FR Doc 03-5206

[Federal Register: March 7, 2003 (Volume 68, Number 45)]
[Proposed Rules]
[Page 11233-11292]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr03-27]

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Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 412

Medicare Program; Prospective Payment System for Long-Term Care
Hospitals: Proposed Annual Payment Rate Updates and Policy Changes;
Proposed Rule

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1472-P]
RIN 0938-AL92

Medicare Program; Prospective Payment System for Long-Term Care
Hospitals: Proposed Annual Payment Rate Updates and Policy Changes

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

ACTION: Proposed rule.

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SUMMARY: In this proposed annual update of the payment rates for the
Medicare prospective payment system (PPS) for inpatient hospital
services provided by long-term care hospitals (LTCHs), we are proposing
to change the annual period during which the updated payment rates for
the LTCH PPS would be effective from October 1 through September 30 to
July 1 through June 30. We also are proposing to change the publication
schedule for these updates to allow for an effective date of July 1
(instead of August 1). The proposed payment amounts and factors used to
determine the proposed updated Federal rates that are described in this
proposed rule have been determined based on this proposed revised
update rate year. In addition, we are proposing that the annual update
of the long-term care diagnosis-related groups (LTC-DRG)
classifications and relative weights will remain linked to the annual
adjustments of the acute care hospital inpatient diagnosis-related
group system, effective each October 1. The proposed outlier threshold
for July 1, 2003 through June 30, 2004 would be derived from the
proposed rate year calculations. In order to conform to a proposed
change in the acute care hospital inpatient PPS (IPPS) outlier policy,
we are proposing a change for outlier payments under the LTCH PPS.
We also are proposing a policy change eliminating bed-number
restrictions for pre-1997 LTCHs that have established satellite
facilities and that elect to be paid 100 percent of the Federal rate.

DATES: Comments will be considered if received at the appropriate
address, as provided below, no later than 5 p.m. on May 6, 2003.

ADDRESSES: Mail written comments (an original and three copies) to the
following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1472-P, PO Box
8010, Baltimore, MD 21244-1850.
If you prefer, you may deliver, by hand or courier, your written
comments (an original and three copies) to one of the following
addresses:

Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room C5-14-03, Central Building, 7500 Security Boulevard, Baltimore, MD
21244-1850.

(Because access to the interior of the Humphrey Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for commenters who wish to retain proof of filing by stamping
in and keeping an extra copy of the comments being filed.)

Comments mailed to those addresses specified as appropriate for
courier delivery may be delayed and could be considered late.
Because of staffing and resource limitation, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code CMS-1472-P.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
For comments that relate to information collection requirements,
mail a copy of comments to the following address:

Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Security and Standards Group,
Regulations Development and Issuances Group Standards, PRA Reports
Clearance Office, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Attn: John Burke, CMS-1472-P; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 3001, New Executive Office Building, Washington, DC 20503,
Attn: Brenda Aguilar, CMS Desk Officer.

FOR FURTHER INFORMATION CONTACT:
Tzvi Hefter, (410) 786-4487 (General information)
Judy Richter, (410) 786-2590 (General information, transition payments,
payment adjustments, and onsite discharges and readmissions)
Michele Hudson, (410) 786-5490 (Calculation of the payment rates,
relative weights and case-mix index, and payment adjustments)
Tiffany Eggers, (410) 786-0400 (Market basket update, short-stay
outliers and interrupted stays)
Ann Fagan, (410) 786-5662 (Patient classification system)
Miechal Lefkowitz, (410) 786-5316 (High-cost outliers and budget
neutrality)
Linda McKenna, (410) 786-4537 (Payment adjustments and transition
period)
Kathryn McCann, (410) 786-7623 (Medigap)
Robert Nakielny, (410) 786-4466 (Medicaid)

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments

Comments received timely will be available for public inspection as
they are processed, generally beginning approximately 4 weeks after
publication of a document, in Room C5-12-08 of the Centers for Medicare
& Medicaid Services, 7500 Security Blvd., Baltimore, MD, on Monday
through Friday of each week from 8:30 a.m. to 5 p.m. Please call (410)
786-7197 to schedule an appointment to view public comments.

Availability of Copies and Electronic Access

Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, PO Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $10. As an alternative, you can view
and photocopy the Federal Register document at most libraries
designated as Federal Depository Libraries and at many other public and
academic libraries throughout the country that receive the Federal
Register.
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The Web site address is: http://
www.access.gpo.gov/nara/index.html.

To assist readers in referencing sections contained in this

preamble, we are providing the following table of contents.

Table of Contents

I. Background
A. Legislative and Regulatory Authority
B. Criteria for Classification as a LTCH

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C. Transition Period for Implementation of the LTCH PPS
D. Limitation on Charges to Beneficiaries
E. System Implementation for the LTCH PPS
II. Summary of the Major Contents of This Proposed Rule
A. Proposed Change in the Annual Update
B. Proposed Update Changes
III. Proposed Changes in the Annual Update of the LTCH PPS
IV. Proposed Changes in Long-Term Care Diagnosis-Related Group (LTC-
DRG) Classifications and Relative Weights
A. Background
B. Patient Classifications into DRGs
C. Organization of DRGs
D. Update of LTC-DRGs
E. ICD-9-CM Coding System
1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
2. Maintenance of the ICD-9-CM Coding System
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
F. Proposed Changes to the Method for Updating the LTC-DRG
Relative Weights
V. Proposed Policy Change Relating to Payments to LTCHs That Are
Satellite Facilities
VI. Proposed Changes to the LTCH PPS Rates for the Proposed 2004
LTCH PPS Rate Year
A. Overview of the Development of the Proposed Payment Rates
B. Proposed Update to the Standard Federal Rate for the Proposed
2004 LTCH PPS Rate Year
1. Proposed Standard Federal Rate Update
a. Description of the Proposed Market Basket for the Proposed
2004 LTCH PPS Rate Year
b. Proposed LTCH Market Basket Increase for the Proposed 2004
LTCH PPS Rate Year
2. Proposed Standard Federal Rate for the Proposed 2004 LTCH PPS
Rate Year
C. Calculation of Proposed LTCH Prospective Payments for the
Proposed 2004 LTCH PPS Rate Year
1. Proposed Adjustment for Area Wage Levels
2. Proposed Adjustment for Cost-of-Living in Alaska and Hawaii
3. Proposed Adjustment for High-Cost Outliers
4. Proposed Adjustment for Special Cases
a. General
b. Short-Stay Outlier Cases
c. Interrupted Stay
d. Onsite Discharges and Readmittances
e. Treatment of Swing Beds Under the Interrupted Stay and Onsite
Discharge and Readmittance Policies
5. Other Proposed Payment Adjustments
6. Proposed Budget Neutrality Offset to Account for the
Transition Methodology
VII. Computing the Proposed Adjusted Federal Prospective Payments
VIII. Transition Period
IX. Proposed Payments to New LTCHs
X. Method of Payment
XI. Monitoring
XII. Collection of Information Requirements
XIII. Regulatory Impact Analysis
A. Introduction
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Impact on Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Anticipated Effects
1. Budgetary Impact
2. Impact on Providers
3. Calculation of Prospective Payments
4. Results
5. Effect on the Medicare Program
6. Effect on Medicare Beneficiaries
C. Executive Order 12866
XIV. Response to Public Comments
Regulations Text
Addendum-Tables

Acronyms

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

BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance
Program] Balanced Budget Refinement Act of 1999, Pub. L. 106-113
BIPA Medicare, Medicaid, and SCHIP [State Children's Health Insurance
Program] Benefits Improvement and Protection Act of 2000, Pub. L. 106-
554
CMS Centers for Medicare & Medicaid Services
DRGs Diagnosis-related groups
FY Federal fiscal year
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act, Pub. L. 104-
191
IPPS Acute Care Hospital Inpatient Prospective Payment System
IRF Inpatient rehabilitation facility
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare provider analysis and review file
OSCAR Online Survey Certification and Reporting (System)
PPS Prospective Payment System
QIO Quality Improvement Organization (formerly Peer Review Organization
(PRO))
SNF Skilled nursing facility
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248

I. Background

A. Legislative and Regulatory Authority

The Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113) and the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA) (Pub. L. 106-554) provide for payment
for both the operating and capital-related costs of hospital inpatient
stays in long-term care hospitals (LTCHs) under Medicare Part A based
on prospectively set rates. The Medicare prospective payment system for
LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of
the Social Security Act (the Act), effective for cost reporting periods
beginning on or after October 1, 2002. Section 1886(d)(1)(B)(iv)(I) of
the Act defines a LTCH as ``a hospital which has an average inpatient
length of stay (as determined by the Secretary) of greater than 25
days.'' Section 1886(d)(1)(B)(iv)(II) of the Act also provides another
definition of LTCHs: Specifically, a hospital that first received
payment under section 1886(d) of the Act in 1986 and has an average
inpatient length of stay (as determined by the Secretary) of greater
than 20 days and has 80 percent or more of its annual Medicare
inpatient discharges with a principal diagnosis that reflects a finding
of neoplastic disease in the 12-month cost reporting period ending in
FY 1997.
Section 123 of Pub. L. 106-113 requires the prospective payment
system for LTCHs to be a per discharge system with a diagnosis-related
group (DRG) based patient classification system that reflects the
differences in patient resources and costs in LTCHs while maintaining
budget neutrality. Section 123 also requires that the system be
implemented for cost reporting periods beginning on or after October 1,
2002.
Section 307(b)(1) of Pub. L. 106-554 mandates the examination of
the feasibility and the impact of basing payment under the LTCH
prospective payment system (LTCH PPS) on the use of existing (or
refined) hospital DRGs that have been modified to account for different
resource use of LTCH patients as well as the use of the most recently
available hospital discharge data. Further, section 307(b)(1) provides
that the Secretary shall examine and may provide for adjustments to
payments under the LTCH PPS, including adjustments to DRG weights, area
wage adjustments, geographic reclassification, outliers, updates, and a
disproportionate share adjustment.
In a Federal Register document issued on August 30, 2002 (67 FR
55954), we implemented the LTCH PPS authorized under Pub. L. 106-113
and Pub. L. 106-554. This system uses

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information from LTCH patient records to classify patients into
distinct long-term care diagnosis-related groups (LTC-DRGs) based on
clinical characteristics and expected resource needs. Payments are
calculated for each LTC-DRG and provisions are made for appropriate
payment adjustments. Payment rates under the LTCH PPS are updated
annually and published in the Federal Register.
The LTCH PPS replaced the reasonable cost-based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),
Pub. L. 97-248, for payments for inpatient services provided by a LTCH
with a cost reporting period beginning on or after October 1, 2002.
(The regulations implementing the TEFRA hospital payment provisions are
located at 42 CFR part 413.) With the implementation of the prospective
payment system for inpatient acute care hospitals authorized by the
Social Security Amendments of 1983 (Pub. L. 98-21), which added section
1886(d) to the Act, certain hospitals, including LTCHs, were excluded
from the PPS for acute care hospitals and paid their reasonable costs
for inpatient services subject to a per discharge limitation or target
amount under the TEFRA system. For each cost reporting period, a
ceiling on payments to each hospital excluded from the acute care
hospital inpatient prospective payment system (IPPS) was determined by
multiplying the hospital's updated target amount by the number of total
current year Medicare discharges. The August 30, 2002 final rule
further details payment policy under the TEFRA system (67 FR 55954).
In the August 30, 2002 final rule, we presented an in-depth
discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of Pub. L. 106-
113. That same final rule, which established regulations for the LTCH
PPS under 42 CFR part 412, Subpart O, also contained provisions related
to covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements.
We refer readers to the August 30, 2002 final rule for a
comprehensive discussion of the research and data that supported the
establishment of the LTCH PPS.

B. Criteria for Classification as a LTCH

LTCHs must have a provider agreement with Medicare and must have an
average Medicare inpatient length of stay of greater than 25 days, or,
for cost reporting periods beginning on or after August 5, 1997, for a
hospital that was first excluded from the PPS in 1986, must have an
average inpatient length of stay for all patients, including both
Medicare and non-Medicare inpatients, of greater than 20 days and
demonstrate that at least 80 percent of its annual Medicare inpatient
discharges in the 12-month cost reporting period ending in FY 1997 have
a principle diagnosis that reflects a finding of neoplastic disease.
Subject to the provisions of Sec. 412.23(e)(3), the average Medicare
inpatient length of stay is determined based on all covered and
noncovered days of stay of Medicare patients as calculated by dividing
the total number of covered and noncovered days of stay of Medicare
inpatients (less leave or pass days) by the number of total Medicare
discharges for the hospital's most recent complete cost reporting
period. Fiscal intermediaries verify that LTCHs meet the average length
of stay requirements.
The fiscal intermediary's determination of whether or not a
hospital qualifies as an LTCH is based on the hospital's discharge data
from its most recent cost reporting period and is effective at the
start of the hospital's next cost reporting period, under Sec.
412.22(d). If a hospital does not meet the length of stay requirement,
the hospital may provide the intermediary with data indicating a change
in the hospital's average length of stay by the same method for the
immediately preceding 6-month period (Sec. 412.23(e)(3)(ii)). (For
procedural efficiency and in order to comply with the timing
requirement of Sec. 412.22(d), we have a longstanding policy of
allowing hospitals to submit data for a period greater than 5 months
for this purpose.) Requirements for hospitals seeking classification as
LTCHs that have undergone a change in ownership, as described in Sec.
489.18, are set forth in Sec. 412.23(e)(3)(iii).
LTCHs that exist as hospitals-within-hospitals or satellite
facilities must also meet the criteria set forth in Sec. 412.22(e) or
Sec. 412.22(h), respectively, to be excluded from the IPPS and paid
under the LTCH PPS.
The following hospitals are paid under special payment provisions,
as described in Sec. 412.22(c) and, therefore, are not subject to the
LTCH PPS rules:
[sbull] Veterans Administration hospitals.
[sbull] Hospitals that are reimbursed under State cost control
systems approved under 42 CFR part 403.
[sbull] Hospitals that are reimbursed in accordance with
demonstration projects authorized under section 402(a) of Pub. L. 90-
248 (42 U.S.C. 1395b-1) or section 222(a) of Pub. L. 92-603 (42 U.S.C.
1395b-1 (note)) (statewide all-payer systems, subject to the rate-of-
increase test at section 1814(b) of the Act).
[sbull] Nonparticipating hospitals furnishing emergency services to
Medicare beneficiaries.

C. Transition Period for Implementation of the LTCH PPS

In the August 30, 2002 final rule (67 FR 56038), we provided for a
5-year transition period from cost-based reimbursement to fully Federal
prospective payment for LTCHs. During the 5-year period, two payment
percentages are to be used to determine a LTCH's total payment under
the PPS. The blend percentages are as follows:

------------------------------------------------------------------------
Prospective
payment Cost-based
Cost reporting periods beginning on or after federal reimbursement
rate rate
percentage percentage
------------------------------------------------------------------------
Oct. 1, 2002................................ 20 80
Oct. 1, 2003................................ 40 60
Oct. 1, 2004................................ 60 40
Oct. 1, 2005................................ 80 20
Oct. 1, 2006................................ 100 0
------------------------------------------------------------------------

The phase-in for payments to the full prospective payment Federal
rate will apply according to each LTCH's cost reporting period.

D. Limitation on Charges to Beneficiaries

In the August 30, 2002 final rule, we presented an in-depth
discussion of beneficiary liability under the LTCH prospective payment
system (67 FR 55974-55975). Under Sec. 412.507, as consistent with
other established hospital prospective payment systems, a LTCH may not
bill a Medicare beneficiary for more than the deductible and
coinsurance amounts as specified under Sec. Sec. 409.82, 409.83, and
409.87 and for items and services as specified under Sec. 489.30(a),
if the Medicare payment to the LTCH is the full LTC-DRG payment amount.
However, if the Medicare payment was for a short-stay outlier case
(Sec. 412.529) that was less than the full LTC-DRG payment amount, the
LTCH could also charge the beneficiary for services for which the costs
of those services or the days those services were provided were not a
basis for calculating the Medicare short-stay outlier payment (Sec.
412.507).
Since the origin of the Medicare system, the intent of our
regulations has been to set limits on beneficiary liability and to
clearly establish the circumstances under which the

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beneficiary would be required to assume responsibility for payment;
that is, upon exhausting benefits described in 42 CFR part 409, subpart
F. The discussion in the August 30, 2002 final rule was not meant to
establish rates or payments for, or define, Medicare-eligible expenses.
While CMS regulates beneficiary liability for coinsurance and
deductibles for hospital stays that are covered by Medicare, payments
from Medigap insurers to providers for inpatient hospital coverage
after Medicare benefits are exhausted are not regulated by CMS.
Furthermore, regulations beginning at Sec. 403.200 and the 1991
National Association of Insurance Commissioners (NAIC) Model Regulation
for Medicare Supplemental Insurance, which was incorporated by
reference into section 1882 of the Act, govern the relationship between
Medigap insurers and beneficiaries.

E. System Implementation for the LTCH PPS

When we established the regulations to implement the LTCH PPS on
August 30, 2002 (67 FR 55954), effective for cost reporting periods
that began on or after October 1, 2002, we did not have computer system
changes in place that were necessary to accommodate claims processing
and payment under the system. However, after January 1, 2003, we made
the necessary system changes. Accordingly, after January 1, 2003, the
fiscal intermediary will reconcile the payment amounts that had been
made to LTCHs for all covered inpatient hospital services furnished to
Medicare beneficiaries from cost reporting periods that began on or
after October 1, 2002, through January 1, 2003, with the amounts that
were payable under the LTCH PPS methodology. Because the LTCH PPS was
effective at the start of the LTCH's first cost reporting period that
began on or after October 1, 2002, only those LTCHs with cost reporting
periods that started October 1, 2002, through January 1, 2003, will
experience the payment reconciliation necessitated by this 3-month
period prior to systems implementation. The claims submission procedure
of using ICD-9-CM codes has not changed following the systems
implementation of the LTCH PPS.
We also want to note that as of October 16, 2002, a LTCH that was
required to comply with the Administrative Simplification Standards
under the Health Insurance Portability and Accountability Act (HIPAA)
(Pub. L. 104-191) and that had not obtained an extension in compliance
with the Administrative Compliance Act (Pub. L. 107-105) is obligated
to comply with the standards for submitting claim forms to the LTCH's
Medicare fiscal intermediary (45 CFR 162.1002 and 45 CFR 162.1102).
Beginning October 16, 2003, LTCHs that obtained an extension and that
are required to comply with the HIPPA Administrative Simplification
Standards must start submitting electronic claims in compliance with
the HIPPA regulations cited above, among others.

II. Summary of the Major Contents of This Proposed Rule

In this proposed rule, we are setting forth the proposed annual
update to the payment rates for the Medicare LTCH PPS and proposing
other policy changes. The following is a summary of the major areas
that we are addressing in this proposed rule:

A. Proposed Change in the Annual Update

We are proposing to change the annual update to the Federal payment
rate under the LTCH PPS from the Federal fiscal year (October 1 through
September 30) to a ``LTCH rate year'' of July 1 through June 30,
beginning July 1, 2003, as discussed in section III. of this preamble.
(In this proposed rule, we would define the LTCH rate year as the
period of July 1 to June 30 for updates to the LTCH PPS.) We are
proposing to publish information on the annual update in the Federal
Register by June 1 of each year. We recognize that it may be necessary
to address issues affecting LTCHs at a time that does not conform to
this schedule and in those circumstances, we could utilize the IPPS
proposed and final rule for this purpose.

