences the largest increase of 1.1 impact of moving from this baseline to a
policy. Hospitals reclassified as rural under percent. Among rural regions, the New simulation incorporating the MGCRB
section 1886(d)(8)(E) of the Act will England region benefits the most with a 1.3 decisions for FY 2006. These decisions affect
experience a 0.2 percent increase. percent increase, while the Mountain region hospitals’ standardized amount and wage
EP04MY05.074</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00358 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23663
By February 28 of each year, the MGCRB qualify to receive a commuting adjustment in income Medicare and Medicaid patients,
makes reclassification determinations that FY 2006. which include rural hospitals and urban
will be effective for the next fiscal year, Due to the statutory formula to calculate hospitals with fewer than 100 beds, SCHs,
which begins on October 1. The MGCRB may the adjustment and the small number of rural referral centers, and rural hospitals with
approve a hospital’s reclassification request counties that qualify, the impact on hospitals less than 500 beds. The increase in DSH
for the purpose of using another area’s wage is minimal, with an overall impact on all payments became effective for discharges
index value. The proposed FY 2006 wage hospitals of 0.1 percent. occurring on or after April 1, 2004. As
index values incorporate all of the MGCRB’s provided in the new Medicare law, the cap
reclassification decisions for FY 2006. The K. All Changes (Column 10)
on DSH payment adjustments increased from
wage index values also reflect any decisions Column 10 compares our estimate of 5.25 percent to 12 percent for urban hospitals
made by the CMS Administrator through the payments per case, incorporating all changes with fewer than 100 beds, SCHs, and rural
appeals and review process through February reflected in this proposed rule for FY 2006
hospitals with less than 500 beds. There is
28, 2005. Additional changes that result from (including statutory changes), to our estimate
no cap on rural referral centers, large urban
the Administrator’s review of MGCRB of payments per case in FY 2005. This
hospitals over 100 beds, or rural hospitals
decisions or a request by a hospital to column includes all of the proposed policy
changes. Because the reclassifications shown over 500 beds.
withdraw its application will be reflected in
in Column 8 do not reflect FY 2005 There might also be interactive effects
the final rule for FY 2006.
reclassifications, the impacts of FY 2006 among the various factors comprising the
The overall effect of geographic
reclassifications only affect the impacts from payment system that we are not able to
reclassification is required by section
1886(d)(8)(D) of the Act to be budget neutral. FY 2005 to FY 2006 if the reclassification isolate. For these reasons, the values in
Therefore, we applied an adjustment of impacts for any group of hospitals are Column 10 may not equal the sum of the
0.992905 to ensure that the effects of different in FY 2006 compared to FY 2005. changes described above.
reclassification are budget neutral. (See • Column 10 reflects all FY 2006 changes The overall change in payments per case
section II.A.4.b. of the Addendum to this relative to FY 2005, shown in Columns 2 for hospitals in FY 2006 would increase by
proposed rule.) through 9 and those not applied until the 2.5 percent. Hospitals in urban areas would
As a group, rural hospitals benefit from final rates are calculated. The average experience a 2.5 percent increase in
geographic reclassification. We estimate that increase for all hospitals is approximately 2.5 payments per case compared to FY 2005.
their payments will rise 2.0 percent in percent. This increase includes the effects of Hospitals in rural areas, meanwhile, would
Column 8. Payments to urban hospitals will the proposed 3.2 percent market basket experience a 2.6 percent payment increase.
decline by 0.3 percent. Hospitals in other update. It also reflects the 0.7 percentage Hospitals in large urban areas would
urban areas will experience an overall point difference between the projected experience a 2.4 percent increase in
decrease in payments of 0.2 percent, while outlier payments in FY 2005 (5.1 percent of payments and hospitals in other urban areas
large urban hospitals will lose 0.4 percent. total DRG payments) and the current estimate would experience a 2.7 percent increase in
Among urban hospital groups (that is, bed of the percentage of actual outlier payments payments.
size, census division, and special payment in FY 2005 (4.4 percent), as described in the Among urban census divisions, the largest
status), payments generally would decline. introduction to this Appendix and the payment increase would be 4.0 percent in the
A positive impact is evident among all of Addendum to this proposed rule. As a result, Pacific region. Hospitals in the urban East
the rural hospital groups. The smallest payments are projected to be 0.7 percentage South Central and West South Central
increase among the rural census divisions is point lower in FY 2005 than originally regions would experience the next largest
0.5 for the Mountain and New England estimated, resulting in a 0.7 percentage point overall increases of 3.0 percent and 3.1
regions. The largest increases are in the rural greater increase for FY 2006 than would percent, respectively. The smallest urban
East South Central region, with an increase otherwise occur. In addition, the impact of increase would occur in the New England
of 3.0 percent and in the West South Central section 505 adjustments accounted for a 0.1 region, with an increase of 1.0 percent.
region, which would experience an increase percent increase. Payment decreases of 1.5 Among rural regions in Column 10, no
of 2.5 percent. percent are primarily attributable to the hospital category will experience overall
Urban hospitals reclassified for FY 2006 impact of expanding the postacute care payment decreases. The Pacific and Middle
are expected to receive an increase of 2.3 transfer policy (¥1.1 percent). Indirect Atlantic regions will benefit the most, with
percent, while rural reclassified hospitals are medical education formula changes for 3.3 and 3.2 percent increases, respectively.
expected to benefit from the MGCRB changes teaching hospitals under section 502 of Pub. The smallest increase will occur in the West
with a 3.7 percent increase in payments. L. 108–173, changes in payments due to the South Central region, with 2.2 percent
Payments to urban and rural hospitals that difference between the FY 2005 and FY 2006 increases in payments.