B. Proposed Update Changes

[sbull] In section IV. of this preamble, we are proposing that the
annual update of the LTC-DRG classifications and relative weights would
remain linked to the annual adjustments of the acute care hospital
inpatient DRG system, which are based on the annual revisions to the
International Classification of Diseases, Ninth Revision, Clinical
Modification (ICD-9-CM) codes, effective each October 1.
[sbull] In section V. of this preamble, we discuss a proposed
policy change in how Medicare payment under the LTCH PPS would be made
to certain LTCHs that have satellite facilities.
[sbull] In sections VI. through X. of this preamble, we discuss our
proposed determination of the LTCH PPS rates that would be applicable
to the proposed LTCH rate year of July 1, 2003 through June 30, 2004,
including proposed revisions to the wage index, the proposed excluded
hospital with capital market basket that would be applied to the
current standard Federal rate to determine the prospective payment
rates, the applicable adjustments to payments, the proposed outlier
threshold, the transition period, and the proposed budget neutrality
factor.
[sbull] We are also proposing to revise Sec. 412.525(a) and Sec.
412.529(c)(4) regarding adjustments to outlier payments under the LTCH
PPS in order to conform the regulation to a proposed policy change
under the IPPS that is published in the Federal Register on March 4,
2003.
[sbull] In section XI. of this preamble, we discuss our continuing
monitoring efforts to evaluate the LTCH PPS.
[sbull] In section XIII. of this preamble, we set forth an analysis
of the impact of the proposed changes in this proposed rule on Medicare
expenditures and on Medicare-participating LTCHs and Medicare
beneficiaries.

III. Proposed Changes in the Annual Update of the LTCH PPS

In existing regulations at Sec. 412.535 that were issued in the
August 30, 2002 final rule, we specify a schedule for publishing
information on the LTCH PPS on or before August 1, which coincided with
the statutorily mandated publication schedule for the IPPS. We are
proposing to revise Sec. 412.535 to provide generally for a change in
the annual rate update for the LTCH PPS, starting on July 1.
Section 1886(e)(5)(A) of the Act requires that, for the IPPS, the
proposed rule be published in the Federal Register ``not later than the
April 1 before each fiscal year; and the final rule, not later than the
August 1 before such fiscal year.'' The statute imposes no such
publication schedule for the LTCH PPS. In the August 30, 2002 final
rule (67 FR 55977), we stated that we were considering changing the
publication schedule of the LTCH PPS annual rulemaking cycle in order
to avoid concurrent publication of annual rules for these two systems
for purposes of administrative feasibility and efficiency. In
considering a change in the publication schedule of the LTCH PPS final
rule, we contemplated a change in the effective date for updating the
Federal rates for the LTCH PPS. Therefore, in this proposed rule, we
are proposing to change the effective date of the annual update for the
LTCH PPS from October 1 to July 1 of each year in order to facilitate a
timely publication of these two significant payment updates (acute care
hospital inpatient and LTCH). Thus, the annual update of the

[[Page 11238]]

LTCH PPS Federal rates would no longer be linked to the start of the
Federal fiscal year, as is the update of the IPPS. This proposed change
would necessitate publication of the final rule for the LTCH PPS by no
later than June 1 of each year (proposed revised Sec. 412.535).
We also are proposing to amend Sec. 412.503 to include a
definition of ``long-term care hospital rate year''. A ``long-term care
hospital rate year'' would mean the 12-month period of July 1 through
June 30. We would use this period for those calculations related to
updating the Federal rate for payments under the LTCH PPS. The
determination of the proposed fixed-loss threshold for outlier payment
calculations, under Sec. 412.525(a), would also be calculated based on
the proposed LTCH rate year. (Section VI.C. of this proposed rule
includes a more detailed discussion of our proposed outlier policy.)
Proposing a change for the annual Federal rate update period for
the LTCH PPS has also necessitated a proposed recalculation of the
excluded hospital market basket with capital estimate for the proposed
forthcoming payment year, July 1, 2003 through June 30, 2004. In the
August 30, 2002 final rule, we adopted a Federal rate of $34,956 that
was computed based on the excluded hospital with capital market basket
calculated for the 12-month Federal fiscal year of October 1, 2002
through September 30, 2003. As already noted, we are proposing to
change the Federal rate update for the LTCH PPS from the Federal fiscal
year to a 12-month year of July 1 through June 30, and the proposed
rates in this proposed rule are based on this period. Because the
Federal rate of $34,956 was originally computed based on a 12-month
year, but in actuality will only be utilized for 9 months, if the
proposed change in the LTCH PPS rate update year is finalized, we are
proposing a budget neutral adjustment to the market basket update
taking this 3-month differential into account in setting the Federal
rate for July 1, 2003 through June 30, 2004. In addition, we are
proposing that the change in the proposed 2004 LTCH PPS rate year be
budget neutral. In section VI.B.1 of this proposed rule, we describe
this proposed adjustment in greater detail.
We are proposing to update the LTCH PPS wage index that adjusts for
differences in area wages under Sec. 412.525(c) using the FY 1999 IPPS
wage data because these are the best available data (as discussed in
section VI.C. of this preamble).
We also are proposing to recalculate the budget neutrality offset
to account for the effect of the transition period and the policy
allowing LTCHs to elect 100 percent Federal rate payments rather than
the transition blend. In addition, we are proposing an updated fixed-
loss amount for determining outlier payments based on the updated
proposed Federal rate (as discussed in section VII. of this preamble).
As discussed in section IV.C. of this proposed rule, we are not
proposing an update to the LTC-DRG classifications or relative weights
at this time. Currently, the LTC-DRG patient classifications utilized
by the LTCH PPS for FY 2003 are based directly on the same version of
DRGs used by the IPPS, that is, GROUPER 20.0. Therefore, we are not
proposing any change to the timing of the annual update of the LTC-DRG
classifications and relative weights. They would remain linked to the
annual adjustments of the acute care hospital inpatient DRG system,
which are based on the annual revisions to the ICD-9-CM codes,
effective each October 1. Table 3 of the Addendum to the August 30,
2002 final rule (67 FR 56076-56084), which we are reprinting as Table 3
of the Addendum to this proposed rule, contains the LTC-DRG
classifications and relative weights that we propose to continue to
apply to discharges occurring during the period of July 1, 2003 through
September 30, 2003. As an aid in calculating payment under the short-
stay outlier policy, under Sec. 412.529, we also are including, in
column 3 of Table 3, the proposed five-sixths average length of stay
that would be applied to each LTC-DRG in determining whether the LTCH
stay is a short-stay outlier. The average length of stay for each DRG
based on the FY 2001 MedPAR data, which were used for the FY 2003 LTCH
PPS final rule, are still the best available complete LTCH discharge
data available at this time.
The revised LTC-DRG classifications and relative weights for
discharges occurring from October 1, 2003 through September 30, 2004,
for payments under the LTCH PPS during that period would continue to be
based on the annual updates to the acute care hospital inpatient DRG
system. The FY 2004 DRGs and relative weights for the IPPS have not yet
been proposed and we are unable to propose updated LTC-DRGs and
relative weights (which would be based on the proposed updated acute
care hospital inpatient DRGs and relative weights) at this time. Thus,
we are proposing that the LTC-DRG classifications and relative weights
would be presented for public comment in the proposed rule for the IPPS
and finalized in the IPPS final rule, for an effective date of October
1, 2003.
The proposed change in the rate year for the LTCH PPS from October
1 through September 30 to July 1 through June 30 means that, although
the Federal rate calculations in the August 30, 2002 final rule were
based on a 12-month year, only 9 months will elapse before the proposed
July 1, 2003 update. We are proposing a prospective adjustment to the
market basket update to take into account this 3-month differential in
setting the proposed rates for July 1, 2003 through June 30, 2004.
Specifically, the proposed updates for the proposed 2004 LTCH PPS
rate year would be affected as follows:
[sbull] The proposed update to the standard Federal rate calculated
in accordance with Sec. 412.523(c)(3) would be adjusted to account for
updating the standard Federal rate on July 1, 2003, instead of October
1, 2003.
[sbull] The fixed-loss amount for determining high-cost outlier
payments under Sec. 412.525(a) would also be updated based on the
proposed Federal rate effective for July 1, 2003 through June 30, 2004.
In section VI.B.1 of this proposed rule, we discuss the proposed
computational adjustments resulting from our proposed establishment of
a LTCH PPS rate year beginning July 1, 2003 through June 30, 2004.
Several provisions of the LTCH PPS would not be affected by the
proposed change in the annual rate update year for the LTCH PPS from
October 1 to July 1 because these policies are not based on any of the
Federal rate calculations for the LTCH PPS. Specifically, the following
provisions would not be affected:
[sbull] The transition blends provided for under Sec. 412.533(a)
would not be affected because they are linked to the start of each
LTCH's cost reporting period, rather than to the start of the Federal
fiscal year. (LTCHs being paid under the transition blend methodology
would receive those blends for the entire 5-year transition period,
unless they elect payments based on 100 percent of the Federal rate.)
For instance, for cost reporting periods that began on or after October
1, 2002, and before October 1, 2003, the total payment for a LTCH is 80
percent of the amount that would have been calculated under the TEFRA
payment system for that specific LTCH and 20 percent of the Federal
prospective payment amount. For cost reporting periods beginning on or
after October 1, 2003 and before October 1, 2004, the total payment for
a LTCH is 60 percent of the amount that would have been calculated
under the

[[Page 11239]]

TEFRA payment system for that specific LTCH and 40 percent of the
Federal prospective payment amount.
[sbull] The 5-year phase-in of the adjustment for differences in
area wage levels under Sec. 412.525(c) would not be affected because
they are linked to the start of each LTCH's cost reporting period,
rather than to the start of the Federal fiscal year. For cost reporting
periods that began on or after October 1, 2002 and before September 30,
2003, the applicable LTCH PPS wage index is one-fifth of the full LTCH
wage index value, and for cost reporting periods beginning on or after
October 1, 2003 and before September 30, 2004, the applicable LTCH PPS
wage index is two-fifths of the full LTCH wage index value.
[sbull] The LTC-DRGs and their relative weights and the GROUPER
would not be affected since they would continue to be updated effective
October 1 through September 30 each year based on the changes to the
DRGs published in the IPPS final rule.
Section XII. of this proposed rule contains an impact analysis that
reflects the impact of these proposed changes.
In summary, we are proposing to amend Sec. 412.535 to indicate
that information on the unadjusted Federal payment rates and a
description of the methodology and data used to calculate the payment
rates under the LTCH PPS would be published in the Federal Register on
or before June 1 prior to the beginning of each proposed LTCH PPS rate
year beginning July 1. We are proposing that information on the DRG
classification system and associated weighting factors, with the DRGs
from which the LTC-DRGs are derived, would be published in the proposed
IPPS rule and, ultimately, the final rule for the IPPS (the final IPPS
rule is published on or before August 1 of each Federal fiscal year).

IV. Proposed Changes in Long-Term Care Diagnosis-Related Group (LTC-
DRG) Classifications and Relative Weights

A. Background

Section 123 of Pub. L. 106-113 specifically requires that the PPS
for LTCHs be a per discharge system with a DRG-based patient
classification system reflecting the differences in patient resources
and costs in LTCHs while maintaining budget neutrality. Section
307(b)(1) of Pub. L. 106-554 modified the requirements of section 123
of Pub. L. 106-113 by specifically requiring that the Secretary examine
``the feasibility and the impact of basing payment under such a system
[the LTCH PPS] on the use of existing (or refined) hospital diagnosis-
related groups (DRGs) that have been modified to account for different
resource use of long-term care hospital patients as well as the use of
the most recently available hospital discharge data.''
In accordance with section 307(b)(1) of Pub. L. 106-554 and Sec.
412.515 of our existing regulations, the LTCH PPS uses information from
LTCH patient records to classify patient cases into distinct long-term
care diagnosis-related groups (LTC-DRGs) based on clinical
characteristics and expected resource needs. The LTC-DRGs used as the
patient classification component of the LTCH PPS correspond to the DRGs
in the IPPS. We apply weights to the existing hospital inpatient DRGs
to account for the difference in resource use by patients exhibiting
the case complexity and multiple medical problems characteristic of
LTCHs.
In a departure from the IPPS, we use low volume LTC-DRGs (less than
25 LTCH cases) in determining the LTC-DRG weights, since LTCHs do not
typically treat the full range of diagnoses as do acute care hospitals.
In order to deal with the large number of low volume DRGs (all DRGs
with fewer than 25 cases), we group low volume DRGs into 5 quintiles
based on average charge per discharge. (A listing of the composition of
low volume quintiles appears in the August 30, 2002 final rule at 67 FR
55986.) We also take into account adjustments to payments for cases in
which the stay at the LTCH is five-sixths of the geometric average
length of stay and classify these cases as short-stay outlier cases. (A
detailed discussion of the application of the Lewin Group model that
was used to develop the LTC-DRGs appears in the August 30, 2002 final
rule at 67 FR 55978.)

B. Patient Classifications into DRGs

Generally, under the LTCH PPS, Medicare payment is made at a
predetermined specific rate for each discharge; that payment varies by
the LTC-DRG to which a beneficiary's stay is assigned. Cases are
classified into LTC-DRGs for payment based on the following six data
elements:
(1) Principal diagnosis.
(2) Up to eight additional diagnoses.
(3) Up to six procedures performed.
(4) Age.
(5) Sex.
(6) Discharge status of the patient.
Upon the discharge of the patient from a LTCH, the LTCH must assign
appropriate diagnosis and procedure codes from the ICD-9-CM. As of
October 16, 2002, a LTCH that was required to comply with the HIPAA
Administrative Simplification Standards and that had not obtained an
extension in compliance with the Administrative Compliance Act (Pub. L.
107-105) is obligated to comply with the standards at 45 CFR 162.1002
and 45 CFR 162.1102. Completed claim forms are to be submitted to the
LTCH's Medicare fiscal intermediary.
Medicare fiscal intermediaries enter the clinical and demographic
information into their claims processing systems and subject this
information to a series of automated screening processes called the
Medicare Code Editor (MCE). These screens are designed to identify
cases that require further review before assignment into a DRG can be
made. During this process, the following type of cases are selected for
further development:
[sbull] Cases that are improperly coded. (For example, diagnoses
are shown that are inappropriate, given the sex of the patient. Code
68.6, Radical abdominal hysterectomy, would be an inappropriate code
for a male.)
[sbull] Cases including surgical procedures not covered under
Medicare (for example, organ transplant in a nonapproved transplant
center).
[sbull] Cases requiring more information. (For example, ICD-9-CM
codes are required to be entered at their highest level of specificity.
There are valid 3-digit, 4-digit, and 5-digit codes. That is, code
136.3, Pneumocystosis, contains all appropriate digits, but if it is
reported with either fewer or more than 4 digits, the claim will be
rejected by the MCE as invalid.)
[sbull] Cases with principal diagnoses that do not usually justify
admission to the hospital. (For example, code 437.9, Unspecified
cerebrovascular disease. While this code is valid according to the ICD-
9-CM coding scheme, a more precise code should be used for the
principal diagnosis.)
After screening through the MCE, each claim will be classified into
the appropriate LTC-DRG by the Medicare LTCH GROUPER. The LTCH GROUPER
is specialized computer software based on the same GROUPER used by the
IPPS. The GROUPER software was developed as a means of classifying each
case into a DRG on the basis of diagnosis and procedure codes and other
demographic information (age, sex, and discharge status). Following the
LTC-DRG assignment, the Medicare fiscal intermediary will determine the
prospective payment by using the Medicare PRICER program, which
accounts for hospital-specific adjustments. As provided for under the
IPPS, we provide an opportunity for the

[[Page 11240]]

LTCH to review the LTC-DRG assignments made by the fiscal intermediary
and to submit additional information within a specified timeframe
(Sec. 412.513(c)).
The GROUPER is used both to classify past cases in order to measure
relative hospital resource consumption to establish the DRG weights and
to classify current cases for purposes of determining payment. The
records for all Medicare hospital inpatient discharges are maintained
in the MedPAR file. The data in this file are used to evaluate possible
DRG classification changes and to recalibrate the DRG weights during
our annual update. DRG weights are based on data for the population of
LTCH discharges, reflecting the fact that LTCH patients represent a
different patient mix than patients in short-term acute care hospitals.

C. Organization of DRGs

The DRGs are organized into 25 Major Diagnostic Categories (MDCs),
most of which are based on a particular organ system of the body; the
remainder involve multiple organ systems (such as MDC 22, Burns).
Accordingly, the principal diagnosis determines MDC assignment. Within
most MDCs, cases are then divided into surgical DRGs and medical DRGs.
Surgical DRGs are assigned based on a surgical hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. The GROUPER does not recognize all ICD-9-CM
procedure codes as procedures that affect DRG assignment, that is,
procedures which are not surgical (for example, EKG), or minor surgical
procedures (for example, 86.11, Biopsy of skin and subcutaneous
tissue).
The medical DRGs are generally differentiated on the basis of
diagnosis. Both medical and surgical DRGs may be further differentiated
based on age, sex, discharge status, and presence or absence of
complications or comorbidities (CC). We note that CCs are defined by
certain secondary diagnoses not related to, or not inherently a part
of, the disease process identified by the principal diagnosis. (For
example, the GROUPER would not recognize a code from the 800.0x series,
Skull fracture, as a CC when combined with principal diagnosis 850.4,
Concussion with prolonged loss of consciousness, without return to
preexisting conscious level.) In addition, we note that the presence of
additional diagnoses does not automatically generate a CC, as not all
DRGs recognize a comorbid or complicating condition in their
definition. (For example, DRG 466, Aftercare without History of
Malignancy as Secondary Diagnosis, is based solely on the principal
diagnosis, without consideration of additional diagnoses for DRG
determination.)
In its June 2000 Report to Congress, MedPAC recommended that the
Secretary ``* * * improve the hospital inpatient prospective payment
system by adopting, as soon as practicable, diagnosis-related group
refinements that more fully capture differences in severity of illness
among patients.'' (Recommendation 3A, p. 63) We have determined it is
not practical at this time to develop a refinement to inpatient
hospital DRGs based on severity due to time and resource requirements.
However, this does not preclude us from development of a severity-
adjusted DRG refinement in the future. That is, a refinement to the
list of comorbidities and complications could be incorporated into the
existing DRG structure. It is also possible a more comprehensive
severity adjusted structure may be created if a new code set is
adopted. That is, if ICD-9-CM is replaced by ICD-10-CM (for diagnostic
coding) and ICD-10-CS (for procedure coding) or by other code sets, a
severity concept may be built into the resulting DRG assignments. Of
course any change to the code set would be adopted through the process
established in the HIPAA Administrative Simplification provisions.

D. Update of LTC-DRGs

For FY 2003, the LTC-DRG patient classification system was based on
LTCH data from the FY 2001 MedPAR file, which contained hospital bills
received through March 31, 2001, for hospital discharges occurring in
FY 2001. The patient classification system consisted of 510 DRGs that
formed the basis of the FY 2003 LTCH PPS GROUPER. The 510 LTC-DRGs
included two ``error DRGs''. As in the IPPS, we included two error DRGs
in which cases that cannot be assigned to valid DRGs will be grouped.
These two error DRGs are DRG 469 (Principal Diagnosis Invalid as a
Discharge Diagnosis) and DRG 470 (Ungroupable). (See the August 1,
2001, Medicare Program final rule, Changes to the Hospital Inpatient
Prospective Payment Systems and Rates and Costs of Graduate Medical
Education; Fiscal Year 2002 Rates, 66 FR 40062.) The other 508 LTC-DRGs
are the same DRGs used in the IPPS GROUPER for FY 2003 (Version 20.0).
In the health care industry, annual changes to the ICD-9-CM codes
are effective for discharges occurring on or after October 1 each year.
Thus, the manual and electronic versions of the GROUPER software, which
are based on the ICD-9-CM codes, are also revised annually and
effective for discharges occurring on or after October 1 each year. As
discussed earlier, the patient classification system for the LTCH PPS
(LTC-DRGs) is based on the IPPS patient classification system (CMS-
DRGs), which is updated annually and effective for discharges occurring
on or after October 1 through September 30 each year. The updated DRGs
and GROUPER software are based on the latest revision to the ICD-9-CM
codes, which are published annually in the IPPS proposed rule and final
rule. The new or revised ICD-9-CM codes are not used by the industry
for either the IPPS or the LTCH PPS until the beginning of the next
Federal fiscal year (effective for discharges occurring on or after
October 1 through September 30). (The use of the ICD-9-CM codes in this
manner is consistent with current usage and the HIPAA regulations.)
October 1 is also when the changes to the CMS-DRGs and the next version
of the GROUPER software becomes effective.
As discussed in section III. of this proposed rule, we are
proposing to make the annual update to the LTCH PPS effective from July
1 through June 30 each year. As a result of this change the LTCH PPS
would use two GROUPERS during the course of a 12-month period: one
GROUPER for 3 months (from July 1 through September 30); and an updated
GROUPER for 9 months (from October 1 through June 30). The need to use
two GROUPERs is based upon the October 1 effective date of the updated
ICD-9-CM coding system. As previously discussed, new ICD-9-CM codes may
result in changes to the structure of the DRGs. In order for the
industry to be on the same schedule (for both the IPPS and the LTCH
PPS) for the use of the most current ICD-9-CM codes, it is necessary
for us to propose to apply two GROUPER programs to the LTCH PPS.
Although we do not believe that this will have any adverse effect on
LTCHs, we are interested in receiving comments on this issue. LTCHs
would continue to code diagnosis and procedures using the most current
version of the ICD-9-CM coding system.
Currently, for Federal FY 2003, we are using Version 20.0 of the
GROUPER software for both the IPPS and the LTCH PPS. For discharges
beginning on October 1, 2003 (Federal FY 2004), we are proposing our
intent to use Version 21.0 of the GROUPER software for both the IPPS
and the LTCH PPS. Thus, proposed changes to the CMS-DRGs

[[Page 11241]]

(the DRGs on which the LTC-DRGs are based), and their relative weights,
as well as the LTC-DRGs and their relative weights that would be
effective for October 1, 2003 through September 30, 2004, would be
presented in the IPPS FY 2004 proposed rule that will be published in
the spring of 2003 in the Federal Register. Accordingly, we would then
notify LTCHs of any revised LTC-DRG relative weights based on the final
DRGs and Version 21.0 GROUPER for the IPPS that would be effective
October 1, 2003.

E. ICD-9-CM Coding System

1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
Because the assignment of a case to a particular LTC-DRG will help
determine the amount that will be paid for the case, it is important
that the coding is accurate. Classifications and terminology used in
the LTCH PPS are consistent with the ICD-9-CM and the UHDDS, as
recommended to the Secretary by the National Committee on Vital and
Health Statistics (``Uniform Hospital Discharge Data: Minimum Data Set,
National Center for Health Statistics, April 1980'') and as revised in
1984 by the Health Information Policy Council (HIPC) of the U.S.
Department of Health and Human Services.
We wish to point out that the ICD-9-CM coding terminology and the
definitions of principal and other diagnoses of the UHDDS are
consistent with the requirements of the HIPPA Administrative
Simplification Act of 1996 (45 CFR Part 162). Furthermore, the UHDDS
has been used as a standard for the development of policies and
programs related to hospital discharge statistics by both governmental
and nongovernmental sectors for over 30 years. In addition, the
following definitions (as described in the 1984 Revision of the UHDDS,
approved by the Secretary of Health and Human Services for use starting
January 1986) are requirements of the ICD-9-CM coding system, and have
been used as a standard for the development of the CMS-DRGs:
[sbull] Diagnoses include all diagnoses that affect the current
hospital stay.
[sbull] Principal diagnosis is defined as the condition established
after study to be chiefly responsible for occasioning the admission of
the patient to the hospital for care.
[sbull] Other diagnoses (also called secondary diagnoses or
additional diagnoses) are defined as all conditions that coexist at the
time of admission, that develop subsequently, or that affect the
treatment received or the length of stay or both. Diagnoses that relate
to an earlier episode of care that have no bearing on the current
hospital stay are excluded.
[sbull] All procedures performed will be reported. This includes
those that are surgical in nature, carry a procedural risk, carry an
anesthetic risk, or require specialized training.
We provide LTCHs with a 60-day window after the date of the notice
of the initial LTC-DRG assignment to request review of that assignment.
Additional information may be provided by the LTCH to the fiscal
intermediary as part of that review.
2. Maintenance of the ICD-9-CM Coding System
The ICD-9-CM Coordination and Maintenance (C&M) Committee is a
Federal interdepartmental committee, co-chaired by the National Center
for Health Statistics (NCHS) and CMS, that is charged with maintaining
and updating the ICD-9-CM system. The C&M Committee is jointly
responsible for approving coding changes, and developing errata,
addenda, and other modifications to the ICD-9-CM to reflect newly
developed procedures and technologies and newly identified diseases.
The C&M Committee is also responsible for promoting the use of Federal
and non-Federal educational programs and other communication techniques
with a view toward standardizing coding applications and upgrading the
quality of the classification system.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
CMS has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The C&M Committee encourages participation by health-related
organizations in the above process and holds public meetings for
discussion of educational issues and proposed coding changes twice a
year at the CMS Central Office located in Baltimore, Maryland. The
agenda and dates of the meetings can be accessed on the CMS Web site
at: http://www.cms.gov/paymentsystems/icd9.

All changes to the ICD-9-CM coding system affecting DRG assignment

are addressed annually in the IPPS proposed and final rules. Because
the DRG-based patient classification system for the LTCH PPS is based
on the IPPS DRGs, these changes will also affect the LTCH PPS LTC-DRG
patient classification system.
As discussed above, the ICD-9-CM coding changes that have been
adopted by the C&M Committee become effective at the beginning of each
Federal fiscal year, October 1. Regardless of the proposed change to
the annual update of the LTCH PPS year to July 1, we are proposing that
coders would use the most current updated ICD-9-CM coding book from
October 1 through September 30 of each year. This would mean that
coders and LTCHs that use the updated ICD-9-CM coding system would be
on the same schedule (effective October 1) as the rest of the health
care industry. The newest version of ICD-9-CM is not available for use
until October 1, which would be 4 months after the date that we are
proposing to publish the LTCH annual payment rate update final rule.
The new codes on which the LTC-DRGs are based would go into effect and
be available for use for discharges occurring on or after October 1
through September 30 of each year. This annual schedule of the revision
to the ICD-9-CM coding system and the change of the ICD-9-CM coding
books or electronic coding programs has been in effect since the
adoption of Revision 9 of the ICD in 1979.
Of particular note to LTCHs will be the invalid diagnosis codes
(Table 6C) and the invalid procedure codes (Table 6D) located in the
annual proposed and final rules for the IPPS. Claims with invalid codes
will not be processed by the Medicare claims processing system.
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
We emphasize the need for proper coding by LTCHs. Inappropriate
coding of cases can adversely affect the uniformity of cases in each
LTC-DRG and produce inappropriate weighting factors at recalibration.
We continue to urge LTCHs to focus on improved coding practices.
Because of concerns raised by LTCHs concerning correct coding, we have
asked the American Hospital Association (AHA) to provide additional
clarification or instruction on proper coding in the LTCH setting. The
AHA will provide this instruction via their established process of
addressing questions through their publication ``Coding Clinic for ICD-
9-CM''. Written questions or requests for clarification may be
addressed to the Central Office on ICD-9-CM, American Hospital
Association, One North Franklin, Chicago, IL 60606. A form for the
question(s) is available to be downloaded and mailed on AHA's Web site
at: http://www.ahacentraloffice.org. In addition, current coding

at: http://www.ahacentraloffice.org. In addition, current coding

guidelines are available at the National Center for Health Statistics
(NCHS) Web site:

[[Page 11242]]

http://www.cdc.gov/nchs.icd9.htm.

In conjunction with the cooperating parties of the C&M Committee

(AHA, AHIMA, and NCHS), we have reviewed actual medical records and are
concerned about the quality of the documentation under the LTCH PPS, as
was the case at the beginning of the IPPS. We fully believe that, with
experience, the quality of the documentation and coding will improve,
just as it did for the IPPS. As noted above, the cooperating parties
have plans to assist their members with improvement in documentation
and coding issues for the LTCHs through specific questions and coding
guidelines. The importance of good documentation is emphasized in the
revised ICD-9-CM Official Guidelines for Coding and Reporting (October
1, 2002): ``A joint effort between the attending physician and coder is
essential to achieve complete and accurate documentation, code
assignment, and reporting of diagnoses and procedures. The importance
of consistent, complete documentation in the medical record cannot be
overemphasized. Without such documentation, the application of all
coding guidelines is a difficult, if not impossible, task. (Coding
Clinic for ICD-9-CM, Fourth Quarter 2002, page 115)
To improve medical record documentation, LTCHs should be aware that
if the patient is being admitted for continuation of treatment of an
acute or chronic condition, guidelines at Section I.B.10 of the Coding
Clinic for ICD-9-CM, Fourth Quarter 2002 (page 129) are applicable
concerning selection of principal diagnosis. To clarify coding advice
issued in the August 30, 2002 final rule (67 FR 55979-55981), we would
like to point out that, at Guideline I.B.12, Late Effects, a late
effect is considered to be the residual effect (condition produced)
after the acute phase of an illness or injury has terminated (Coding
Clinic for ICD-9-CM, Fourth Quarter 2002, page 129). We have received
question regarding whether a LTCH should report the ICD-9-CM code(s)
for an unresolved acute condition instead of the code(s) for late
effect or rehabilitation. Depending on the documentation in the medical
record, either code could be appropriate in a LTCH. Since
implementation of the LTCH PPS, our Medicare fiscal intermediaries have
been conducting training and providing assistance to LTCHs in correct
coding. We have also issued manuals containing procedures as well as
coding instructions to LTCHs and fiscal intermediaries. We will
continue to conduct such training and provide guidance on an as-needed
basis. We also refer readers to the detailed discussion on correct
coding practices in the August 30, 2002 final rule (67 FR 55979-55981).

F. Proposed Changes to the Method for Updating the LTC-DRG Relative
Weights

As previously discussed, under the LTCH PPS, each LTCH will receive
a payment that represents an appropriate amount for the efficient
delivery of care to Medicare patients. The system must be able to
account adequately for each LTCH's case-mix in order to ensure both
fair distribution of Medicare payments and access to adequate care for
those Medicare patients whose care is more costly. Therefore, in
accordance with Sec. 412.523(c), we adjust the standard Federal PPS
rate by the LTC-DRG relative weights in determining payment to LTCHs
for each case.
Under this payment system, relative weights for each LTC-DRG are a
primary element used to account for the variations in cost per
discharge and resource utilization among the payment groups (Sec.
412.515). To ensure that Medicare patients who are classified to each
LTC-DRG have access to an appropriate level of services and to
encourage efficiency, we calculate a relative weight for each LTC-DRG
that represents the resources needed by an average inpatient LTCH case
in that LTC-DRG. For example, cases in a LTC-DRG with a relative weight
of 2 will, on average, cost twice as much as cases in a LTC-DRG with a
weight of 1.
As we discussed in the August 30, 2002 final rule (67 FR 55984-
55995), the LTC-DRG relative weights effective under the LTCH PPS for
Federal FY 2003 were calculated using the March 2002 update of FY 2001
MedPAR data and Version 20.0 of the CMS GROUPER software. We use total
days and total charges in the calculation of the LTC-DRG relative
weights.
By nature, LTCHs often specialize in certain areas, such as
ventilator-dependent patients and rehabilitation and wound care. Some
case types (DRGs) may be treated, to a large extent, in hospitals that
have, from a perspective of charges, relatively high (or low) charges.
Such distribution of cases with relatively high (or low) charges in
specific LTC-DRGs has the potential to inappropriately distort the
measure of average charges. To account for the fact that cases may not
be randomly distributed across LTCHs, we use a hospital-specific
relative value method to calculate relative weights. We believe this
method removes this hospital-specific source of bias in measuring
average charges. Specifically, we reduce the impact of the variation in
charges across providers on any particular LTC-DRG relative weight by
converting each LTCH's charge for a case to a relative value based on
that LTCH's average charge. (See the August 30, 2002 final rule (67 FR
55985) for further information of the hospital-specific relative value
methodology.)
In order to account for LTC-DRGs with low volume (that is, with
fewer than 25 LTCH cases), we grouped those low volume LTC-DRGs into
one of five categories (quintiles) based on average charges, for the
purposes of determining relative weights. For FY 2003 based on the FY
2001 MedPAR data, we identified 161 LTC-DRGs that contained between 1
and 24 cases. This list of low volume LTC-DRGs was then divided into
one of the five low volume quintiles, each containing a minimum of 32
LTC-DRGs (161/5 = 32 with 1 LTC-DRG as a remainder). Each of the low
volume LTC-DRGs grouped to a specific quintile received the same
relative weight and average length of stay using the formula applied to
the regular LTC-DRGs (25 or more cases), as described below. (See the
August 30, 2002 final rule (67 FR 55985-55988) for further explanation
of the development and composition of each of the five low volume
quintiles for FY 2003.)
After grouping the cases in the appropriate LTC-DRG, we calculate
the relative weights by first removing statistical outliers and cases
with a length of stay of 7 days or less. Next, we adjust the number of
cases in each LTC-DRG for the effect of short-stay outlier cases under
Sec. 412.529. The short-stay adjusted discharges and corresponding
charges were used to calculate ``relative adjusted weights'' in each
LTC-DRG using the hospital-specific relative value method described
above. (See the August 30, 2002 final rule (67 FR 55989-55995) for
further details on the steps for calculating the LTC-DRG relative
weights.)
We also adjust the LTC-DRG relative weights to account for
nonmonotonically increasing relative weights. That is, we make an
adjustment if cases classified to the LTC-DRG ``with comorbidities
(CCs)'' of a ``with CC''/``without CC'' pair had a lower average charge
than the corresponding LTC-DRG ``without CCs'' by assigning the same
weight to both LTC-DRGs in the ``with CC''/``without CC'' pair. (See
August 30, 2002, 67 FR 55990-55991). In addition, of the 510 LTC-DRGs
in the LTCH PPS for FY 2003, based on the FY 2001 MedPAR data, we
identified 159 LTC-DRGs for which there were no LTCH cases in the
database. That is, no

[[Page 11243]]

patients who would have been classified to those DRGs were treated in
LTCHs during FY 2001 and, therefore, no charge data were reported for
those DRGs. Thus, in the process of determining the relative weights of
LTC-DRGs, we were unable to determine weights for these 159 LTC-DRGs
using the method described above. However, since patients with a number
of the diagnoses under these LTC-DRGs may be treated at LTCHs beginning
in FY 2003, we assigned relative weights to each of the 159 ``no
volume'' LTC-DRGs based on clinical similarity and relative costliness
to one of the remaining 351 (510 - 159 = 351) LTC-DRGs for which we
were able to determine relative weights, based on the FY 2001 claims
data. (A list of the no volume LTC-DRGs and further explanation of
their relative weight assignment can be found in the August 30, 2002
final rule (67 FR 55991-55994).)
Furthermore, we establish LTC-DRG relative weights of 0.0000 for
heart, kidney, liver, lung, pancreas, and simultaneous pancreas/kidney
transplants (LTC-DRGs 103, 302, 480, 495, 512 and 513, respectively)
because Medicare will only cover these procedures if they are performed
at a hospital that has been certified for the specific procedures by
Medicare and presently no LTCH has been so certified. If in the future,
however, a LTCH applies for certification as a Medicare-approved
transplant center, we believe that the application and approval
procedure would allow sufficient time for us to propose appropriate
weights for the LTC-DRGs effected. At the present time, though, we only
include these six transplant LTC-DRGs in the GROUPER program for
administrative purposes because since the LTCH PPS uses the same
GROUPER program for LTCHs as is used under the IPPS, removing these
DRGs would be administratively burdensome.
As we stated previously, we are proposing that we would continue to
use the same LTC-DRGs and relative weights until October 1, 2003.
Accordingly, Table 3 in the Addendum to this proposed rule lists the
LTC-DRGs and their respective relative weights and arithmetic mean
length of stay that we are proposing would continue to be used for the
period of July 1, 2003 through September 30, 2003. (This table is the
same as Table 3 of the Addendum to the August 30, 2002 final rule (67
FR 56076-56084), except that it includes the proposed five-sixth of the
average length of stay for short-stay outliers under Sec. 412.529. As
we noted in section IV.D. of this preamble, we are proposing that the
final DRGs and GROUPER for FY 2004 that would be used for the IPPS and
the LTCH PPS, effective October 1, 2003, would be presented in the IPPS
FY 2004 final rule published no later than August 1, 2003 in the
Federal Register.
Accordingly, we would notify LTCHs of the revised LTC-DRG relative
weights for use in determining payments for discharges occurring
between October 1, 2003 and September 30, 2004, based on the final DRGs
and Version 21.0 GROUPER published in the IPPS rule on or before August
1, 2003.

V. Proposed Policy Change Related to Payments to LTCHs That Are
Satellite Facilities

In the March 22, 2002 proposed rule related to the establishment of
the LTCH PPS (67 FR 13416), we stated that we were considering
proposing the elimination of the bed limit in Sec. 412.22(h)(2)(i) for
pre-1997 excluded hospitals once the applicable prospective payment
system was fully phased in and all payments were based on 100 percent
of the Federal prospective payment rates. This statement generated a
number of comments and in the August 30, 2002 final rule (67 FR 56012),
we stated our agreement with commenters who urged us to adopt a policy
eliminating the bed-number restrictions for pre-1997 LTCHs with
satellite facilities, as soon as a LTCH elected to be paid based on 100
percent of the Federal prospective rate. However, we also noted that we
would address a change in the policy concerning bed limits in the next
update of the LTCH PPS. Therefore, we are now proposing to eliminate
the application of the bed-number restrictions set forth in Sec.
412.22(h)(i) for LTCHs established prior to 1997 with satellite
facilities, effective at the start of the first cost reporting year
that the LTCH is paid under the 100 percent fully Federal prospective
payment system. This would be either when the LTCH elects to be paid
based on 100 percent of the Federal prospective rate or when the LTCH
is transitioned to 100 percent of the Federal prospective rate,
whichever comes first.
Presently, section 1886(b)(3) of the Act, as amended by section
4414 of Pub. L. 105-33, requires existing LTCHs to be subject to caps
on their target amounts for cost reporting periods beginning on or
after October 1, 1997 through September 30, 2002. For purposes of
calculating these caps, the statute required the Secretary to
``estimate the 75th percentile of the target amounts for such hospitals
within [each] class for cost reporting periods ending during fiscal
year 1996.'' Section 1886(b)(3)(H) of the Act, as amended by section
121 of Pub. L. 106-113, directed the Secretary to provide for an
appropriate wage adjustment to the caps on the target amounts for
psychiatric and rehabilitation hospitals and units and LTCHs effective
for cost reporting periods beginning on or after October 1, 1999
through September 30, 2002. In addition, payment limits were
established for new excluded hospitals or units (excluding children's
hospitals) effective October 1, 1997. For new excluded hospitals (that
is, post-1997 LTCHs), section 1886(b)(7) of the Act, as added by
section 4416 of Pub. L. 105-33, specified that the payment amount for
the facility's first two 12-month cost reporting periods, for which the
hospital has a settled cost report, must not exceed 110 percent of the
national median of target amounts of similarly classified hospitals for
cost reporting periods ending during FY 1996, updated by the hospital
market basket increase percentage to the first cost reporting period in
which the hospital receives payment, as adjusted by section
1886(b)(7)(C) of the Act. The result of section 4414 and 4416 of Pub.
L. 105-33 was a distinction between the LTCHs established prior to and
those established after 1997 with lower payment caps for the post-1997
LTCHs.
In the July 30, 1999 final rule for the IPPS (64 FR 41532-41533),
we promulgated regulations at Sec. 412.22(h)(2)(i) to discourage pre-
1997 excluded hospitals, which had the higher caps on target amounts as
discussed above (under Sec. 413.40(c)(4)(iii), which implemented
section 4414 of Pub. L. 105-33), from creating satellite arrangements
rather than establishing new hospitals, in order to avoid the payment
impact of the lower caps that apply to new hospitals (under Sec.
413.40(f)(2)(ii) which implemented section 4416 of Pub. L. 105-33).
Under the July 30, 1999 acute care hospital inpatient final rule (64 FR
41490), in order to address this possibility of gaming if a pre-1997
excluded hospital, such as a LTCH, established a satellite facility
and, in doing so, its total beds, in both the parent hospital (or unit)
and the satellite facility, exceeded the number of State-licensed and
Medicare-certified beds in the parent hospital on the last day of its
last cost reporting period beginning before October 1, 1997, the
excluded hospital would be paid under the inpatient DRG system instead
of receiving payment as an excluded hospital under the TEFRA payment
system. Although the excluded hospital

[[Page 11244]]

could ``transfer'' bed capacity from the parent facility to the
satellite, it could not increase its total bed capacity beyond the
level it had in the most recent cost reporting period beginning before
October 1, 1997, and still be paid as a hospital excluded from the
IPPS. However, no such limitation was imposed on a LTCH (or other
excluded facility) established after October 1, 1997 because it would
have already been subject to the lower payment limits under Sec.
413.40(f)(2)(ii) of 110 percent of the national median of target
amounts for similarly classified hospitals. Therefore, it would not
benefit from the higher 75 percent cap on target amounts under Sec.
413.40(c)(4) by establishing a satellite facility, as would a pre-1997
LTCH.
The rationale for the bed-limit provision based on the distinction
between these groups of hospitals was the potential for gaming, by
creating a satellite facility with a higher TEFRA target cap where, in
reality, the satellite facility should have been a separately certified
excluded facility, which would have been subject to the lower cap on
payments to new (post-1997) facilities paid under the TEFRA system.
Once the LTCH is paid based on 100 percent of the Federal prospective
rate, however, the LTCH will no longer be subject to TEFRA caps and
LTCH prospective payments will be the same regardless of when the LTCH
was established. Therefore, we are proposing to eliminate the bed-limit
provision once the LTCH is paid based on 100 percent of the LTCH
Federal PPS rate. Finally, under this proposed policy, the bed
limitation on ``existing'' LTCHs would, however, continue to apply to
those LTCHs while they are paid based on the transition blend, and,
therefore, continue to receive a percentage of their payments based on
the TEFRA payment rules, until they transition to a rate based on 100
percent of the Federal prospective payment rate.