did not reclassify are expected to decrease wage index values assigned to providers Among special categories of rural hospitals
slightly due to the MGCRB changes, reclassified under section 508 of Pub. L. 108– in Column 10, those hospitals receiving
decreasing by 0.6 percent for urban hospitals 173, and changes in the incremental increase payment under the hospital-specific
and 0.3 percent for rural hospitals. in payments from section 505 of Pub. L. 108– methodology (SCHs, MDHs, and SCH/RRCs)
173 out migration adjustments account for would experience payment increases of 2.8
J. Impacts of the Proposed Wage Index the remaining ¥0.4 percent.
Adjustment for Out-Migration (Column 9) percent, 2.4 percent, and 2.7 percent,
Section 213 of Pub. L. 106–554 provides respectively. This outcome is primarily
Section 1886(d)(13) of the Act, as added by that all SCHs may receive payment on the related to the fact that, for hospitals receiving
section 505 of Pub. L. 108–173, provides for basis of their costs per case during their cost payments under the hospital-specific
an increase in the wage index for hospitals reporting period that began during 1996. For methodology, there were several increases to
located in certain counties that have a FY 2006, eligible SCHs receive 100 percent payments made in relation to
relatively high percentage of hospital of their 1996 hospital-specific rate. In implementation of the Pub. L. 108–173.
employees who reside in the county, but addition, in this proposed rule we are
Urban hospitals reclassified for FY 2006
work in a different area with a higher wage proposing to revise the budget neutrality
are anticipated to receive an increase of 3.0
index. Hospitals located in counties that adjustment applied to the hospital-specific
percent, while rural reclassified hospitals are
qualify for the payment adjustment are to rates to reflect only the payment changes
expected to benefit from reclassification with
receive an increase in the wage index that is resulting from DRG recalibration. Previously,
a 2.8 percent increase in payments. Those
equal to a weighted average of the difference we had also adjusted the hospital-specific
hospitals located in rural counties, but
between the wage index of the resident rates to reflect payment changes based on
deemed to be urban under section
county and the higher wage index work area wage levels. The impact of this
1886(d)(8)(B) of the Act, are expected to
area(s), weighted by the overall percentage of provision is modeled in Column 10 as well.
receive an increase in payments of 1.4
workers who are employed in an area with In addition, section 402 of Pub. L. 108–173
percent.
a higher wage index. Using our established increases the DSH adjustment for hospitals
criteria, 345 counties and 688 hospitals that serve a disproportionate share of low- BILLING CODE 4120–01–P
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00359 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23664 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
EP04MY05.075</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00360 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23665
EP04MY05.076</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00361 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
23666 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
Table II presents the projected impact of II equal the percentage changes in average changes. Our estimates of the likely impacts
the proposed changes for FY 2006 for urban payments from Column 10 of Table I. associated with these other proposed changes
and rural hospitals and for the different are discussed below.
VII. Impact of Other Proposed Policy
categories of hospitals shown in Table I. It
Changes A. Impact of Proposed LTC-DRG
compares the estimated payments per case
In addition to those proposed changes Reclassifications and Relative Weights for
for FY 2005 with the average estimated per
discussed above that we are able to model LTCHs
case payments for FY 2006, as calculated
under our models. Thus, this table presents, using our IPPS payment simulation model, In section II.D. of the preamble of this
in terms of the average dollar amounts paid we are proposing various other changes in proposed rule, we discuss the proposed
per discharge, the combined effects of the this proposed rule. Generally, we have changes in the LTC-DRG relative weights for
changes presented in Table I. The percentage limited or no specific data available with FY 2006 based on the proposed version 23.0
EP04MY05.077</GPH>
changes shown in the last column of Table which to estimate the impacts of these of the CMS GROUPER (including the
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00362 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23667
proposed changes in the classifications, section II.E. of the preamble of this proposed reduced payment to some hospitals, we
relative weights and geometric mean length rule, we are not proposing to approve any of estimate savings to the Medicare program of
of stay for each LTC-DRG). Based on LTCH the new technology applications that were approximately $20 million for FY 2006.
cases in the FY 2004 MedPAR file, we filed for FY 2006. However, we are proposing
estimate that the proposed changes would to continue to make add-on payments in FY D. Impact of Proposed Policy on Payment
result in an aggregate decrease in LTCH 2006 for an FY 2005 new technology: Adjustments for Low-Volume Hospitals
payments of approximately 4.7 percent. KinetraTM implants. We estimate this In section V.E. of the preamble to this
When we compared the version 22 (FY 2005) approval would increase overall payments by proposed rule, we discussed our proposed
LTC-DRG relative weights to the proposed $12.8 million. The increase in payments for FY 2006 implementation of section
version 23 (FY 2006) LTC-DRG relative this new technology is not reflected in the 1886(d)(12) of the Act, as added by section
weights, we found that approximately 72 tables. 406 of Pub. L. 108–173, which provides for
percent of the LTC-DRGs had higher relative a payment adjustment to account for the
C. Impact of Requirements for Hospital
weights under version 22 in comparison to higher costs per discharge of low-volume
Reporting of Quality Data for Annual
the proposed version 23. We also found that hospitals under the IPPS. For FY 2006, we
Hospital Payment Update
the version 22 LTC-DRG relative weights are proposing to continue to apply the low-
were, on average, approximately 16 percent In section V.B. of the preamble to this
volume adjustment criteria that we specified
higher than the proposed version 23 LTC- proposed rule, we discuss our
implementation of section 1886(b)(3)(B)(vii) in the FY 2005 IPPS final rule (69 FR 49099).
DRG relative weights.
of the Act, as added by section 501(b) of Pub. Currently, our fiscal intermediaries have
In addition, based on an analysis of the
L. 108–173, which revised the mechanism identified 10 providers that are eligible for
most recent available LTCH claims data from
the FY 2004 MedPAR file, we continue to used to update the standardized amount of the low-volume adjustment. We estimate that
observe that the proposed average LTC-DRG payment for inpatient hospital operating the impact of these providers receiving the
relative weight decreases due to an increase costs. Specifically, section 1886(b)(3)(B)(vii) additional 25 percent payment increase to be
of relatively lower charge cases being of the Act provides for a reduction of 0.4 approximately $1.5 million.
assigned to LTC-DRGs with higher relative percentage points to the update percentage E. Impact of Proposed Policies on Payment
weights in the prior year. Contributing to this increase (also known as the market basket for Indirect Costs of Graduate Medical
increase in these relatively lower charge update) for each of FYs 2005 through 2007 Education
cases being assigned to LTC-DRGs with for any subsection (d) hospital that does not
higher relative weights in the prior year are submit data on a set of 10 quality indicators 1. IME Adjustment for TEFRA Hospitals
improvements in coding practices, which are established by the Secretary as of November Converting to IPPS Hospitals
typically found when moving from a 1, 2003. The statute also provides that any In section V.F.2. of the preamble of this
reasonable cost-based payment system to a reduction will apply only to the year proposed rule, we discuss our proposal to
PPS. The impact of including cases with involved, and will not be taken into account incorporate into regulations our existing
relatively lower charges into LTC-DRGs that in computing the applicable percentage policy regarding the IME adjustment for
had a relatively higher relative weight in the increase for a subsequent fiscal year. We are TEFRA hospitals converting to IPPS
version 22.0 (FY 2005) GROUPER is a unable to precisely estimate the effect of this hospitals. We establish an FTE resident cap
decrease in the average relative weight for provision because, while receiving the full for TEFRA hospitals converting to an IPPS
those LTC-DRGs in the proposed GROUPER update for those years is conditional upon hospital for IME payment purposes as if the
version 23.0. We also found that there is over the submission of quality data by a hospital, hospital had been an IPPS hospital during
a 15 percent increase in the average LTCH the submitted data must also be validated, as the base year used to compute the hospital’s
charge across all LTC-DRGs from FY 2003 to described in section V.B. above. The final direct GME FTE resident cap. We are only
FY 2004. For some LTC-DRGs in which the date for submission of quality data for
aware of four hospitals where this issue has
average charge within the LTC-DRG increase purposes of receiving the full adjustment in
arisen. The proposed addition to the
is less than 15 percent, the relative weights FY 2006 is May 15, 2005. Preliminary results
regulations clarifies the established policy for
for those LTC-DRGs will decrease because indicate that over 98 percent of IPPS
hospitals have submitted quality data. The computing an IME FTE resident cap for these
the average charge for each of those LTC-
QIOs are still in the process of validating that hospitals. Because this is a proposal to clarify
DRGs is being divided by a larger number
data and certifying those hospitals eligible to existing policy and codify it in regulations,
(that is, the average charge across all LTC-
receive the full update for FY 2006. We have there is no financial impact for FY 2006.
DRGs). For the reasons discussed above, we
believe that the proposed changes in the continued our efforts to ensure that QIOs 2. Section 1886(d)(8)(E) Teaching Hospitals
LTC-DRG relative weights, which include a provide assistance to all hospitals that wish That Withdraw Rural Reclasssification
number of proposed LTC-DRGs with lower to submit data. In the preamble to this In section V.F.3. of the preamble to this
proposed relative weights, would result in proposed rule, we are proposing additional proposed rule, we present our proposal to
approximately a 4.6 percent decrease in validation criteria to ensure that the quality
adjust the IME FTE resident caps of hospitals
aggregate LTCH PPS payments. data being sent to CMS are accurate. Our
that rescind their section 1886(d)(8)(E) rural
validation process requires participating
B. Impact of Proposed New Technology Add- reclassifications so that they do not continue
hospitals to submit five charts per quarter.
On Payments We reimburse each hospital for the cost of to receive the increase in the FTE resident
We are no longer required to ensure that sending charts to the Clinical Data cap that is applied for rural teaching hositals.
any add-on payments for new technology Abstraction Center at the rate of 12 cents per The purpose of this policy is to prevent
under section 1886(d)(5)(K) of the Act are page for copying and approximately $4.00 urban hospitals from reclassifying to rural
budget neutral (see section II.E. of the per chart for postage. Based on our areas under section 1886(d)(8)(E) of the Act
preamble to this proposed rule). However, we experience, the average size of a chart is 140 for a short period of time, solely as a means
are still providing an estimate of the payment pages. Therefore, we estimate our of receiving a permanent increase to their
increases here, as they will have a significant expenditures for chart collection at $380,000 IME FTE caps. The impact of this policy is
impact on total payments made in FY 2006. per quarter. Because we provide that section 1886(d)(8)(E) hospitals may
New technology add-on payments are limited reimbursement to hospitals for the costs of receive decreased IME payments if they
to the lesser of 50 percent of the costs of the chart submission, we believe that this return to urban status. This impact cannot be
technology, or 50 percent of the costs in requirement represents a minimal burden to quantified because we are unable to
excess of the DRG payment for the case. participating hospitals. Based on test determine the number of hospitals that
Because it is difficult to predict the actual applications of these validation criteria to would otherwise game the system in the
new technology add-on payment for each quality data that have been submitted thus absence of this proposal and we are not
case, we are estimating the increase in far, we currently estimate that approximately aware of any teaching hospitals that became
payment for FY 2006 as if every claim with 5 percent of hospitals will fail the edits and rural under the provision of section
these add-on payments will receive the receive the reduced market basket update to 1886(d)(8)(E) of the Act that have
maximum add-on payment. As discussed in the standardized amount. Based on this subsequently reverted to urban status.