VI. Proposed Changes to the LTCH PPS Rates for the Proposed 2004 LTCH
PPS Rate Year

A. Overview of the Development of the Proposed Payment Rates

The PPS for LTCHs was effective for cost reporting periods
beginning on or after October 1, 2002. Effective with that cost
reporting period, LTCHs are paid, during a 5-year transition period, on
the basis of an increasing proportion of the LTCH PPS Federal rate and
a decreasing proportion of a hospital's payment under TEFRA, unless the
hospital makes a one-time election to receive payment based on 100
percent of the Federal rate (see Sec. 412.533). New LTCHs (as defined
at Sec. 412.23(e)(4)) are paid based on 100 percent of the Federal
rate, with no phase-in transition payments.
The basic methodology for determining LTCH PPS Federal prospective
payment rates is set forth in our regulations at Sec. Sec. 412.521
through 412.529. Below we discuss the factors that we are proposing to
use to update the LTCH PPS standard Federal rate for the proposed 2004
LTCH PPS rate year, which would be effective for LTCHs paid under the
PPS for discharges occurring on or after July 1, 2003 through June 30,
2004.
In the August 30, 2002 final rule (67 FR 56029-56031), for cost
reporting periods beginning on or after October 1, 2002 (FY 2003), we
computed the LTCH PPS standard Federal payment rate by updating the
best available (FY 1998 or FY 1999) Medicare inpatient operating and
capital costs per case data, using the excluded hospital market basket.
Section 123(a)(1) of Pub. L. 106-113 requires that the PPS
developed for LTCHs be budget neutral. Therefore, in calculating the
standard Federal rate for FY 2003 under Sec. 412.523(d)(2), we set
total estimated PPS payments equal to estimated payments that would
have been made under the TEFRA methodology if the PPS for LTCHs were
not implemented. Section 307(a) of Pub. L. 106-554 specified that the
increases to the hospital-specific target amounts and cap on the target
amounts for LTCHs for FY 2002 provided for by section 307(a)(1) of Pub.
L. 106-554 shall not be taken into account in the development and
implementation of the LTCH PPS. In addition, the statute provides for
enhanced bonus payments for LTCHs for FY 2001 and FY 2002 provided for
by section 122 of Pub. L. 106-113. Furthermore, as specified at Sec.
412.523(d)(1), the standard Federal rate is reduced by an adjustment
factor to account for the estimated proportion of outlier payments
under the LTCH PPS to total LTCH PPS payments (8 percent). For further
details on the development of the FY 2003 standard Federal rate, see
the August 30, 2002 final rule (67 FR 56027-56037). Under the existing
regulations at Sec. 412.523(c)(3)(ii) for fiscal years after FY 2003,
we update the standard Federal rate annually to adjust for the most
recent estimate of the projected increases in prices for LTCH inpatient
hospital services.

B. Proposed Update to the Standard Federal Rate for the Proposed 2004
LTCH PPS Rate Year

In the August 30, 2002 final rule (67 FR 56033), we established a
LTCH PPS standard Federal rate of $34,956.15 for FY 2003. Based on the
most recent estimate of the excluded hospital with capital market
basket, adjusted to account for the proposed change in the rate year
update cycle for the LTCH PPS rates discussed in section III. of this
proposed rule, the proposed LTCH PPS standard Federal rate, effective
from July 1, 2003 through June 30, 2004, would be $35,726.64 (as
discussed below).
In the discussion that follows, we explain how we developed the
proposed update to the standard Federal rate. The proposed Federal rate
for the proposed 2004 LTCH PPS rate year is calculated based on the
proposed update factor of 1.0250. Thus, the proposed standard Federal
rate for the proposed 2004 LTCH PPS rate year would increase 2.2
percent compared to the FY 2003 standard Federal rate.
1. Proposed Standard Federal Rate Update
In the August 30, 2002 final rule, we established in Sec. 412.523
that, for years after FY 2003, the annual update to the LTCH PPS
standard Federal rate will be equal to the percentage change in the
excluded hospital with capital market basket (described in further
detail below). As we discussed in the August 30, 2002 final rule (67 FR
56087), in the future we may propose to develop a framework to update
payments to LTCHs that would account for other appropriate factors that
affect the efficient delivery of services and care provided to Medicare
patients. Because the LTCH PPS has only been implemented for cost
reporting periods beginning on or after October 1, 2002, we have not
yet collected sufficient data to allow for the analysis and development
of an update framework under the LTCH PPS. Therefore, at this time, we
are not proposing an update framework for the LTCH PPS. However, a
conceptual basis for the proposal of developing an update framework in
the future can be found in Appendix B of the August 30, 2002 final rule
(67 FR 56086-56090).
a. Description of the Proposed Market Basket for LTCHs for the Proposed
2004 LTCH PPS Rate Year
A market basket has historically been used in the Medicare program
to account for price increases of the services furnished by providers.
The market basket used for the LTCH PPS includes both operating and
capital-related costs of LTCHs because the LTCH PPS uses a single
payment rate for both operating and capital-related costs. The
development of the LTCH

[[Page 11245]]

PPS standard Federal rate is discussed in further detail in the August
30, 2002 final rule (67 FR 56027-56037).
Under the reasonable cost-based TEFRA reimbursement system, the
excluded hospital market basket was used to update the hospital-
specific limits on payment for operating costs of LTCHs. The excluded
hospital market basket is based on operating costs from FY 1992 cost
report data and includes Medicare-participating long-term care,
rehabilitation, psychiatric, cancer, and children's hospitals. Since
LTCHs' costs are included in the excluded hospital market basket, this
market basket index, in part, also reflects the costs of LTCHs.
However, in order to capture the total costs (operating and capital-
related) of LTCHs, we added a capital component to the excluded
hospital market basket for use under the LTCH PPS. We refer to this
index as the excluded hospital with capital market basket.
Beginning with the implementation of the LTCH PPS in FY 2003, the
excluded hospital with capital market basket based on FY 1992 Medicare
cost report data has been used for updating payments to LTCHs. The FY
1992-based market basket reflected the distribution of costs in FY 1992
for Medicare-participating freestanding rehabilitation, long-term care,
psychiatric, cancer, and children's hospitals. This information was
derived from the FY 1992 Medicare cost reports. A full discussion of
the methodology and data sources used to construct the FY 1992-based
excluded hospital with capital market basket is included in Appendix A
of the August 30, 2001 final rule (67 FR 56085-56086). In this proposed
rule, we are proposing to revise and rebase the excluded hospital with
capital market basket, based on more recent data, to an FY 1997 base
year for application beginning with the proposed 2004 LTCH PPS rate
year.
We believe it is appropriate to propose to rebase the LTCH PPS
market basket based on the most recent complete data available (FY
1997) since these data would more accurately reflect LTCH current
costs. This proposed rebasing of the LTCH PPS market basket from an FY
1992 base year to a FY 1997 base year is consistent with the rebasing
of both the IPPS and the excluded hospital market basket used under the
TEFRA payment system for FY 2003, as discussed in the August 1, 2002
IPPS final rule (67 FR 50032-50047).
The operating portion of the proposed FY 1997-based excluded
hospital with capital market basket that we are proposing to use under
the LTCH PPS is derived from the FY 1997-based excluded hospital market
basket used under the TEFRA payment system. The methodology we proposed
to use to develop the proposed operating portion of the market basket
under the LTCH PPS is the same methodology used to describe the
rebasing of the excluded hospital market basket used under the TEFRA
payment system, which is described in greater detail in the August 1,
2002 IPPS final rule (67 FR 50042-50044). In brief, the operating cost
category weights in the FY 1997-based excluded market basket added to
100.0. These weights were determined from FY 1997 Medicare cost report
data, the 1997 Business Expenditure Survey, and the 1997 Annual Input-
Output data from the Bureau of the Census. In this proposed rule, in
applying the proposed FY 1997-based market basket we are proposing to
make the same two methodological revisions that we established when we
rebased the hospital inpatient market basket and the excluded hospital
market basket in the August 1, 2002 IPPS final rule: (1) Changing the
wage and benefit price proxies to use the Employment Cost Index (ECI)
wage and benefit data for hospital workers; and (2) adding a cost
category for blood and blood products.
When we add the weight for capital costs to the excluded hospital
market basket, the sum of the operating and capital weights must still
equal 100.0. Based on FY 1997 Medicare cost reports for excluded
hospitals, the capital cost weight would be 8.968 percent. Because
capital costs would account for 8.968 percent of total costs for
excluded hospitals in FY 1997, operating costs must, therefore, account
for 91.032 percent (100 percent-8.968 percent). Each operating cost
category weight in the FY 1997-based excluded hospital market basket
from the August 1, 2002 IPPS final rule (67 FR 50442-50444) was
multiplied by 0.91032 to determine its weight in the FY 1997-based
excluded hospital with capital market basket.
The aggregate capital component of the proposed FY 1997-based
excluded hospital market basket (8.968 percent) was determined from the
same set of Medicare cost reports used to derive the operating
component. The detailed capital cost categories of depreciation,
interest, and other capital expenses were also determined using the
Medicare cost reports. We needed to determine two sets of weights for
the capital portion of the proposed revised and rebased market basket.
The first set of weights identifies the proportion of capital
expenditures attributable to each capital cost category; the second set
represents relative vintage weights for depreciation and interest. The
vintage weights identify the proportion of capital expenditures that is
attributable to each year over the useful life of capital assets within
a cost category (See 67 FR 50046-50047, August 1, 2002, for a
discussion of how vintage weights are determined).
The cost categories, price proxies, and base-year FY 1992 and
proposed FY 1997 weights for the proposed excluded hospital with
capital market basket are presented below in Table I. The vintage
weights for the proposed FY 1997-based excluded hospital with capital
market basket are presented in Table II.

Table I.--Proposed Excluded Hospital With Capital Input Price Index (FY 1992-Based and Proposed FY 1997-Based)
Structure and Weights
----------------------------------------------------------------------------------------------------------------
Weights (%), base-year Proposed weights (%)
Cost category Price/wage variable FY 1992 ¹ ² base-year FY 1997 ¹ ²
----------------------------------------------------------------------------------------------------------------
Total............................ 100.000 100.000
Compensation..................... 57.935 57.579
Wages and Salaries........... ECI--Wages and Salaries, 47.417 47.335
Civilian Hospital
Workers.
Employee Benefits............ ECI--Benefits, Civilian 10.519 10.244
Hospital Workers to
Capture Total Costs.
Professional fees: Non-Medical... ECI--Compensation: 1.908 4.423
Professional & Technical.
Utilities........................ ......................... 1.524 1.180
Electricity.................. PPI--Commercial Electric 0.916 0.726
Power.
Fuel Oil, Coal, etc.......... PPI--Commercial Natural 0.365 0.248
Gas.
Water and Sewerage........... CPI-U--Water & Sewerage 0.243 0.206
Maintenance.

[[Page 11246]]

Professional Liability Insurance. CMS--Professional 0.983 0.733
Liability Insurance
Premiums Index.
All Other Products and Services.. 28.571 27.117
All Other Products........... 22.027 17.914
Pharmaceuticals.......... PPI--Ethical 2.791 6.318
(Prescription) Drugs.
Food: Direct Purchase.... PPI--Processed Foods and 2.155 1.122
Feeds.
Food: Contract Service... CPI-U--Food Away from 0.998 1.043
Home.
Chemicals................ PPI--Industrial Chemicals 3.413 2.133
Blood and Blood Products. PPI--Blood and Blood 0.748
Derivatives, Human Use.
Medical Instruments...... PPI--Medical Instruments 2.868 1.795
& Equipment.
Photographic Supplies.... PPI--Photographic 0.364 0.167
Supplies.
Rubber and Plastics...... PPI--Rubber & Plastic 4.423 1.366
Products.
Paper Products........... PPI--Converted Paper and 1.984 1.110
Paperboard Products.
Apparel.................. PPI--Apparel............. 0.809 0.478
Machinery and Equipment.. PPI--Machinery & 0.193 0.852
Equipment.
Miscellaneous Products... PPI--Finished Goods Less 2.029 0.783
Food and Energy.
All Other Services........... 6.544 9.203
Telephone................ CPI-U--Telephone Services 0.574 0.348
Postage.................. CPI-U--Postage........... 0.268 0.702
All Other: Labor ECI--Compensation for 4.945 4.453
Intensive. Private Service
Occupations.
All Other: Non-Labor CPI-U--All Items......... 0.757 3.700
Intensive.
Capital-Related Costs............ 9.080 8.968
Depreciation................. 5.611 5.586
Building & Fixed Boeckh-Institutional 3.570 3.503
Equipment. Construct. Index--
Vintage Weighted (23
years).
Movable Equipment........ PPI--Machinery & 2.041 2.083
Equipment--Vintage
Weighted (11 Years).
Interest Costs............... 3.212 2.682
Government/ Nonprofit.... Yield on Domestic 2.730 2.280
Municipal Bonds (Bond
Buyer 20 Bonds)--Vintage
Weighted (23 years).
For-profit............... Yield on Moody's Aaa 0.482 0.402
Bonds--Vintage Weighted
(23 Years).
Other Capital-Related CPI-U--Residential Rent.. 0.257 0.699
Costs.
----------------------------------------------------------------------------------------------------------------
\1\ The operating cost category weights in the excluded hospital market basket described in the August 1, 2002
final rule (67 FR 50042-50044) add to 100.0. When we add an additional set of cost category weights (total
capital weight = 8.968 percent) to this original group, the sum of the weights in the new index must still add
to 100.0. Capital costs account for 8.968 percent of the market basket; operating costs account for 91.032
percent. Each weight in the FY 1997-based excluded hospital market basket from the August 1, 2002 final rule
(67 FR 50042-50044) was multiplied by 0.91032 to determine its weight in the proposed FY 1997-based excluded
hospital with capital market basket.
\2\ Weights may not sum to 100.0 due to rounding.

Table II.--Proposed Excluded Hospital With Capital Input Price Index (FY
1997) Vintage Weights
------------------------------------------------------------------------
Building Interest:
and fixed Movable capital-
Year (from farthest to most recent) equipment equipment related
* (23-year (11-year (23-year
weights) * weights) * weights) *
------------------------------------------------------------------------
1................................... 0.018 0.063 0.007
2................................... 0.021 0.068 0.009
3................................... 0.023 0.074 0.011
4................................... 0.025 0.080 0.012
5................................... 0.026 0.085 0.014
6................................... 0.028 0.091 0.016
7................................... 0.030 0.096 0.019
8................................... 0.032 0.101 0.022
9................................... 0.035 0.108 0.026
10.................................. 0.039 0.114 0.030
11.................................. 0.042 0.119 0.035
12.................................. 0.044 .......... 0.039
13.................................. 0.047 .......... 0.045
14.................................. 0.049 .......... 0.049
15.................................. 0.051 .......... 0.053
16.................................. 0.053 .......... 0.059
17.................................. 0.057 .......... 0.065
18.................................. 0.060 .......... 0.072
19.................................. 0.062 .......... 0.077
20.................................. 0.063 .......... 0.081
21.................................. 0.065 .......... 0.085

[[Page 11247]]

22.................................. 0.064 .......... 0.087
23.................................. 0.065 .......... 0.090
-------------
Total........................... 1.0000 1.0000 1.0000
------------------------------------------------------------------------
* Weights may not sum to 1.000 due to rounding.

Table III. compares the FY 1992-based excluded hospital with
capital market basket to the proposed FY 1997-based excluded hospital
with capital market basket. As shown in the table, the proposed rebased
and revised market basket grows slightly faster over the FY 1999-2001
period than the FY 1992-based market basket. The major reason for this
was the switching of the wage and benefit proxy to the ECI for hospital
workers from the previous occupational blend. This revision had a
similar impact on the IPPS and excluded market baskets, as described in
the August 1, 2002 final rule (67 FR 50043-50047).