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00363 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23668 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
F. Impact of Proposed Policy Relating to regard to the fact that the resident had not the demonstration. For 13 participating
Geographic Reclassifications of Multicampus matched for a clinical base year training hospitals, the total annual impact of the
Hospitals program. For purposes of this proposed rule, demonstration program is estimated to be
In section V.H. of the preamble of this we have estimated the impact of this $12,706,334. We describe the budget
proposed rule, we discuss the impact of our proposed rule change for FY 2006, using neutrality adjustment required for this
implementation of the new labor market assumptions about the national average per purpose in the Addendum to this proposed
areas on multicampus hospital systems. resident amount, the number of affected rule.
Under our current policy, a multicampus residents, and the national average Medicare
utilization rate. We estimate that this I. Impact of Proposed Policy on CAH
hospital with campuses located in the same Relocation Provisions
labor market area receives a single wage provision will affect approximately 600
index. However, if the campuses are located residents. Using a national average per In section VII.B.3. of the preamble to this
in more than one labor market area, payment resident amount of $92,000, and an average proposed rule, we discuss the proposed
for each discharge is determined using the Medicare utilization rate of 35 percent, we change to the necessary provider provision as
wage index value for the labor market area estimate that, for FY 2006, the impact of it applies to CAHs. As required by statute, no
in which the campus of the hospital is treating those residents as a full FTE rather additional CAHs will be certified as a
located. In addition, current provisions than .50 FTE, Medicare payments for direct necessary provider on or after January 1,
provide that, in the case of a merger of GME will increase by approximately $9.7 2006. We are proposing to revise the
hospitals, if the merged facilities operate as million. regulations to allow some flexibility for those
a single institution, the institution must 2. New Teaching Hospitals’ Participation in CAHs previously designated as necessary
submit a single cost report, which Medicare GME Affiliated Groups providers that embarked on a replacement
necessitates a single provider identification facility project before the sunset provision
In section V.I.3. of the preamble to this was enacted on December 8, 2003, but find
number. This provision also does not proposed rule, we discuss our proposed
differentiate between merged facilities in a that they cannot be operational in the
changes related to new teaching hospitals’ replacement facility by January 1, 2006. We
single wage index area or in multiple wage participation in Medicare GME affiliated
index areas. As a result, the wage index data are proposing that, when a CAH is
groups. Under current regulations, a new determined to have relocated, it may
for the merged facility is reported for the teaching hospital located in an urban area
entire entity on a single cost report. continue to operate under its existing
that establishes an FTE resident cap under necessary provider designation that exempts
The current criteria for a hospital being § 413.79(e) may not participate in a Medicare
reclassified to another wage area by the CAHs from the distance from another
GME affiliated group. We are proposing to provider requirement only if certain
MGCRB do not address the circumstances revise the regulations to allow a new teaching
under which a single campus of a conditions are met. The proposed
hospital located in an urban area to clarification to the sunset of the necessary
multicampus hospital may seek participate in a Medicare GME affiliated
reclassification. provider provision is intended to allow CAHs
group, but only if any adjustments made by to complete construction projects that were
Specifically, we are proposing that for the Medicare GME affiliation agreement
reclassification applications submitted for FY initiated prior to the enactment of Pub. L.
result in an increase to the new teaching 108–173. The Health Resources Services
2006 (that is, applications received by hospital’s adjusted resident FTE resident
September 1, 2004), we would allow a Administration (HRSA) estimates that this
caps for purposes of IME and direct GME proposal will apply to fewer than six CAHs
campus or campuses of a multicampus payment. There is no estimated increase in
hospital system to seek geographic nationwide. The average cost of construction
program payments related to this proposed of a new 25 bed CAH is approximately $25
reclassification on the basis of the average change because any additional residents that
hourly wage data submitted for the entire million. Given a depreciation schedule based
would be counted at the new teaching on a 25 useful life and Medicare utilization
hospital system. For reclassification hospitals as a result of this change could
applications that would take effect for FY of approximately 50 percent, the additional
have been counted prior to the affiliation for capital costs for six CAHs would be $3
2007 (that is, applications received by Medicare GME payment purposes at the
September 1, 2005) and thereafter, a campus million. However, the actual cost to the
hospital that is losing slots under the program would be further reduced since
of a multihospital system could not use the affiliation agreement.
wage data of the entire hospital system, but those 6 CAH are currently being reimbursed
rather, would have the opportunity to H. Impact of Policy on Rural Community for their existing capital costs and also the
separate out campus-specific wage data for Hospital Demonstration Program increased operating costs that are associated
purposes of seeking reclassification for such with operating an aged facility. Accordingly,
In section V.K. of the preamble to this the budgetary impact for the proposed
campus. We estimate that this proposal will proposed rule, we discuss our
apply to fewer than 12 multicampus hospital change on the affected CAHs is estimated at
implementation of section 410A of Pub.L. between $1 million and $2 million.
systems nationwide and, therefore, will not 108–173 that required the Secretary to
lead to additional program expenditures Expressed on a per-facility basis, the
establish a demonstration that will modify budgetary impact of this proposed change is
because hospital geographic reclassifications reimbursement for inpatient services for up
are budget neutral under section estimated at between $167,000 and $333,000
to 15 small rural hospitals. Section per CAH.
1886(d)(8)(D) of the Act. 410A(c)(2) requires that ‘‘in conducting the
G. Impact of Proposed Policy on Payment for demonstration program under this section, VIII. Impact of Proposed Changes in the
Direct Costs of Graduate Medical Education the Secretary shall ensure that the aggregate Capital PPS
payments made by the Secretary do not
1. GME Initial Residency—Match for Second A. General Considerations
exceed the amount which the Secretary
Year would have paid if the demonstration Fiscal year (FY) 2001 was the last year of
In section V.I.2. of the preamble to this program under this section was not the 10-year transition period established to
proposed rule, we discuss our proposed implemented.’’ As discussed in section V.K. phase in the PPS for hospital capital-related
changes related to the initial residency of the preamble to this proposed rule, we are costs. During the transition period, hospitals
period for residents that match into an satisfying this requirement by adjusting were paid under one of two payment
advanced residency program, but fail to national IPPS rates by a factor that is methodologies: fully prospective or hold
match into a clinical base year of training. sufficient to account for the added costs of harmless. Under the fully prospective
We are proposing that, in instances where a this demonstration. We estimate that the methodology, hospitals were paid a blend of
hospital can document that, prior to average additional annual payment for FY the capital Federal rate and their hospital-
commencement of any residency training, a 2006 that will be made to each participating specific rate (see § 412.340). Under the hold-
resident matched into an advanced program hospital under the demonstration will be harmless methodology, unless a hospital
that begins in the second residency year, that approximately $977,410. We based this elected payment based on 100 percent of the
resident’s initial residency period will be estimate on the recent historical experience capital Federal rate, hospitals were paid 85
determined based on the period of board of the difference between inpatient cost and percent of reasonable costs for old capital
eligibility for the advanced program, without payment for hospitals that have applied for costs (100 percent for SCHs) plus an amount
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00364 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23669
for new capital costs based on a proportion case-mix. We then added estimated payments The simulation results show that, on
of the capital Federal rate (see § 412.344). As for indirect medical education, average, capital payments per case can be
we state in section VI. of the preamble of this disproportionate share, large urban add-on, expected to increase 1.7 percent in FY 2006.
proposed rule, with the 10-year transition and outliers, if applicable. For purposes of In addition to the 0.7 percent increase due to
period ending with hospital cost reporting this impact analysis, the model includes the the capital market basket update, this
periods beginning on or after October 1, 2001 following assumptions: projected increase in capital payments per
(FY 2002), beginning in FY 2002 capital • We estimate that the Medicare case-mix case is largely attributable to an estimated
prospective payment system payments for index would increase by 1.0 percent in both increase in outlier payments in FY 2006. Our
most hospitals are based solely on the capital FYs 2005 and 2006. comparison by geographic location shows
Federal rate. Therefore, we no longer include • We estimate that the Medicare that urban hospitals are expected to
information on obligated capital costs or discharges will be 13.5 million in FY 2005 experience a 1.8 percent increase in IPPS
projections of old capital costs and new and 13.3 million in FY 2006 for a 1.5 percent capital payments per case, while rural
capital costs, which were factors needed to decrease from FY 2005 to FY 2006. hospitals are only expected to experience a
calculate payments during the transition • The capital Federal rate was updated 1.2 percent increase in capital payments per
period, for our impact analysis. beginning in FY 1996 by an analytical case. This difference is mostly due to a
In accordance with § 412.312, the basic framework that considers changes in the projection that urban hospitals would
methodology for determining a capital PPS prices associated with capital-related costs experience a larger increase in estimated
payment is: and adjustments to account for forecast error, outlier payments from FY 2005 to FY 2006
(Standard Federal Rate) × (DRG weight) × changes in the case-mix index, allowable compared to rural hospitals.
(Geographic Adjustment Factor (GAF)) × changes in intensity, and other factors. The All regions are estimated to receive an
(Large Urban Add-on, if applicable) × (COLA proposed FY 2006 update is 0.7 percent (see increase in total capital payments per case
adjustment for hospitals located in Alaska section III.A.1.a. of the Addendum to this from FY 2005 to FY 2006. Changes by region
and Hawaii) × (1 +3 Disproportionate Share proposed rule). vary from a minimum increase of 0.1 percent
(DSH) Adjustment Factor + Indirect Medical • In addition to the proposed FY 2006 (Middle Atlantic rural region) to a maximum
Education (IME) Adjustment Factor, if update factor, the proposed FY 2006 capital increase of 3.3 percent (Pacific urban region).
applicable). Federal rate was calculated based on a The relatively small increase in projected
In addition, hospitals may also receive proposed GAF/DRG budget neutrality factor capital payments per discharge for hospitals
outlier payments for those cases that qualify of 1.0019, a proposed outlier adjustment located in the Middle Atlantic rural region is
under the threshold established for each factor of 0.9497, and a proposed (special) largely attributable to the proposed changes
fiscal year. exceptions adjustment factor of 0.9997. in the GAF values (that is, the proposed
The data used in developing the impact GAFs for most of these hospitals for FY 2006
analysis presented below are taken from the 2. Results are lower than the weighted average of the
December 2004 update of the FY 2004 In the past, in this impact section we GAFs for FY 2005) . The relatively large
MedPAR file and the December 2004 update presented the redistributive effects that were increase in capital payments per discharge
of the Provider Specific File that is used for expected to occur between ‘‘hold-harmless’’ for hospitals located in the Pacific urban
payment purposes. Although the analyses of hospitals and ‘‘fully prospective’’ hospitals region is largely due to the proposed changes
the changes to the capital prospective and a cross-sectional summary of hospital in the GAF values (that is, the proposed
payment system do not incorporate cost data, groupings by the capital PPS transition GAFs for most of these hospitals for FY 2006
we used the December 2004 update of the period payment methodology. We are no are higher than the average of the GAFs for
most recently available hospital cost report longer including this information because all FY 2005) and a larger than average increase
data (FY 2003) to categorize hospitals. Our hospitals (except new hospitals under in estimated outlier payments for FY 2006.
analysis has several qualifications. First, we § 412.324(b) and under § 412.304(c)(2)) will Hospitals located in Puerto Rico are
do not make adjustments for behavioral be paid 100 percent of the capital Federal expected to experience an increase in total
changes that hospitals may adopt in response rate in FY 2006. capital payments per case of 1.0 percent. This
to policy changes. Second, due to the We used the actuarial model described slightly lower than average increase in
interdependent nature of the IPPS, it is very above to estimate the potential impact of our payment per case for hospitals located in
difficult to precisely quantify the impact changes for FY 2006 on total capital Puerto Rico is largely due to the proposed
associated with each change. Third, we draw payments per case, using a universe of 3,693 changes in the proposed GAF values (that is,
upon various sources for the data used to hospitals. As described above, the individual the proposed GAFs for most of these
categorize hospitals in the tables. In some hospital payment parameters are taken from hospitals for FY 2006 are higher than the
cases (for instance, the number of beds), there the best available data, including the average of the GAFs for FY 2005).