Table III.--Percent Changes in the FY 1992-Based and Proposed FY 1997-
Based Excluded Hospital with Capital Market Baskets, FYs 1999-2004
------------------------------------------------------------------------
Percentage change
-------------------------
FY 1992- Proposed
based rebased FY
Fiscal year (FY) excluded 1997-based
hospital excluded
market market
basket basket
------------------------------------------------------------------------
1999.......................................... 2.3 2.7
2000.......................................... 3.4 3.1
2001.......................................... 3.9 4.0
Average historical............................ 3.2 3.3
2002.......................................... 2.8 3.7
2003.......................................... 2.8 3.1
2004.......................................... 3.0 3.3
Average forecast.............................. 2.9 3.3
------------------------------------------------------------------------

In the August 30, 2002 LTCH PPS final rule (67 FR 56016 and 56085-
56086), we discussed why we believe the excluded hospital with capital
market basket provides a reasonable measure of the price changes facing
LTCHs. However, we have been researching the feasibility of developing
a market basket specific to LTCH services. This research has included
analyzing data sources for cost category weights, specifically the
Medicare cost reports, and investigating other data sources on cost,
expenditure, and price information specific to LTCHs. Based on this
research (as discussed below), at this time we are not proposing to
develop a market basket specific to LTCH services.
Our analysis of the Medicare cost reports indicates that the
distribution of costs among major cost report categories (wages,
pharmaceuticals, capital) for LTCHs is not substantially different from
the proposed 1997-based excluded hospital with capital market basket
presented in this proposed rule. Data on other major cost categories
(benefits, blood, contract labor) that we would like to analyze were
excluded by many LTCHs in their Medicare cost reports. An analysis
based on only the data available to us for these cost categories
presented a potential problem since no other major cost category weight
would be based on LTCH data.
We conducted a sensitivity analysis of annual percent changes in
the market basket when the weights for wages, pharmaceuticals, and
capital in LTCHs were substituted into the excluded hospital with
capital market basket. Other cost categories were recalibrated using
ratios available from the IPPS market basket. On average between FY
1995 and FY 2002, the proposed excluded hospital with capital market
basket shows increases at nearly the same average annual rate (2.9
percent) as the market basket with LTCH weights for wages,
pharmaceuticals, and capital (2.8 percent). This difference is less
than the 0.25 percentage point criterion that determines whether a
forecast error adjustment is warranted under the IPPS update framework.
We believe that an excluded hospital with capital market basket
adequately reflects the price changes facing LTCHs. We will continue to
solicit comments about issues particular to LTCHs that should be
considered in relation to the proposed FY 1997-based excluded hospital
with capital market basket and to encourage suggestions for additional
data sources that may be available.
b. Proposed LTCH Market Basket Increase for the Proposed 2004 LTCH
PPS Rate Year
As stated earlier, for LTCHs paid under the LTCH PPS, we are
proposing that the 2004 rate year update would apply to discharges
occurring from July 1, 2003 through June 30, 2004. Because we are
proposing to change the timeframe of the standard Federal rate annual
update, we needed to calculate an update factor that would reflect this
proposed change in the update cycle. Presently, the current rate cycle
is October 1, 2002 through September 30, 2003. This means that the
standard Federal rate ($34.956.15; see the August 30, 2002 final rule,
67 FR 56033) was determined based on the market basket increase through
September 30, 2003. Since we are proposing to change the rate update
cycle and, therefore, update the standard Federal rate 3 months earlier
(that is, July 1, 2003 instead of October 1, 2003), we need to propose
an adjustment to the projected full (12-month) market basket increase
to eliminate the projected increase for the 3-month overlapping period
(July 1, 2003 through September 30, 2003).
Thus, we needed to account for the fact that the FY 2003 standard
Federal rate of $34,956.15 already includes an update for the 3-month
period from July 1, 2003 through September 30, 2003. In the absence of
this proposed change, the update for FY 2004 would have been calculated
using the estimated increase between FY 2003 and FY 2004. For the
proposed update for the proposed 2004 LTCH PPS rate year, we calculated
the estimated increase between FY 2003 and the proposed 2004 LTCH PPS
rate year. Based on the fourth quarter 2002 forecast of the proposed
rebased FY 1997-based excluded hospital with capital market basket,
this calculation results in an increase that is 0.8 percentage points
less than it would have been if the proposed change in the LTCH PPS
rate cycle would not be made. The projected market basket increase for
this 3-month period (0.8

[[Page 11248]]

percent) was already included in the FY 2003 standard Federal rate and,
therefore, needs to be deducted from the projected market basket
increase for the 12-month period of July 1, 2003 through June 30, 2004
(3.3 percent) in order to account for the proposed change in the update
cycle.
Consistent with our historical practice of estimating market basket
increases, based on Global Insights' (formerly DRI-WEFA) fourth quarter
2002 forecast of the proposed rebased FY 1997-based excluded hospital
with capital market basket, we are proposing an update of 2.5 percent,
as shown in Table IV. below.

Table IV.--Calculation of Proposed Market Basket Increase for the
Proposed 2004 LTCH Prospective Payment System Rate Year
------------------------------------------------------------------------
Percent
------------------------------------------------------------------------
Proposed 2004 rate year full market basket with capital 3.3
increase*....................................................
Adjustment for the proposed change in the update cycle**...... -0.8
Proposed 2004 market basket increase.......................... 2.5
------------------------------------------------------------------------
\*\ Projected market basket increase for the 12-month period of July 1,
2003 through June 30, 2004.
\**\ Projected market basket increase for the 3-month period of July 1,
2003 through September 30, 2003 already included in the FY 2003
standard Federal rate.

In addition, based on the best available data for 194 LTCHs, we
estimate that LTCH prospective payment system payments would be $1.960
billion for the proposed 2004 LTCH prospective payment system rate
year. As indicated previously, we are proposing to update the FY 2003
standard Federal rate and wage index data 3 months early (July 1, 2003
instead of October 1, 2003). We are proposing that this change be
budget neutral because, as we discussed in the August 30, 2002 final
rule (67 FR 56027), total estimated LTCH PPS payments in FY 2003 will
equal estimated payments that would have been made under the reasonable
cost-based principles if the LTCH PPS were not implemented. Based on
the most recent data, for the 3-month period from July 1, 2003 through
September 30, 2003, the proposed increase in the standard Federal rate
would result in an additional cost of $5.66 million to the FY 2003
Federal budget. Accordingly, in order to maintain budget neutrality for
the proposed change in the rate update cycle, under proposed Sec.
412.523(c)(3)(ii), we are proposing to adjust the standard Federal rate
by a factor of 0.997 (($1.960 billion--$5.66 million)/$1.960 billion)
or -0.003. Also, we propose to revise this adjustment factor in the
final rule based on the best available data.
Therefore, we are proposing to update the current standard Federal
rate ($34,956.15) established in the August 30, 2002 final rule (67 FR
56033) by 2.2 percent (2.5 percent minus 0.3 percent) for discharges
paid under the LTCH PPS that occur on or after July 1, 2003 through
June 30, 2004. This proposed update represents the most recent estimate
of the increase in the excluded hospital with capital market basket for
the proposed 2004 LTCH PPS rate year, adjusted by the above described
factor to transition to the proposed change in the rate update cycle to
July 1, and is based on the best available data for 194 LTCHs.
2. Proposed Standard Federal Rate for the Proposed 2004 LTCH PPS Rate
Year
In the August 30, 2002 LTCH PPS final rule (67 FR 56033), we
established a standard Federal rate of $34,956.15. For the proposed
2004 LTCH PPS rate year, we are proposing a standard Federal rate of
$35,726.64. Since the proposed standard Federal rate has already been
adjusted for differences in case-mix, wages, cost-of-living, and high-
cost outlier payments, we are not proposing any additional adjustments
in the proposed standard Federal rate for these factors.

C. Calculation of Proposed LTCH Prospective Payments for the Proposed
2004 LTCH PPS Rate Year

The basic methodology for determining prospective payment rates for
LTCH inpatient operating and capital-related costs is set forth in
Sec. 412.521. In accordance with Sec. 412.515, we assign appropriate
weighting factors to each LTC-DRG to reflect the estimated relative
cost of hospital resources used for discharges within that group as
compared to discharges classified within other groups. The amount of
the prospective payment is based on the standard Federal rate,
established under Sec. 412.523, and adjusted for the LTC-DRG relative
weights, differences in area wage levels, cost-of-living in Alaska and
Hawaii, high-cost outliers, and other special payment provisions
(short-stay outliers under Sec. 412.529 and interrupted stays under
Sec. 412.531). In accordance with Sec. 412.533, during the 5-year
transition period, payment is based on the applicable transition blend
percentage of the adjusted Federal rate and the TEFRA rate unless the
LTCH makes a one-time election to receive payment based on 100 percent
of the Federal rate. A LTCH defined as ``new'' under Sec. 412.23(e)(4)
is paid based on 100 percent of the Federal rate with no blended
transition payments (Sec. 412.533(d)). As discussed in the August 30,
2002 final rule and in accordance with Sec. 412.533(a), the applicable
transition blends are as follows:

------------------------------------------------------------------------
Federal
Cost reporting periods beginning on or after rate TEFRA rate
percentage percentage
------------------------------------------------------------------------
Oct. 1, 2002.................................... 20 80
Oct. 1, 2003.................................... 40 60
Oct. 1, 2004.................................... 60 40
Oct. 1, 2005.................................... 80 20
Oct. 1, 2006.................................... 100 0
------------------------------------------------------------------------

Accordingly, for cost reporting periods beginning during FY 2003
(that is, on or after October 1, 2002, and before September 30, 2003),
blended payments under the transition methodology are based on 80
percent of the LTCH's TEFRA rate and 20 percent of the adjusted Federal
rate. For cost reporting periods beginning during FY 2004 (that is, on
or after October 1, 2003 and before September 30, 2004), blended
payments under the transition methodology will be based on 60 percent
of the LTCH's TEFRA rate and 40 percent of the adjusted Federal rate.
1. Proposed Adjustment for Area Wage Levels
Under the authority of section 307(b) of Pub. L. 106-554, we
established an adjustment to account for differences in LTCH area wage
levels under Sec. 412.525(c) using the labor-related share estimated
by the excluded hospital market basket with capital and wage indices
that were computed using wage data from acute care inpatient hospitals
without regard to reclassification under section 1886(d)(8) or section
1886(d)(10) of the Act. Furthermore, as we discussed in the August 30,
2002 final rule (67 FR 56015-56019), we established a 5-year transition
to the full wage adjustment. For cost reporting periods beginning on or
after October 1, 2002 and before September 30, 2003 (FY 2003), the
applicable LTCH wage index value is one-fifth of the full FY 2002 acute
care hospital inpatient wage index data, without taking into account
geographic reclassification under section 1886(d)(8) and section
1886(d)(10) of the Act.
In that same final rule (67 FR 56018), we stated that we would
continue to reevaluate LTCH data as they become available and would
propose to adjust the phase-in if subsequent data support

[[Page 11249]]

a change. Because the LTCH PPS was only recently implemented,
sufficient new data have not been generated that would enable us to
conduct a comprehensive reevaluation of the appropriateness of
adjusting the phase-in. However, we have reviewed the most recent data
available and did not find any evidence to support a change in the 5-
year phase-in of the wage index. Therefore, we are not proposing to
adjust the phase-in at this time. In addition, as stated earlier, the
5-year phase-in of the wage index would not be affected by the proposed
establishment of a LTCH PPS rate year of July 1 to June 30. Instead,
the 5-year phase-in of the wage index established in the August 30,
2002 final rule (67 FR 56018) will continue to follow the Federal
fiscal year. That is, for cost reporting periods beginning on or after
October 1, 2003 and before September 30, 2004 (FY 2004), the applicable
proposed LTCH wage index will be two-fifths of the proposed applicable
LTCH PPS index values discussed below. However, we will reevaluate LTCH
data as they become available and would propose to adjust the phase-in
if subsequent data support a change.
Section 412.525(c) provides that the adjustment to account for
differences in area wage levels is made by multiplying the labor-
related portion of the Federal rate by the appropriate wage index value
for the area in which the LTCH is physically located. In the August 30,
2002 final rule (67 FR 56018), based on the best available data at that
time, we stated that the wage index adjustment is based on the FY 2002
inpatient acute care hospital wage index data without taking into
account geographic reclassification under section 1886(d)(8) and
section 1886(d)(10) of the Act. For the proposed 2004 LTCH PPS rate
year, we are proposing that the wage index adjustment provided for
under Sec. 412.525(c) be based on the most recent available inpatient
acute care hospital wage data, that is, the FY 2003 inpatient acute
care hospital wage index data without taking into account geographic
reclassification under section 1886(d)(8) and section 1886(d)(10) of
the Act. As we noted above, the 5-year phase-in of the wage index
adjustment would not be affected by the proposed change in the LTCH PPS
rate update cycle and will continue to be based on the Federal fiscal
year. However, we are proposing to update the data used to compute the
annual wage index values on the proposed 2004 LTCH PPS rate year cycle
(July through June). For example, for a LTCH with a cost reporting
period from January 1, 2003 through December 31, 2003, the LTCH will be
paid using the one-fifth wage index value for its entire cost reporting
period. For the first 6 months of that period (January 1, 2003 through
June 30, 2003), the one-fifth wage index value would be based on the FY
2000 inpatient acute care hospital wage index data without taking into
account geographic reclassifications under sections 1886(d)(8) and
(d)(10) of the Act as established in the August 30, 2002 final rule (67
FR 56018). Under our proposal to update the data used to compute the
LTCH PPS wage index values for July 1, 2003 through June 30 2004, for
the next 6 months (July 1, 2003 through December 31, 2003) the LTCH
would still be paid using one-fifth of the wage index value, but the
wage index value would now be computed using FY 2003 inpatient acute
care hospital wage index data without taking into account geographic
reclassifications under sections 1886(d)(8) and (d)(10) of the Act (as
shown in Tables 1 and 2 of the Addendum of this proposed rule). For the
LTCH's cost reporting period from January 1, 2004 through December 31,
2004, the LTCH would be paid using the two-fifth wage index value. For
the first 6 months of that period (January 1, 2004 through June 30,
2004), the two-fifth wage index value would be based on the FY 2000
inpatient acute care hospital wage index data without taking into
account geographic reclassifications under sections 1886(d)(8) and
(d)(10) of the Act, as shown in Tables 1 and 2 of the Addendum of this
proposed rule.
In the August 30, 2002 final rule (67 FR 56018), for FY 2003 we
used the FY 2002 inpatient acute care hospital wage index data without
taking into account geographic reclassifications under sections
1886(d)(8) and (d)(10) of the Act. The inpatient acute care hospital
wage index data, without taking into account geographic
reclassification under section 1886(d)(8) or section 1886(d)(10) of the
Act, is also used under other postacute care PPSs, such as the IRF PPS
and the SNF PPS. As we discussed in the August 30, 2002 final rule (67
FR 56019), since hospitals that are excluded from the IPPS are not
required to provide wage-related information on the Medicare cost
report and we would need to establish instructions for the collection
of such LTCH data in order to establish a geographic reclassification
adjustment under the LTCH PPS, the wage adjustment established under
the LTCH PPS is based on a LTCH's actual location without regard to the
urban or rural designation of any related or affiliated provider. In
this proposed rule, for the proposed 2004 LTCH PPS rate year, we are
proposing to use the FY 2000 inpatient acute care hospital wage index
data without taking into account geographic reclassifications under
sections 1886(d)(8) and (d)(10) of the Act, because it is the most
recent available complete data. This is the same wage data that were
used to compute the FY 2003 wage indices currently used under the IPPS.
The proposed LTCH wage index values for July 1, 2003 through June 30,
2004 is shown in Table 1 (for urban areas) and Table 2 (for rural
areas) in the Addendum of this proposed rule. As noted above, for cost
reporting periods beginning on or after October 1, 2002 and before
September 30, 2003 (FY 2003), the applicable LTCH wage index is one-
fifth of the full FY 2003 acute care hospital inpatient wage index
data, without taking into account geographic reclassifications under
sections 1886(d)(8) and (d)(10) of the Act. For cost reporting periods
beginning on or after October 1, 2003 and before September 30, 2003 (FY
2004), the applicable proposed LTCH wage index would be two-fifths of
the full FY 2003 acute care hospital inpatient wage index data, without
taking into account geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act.
In conjunction with our proposal to rebase the excluded hospital
with capital market basket from an FY 1992 to an FY 1997 base year (as
discussed in section VI.B.1.a. of this preamble), we also are proposing
to use a labor-related share that is determined from our proposed FY
1997-based excluded hospital with capital market basket. In the August
30, 2002 final rule (67 FR 56016), we established a labor-related share
of 72.885 percent based on the relative importance of the labor-related
share of operating and capital costs of the excluded hospital with
capital market basket with an FY 1992 base-year. In this proposed rule,
as discussed in further detail below, we are proposing a labor-related
share of 72.612 percent based on the relative importance of the labor-
related share of operating costs (wages and salaries, employee
benefits, professional fees, postal services, and all other labor-
intensive services) and capital costs in the proposed FY 1997 rebased
excluded hospital with capital market basket.
To determine the proposed labor-related share, we use the cost
categories contained in the proposed FY 1997-based excluded hospital
with capital market basket that are influenced by local labor markets,
which reflect the different rates of price change for these cost
categories between the base year

[[Page 11250]]

(FY 1997) and this period. First, we estimate the portion related to
operating costs, which we estimate to be 69.075 percent for the
proposed LTCH PPS rate year of July 1, 2003 through June 30, 2004,
calculated based on the Medicare cost reports for excluded hospitals as
the sum of the relative importance for wages and salaries (48.967),
employee benefits (11.032), professional fees (4.518), and labor-
intensive services (4.558), as shown in Table V. The labor-related
share of capital costs in the market basket needed to be considered as
well. After an analysis of FY 1997 Medicare cost report data, we found
no evidence to revise our current estimate of the portion of capital
costs that is influenced by local labor markets of 46 percent (see 67
FR 56016, August 30, 2002). Based on the proposed change in the LTCH
PPS rate update cycle, the relative importance of capital is estimated
to be 7.692 percent. Because the relative importance of capital is
7.692 percent of the proposed FY 1997-based excluded hospital with
capital market basket for the proposed 2004 LTCH PPS rate year, we
multiplied 46 percent by 7.692 percent to determine the labor-related
share of capital costs to be 3.538 percent. We then added the 3.543
that was calculated for capital costs to the 69.075 percent that was
calculated for operating costs to determine the total labor-related
relative importance of 72.612. Therefore, we are proposing to use a
labor-related share of 72.612 percent for the proposed 2004 LTCH PPS
rate year.

Table V.--Proposed Labor-Related Share Relative Importance
------------------------------------------------------------------------
Relative Relative
importance FY importance FY
1992-based 1997-based
Cost category market basket market basket
(proposed 2004 (proposed 2004
LTCH PPS rate LTCH PPS rate
year) year)
------------------------------------------------------------------------
Wages and salaries.................. 50.572 48.967
Employee benefits................... 11.882 11.032
Professional fees................... 2.052 4.518
Postage............................. 0.254 ................
All other labor intensive services.. 5.242 4.558
Subtotal........................ 70.001 69.075
-------------------
Labor-related share of capital costs 3.412 3.538
-------------------
Total........................... 73.413 72.612*
------------------------------------------------------------------------
\*\ Although the weights of the cost categories appear to add to 76.213,
this is due to rounding; the actual labor-related share is 72.61246.

2. Proposed Adjustment for Cost-of-Living in Alaska and Hawaii
Under Sec. 412.525(b), we make a cost-of-living adjustment (COLA)
for LTCHs located in Alaska and Hawaii to account for the higher costs
incurred in those States.
For the proposed 2004 LTCH PPS rate year, under Sec. 412.525(b),
we are proposing to make a COLA to payments for LTCHs located in Alaska
and Hawaii by multiplying the standard Federal payment rate by the
appropriate factor listed in Table VI. below. These factors are
obtained from the U.S. Office of Personnel Management (OPM). If OPM
releases revised COLA factors before May 1, 2003, we propose to use
them for the development of payments and will publish them in the final
rule.