is a fair degree of variation in the data from December 2004 update of the FY 2004 By type of ownership, government
different sources. We have attempted to MedPAR file, the December 2004 update to hospitals are projected to have the largest rate
construct these variables with the best the Provider-Specific File, and the most of increase of total payment changes (2.0
available sources overall. However, for recent cost report data from the December percent). Similarly, payments to voluntary
individual hospitals, some 2004 update of HCRIS. In Table III, we and proprietary hospitals are expected to
miscategorizations are possible. present a comparison of total payments per increase 1.6 percent and 1.8 percent,
Using cases from the December 2004 case for FY 2005 compared to FY 2006 based respectively. As noted above, this slightly
update of the FY 2004 MedPAR file, we on the proposed FY 2006 payment policies. larger projected increase in capital payments
simulated payments under the capital PPS Column 2 shows estimates of payments per per case for government hospitals is mostly
for FY 2005 and FY 2006 for a comparison case under our model for FY 2005. Column due to the larger than average increase in
of total payments per case. Any short-term, 3 shows estimates of payments per case projected outlier payments for FY 2006 and
acute care hospitals not paid under the under our model for FY 2006. Column 4 a smaller than average decrease in the
general IPPS (Indian Health Service hospitals shows the total percentage change in proposed GAF values.
and hospitals in Maryland) are excluded payments from FY 2005 to FY 2006. The Section 1886(d)(10) of the Act established
from the simulations. change represented in Column 4 includes the the MGCRB. Previously, hospitals could
As we explain in section III.A.4. of the 0.7 percent update to the capital Federal rate, apply for reclassification for purposes of the
Addendum of this proposed rule, payments a 1.0 percent increase in case-mix, changes standardized amount, wage index, or both.
are no longer made under the regular in the adjustments to the capital Federal rate Section 401(c) of Pub. L. 108–173 equalized
exceptions provision under §§ 412.348(b) (for example, the effect of the new hospital the standardized amounts under the
through (e). Therefore, we no longer use the wage index on the GAF), and operating IPPS. Therefore, beginning in FY
actuarial capital cost model (described in reclassifications by the MGCRB, as well as 2005, there is no longer reclassification for
Appendix B of the August 1, 2001 proposed changes in special exception payments. The the purposes of the standardized amounts;
rule (66 FR 40099)). We modeled payments comparisons are provided by: (1) Geographic hospitals may apply for reclassification for
for each hospital by multiplying the capital location; (2) region; and (3) payment purposes of the wage index in FY 2006.
Federal rate by the GAF and the hospital’s classification. Reclassification for wage index purposes also
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00365 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23670 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
affects the GAF because that factor is are further identified by urban and rural reclassified during FY 2006 only are
constructed from the hospital wage index. designation. projected to receive an increase in payments
To present the effects of the hospitals being Hospitals reclassified for FY 2006 as a of 3.2 percent. This relatively large increase
reclassified for FY 2006 compared to the whole are projected to experience a 2.0 is primarily due to the proposed changes in
effects of reclassification for FY 2005, we percent increase in payments. Payments to the GAF values (that is, the proposed GAFs
show the average payment percentage nonreclassified hospitals in FY 2006 are for most of these hospitals for FY 2006 are
increase for hospitals reclassified in each expected to increase 1.7 percent. Hospitals higher than the average of the GAFs for FY
fiscal year and in total. The reclassified reclassified during both FY 2005 and FY
2005).
groups are compared to all other 2006 are projected to experience an increase
nonreclassified hospitals. These categories in payments of 1.3 percent. Hospitals BILLING CODE 4120–01–P
EP04MY05.078</GPH>
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00366 Fmt 4701 Sfmt 4725 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23671
Appendix B: Recommendation of hospital services for each fiscal year that take discuss our update framework and respond
Update Factors for Operating Cost into account the amounts necessary for the to MedPAC’s recommendations concerning
Rates of Payment for Inpatient Hospital efficient and effective delivery of medically the update factors.
Services appropriate and necessary care of high
quality. Under section 1886(e)(5) of the Act, II. Secretary’s Recommendations
(If you choose to comment on issues in this we are required to publish update factors Section 1886(b)(3)(B)(i)(XIX) of the Act sets
section, please include the caption ‘‘Update recommended by the Secretary in the the FY 2006 percentage increase in the
Factors’’ at the beginning of your comment.) proposed and final rule. Accordingly, this operating cost standardized amount equal to
Appendix provides the recommendations of the rate-of-increase in the hospital market
I. Background basket for IPPS hospitals in all areas subject
appropriate update factors for the IPPS
Section 1886(e)(4)(A) of the Act requires standardized amount, the hospital-specific to the hospital submitting quality
that the Secretary, taking into consideration rates for SCHs and MDHs, and the rate-of- information under rules established by the
the recommendations of the Medicare increase limits and Federal prospective Secretary under section 1886(b)(3)(B)(vii) of
Payment Advisory Commission (MedPAC), payment amounts for hospitals and hospitals the Act. For hospitals that do not provide
EP04MY05.079</GPH>
recommend update factors for inpatient units excluded from the IPPS. We also these data, the update is equal to the market
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00367 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
23672 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules
basket percentage increase less 0.4 based excluded hospital market basket the effect of causing admissions to decline.
percentage points. Based on the Office of the (currently estimated at 3.4 percent). However, we do not have information on
Actuary’s fourth quarter 2004 forecast of the Effective for cost reporting periods how hospital employment will be affected for
FY 2006 market basket increase, we are beginning FY 2003, LTCHs are paid under our methodology. Thus, in the absence of
proposing an update to the standardized the LTCH PPS, which was implemented with data to predict the effect of a decline in
amount of 3.2 percent (that is, the market a 5-year transition period. (Refer to the hospital admissions on hospital employment,
basket rate-of-increase) for hospitals in all August 30, 2002 final rule (67 FR 55954).) A we cannot appropriately reflect productivity
areas, provided the hospital submits quality LTCH may elect to be paid on 100 percent in our framework. As a result, based on the
data in accordance with our rules. of the Federal prospective rate at the start of discussion above, we believe it is appropriate
Section 1886(b)(3)(B)(iv) of the Act sets the any of its cost reporting periods during the to recommend an update of 3.2 percent,
FY 2006 percentage increase in the hospital- 5-year transition period. For purposes of the based on the Office of the Actuary’s fourth
specific rates applicable to SCHs and MDHs update factor for inpatient operating services quarter 2004 forecast of the FY 2006 market
equal to the rate set forth in section for FY 2006, the portion of the LTCH PPS basket percentage increase.
1886(b)(3)(B)(i) of the Act (that is, the same transition blend payment that is based on We note that, although we are not using the
update factor as for all other hospitals subject reasonable costs would be determined by framework for our recommendation to update
to the IPPS, or the rate-of-increase in the updating the LTCH’s TEFRA limit by the the operating standardized amounts due to
market basket). Therefore, the proposed current estimate of the FY 2002-based the reasons above, we continue to use the
update to the hospital-specific rate applicable excluded hospital market basket (or 3.4 framework to calculate the capital
to SCHs and MDHs is also 3.2 percent. percent). standardized amounts as discussed in section
Section 1886(b)(3)(B)(ii) of the Act sets the Effective for cost reporting periods III.A.1.a. of the Addendum to this proposed
FY 2006 percentage increase in the rate-of- beginning on or after January 1, 2005, IPFs rule. This is due to the fact that the
increase limits for various hospitals and are paid under the IPF PPS under which they framework for the capital standardized
hospital units excluded from the IPPS, that receive payment based on a Federal per diem amounts is calculated without a productivity
is, certain psychiatric hospitals and units rate that is based on the sum of the average factor and, therefore, the reasons discussed
(now referred to as inpatient psychiatric routine operating, ancillary, and capital costs above do not apply to the update framework
facilities (IPFs)), certain LTCHs, cancer for each patient day of psychiatric care in an of the capital standardized amounts.
hospitals, and children’s hospitals, equal to IPF, adjusted for budget neutrality. During a We also note that section 1886(e)(3) of the
the market basket percentage increase. In the transition period between January 1, 2005 Act directs the Secretary to report to
past, hospitals and hospital units excluded and January 1, 2008, some IPFs are paid Congress an initial estimate of the
from the IPPS have been paid based on their based on a blend of the reasonable cost-based recommendation of an appropriate payment
reasonable costs subject to TEFRA limits. payments, subject to the TEFRA limit, and inflation update for inpatient hospital
However, some of these categories of the Federal per diem base rate. For cost services for the upcoming fiscal year. Earlier
excluded hospitals and units are currently, or reporting periods beginning on or after this year, the Secretary reported to Congress
soon will be, paid under their own January 1, 2008, IPFs will be paid based on that the initial estimate of the
prospective payment systems. Currently, 100 percent of the Federal per diem rate. For recommendation of an update factor was 3.3
children’s and cancer hospitals and RNHCIs purposes of the update factor for FY 2006, percent, which was the market basket update
are the remaining three types of hospitals the portion of the IPF PPS transitional blend for the IPPS standardized amount in the
still reimbursed fully under reasonable costs. payment based on reasonable costs would be President’s FY 2006 budget. The difference
Those psychiatric hospitals and units of determined by updating the IPF’s TEFRA between the Secretary’s initial estimate and
hospitals not yet paid under a PPS are still limit by the current estimate of the FY 2002- the update we are recommending in this
reimbursed fully on a reasonable cost basis based excluded hospital market basket (or 3.4 proposed rule (3.2 percent) is due to the
subject to TEFRA limits. In addition, those percent). availability and use of more recent data for
LTCHs and IPFs paid under a blend IRFs are paid under the IRF PPS for cost the market basket than were available at the
methodology have the TEFRA portion of that reporting periods beginning on or after time the Secretary’s initial estimate was
payment subject to the TEFRA limits. January 1, 2002. For cost reporting periods developed. In addition, the Secretary’s initial
Hospitals and units that receive any beginning during FY 2004, and thereafter, the estimate was based on the FY 1997-based
reasonable cost-based payments will have Federal prospective payments to IRFs are hospital market basket, while the proposed
those payments determined subject to the based on 100 percent of the adjusted Federal update in this proposed rule (the current
TEFRA limits for FY 2006. IRF prospective payment amount, updated update recommendation) is based on the
As we discuss in section IV. of the annually. (Refer to the July 30, 2004 final rule proposed FY 2002-based hospital market
preamble and in section IV. of the (69 FR 45721).) basket.