Table VI.--Proposed Cost-of-Living Adjustment Factors for Alaska and
Hawaii Hospitals for the Proposed 2004 LTCH PPS Rate Year
------------------------------------------------------------------------

------------------------------------------------------------------------
Alaska:
All areas..................................................... 1.25
Hawaii:
Honolulu County............................................... 1.25
Hawaii County................................................. 1.165
Kauai County.................................................. 1.2325
Maui County................................................... 1.2375
Kalawao County................................................ 1.2375
------------------------------------------------------------------------

3. Proposed Adjustment for High-Cost Outliers
Under Sec. 412.525(a), we make an adjustment for additional
payments for outlier cases that have extraordinarily high costs
relative to the costs of most discharges. Providing additional payments
for outliers strongly improves the accuracy of the LTCH PPS in
determining resource costs at the patient and hospital level. These
additional payments reduce the financial losses that would otherwise be
caused by treating patients who require more costly care and,
therefore, reduce the incentives to underserve these patients. We
include a provision for outlier payments under the LTCH PPS and set the
outlier threshold before the beginning of the applicable proposed rate
update year so that total outlier payments are projected to equal 8
percent of total payments under the LTCH PPS.
Under Sec. 412.525(a), we make outlier payments for any discharges
if the estimated cost of a case exceeds the adjusted LTCH PPS payment
for the LTC-DRG plus a fixed-loss amount. The fixed-loss amount is the
amount used to limit the loss that a hospital will incur under an
outlier policy. This results in Medicare and the LTCH sharing financial
risk in the treatment of extraordinarily costly cases. The LTCH's loss
is limited to the fixed-loss amount and the percentage of costs above
the marginal cost factor. We calculate the estimated cost of a case by
multiplying the overall hospital cost-to-charge ratio by the Medicare
allowable covered charge. In accordance with Sec. 412.525(a), we pay
outlier cases 80 percent of the difference between the estimated cost
of the patient case and the outlier threshold (the sum of the adjusted
Federal prospective payment for the LTC-DRG and the fixed-loss amount).
We determine a fixed-loss amount, that is, the maximum loss that a
LTCH can incur under the PPS for a case with unusually high costs
before the hospital will receive any additional payments. We calculate
the fixed-loss amount by simulating aggregate payments with and without
an outlier policy. The fixed loss amount would result in estimated
total outlier payments being equal to 8

[[Page 11251]]

percent of projected total LTCH PPS payments.
Outlier payments under the LTCH PPS are determined consistent with
the IPPS outlier policy. Currently, under the IPPS, a floor and a
ceiling are applied to an acute care hospital's cost-to-charge ratio
and if the acute care hospital's cost-to-charge ratio is either below
the floor or above the ceiling, the applicable statewide average cost-
to-charge ratio is assigned to the acute care hospital. Similarly, if a
LTCH's cost-to-charge ratio is below the floor or above the ceiling,
currently the applicable statewide average cost-to-charge ratio is
assigned to the hospital. In addition, for LTCHs for which we are
unable to compute a cost-to-charge ratio, we also assign the applicable
statewide average. Currently, MedPAR claims data and cost-to-charge
ratios based on the latest available cost report data from HCRIS and
corresponding MedPAR claims data are used to establish a fixed-loss
threshold amount under the LTCH PPS.
For FY 2003, based on FY 2001 MedPAR claims data and cost-to-charge
ratios based on the latest available data from HCRIS and corresponding
MedPAR claims data from FYs 1998 and 1999, we established a fixed-loss
amount of $24,450. For the proposed 2004 LTCH PPS rate year, we are
proposing to continue to use the March 2002 update of the FY 2001
MedPAR claims data to determine a fixed-loss threshold that would
result in outlier payments being equal to 8 percent of total payments,
based on the policies described in this proposed rule, because these
data are the best data available. We would calculate cost-to-charge
ratios for determining the proposed fixed-loss amount based on the
latest available cost report data in HCRIS and corresponding MedPAR
claims data from FYs 1998, 1999, and 2000. Consistent with the proposed
outlier policy changes for acute care hospitals under the IPPS
discussed in the March 4, 2003 proposed rule, we are proposing to no
longer assign the applicable statewide average cost-to-charge ratio
when a LTCH's cost-to-charge ratio falls below the floor. We are
proposing this policy change because, as is the case for acute care
hospitals, we believe LTCHs could arbitrarily increase their charges in
order to maximize outlier payments. Even though this arbitrary increase
in charges should result in a lower cost-to-charge ratio in the future
(due to the lag time in cost report settlement), currently when a
LTCH's actual cost-to-charge ratio falls below the floor, the LTCH's
cost-to-charge ratio would be raised to the applicable statewide
average. This application of the statewide average would result in
inappropriately higher outlier payments. Accordingly, we are proposing
to apply the LTCH's actual cost-to-charge ratio to determine the cost
of the case, even where the LTCH's actual cost-to-charge ratio falls
below the floor. No longer applying the applicable statewide average
cost-to-charge ratio when a LTCH's actual cost-to-charge ratio falls
below the floor would result in a lower future cost-to-charge ratio.
Applying this lower cost-to-charge ratio to charges in the future to
determine the cost of the case would result in more appropriate outlier
payments. Therefore, consistent with the proposed policy change for
acute care hospitals under the IPPS, we are proposing that LTCHs would
receive their actual cost-to-charge ratios no matter how low their
ratios fall. Also, consistent with the proposed policy change for acute
care hospitals under the IPPS, we are proposing under Sec.
412.525(a)(4), by cross-referencing proposed Sec. 412.84(i), to
continue to apply the applicable statewide average cost-to-charge ratio
when a LTCH's cost-to-charge ratio exceeds the ceiling by adopting the
proposed policy at proposed Sec. 412.84(i)(1)(ii). Cost-to-charge
ratios above this range are probably due to faulty data reporting or
entry, and, therefore, should not be used to identify and make payments
for outlier cases because such data are clearly errors and should not
be relied upon. In addition, we are proposing to make a similar change
to Sec. 412.529(c), by cross-referencing proposed Sec. 412.84(i), for
determining short-stay outlier payments to indicate that the applicable
statewide average cost-to-charge ratio would be applied when a LTCH's
cost-to-charge ratio exceeds the ceiling, but not when a LTCH's cost-
to-charge ratio falls below the floor. Since cost-to-charge ratios are
also used in determining short-stay outlier payments, the rationale for
this proposed change mirrors that for high-cost outliers.
Therefore, consistent with IPPS outlier policy in determining the
proposed fixed-loss amount for the proposed 2004 LTCH PPS rate year, we
are proposing to use only the current combined operating and capital
cost-to-charge ratio ceiling under the IPPS of 1.421 (as explained in
the acute care hospital inpatient PPS final rule (67 FR 50125, August
1, 2002)). We believe that using the current combined IPPS operating
and capital cost-to-charge ratio ceiling for LTCHs is appropriate
since, as we explained in the August 30, 2002 final rule (67 FR 55960),
LTCHs are certified as acute care hospitals that meet the criteria set
forth in section 1861(e) of the Act in order to participate in the
hospital in the Medicare program. As we also discussed in the August
30, 2002 final rule (67 FR 55956), in general hospitals are paid as a
LTCH only because their average length of stay is greater than 25 days
in accordance with Sec. 412.23(e). Furthermore, prior to qualifying as
a LTCH under Sec. 412.23(e)(2)(i), the hospitals generally are paid as
acute care hospitals under the IPPS during the period in which they
demonstrate that they have an average length of stay of greater than 25
days. Accordingly, if a LTCH's cost-to-charge ratio is above this
ceiling, we are proposing to assign the applicable IPPS statewide
average cost-to-charge ratio. (Currently, the applicable IPPS statewide
averages can be found in Tables 8A and 8B of the August 1, 2002 IPPS
final rule (67 FR 50263).) We would also assign the applicable
statewide average for LTCHs for which we are unable to compute a cost-
to-charge ratio. Accordingly, for the proposed 2004 LTCH PPS rate year,
we are proposing a fixed-loss amount of $19,978. Thus, we would pay an
outlier case 80 percent of the difference between the estimated cost of
the case and the outlier threshold (the sum of the adjusted Federal
LTCH payment for the LTC-DRG and the proposed fixed-loss amount of
$19,978).
As we discussed in section IV.D. of this preamble, the IPPS
standard Federal rate and relative weights are updated simultaneously,
effective October 1 of each year, when the new GROUPER with the final
DRGs and the new relative weights are implemented for that fiscal year.
The LTCH PPS utilizes the same DRGs and Medicare GROUPER program as the
IPPS. The GROUPER in effect on July 1, 2003 will be version 20.0.
Although we are proposing to update the LTCH PPS standard Federal rate
on July 1, 2003, version 21.0 of the GROUPER will not be available at
the time the final rule following this proposed rule is published. To
the extent that the LTC-DRG weights in the version 21.0 GROUPER may
change, total LTCH PPS payments may also change. Therefore, as
explained in section IV.F. of this proposed rule, we are not proposing
an update to the LTC-DRG weights for the period of July 1, 2003 through
September 30, 2003, and the LTCH PPS would continue to use version 20.0
of the GROUPER and the LTC-DRG relative weights published in Table 3 of
the Addendum to the August 30, 2002 final rule (reprinted in Table 3 of
the Addendum to this proposed rule) for the

[[Page 11252]]

period from July 1, 2003 through September 30, 2003.
The calculation of the fixed-loss amount is dependent in part on
the LTC-DRG relative weights because the fixed-loss amount is set so
that estimated total outlier payments are estimated to be equal to 8
percent of total LTCH PPS payments. We are proposing to calculate a
fixed-loss amount that would result in total estimated outlier payments
being equal to 8 percent of total LTCH PPS payments for the proposed
2004 LTCH PPS rate year, using the LTC-DRG relative weights based on
the version 20.0 GROUPER. We are proposing to use the version 20.0
GROUPER in determining the fixed-loss amount for the period of July 1,
2003 through June 30, 2004 as it contains the best available data at
the time the fixed-loss amount is determined.
As we discuss below, we are not proposing to change the fixed-loss
amount to account for changes in the version 21.0 GROUPER because we
believe implementing two fixed-loss amounts would be administratively
burdensome. Implementing a single fixed-loss amount which would be in
effect for a full 12 months (July through June) would be consistent
with other components of the LTCH PPS, such as the standard Federal
rate and the wage index, both of which would be in effect for a full
12-month period (July through June). Similarly, the relative weights
and the GROUPER program are in effect for 12 months (October through
September). However, because the update to the ICD-9-CM codes, as
described in section IV.E.2. of this proposed rule, is effective at the
beginning of the Federal fiscal year, we will continue to update the
GROUPER and the relative weights on October 1. Furthermore, we do not
anticipate that the fixed-loss amount calculated using the relative
weights based on the version 20.0 GROUPER would be significantly
different from a fixed-loss amount calculated using the relative
weights based on the version 21.0 GROUPER. We believe this based on the
fact that the LTCH PPS outlier policy, one component of which is a
fixed-loss amount, was based on the IPPS outlier policy. The annual
reclassification and recalibration of DRGs under the IPPS generally
does not result in a significant impact on the IPPS fixed-loss amount
(although this impact would vary from year to year depending on the
actual DRG changes). Therefore, as explained above, we are proposing to
calculate a single fixed-loss amount for each LTCH PPS rate year based
on the version of the GROUPER that is in effect as of July 1 of that
year.
Since the proposed effective date of the updated LTCH PPS standard
Federal rate would be July 1, while the updated GROUPER would not be
effective until October 1, we did consider an alternative proposal that
would establish two separate fixed-loss amounts: one for July through
September based on the current GROUPER and another for October through
June based on the updated GROUPER. We decided not to propose this
alternative because, as we discussed above, calculating and
implementing two fixed-loss amounts in one proposed LTCH PPS rate year
is administratively burdensome.
As we stated in the August 30, 2002 final rule (67 FR 56026), under
some rare circumstances, a LTCH discharge could qualify as a short-stay
outlier case (as defined under Sec. 412.529 and discussed in section
VI. of this preamble) and also as a high-cost outlier case. In such a
scenario, a patient could be hospitalized for less than five-sixths of
the geometric average length of stay for the specific LTC-DRG, and yet
incur extraordinarily high treatment costs. If the costs exceeded the
outlier threshold (that is, the short-stay outlier payment plus the
fixed-loss amount), the discharge would be eligible for payment as a
high-cost outlier. Thus, for short-stay outlier in the proposed 2004
LTCH PPS rate year, the high-cost outlier payment would be based on 80
percent of the difference between the estimated cost of the case plus
the outlier threshold (the sum of the proposed fixed-loss amount of
$19,978 and the amount paid under the short-stay outlier policy).
Under existing regulations at Sec. 412.525(a) (as established in
the August 30, 2002 LTCH PPS final rule (67 FR 56026)), we specify that
no retroactive adjustment will be made to the outlier payments upon
cost report settlement to account for differences between the estimated
cost-to-charge ratios and the actual cost-to-charge ratios for outlier
cases. This policy is consistent with the existing outlier payment
policy for short-term acute care hospitals under the IPPS. However, we
note that in the proposed rule on March 4, 2003, we proposed to revise
the methodology for determining cost-to-charge ratios for acute care
hospitals under the IPPS because, as we discussed in that notice, we
became aware that payment vulnerabilities exist in the current IPPS
outlier policy.
Because the LTCH PPS high-cost outlier and short-stay policies are
modeled after the outlier policy in the IPPS, we believe they are
susceptible to the same payment vulnerabilities and, therefore, merit
revision. As proposed for acute care hospitals under the IPPS at
proposed Sec. 412.84(m) in the March 4, 2003 proposed rule, we are
proposing under Sec. 412.525(a)(4)(ii), by cross-referencing proposed
Sec. 412.84(m), that for LTCHs any reconciliation of outlier payments
would be made upon cost report settlement to account for differences
between the estimated cost-to-charge ratio for the period during which
the discharge occurs. As is the case with the proposed changes to the
outlier policy for acute care hospitals under the IPPS, we are still
assessing the procedural changes that would be necessary to implement
this change. In addition, we are proposing to make a similar change in
Sec. 412.529(c)(4)(ii), by cross-referencing proposed Sec. 412.84(m),
to indicate that any reconciliation of payments for short-stay outliers
would be made upon cost report settlement to account for differences
between the estimated cost-to-charge ratio and the actual cost-to-
charge ratio for the period during which the discharge occurs.
In addition, because we currently use cost-to-charge ratios based
on the latest settled cost report, again consistent with the policy for
acute care hospitals under the IPPS, any dramatic increases in charges
during the payment year are not reflected in the cost-to-charge ratios
when making outlier payments. Consistent with the proposed policy
change for acute care hospitals under the IPPS at proposed Sec.
412.84(i) discussed in the March 4, 2003 proposed rule, because a LTCH
has the ability to increase its outlier payments through a dramatic
increase in charges and because of the lag time in the data used to
calculate cost-to-charge ratios, we are proposing that fiscal
intermediaries would use more recent data when determining a LTCH's
cost-to-charge ratio. Therefore, under Sec. 412.525(a)(4)(ii), by
cross-referencing proposed Sec. 412.84(i), we are proposing that
fiscal intermediaries would use either the most recent settled cost
report or the most recent tentative settled cost report, whichever is
later. In addition, we are proposing to make a similar change in Sec.
412.529(c)(4)(ii), by cross-referencing proposed Sec. 412.84(i), to
indicate that subject to the proposed provisions in the regulations at
Sec. 412.84(i), fiscal intermediaries would use either the most recent
settled cost report or the most recent tentative settled cost report,
whichever is later.

[[Page 11253]]

4. Proposed Adjustments for Special Cases
a. General
As discussed in the August 30, 2002 final rule (67 FR 55995), under
section 123 of Pub. L. 106-113 the Secretary generally has broad
authority in developing the PPS for LTCHs, including whether (and how)
to provide for adjustments to reflect variations in the necessary costs
of treatment among LTCHs.
Generally, LTCHs, as described in section 1886(d)(1)(B)(iv) of the
Act, are distinguished from other inpatient hospital settings by
maintaining an average length of stay of greater than 25 days. However,
LTCHs may have cases that have stays of considerably less than the
average length of stay and that receive significantly less than the
full course of treatment for a specific LTC-DRG. As we explained in the
August 30, 2002 final rule (67 FR 55995), such cases would be paid
inappropriately if the hospital were to receive the full LTC-DRG
payment. While we are not proposing any changes to the payment policy
for special cases at this time, below we discuss the payment
methodology for these special cases as implemented in the August 30,
2002 final rule (67 FR 55955-56010).
b. Short-Stay Outlier Cases
A short-stay outlier case may occur when a beneficiary receives
less than the full course of treatment at the LTCH before being
discharged. These patients may be discharged to another site of care or
they may be discharged and not readmitted because they no longer
require treatment. Furthermore, patients may expire early in their LTCH
stay.
As noted above, generally LTCHs are defined by statute as having an
average length of stay of greater than 25 days. We believe that a
payment adjustment for short-stay outlier cases results in more
appropriate payments, because these cases most likely would not receive
a full course of treatment in such a short period of time and a full
LTC-DRG payment may not always be appropriate. Payment-to-cost ratios
simulated for LTCHs, for the cases described above, show that if LTCHs
receive a full LTC-DRG payment for those cases, they would be
significantly ``overpaid'' for the resources they have actually
expended.
Under Sec. 412.529, we adjust the per discharge payment to the
least of 120 percent of the cost of the case, 120 percent of the LTC-
DRG specific per diem amount multiplied by the length of stay of that
discharge, or the full LTC-DRG payment, for all cases with a length of
stay up to and including five-sixths of the geometric average length of
stay of the LTC-DRG.
As we discussed above, in section VI.C.3. of this preamble, in the
March 4, 2003 proposed rule we proposed to revise the methodology for
determining cost-to-charge ratios for acute care hospitals under the
IPPS because, as we discussed in that notice, we became aware that
payment vulnerabilities exist in the current IPPS outlier policy.
Because the LTCH PPS high-cost outlier and short-stay outlier policies
are modeled after the outlier policy in the IPPS, we believe they are
susceptible to the same payment vulnerabilities and, therefore, merit
revision. As proposed for acute care hospitals under the IPPS at
proposed Sec. 412.84(i) and (m) in the March 4, 2003 proposed rule and
as we are proposing above for high-cost outlier payments at Sec.
412.525(a)(4)(ii), we are proposing under Sec. 412.529 that short-stay
outlier payments would be subject to the proposed provisions in the
regulations at Sec. 412.84(i) and (m). Therefore, consistent with the
proposed changes to the high-cost outlier policy discussed above in
section VI.C.3. of this preamble, we are proposing, by cross-
referencing Sec. 412.84(i), that fiscal intermediaries would use
either the most recent settled cost report or the most recent tentative
settled cost report, whichever is later, in determining a LTCH's cost-
to-charge ratio. We also are proposing, by cross-referencing Sec.
412.84(i), that the applicable statewide average cost-to-charge ratio
would be applied when a LTCH's cost-to-charge ratio exceeds the
ceiling. Finally, we are proposing, by cross-referencing Sec.
412.84(m), that any reconciliation of payments for short-stay outliers
would be made upon cost report settlement to account for differences
between the estimated cost-to-charge ratio and the actual cost-to-
charge ratio for the period during which the discharge occurs. As is
the case with the proposed changes to the outlier policy for acute care
hospitals under the IPPS, we are still assessing the procedural changes
that would be necessary to implement this change.
c. Interrupted Stay
In Sec. 412.531(a), we define an ``interruption of a stay'' as a
stay at a LTCH during which a Medicare inpatient is transferred upon
discharge to an acute care hospital, an IRF, or a SNF for treatment or
services that are not available in the LTCH and returns to the same
LTCH within applicable fixed day periods. For a discharge to an acute
care hospital, the applicable fixed-day period is 9 days. For a
discharge to an IRF, the applicable fixed-day period is 27 days. For a
discharge to a SNF, the applicable fixed-day period is 45 days. The
counting of the days begins on the day of discharge from the specified
facility and ends on the 9th, 27th, or 45th day for an acute care
hospital, an IRF, or a SNF, respectively. (We refer readers to section
VI.C.4.e. of this preamble for a discussion of application of this
interrupted stay policy to Medicare-participating providers with
approved swing beds.)
If the patient's length of stay away from the LTCH does not exceed
the fixed-day thresholds, the return to the LTCH is considered part of
the first admission and only a single LTCH PPS payment will be made.
(From the standpoint of implementing this policy, in the event that a
Medicare inpatient is discharged from a LTCH and is readmitted and the
stay qualifies as an interrupted stay, the provider should cancel the
claim generated by the original stay in the LTCH and submit one claim
for the entire stay. For further details, see Program Memorandum
Transmittal A-02-093, September 2002.) On the other hand, if the
patient stay exceeds the total fixed-day threshold outside of the LTCH
at another facility before being readmitted, two separate LTC-DRG
payments will be made, one based on the principal diagnosis for the
first admittance and the other based on the principal diagnosis for the
second admittance. Moreover, if the principal diagnoses are the same
for both admissions, the hospital could receive two similar payments.
(See section VI.C.4.e. of this proposed rule for application of the
interrupted stay policy to transfers to swing bed hospitals.)
d. Onsite Discharges and Readmittances
Under Sec. 412.532, generally, if a LTCH readmits more than 5
percent of its Medicare patients who are discharged to an onsite SNF,
IRF, or psychiatric facility, or to an onsite acute care hospital, only
one LTC-DRG payment will be made to the LTCH for discharges and
readmittances during the LTCH's cost reporting period. Therefore,
payment for the entire stay will be paid either as one full LTC-DRG
payment or a short-stay outlier, depending on the duration of the
entire LTCH stay.
In applying the 5-percent threshold, we apply one threshold for
discharges and readmittances with a co-located acute care hospital.
There is also a separate 5-percent threshold for all discharges and
readmittances with co-located SNFs, IRFs, and psychiatric facilities.
In the case of a LTCH that is co-located with an acute care hospital,