Addendum to this proposed rule, we are Aside from making a recommendation for
proposing to use the estimated FY 2006 IPPS III. Update Framework IPPS hospitals, in accordance with section
operating market basket percentage increase Consistent with the current law, for FY 1886(e)(4)(A) of the Act, it is necessary to
(3.2 percent) to update the target limits for 2006, for IPPS hospitals, we are make a recommendation of the update factor
children’s hospitals, cancer hospitals, and recommending an update of 3.2 percent, for all other types of hospitals. Consistent
religious nonmedical institutions. which reflects the CMS Office of the with current law, for FY 2006, for SCHs and
As described in greater detail below, under Actuary’s most recent (fourth quarter) 2004 MDHs, we are recommending an update of
their respective PPSs, LTCHs and IPFs are in forecast of the FY 2006 market basket 3.2 percent, which reflects the CMS Office of
a transition period during which some increase. In previous years, in making a the Actuary’s most recent (fourth quarter)
LTCHs and IPFs are paid a blend of recommendation, we included an update 2004 forecast of the FY 2006 market basket
reasonable cost-based payments (subject to framework that analyzed hospital percentage increase.
the TEFRA limits) and a Federal prospective productivity, scientific and technological Consistent with our proposal in section IV.
payment amount. Under the respective advances, practice pattern changes, changes of the preamble of this proposed rule, for FY
transition period methodologies for the LTCH in case mix, the effects of reclassification on 2006, for cancer hospitals, religious
PPS and IPF PPS, which are described below, recalibration and forecast error correction. nonmedical health care institutions, and
payment is based, in part, on a decreasing Although we have used this framework in children’s hospitals, we are recommending
percentage of the reasonable cost-based past years, we are no longer including this an update of 3.2 percent to the target limits.
payment amount. As we discuss in section analysis in our recommendation for the Consistent with our proposal in the February
IV. of the preamble of this proposed rule, we update. We are not discussing the framework 3, 2005 LTCH PPS proposed rule (70 FR
are proposing to rebase the market basket because the productivity measure cannot be 5735), we are recommending an update factor
used to determine the reasonable cost-based adequately computed for FY 2006 because of of 3.1 percent for rate year (RY) 2006. For
payment amount for LTCHs and IPFs. We are the anticipated effects on admissions due to LTCHs that currently may be paid during a
proposing that the portion of payments to the expected increases in enrollment in transition period a blend of reasonable cost-
LTCHs and IPFs that are reasonable cost- Medicare Advantage plans. The increased based payments (subject to the TEFRA limits)
based will be determined using the FY 2002- enrollment in Medicare Advantage plans has and Federal prospective payment amounts,
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00368 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2
Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Proposed Rules 23673
we are recommending an update factor of 3.4 In the first portion of MedPAC’s analysis • Change in providers’ access to capital.
percent for the portion of the payment that on the assessment of payment adequacy, the MedPAC’s recommendation was to
is based on reasonable costs, subject to the Commission reviewed the relationship increase payments under the IPPS by the
TEFRA limits, consistent with our proposal between costs and payments. MedPAC’s projected increase in the hospital market
in section IV. of the preamble of this indicator of the relationship between basket index, less 0.4 percent, for FY 2006.
proposed rule. For the Federal portion of this payments and costs is the overall Medicare MedPAC noted that the indicators of
same blended payment amount, we are margin. The overall Medicare margin is payment adequacy present a mixed picture.
recommending an update of 3.1 percent. calculated as the difference between MedPAC was concerned about the trend of
Because the IPF PPS was effective for cost payments and costs divided by payments. falling hospital margins, which may result in
reporting periods beginning on or after Based on the latest cost report data available, hospitals having a limited financial cushion
January 1, 2005, and the base rates are MedPAC estimated an inpatient hospital for dealing with pressures that may arise in
effective until July 1, 2006, we are Medicare operating margin for FY 2003 of 1.3 the coming year. On the other hand, MedPAC
recommending an update of zero for IPFs (69 percent (down from 5.9 percent and 9.8
FR 66922). Finally, for the IRF PPS, we have stated that the current cost trend was
percent for FY 2002 and FY 2001, unsustainable and may have been driven by
not published a proposed rule proposing an
respectively). a lack of cost containment. Therefore,
update for FY 2006. As a result, we are
MedPAC also projected margins for FY MedPAC concluded that an update of the
recommending an update of 3.1 percent to
2005, making certain assumptions about hospital market basket index minus 0.4
IRF PPS for FY 2006, the same update used
changes in payments and costs. On the percent is appropriate.
for FY 2005.
payment side, MedPAC applied the annual Response: As described above, we are
IV. MedPAC Recommendation for Assessing payment updates (as specified by law for FYs recommending a full market basket update
Payment Adequacy and Updating Payments 2001 through 2005), and then modeled the for FY 2006 consistent with current law. We
in Traditional Medicare effects of other policy changes that have believe this will appropriately balance
In the past, MedPAC has suggested specific affected the level of payments. On the cost incentives for hospitals to operate efficiently
adjustments to its update recommendation side, MedPAC estimated the increases in cost with the need to provide sufficient payments
for each of the factors discussed under per unit of output over the same time period to maintain access to quality care for
section III. of this Appendix. In its March at the rate of inflation as measured by the Medicare beneficiaries.
2005 Report to Congress, MedPAC assessed applicable market basket index generated by In addition, because the operating and
the adequacy of current payments and costs CMS.
capital prospective payment systems remain
and the relationship between payments and In addition to considering the relationship
separate, we are proposing to continue to use
an appropriate cost base, utilizing an between estimated payments and costs,
separate updates for operating and capital
established methodology used by the MedPAC also considered the following three
payments. The proposed update to the
Commission in the past several years. factors to assess whether current payments
capital payment rate is discussed in section
MedPAC stressed that the issue at hand was are adequate:
III. of the Addendum to this proposed rule.
whether payments were too high or too low, • Changes in access to or quality of care;
and not how they became either too high or • Changes in the volume of services or [FR Doc. 05–8507 Filed 4–25–05; 4:12 pm]
too low. number of providers; and BILLING CODE 4120–01–P
VerDate Aug<04>2004 18:31 May 03, 2005 Jkt 205001 PO 00000 Frm 00369 Fmt 4701 Sfmt 4702 E:\FR\FM\04MYP2.SGM 04MYP2