[[Page 11254]]

an IRF, or a SNF, the interrupted stay policy at Sec. 412.531 applies
until the 5-percent threshold is reached. However, once the applicable
threshold is reached, all such discharges and readmittances to the
applicable site(s) for that cost reporting period are paid as one
discharge. This means that even if a discharged LTCH Medicare patient
was readmitted to the LTCH following a stay in an acute care hospital
of greater than 9 days, if the facilities share a common location and
the 5-percent threshold were exceeded, the subsequent discharge from
the LTCH will not represent a separate hospitalization for payment
purposes. Only one LTC-DRG payment will be made for all such discharges
during a cost reporting period to the acute care hospital, regardless
of the length of stay at the acute care hospital, that are followed by
readmittances to the onsite LTCH.
Similarly, if the LTCH has exceeded its 5-percent threshold for all
discharges to an onsite IRF, SNF, or psychiatric hospital or unit with
readmittances to the LTCH, the subsequent LTCH discharge for patients
from those sites for the entire cost reporting period will not be
treated as a separate discharge for Medicare payment purposes. (As
under the interrupted stay policy, payment to an acute care hospital
under the IPPS, to an IRF under the IRF PPS, and to a SNF under the SNF
PPS, will not be affected. Payments to the psychiatric facility also
will not be affected.)
e. Treatment of Swing Beds Under the Interrupted Stay and Onsite
Discharge and Readmittance Policies
A swing-bed hospital is defined at Sec. 413.114(b) as a hospital
or critical access hospital (CAH) participating in Medicare that has an
approval from CMS to provide posthospital SNF care as defined in Sec.
409.20 and meets the requirements specified in Sec. 482.66 or Sec.
485.645. Swing beds are otherwise licensed hospital beds that may,
under certain circumstances, be used temporarily as SNF beds. Under
Sec. 413.114(a)(2), posthospital SNF care furnished in general routine
inpatient beds in rural hospitals (other than CAHs) is paid in
accordance with the provisions of the SNF PPS for services furnished
for cost reporting periods beginning on or after July 1, 2002. Since it
is possible for a Medicare beneficiary to be discharged from a LTCH for
posthospital SNF care that is being provided by another hospital-level
Medicare provider with swing beds, such a discharge would be considered
the same as if it were to a individual SNF. We interpret the extension
of the SNF PPS to swing beds to require that all payment policy
determinations regarding patient movement between LTCHs and SNFs,
including the onsite policy described above, also apply to swing beds.
We want to emphasize that our inclusion of swing beds in payment
policy determinations for all patient movement between LTCHs and SNFs
(see section VI.C.4.c. of this preamble) would mean that a readmission
to a LTCH from posthospital SNF care being provided in a swing bed that
is located either in the LTCH itself or in another onsite Medicare
provider would have the same policy consequences as would a readmission
to the LTCH from an onsite SNF.
5. Other Proposed Payment Adjustments
As indicated earlier, we had broad authority under section 123 of
Pub. L. 106-113, including whether (and how) to provide for adjustments
to reflect variations in the necessary costs of treatment among LTCHs.
Thus, in the August 30, 2002 final rule (67 FR 56014-56027), we
discussed our extensive data analysis and rationale for not
implementing an adjustment for geographic reclassification, rural
location, treating a disproportionate share of low-income patients
(DSH), or indirect medical education (IME) costs. In that same final
rule, we stated that we would collect data and reevaluate the
appropriateness of these adjustments in the future once more LTCH data
become available after the LTCH PPS is implemented. Because the LTCH
PPS was only recently implemented, sufficient new data have not yet
been generated that would enable us to conduct a comprehensive
reevaluation of these payment adjustments. Therefore, we are not
proposing an adjustment for geographic reclassification, rural
location, DSH, or IME at this time. However, we will continue to
collect and interpret new data as they become available in the future
to determine if these data support proposing any additional payment
adjustments.
6. Proposed Budget Neutrality Offset to Account for the Transition
Methodology
Under Sec. 412.533, we implemented a 5-year transition period from
cost-based TEFRA reimbursement to prospective payment, during which a
LTCH will be paid an increasing percentage of the LTCH PPS rate and a
decreasing percentage of its payments under the TEFRA payment
principles for each discharge. Furthermore, we allow a LTCH to elect to
be paid based on 100 percent of the standard Federal rate in lieu of
the blend methodology.
As we discussed in further detail in the August 30, 2002 final rule
(67 FR 56032-56037), the standard Federal rate was determined as if all
LTCHs will be paid based on 100 percent of the standard Federal rate.
As stated earlier, we provide for a 5-year transition period
methodology that allows LTCHs to receive payments based partially on
reasonable cost principles. In order to maintain budget neutrality as
required by section 123(a)(1) of the Pub. L. 106-113 and Sec.
412.523(d)(2), during the 5-year transition period, we reduce all LTCH
Medicare payments (whether a LTCH elects payment based on 100 percent
of the Federal rate or whether a LTCH is being paid under the
transition blend methodology) by a factor that is equal to 1 minus the
ratio of the estimated TEFRA reasonable cost-based payments that would
have been made if the LTCH PPS had not been implemented, to the
projected total Medicare program PPS payments (that is, payments made
under the transition methodology and the option to elect payment based
on 100 percent of the Federal rate).
For FY 2003, based on a comparison of the estimated FY 2003
payments to each LTCH based on 100 percent of the standard Federal rate
and the transition blend methodology, we projected that approximately
49 percent of LTCHs would elect to be paid based on 100 percent of the
standard Federal rate rather than receive payment based on the
transition blend methodology. This projection was based on our estimate
that those 49 percent of LTCHs would receive higher payments based on
100 percent of the standard Federal rate compared to the payments they
would receive under the transition blend methodology. Similarly, we
projected that the remaining 51 percent of LTCHs would choose to be
paid based on the transition blend methodology (80 percent of TEFRA and
20 percent of the PPS) in FY 2003, because those payments would be
higher than if they were paid based on 100 percent of the standard
Federal rate.
In the August 30, 2002 final rule (67 FR 56034), we projected that
the full effect of the 5-year transition period and the election option
would result in a cost to the Medicare program of $240 million as
follows: For FY 2003, $50 million; for FY 2004, $80 million; for FY
2005, $60 million; for FY 2006, $40 million; for FY 2007, $10 million.
Thus, in order to maintain budget neutrality, we applied a 6.6 percent
reduction (0.934) to all LTCHs' payments in FY 2003 to account for the
estimated cost

[[Page 11255]]

of $50 million for FY 2003. Furthermore, in order to maintain budget
neutrality, we indicated that, in the future, we would propose a budget
neutrality offset for each of the remaining years of the transition
period to account for the estimated payments for the respective fiscal
year. Based on the data available at that time, in the August 30, 2002
final rule (67 FR 56037) we estimated the following budget neutrality
offsets to LTCH payments during the remainder of transition period: 5.0
percent (0.950) in FY 2004; 3.4 percent (0.996) in FY 2005; and 1.7
percent (0.983) in FY 2006. We also stated that no budget neutrality
offset is necessary in the 5th year of the transition period (FY 2007)
because under the transition methodology at Sec. 412.533, all LTCHs
will be paid based on 100 percent of the standard Federal rate and zero
percent of the TEFRA rate.
For the proposed 2004 LTCH PPS rate year, based on the best
available data and the policies presented in this proposed rule, we
project that approximately 49 percent of LTCHs would be paid based on
100 percent of the proposed standard Federal rate rather than receive
payment under the transition blend methodology. Using the same
methodology described in the August 30, 2002 final rule (67 FR 56034),
this projection, which uses updated data and inflation factors, is
based on our estimate that LTCHs would receive higher payments based on
100 percent of the proposed standard Federal rate compared to the
payments they would receive under the transition blend methodology.
Similarly, we project that the remaining 51 percent of LTCHs would
choose to be paid based on the transition blend methodology (80 percent
of TEFRA and 20 percent of the PPS for cost reporting periods beginning
during FY 2003; and 60 percent of TEFRA and 40 percent of the PPS for
cost reporting periods beginning during FY 2004 in accordance with
Sec. 412.533(a)) because they would receive higher payments than if
they were paid based on 100 percent of the proposed standard Federal
rate. We note that, as discussed in section VIII. of this preamble, we
are not proposing to change the 5-year transition period set forth in
Sec. 412.533(a) in conjunction with the proposed change in the
proposed 2004 LTCH PPS rate update discussed in detail in section III.
of this preamble. Therefore, the applicable transition blend percentage
will apply for a LTCH's entire cost reporting period beginning on or
after October 1 (unless the LTCH elects payment based on 100 percent of
the Federal rate).
In this proposed rule, based on the best available data and the
proposed policy revisions described, we project that the full effect of
the remaining 4 years of the transition period (including the election
option) would result in a cost to the Medicare program of $300 million
as follows:

------------------------------------------------------------------------
Estimated
Proposed LTCH PPS rate year cost (in
millions)
------------------------------------------------------------------------
2004...................................................... $120
2005...................................................... 90
2006...................................................... 60
2007...................................................... 30
------------------------------------------------------------------------

Therefore, we are proposing a 5.7 percent reduction (0.943) to all
LTCHs' payments for discharges occurring on or after July 1, 2003 and
through June 30, 2004, to account for the estimated cost of the $120
million for the proposed 2004 LTCH PPS rate year. We emphasize that the
budget neutrality offset to account for the transition methodology is
calculated based on and effective for payments made for discharges
occurring during the proposed 2004 LTCH PPS rate year of July 1, 2003
through June 30, 2004, not the Federal FY 2004 of October 1, 2003
through September 30, 2004.
As we stated above, in order to maintain budget neutrality, we
indicated that we would propose a budget neutrality offset for each of
the remaining years of the transition period to account for the
estimated costs for the respective fiscal year. Based on the best
available data at this time, we are proposing the following budget
neutrality offsets to LTCH payments during the transition period: 4.4
percent (0.956) in proposed 2005 LTCH PPS rate year; 2.9 percent
(0.971) in proposed 2006 LTCH PPS rate year; and 1.2 percent (0.988) in
proposed 2007 LTCH PPS rate year.
As we discussed in the August 30, 2002 final rule (67 FR 56036),
consistent with the statutory requirement for budget neutrality in
section 123(a)(1) of Pub. L. 106-113, we intend for estimated aggregate
payments under the LTCH PPS to equal the estimated aggregate payments
that would be made if the LTCH PPS was not implemented. Our methodology
for estimating proposed payments for purposes of the proposed budget
neutrality calculations used the best available data at this time and
necessarily reflects assumptions. As the LTCH PPS progresses, we are
monitoring payment data and will evaluate the ultimate accuracy of the
assumptions used in the budget neutrality calculations (for example,
inflation factors, intensity of services provided, or behavioral
response to the implementation of the LTCH PPS) described in the August
30, 2002 final rule (67 FR 56027-56037). To the extent these
assumptions significantly differ from actual experience, the aggregate
amount of actual payments may turn out to be significantly higher or
lower than the estimates on which the budget neutrality calculations
were based.
Section 123 of Pub. L. 106-113 and section 307 of Pub. L. 106-554
provide the Secretary broad authority in developing the LTCH PPS,
including the authority for appropriate adjustments. Under this broad
authority, as implemented in the regulations at Sec. 412.523(d)(3), we
have provided for the possibility of making a one-time prospective
adjustment to the LTCH PPS rates by October 1, 2006, so that the effect
of any significant difference between actual payments and estimated
payments for the first year of the LTCH PPS would not be perpetuated in
the PPS rates for future years.
In the August 30, 2002 final rule (67 FR 56037), we estimated that
total Medicare program payments for LTCH services over 5 years would be
$1.59 billion for FY 2003; $1.69 billion for FY 2004; $1.79 billion for
FY 2005; $1.90 billion for FY 2006; and $2.00 billion for FY 2007. In
this proposed rule, based on the best available data, we estimate that
total Medicare program payments for LTCH services from the proposed
LTCH PPS rate years of 2004 through 2008 would be:

------------------------------------------------------------------------
Estimated
Proposed LTCH PPS rate year payments ($
in billions)
------------------------------------------------------------------------
2004...................................................... $2.17
2005...................................................... 2.29
2006...................................................... 2.42
2007...................................................... 2.56
2008...................................................... 2.71
------------------------------------------------------------------------

As in our August 30, 2002 final rule (67 FR 56037), these estimates
are based on the projection that 49 percent of LTCHs would elect to be
paid based on 100 percent of the proposed standard Federal rate rather
than the transition blend, and an update of our estimate of proposed
2004 LTCH PPS rate year payments to LTCHs using our Office of the
Actuary's most recent estimate of the excluded hospital with capital
market basket of 2.5 percent for proposed 2004 LTCH PPS rate year
(adjusted to account for the proposed change in the rate update cycle
discussed in section VI.B.1.b. of this preamble), 3.1 percent for
proposed 2005 LTCH PPS rate year, 3.0 percent for proposed 2006 LTCH
PPS rate year, 2.9 percent for proposed 2007 LTCH

[[Page 11256]]

PPS rate year, and 3.0 percent for proposed 2008 LTCH PPS rate year. We
also have taken into account our Office of the Actuary's projection
that there would be an increase in Medicare beneficiary enrollment of
1.3 percent in proposed 2004 LTCH PPS rate year, 1.6 percent in
proposed 2005 LTCH PPS rate year, and 1.9 percent in proposed 2006 LTCH
PPS rate year and 2.0 percent in proposed 2007 LTCH PPS rate year and
2.1 percent in proposed 2008 LTCH PPS rate year.
Because the LTCH PPS was only recently implemented, sufficient new
data have not been generated that would enable us to conduct a
comprehensive reevaluation of our budget neutrality calculations.
Therefore, we are not proposing an adjustment for budget neutrality
under Sec. 412.523(d)(3) at this time. However, we will continue to
collect and interpret new data as the data become available in the
future to determine if such an adjustment should be proposed.

VII. Computing the Proposed Adjusted Federal Prospective Payments

In accordance with Sec. 412.525 and as discussed in sections VI.
of this proposed rule, the proposed standard Federal rate would be
adjusted to account for differences in area wages by multiplying the
labor-related share of the proposed standard Federal rate by the
appropriate proposed LTCH wage index. The proposed standard Federal
rate would also be adjusted to account for the higher costs of
hospitals in Alaska and Hawaii by multiplying the nonlabor-related
share of the proposed standard Federal rate by the appropriate
adjustment factor shown in the table in section VI.C.2. of this
preamble. To illustrate the methodology we are using to adjust the
proposed Federal prospective payments, we are providing the following
example:
During the proposed 2004 LTCH PPS rate year, a Medicare patient is
in a LTCH located in Chicago, Illinois (MSA 1600) with a proposed two-
fifths wage index value of 1.0418 (see Table 1 in the Addendum to this
proposed rule). The Medicare patient is classified into LTC-DRG 4
(Spinal Procedures), which has a proposed relative weight of 1.2493
(see Table 3 of the Addendum to this proposed rule). To calculate the
LTCH's total adjusted Federal prospective payment for this Medicare
patient, we compute the wage-adjusted Federal prospective payment
amount by multiplying the unadjusted proposed standard Federal rate
($35,830.05) by the labor-related share (72.612 percent) and the
proposed wage index (1.0418). This wage-adjusted amount is then added
to the nonlabor-related portion of the unadjusted proposed standard
Federal rate (27.388 percent) to determine the adjusted proposed
Federal rate, which is then multiplied by the proposed LTC-DRG relative
weight (1.2493) to calculate the total adjusted proposed Federal
prospective payment for the proposed 2004 LTCH PPS rate year
($46,121.11). In addition, as discussed in section VI.C.6. of this
preamble, for the proposed 2004 LTCH PPS rate year, we are proposing to
reduce the LTCH PPS payment by 5.6 percent for the proposed budget
neutrality offset to account for the costs of the transition
methodology. The following illustrates the components of the
calculations in this example:

Proposed Unadjusted Standard Federal Prospective $35,830.05
Payment Rate........................................
Labor-Related Share.................................. 0.72612
Labor-Related Portion of the Federal Rate............ = $26,016.92
Proposed \2/5\th Wage Index (MSA 1600)............... 1.0418
Wage-Adjusted Labor Share............................ = $27,104.43
Nonlabor-Related Portion of the Federal Rate + $ 9,813.36
(adjusted for COLA if applicable)...................
Adjusted Proposed Federal Rate....................... = $36,917.56
Proposed LTC-DRG 4 Relative Weight................... x 1.2493
Total Adjusted Proposed Federal Prospective Payment = $46,121.11
(Before the Proposed Budget Neutrality Offset)......
Proposed Budget Neutrality Offset.................... x 0.944
Total Proposed Federal Prospective Payment (With the = $43,538.33
Proposed Budget Neutrality Offset)..................

VIII. Transition Period

To provide a stable fiscal base for LTCHs, under Sec. 412.533, we
implemented a 5-year transition period from reasonable cost-based
reimbursement under the TEFRA system to a prospective payment based on
industry-wide average operating and capital-related costs. Under the
average pricing system, payment is not based on the experience of an
individual hospital. We believe that a 5-year phase-in will provide
LTCHs time to adjust their operations and capital financing to the new
LTCH PPS, which is based on prospectively determined Federal payment
rates. Furthermore, we believe that the 5-year phase-in of the LTCH PPS
allows LTCH personnel to develop proficiency with the LTC-DRG coding
system, resulting in improvement in the quality of the data used for
generating our annual determination of relative weights and payment
rates.
In accordance with Sec. 412.533, the transition period for all
hospitals subject to the LTCH PPS begins with the hospital's first cost
reporting period beginning on or after October 1, 2002 and extends
through the hospital's last cost reporting period beginning before
October 1, 2007. During the 5-year transition period, a LTCH's total
payment under the LTCH PPS is based on two payment percentages--one
based on reasonable cost-based (TEFRA) payments and the other based on
the standard Federal prospective payment rate. The percentage of
payment based on the LTCH PPS Federal rate increases by 20 percentage
points each year, while the TEFRA rate percentage decreases by 20
percentage points each year, for the next 4 fiscal years. For cost
reporting periods beginning on or after October 1, 2006, Medicare
payment to LTCHs will be determined entirely under the Federal PPS
methodology. The blend percentages are as follows:

------------------------------------------------------------------------
Reasonable
cost
Cost reporting periods beginning on or after Federal rate principles
percentage rate
percentage
------------------------------------------------------------------------
October 1, 2002............................. 20 80
October 1, 2003............................. 40 60
October 1, 2004............................. 60 40

[[Page 11257]]

October 1, 2005............................. 80 20
October 1, 2006............................. 100 0
------------------------------------------------------------------------

For a cost reporting period that began on or after October 1, 2002,
and before October 1, 2003 (FY 2003), the total payment for a LTCH is
80 percent of the amount calculated under reasonable cost principles
for that specific LTCH and 20 percent of the Federal prospective
payment amount. For cost reporting periods beginning on or after
October 1, 2003 and before October 1, 2004 (Federal FY 2004), the total
payment for a LTCH will be 60 percent of the amount calculated under
reasonable cost principles for that specific LTCH and 40 percent of the
Federal prospective payment amount. We note that the proposed change in
the effective date of the proposed 2004 LTCH PPS rate year update
discussed in section III. of this preamble has no effect on the LTCH
PPS transition period as set forth in Sec. 412.533(a). That is, LTCHs
paid under the transition blend under Sec. 412.533(a), will receive
those blended for the entire 5-year transition period (unless they
elect payments based on 100 percent of the Federal rate). Furthermore,
LTCHs paid under the transition blend will receive the appropriate
blend percentages of the Federal and reasonable cost-based rate for
their entire cost reporting period as prescribed in Sec. 412.533(a)(1)
through (a)(5). For example, a LTCH with a cost reporting period
beginning on July 1, 2003 (which is the LTCH's first cost reporting
period since the implementation of the LTCH PPS) would receive payments
based on 80 percent of the reasonable cost-based rate and 20 percent of
the Federal rate for its discharges occurring on or after July 1, 2003
through June 30, 2004 (if the LTCH does not elect payment based on 100
percent of the Federal rate).
The reasonable cost-based rate percentage is a LTCH specific amount
that is based on the amount that the LTCH would have been paid (under
TEFRA) if the PPS were not implemented. Medicare fiscal intermediaries
will continue to compute the LTCH reasonable cost-based payment amount
according to Sec. 412.22(b) of the regulations and sections 1886(d)
and (g) of the Act. We note that several reasonable cost-based payment
provisions that were previously in effect are no longer effective,
starting with cost reporting periods beginning in FY 2003. For
instance, the caps on the target amounts for ``existing'' LTCHs
provided for under section 4414 of the BBA (see Sec.
413.40(c)(4)(iii)) for FYs 1998 through 2002 will no longer be
applicable for cost reporting periods beginning in FY 2003. Thus, a
LTCH's target amount for FYs 2003 and beyond will be determined by
updating its prior year's target amount (which for FY 2003 was subject
to the FY 2002 cap). In addition, the 15-percent reduction to payments
to LTCHs for capital-related costs provided for under section 4412 of
Pub. L. 105-33 (Sec. 413.40(j)) is only applicable for portions of
cost reporting periods occurring in FYs 1998 through FY 2002. This
reduction is no longer applicable for cost reporting periods beginning
in FY 2003. Therefore, the TEFRA portion of a LTCH's payment for
capital-related costs during the LTCH PPS transition period is based on
100 percent of its Medicare allowable capital costs.
As we discussed in the August 30, 2002 final rule (67 FR 56038), in
implementing the PPS for LTCHs, one of our goals is to transition
hospitals to full prospective payments as soon as appropriate.
Therefore, under Sec. 412.533(c), we allow a LTCH, which is subject to
a blended rate, to elect payment based on 100 percent of the Federal
rate at the start of any of its cost reporting periods during the 5-
year transition period rather than incrementally shifting from
reasonable cost-based payments to prospective payments. Once a LTCH
elects to be paid based on 100 percent of the Federal rate, it will not
be able to revert to the transition blend. For cost reporting periods
beginning on or after December 1, 2002, and for the remainder of the 5-
year transition period, a LTCH must notify its fiscal intermediary in
writing of its election on or before the 30th day prior to the start of
the LTCH's next cost reporting period. For example, a LTCH with a cost
report period that begins on October 15, 2003, must notify its fiscal
intermediary in writing of an election before September 15, 2003.
Under Sec. 412.533(c)(2)(i), the notification by the LTCH to make
the election must be made in writing to the Medicare fiscal
intermediary. Under Sec. 412.533(c)(2)(ii) and (iii), the intermediary
must receive the request on or before the specified date (that is,
before November 1, 2002 for cost reporting periods that begin on or
after October 1, 2002 through November 30, 2002 and on or before the
30th day before the applicable cost reporting period begins for cost
reporting periods beginning on or after December 1, 2002 through
September 30, 2006), regardless of any postmarks or anticipated
delivery dates.
Notifications received, postmarked, or delivered by other means
after the specified date will not be accepted. If the specified date
falls on a day that the postal service or other delivery sources are
not open for business, the LTCH will be responsible for allowing
sufficient time for the delivery of the request before the deadline. If
a LTCH's notification is not received timely, payment will be based on
the transition period rates.

IX. Proposed Payments to New LTCHs

Under Sec. 412.23(e)(4), for purposes of Medicare payment under
the LTCH PPS, we define a new LTCH as a provider of inpatient hospital
services that otherwise meets the qualifying criteria for LTCHs, set
forth in Sec. Sec. 412.23(e)(1) and (e)(2) and, under present or
previous ownership (or both), and its first cost reporting period as a
LTCH begins on or after October 1, 2002. We also specify in Sec.
412.500 that the LTCH PPS applies to hospitals with a cost reporting
period beginning on or after October 1, 2002.
This definition of new LTCHs should not be confused with those
LTCHs first paid under the TEFRA payment system for discharges
occurring on or after October 1, 1997, described in section
1886(b)(7)(A) of the Act, added by section 4416 of Pub. L. 105-33. As
stated in Sec. 413.40(f)(2)(ii), for cost reporting periods beginning
on or after October 1, 1997, the payment amount for a ``new'' (post-FY
1998) LTCH is the lower of the hospital's net inpatient operating cost
per case or 110 percent of the national median target amount payment
limit for hospitals in the same class for cost reporting periods ending
during FY 1996, updated to the applicable cost reporting period (see 62
FR 46019, August 29, 1997). Under the PPS for LTCHs, those ``new''
LTCHs that meet the definition of ``new'' under

[[Page 11258]]

Sec. 413.40(f)(2)(ii) and that have first cost reporting periods prior
to October 1, 2002, will be paid under the transition methodology
described in Sec. 412.533.
As noted above and in accordance with Sec. 412.533(d), new LTCHs
will not participate in the 5-year transition from reasonable cost-
based reimbursement to prospective payment. The transition period is
intended to provide existing LTCHs time to adjust to payment under the
new system. Since these new LTCHs with cost reporting periods beginning
on or after October 1, 2002, would not have received payment under
reasonable cost-based reimbursement for the delivery of LTCH services
prior to the effective date of the LTCH PPS, we do not believe that
those new LTCHs require a transition period in order to make
adjustments to their operations and capital financing, as will LTCHs
that have been paid under reasonable cost-based.
For example, a ``new'' LTCH (post-FY 1998) that first began
receiving payment as a LTCH on October 1, 2001, will be subject to the
110 percent of the median target amount payment limit for LTCHs (in
accordance with Sec. 413.40(f)(2)(ii)) for both its FY 2002 (October
1, 2001 through September 30, 2002) and FY 2003 (October 1, 2002
through September 30, 2003) cost reporting periods. Assuming the
hospital has not elected to be paid 100 percent of the Federal rate for
its cost reporting period beginning on October 1, 2002 (the first cost
reporting period when the LTCH will be subject to the PPS), the
hospital would be paid under the transition methodology whereby the
LTCH's reasonable cost-based portion of its payment for operating costs
(80 percent) is limited by the 110 percent of the median target amount
payment limit for LTCHs under Sec. 413.40(f)(2)(ii). For its cost
reporting period beginning on October 1, 2003 (which is the hospital's
third cost reporting period), under the transition methodology, that
LTCH's reasonable cost-based portion of its payment for operating costs
(60 percent) will be limited to its target amount as determined under
Sec. 413.40(c)(4)(v). Furthermore, if a hospital is designated as a
LTCH on September 1, 2002, it would not be considered a new LTCH under
Sec. 412.23(e)(4), even if it had not discharged any patients or
received any payments as of the implementation date of the LTCH PPS on
October 1, 2002, because its first cost reporting period did not begin
on or after October 1, 2002. Thus, it would be paid according to Sec.
413.40(f)(2)(ii) from September 1, 2002 through August 30, 2003. This
LTCH will not be subject to payments under the LTCH PPS until the start
of its next cost reporting period on September 1, 2003. At the
beginning of its second cost reporting period as a LTCH (that is,
September 1, 2003), this LTCH would be subject to the transition period
in Sec. 412.533(a)(1), because this provision applies to cost
reporting periods beginning on or after October 1, 2002, and before
October 1, 2003. Under the blended payments of the transition period in
Sec. 412.533(a)(1), 80 percent of payments for operating costs would
be paid under the reasonable cost principles, as described in Sec.
413.40(f)(2)(ii). (This hospital could also elect to be paid 100
percent of the Federal rate for its cost reporting period beginning
September 1, 2003.)

X. Method of Payment

Under Sec. 412.513, a Medicare LTCH patient is classified into a
LTC-DRG based on the principal diagnosis, up to eight additional
(secondary) diagnoses, and up to six procedures performed during the
stay, as well as age, sex, and discharge status of the patient. The
LTC-DRG is used to determine the Federal prospective payment that the
LTCH will receive for the Medicare-covered Part A services the LTCH
furnished during the Medicare patient's stay. Under Sec. 412.541(a),
the payment is based on the submission of the discharge bill. The
discharge bill also provides data to allow for reclassifying the stay
from payment at the full LTC-DRG rate to payment for a case as a short-
stay outlier (under Sec. 412.529) or as an interrupted stay (under
Sec. 412.531), or to determine if the case will qualify for a high-
cost outlier payment (under Sec. 412.525(a)).
Accordingly, the ICD-9-CM codes and other information used to
determine if an adjustment to the full LTC-DRG payment is necessary
(for example, length of stay or interrupted stay status) are recorded
by the LTCH on the Medicare patient's discharge bill and submitted to
the Medicare fiscal intermediary for processing. The payment made
represents payment in full, under Sec. 412.521(b), for inpatient
operating and capital-related costs, but not for the costs of an
approved medical education program, bad debts, blood clotting factors,
anesthesia services by hospital-employed nonphysician anesthetists or
obtained under arrangement, or the costs of photocopying and mailing
medical records requested by a QIO, which are costs paid outside the
LTCH PPS.
As under the previous (reasonable cost-based) payment system, under
Sec. 412.541(b) a LTCH may elect to be paid using the periodic interim
payment (PIP) method described in Sec. 413.64(h) and may be eligible
to receive accelerated payments as described in Sec. 413.64(g).
For those LTCHs that are paid during the 5-year transition based on
the blended transition methodology in Sec. 412.533 for cost reporting
periods beginning on or after October 1, 2002, and before October 1,
2006, the PIP amount is based on the transition blend. For those LTCHs
that are paid based on 100 percent of the standard Federal rate, the
PIP amount is based on the estimated prospective payment for the year
rather than on the estimated reasonable cost-based reimbursement. We
exclude outlier payments that are paid upon submission of a discharge
bill from the PIP amounts. In addition, Part A costs that are not paid
for under the LTCH PPS, including Medicare costs of an approved medical
education program, bad debts, blood clotting factors, anesthesia
services by hospital-employed nonphysician anesthetists or obtained
under arrangement, and the costs of photocopying and mailing medical
records requested by a QIO, are subject to the interim payment
provisions (Sec. 412.541(c)).
Under Sec. 412.541(d), LTCHs with unusually long lengths of stay
and that are not receiving payment under the PIP method may bill on an
interim basis (60 days after an admission and at intervals of at least
60 days after the date of the first interim bill) and should include
any outlier payment determined as of the last day for which the
services have been billed.

XI. Monitoring

In the August 30, 2002 final rule (67 FR 56014), we discussed our
intent to develop a monitoring system that will assist us in evaluating
the LTCH PPS. Specifically we discussed the monitoring of the various
policies that we believed would provide equitable payment for stays
that reflect less than the full course of treatment and reduce the
incentives for inappropriate admissions, transfers, or premature
discharges of patients that are present in a discharge-based
prospective payment system. We also stated our intent to collect and
interpret data on changes in average lengths of stay under the PPS for
specific LTC-DRGs and the impact of these changes on the Medicare
program. We stated that if our data indicate that changes might be
warranted, we may revisit these issues and consider proposing revisions
to these policies in the future. To this end, we have designed systems
features that will enable CMS and the fiscal intermediary to track a
beneficiary to

[[Page 11259]]

and from a LTCH and to and from another Medicare provider.
In that same final rule, we also explained that, given that the
only unique requirement that distinguishes a LTCH from other hospitals
is an average length of stay of greater than 25 days, we continue to be
concerned about the extent to which LTCH services and patients differ
from those services and patients treated in other Medicare covered
settings (for example, SNFs and IRFs) and how the LTCH PPS will affect
the access, quality, and costs across the health care continuum. Thus,
we will monitor trends in the supply and utilization of LTCHs and
Medicare's costs in LTCHs relative to other Medicare providers. For
example, we may conduct medical record reviews of Medicare patients to
monitor changes in service use (for example, ventilator use) over a
LTCH episode of care and to assess patterns in the average length of
stay at the facility level. We will consider future changes to LTCH
coverage and payment policy based upon the results of such analyses.

XII. Collection of Information Requirements

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

XIII. Regulatory Impact Analysis

A. Introduction

We have examined the impact of this proposed rule as required by
Executive Order 12866. We also have examined the impacts of this
proposed rule under the criteria of the Regulatory Flexibility Act
(RFA) (Pub. L. 96-354), section 1102(b) of the Social Security Act (the
Act), the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4),
and Executive Order 13132 (Federalism).
1. Executive Order 12866
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for proposed and final rules that
constitute significant regulatory action, including rules that have an
economic effect of $100 million or more in any one year (major rules).
We have determined that this proposed rule would not be a major rule
within the meaning of Executive Order 12866 because the redistributive
effects do not constitute a shift of $100 million in any one year. As
we discuss in further detail below, and in section VI.B.1.b. of the
preamble of this proposed rule, we are proposing that the proposed
change to the LTCH PPS rate update cycle be budget neutral. Therefore,
we estimate that there would be no budgetary impact for the Medicare
program as a result of the proposed change to the LTCH PPS rate update
cycle. Based on the best available data for 194 LTCHs, we estimate that
the proposed 2.2 percent increase in the standard Federal rate for the
proposed 2004 LTCH PPS rate year would result in $21.4 million and
there are no significant redistributive effects among any groups of
hospitals. (Section VI.C.6. of this preamble includes an estimate of
Medicare program payments for LTCH services.)
2. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small businesses in issuing a proposed and final rule. For purposes
of the RFA, small entities include small businesses, nonprofit
organizations, and government agencies. Most hospitals and most other
providers and suppliers are small entities, either by nonprofit status
or by having revenues of $25 million or less annually. For purposes of
the RFA, all hospitals are considered small entities. Medicare fiscal
intermediaries are not considered to be small entities. Individuals and
States are not included in the definition of a small entity. We certify
that this proposed rule would not have a significant impact on a
substantial number of small entities, in accordance with RFA.
3. Impact on Rural Hospitals
Section 1102(b) of the Social Security Act requires us to prepare a
regulatory impact analysis if a proposed or final rule may have a
significant impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside of
an MSA and has fewer than 100 beds. As discussed in detail in section
XIII.B. of this preamble, this proposed rule would not have a
substantial impact on the seven rural hospitals for which data were
available that have fewer than 100 beds and that are located in rural
areas.
4. Unfunded Mandates
Section 202 of the UMRA requires that agencies assess anticipated
costs and benefits before issuing any proposed rule or any final rule
preceded by a rule that may result in expenditures in any one year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million or more. This proposed rule would not
mandate any requirements for State, local, or tribal governments nor
would it result in expenditures by the private sector of $110 million
or more in any one year.

5. Federalism

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications.
We have examined this proposed rule under the criteria set forth in
Executive Order 13132 and have determined that this proposed rule will
not have any significant impact on the rights, roles, and
responsibilities of State, local, or tribal governments or preempt
State law.

B. Anticipated Effects

We discuss the impact of this proposed rule below in terms of its
fiscal impact on the Federal Medicare budget and on LTCHs.
1. Budgetary Impact
Section 123(a)(1) of Pub. L. 106-113 requires us to set the payment
rates contained in this proposed rule such that total payments under
the LTCH PPS are projected to equal the amount that would have been
paid if this PPS had not been implemented. However, as discussed in
greater detail in the August 30, 2002 final rule (67 FR 56033-56036),
the FY 2003 standard Federal rate ($34,956.15) was calculated as if all
LTCHs will be paid based on 100 percent of the standard Federal rate in
FY 2003. As discussed in section VI.C.6. of this proposed rule, we are
applying a budget neutrality offset to payments to account for the
monetary effect of the 5-year transition period and the policy to
permit LTCHs to elect to be paid based on 100 percent of the standard
Federal rate rather than a blend of Federal prospective payments and
reasonable cost-based payments during the transition. The amount of the
offset is equal to 1 minus the ratio of the estimated reasonable cost-
based payments that would have been made if the LTCH PPS had not been
implemented, to the projected total

[[Page 11260]]

Medicare program payments that would be made under the transition
methodology and the option to elect payment based on 100 percent of the
Federal prospective payment rate.
Our Office of the Actuary computed an update factor to update LTCH
PPS payments from the current rate period (Federal FY 2003) to the
proposed new LTCH PPS rate year (July 1, 2003 through June 30, 2004).
The proposed LTCH PPS rate year overlaps the current rate period by 3
months (July 1, 2003 through September 30, 2003). The update for
Federal FY 2003 is currently estimated at 3.5 percent and the proposed
update factor for the proposed 2004 LTCH PPS rate year is estimated at
2.5 percent (as discussed in section VI.B. of the preamble of this
proposed rule). Therefore, over the period from FY 2002 through the
proposed 2004 LTCH PPS rate year (June 30, 2004), the cumulative
increase would be 6.0 percent [1.035 * 1.025 = 1.060]. This cumulative
increase matches (within rounding) the cumulative increase calculated
by using the index level in the new proposed effective period and the
index level in FY 2002, such that having two separate updates result in
the same cumulative update as if we had used a single update for the
entire 21-month period (October 1, 2002 through June 30, 2004). Thus,
the proposed change to the proposed 2004 LTCH PPS rate update cycle
would not result in a higher or lower update than would have been the
case (except due to rounding) if no change had been made to the LTCH
PPS update cycle. In addition, as discussed in section VI.B.1.b. of the
preamble of this proposed rule, we proposed to apply a budget
neutrality adjustment of 0.997 in determining the proposed standard
Federal rate to account for the estimated $5.66 million budgetary
impact for the Medicare program in FY 2003 as a result of the proposed
change to LTCH PPS rate update cycle.
2. Impact on Providers
The basic methodology for determining a LTCH PPS payment is set
forth in the regulations at Sec. 412.521 through Sec. 412.525. In
addition to the basic LTC-DRG payment (standard Federal rate x LTC-DRG
relative weight), we make adjustments for differences in area wage
levels, cost-of-living adjustment for Alaska and Hawaii, and short-stay
outliers. In addition, LTCHs may also receive high-cost outlier
payments for those cases that qualify under the threshold established
each rate year. Section 412.533 provides for a 5-year transition to
fully prospective payments from payment based on reasonable cost-based
principles. During the 5-year transition period, payments to LTCHs are
based on an increasing percentage of the LTCH PPS Federal rate and a
decreasing percentage of payment based on reasonable cost-based
principles. Section 412.533(c) provides for a one-time opportunity for
LTCHs to elect payments based on 100 percent of the LTCH PPS Federal
rate.
In order to understand the impact of the proposed changes to the
LTCH PPS discussed in this proposed rule on different categories of
LTCHs for the proposed 2004 LTCH PPS rate year, it is necessary to
estimate payments per discharge under the current (Federal FY 2003)
LTCH PPS rates and factors (see the August 30, 2002 final rule) and
payments per discharge that would be made under the proposed LTCH PPS
rates and factors for the proposed 2004 LTCH PPS rate year (July 1,
2003 through June 30, 2004). We also evaluated the percent change in
payments per discharge of estimated FY 2003 prospective payments to
estimated proposed 2004 LTCH PPS rate year payments for each category
of LTCHs.
Hospital groups were based on characteristics provided in OSCAR
data and FYs 1999 through 2000 cost report data from HCRIS. Hospitals
with incomplete characteristics were grouped into the ``unknown''
category. Hospital groups include:
[sbull] Location: Large Urban/Other Urban/Rural.
[sbull] Participation Date.
[sbull] Ownership Control.
[sbull] Census Region.
[sbull] Bed Size.
To estimate the impacts among the various categories of providers
during the transition period, it is imperative that reasonable cost-
based principle payments and prospective payments contain similar
inputs. More specifically, in the impact analysis showing the impact
reflecting the applicable transition blend percentages of prospective
payments and reasonable cost-based principle payments and the option to
elect payment based on 100 percent of the Federal rate (Table I below),
we estimated payments only for those providers that we are able to
calculate payments based on reasonable cost-based principles. For
example, if we did not have FYs 1996 through 1999 cost data for a LTCH,
we were unable to determine an update to the LTCH's target amount to
estimate payment under the current reasonable cost-based principles.
Using LTCH cases from the FY 2001 MedPAR file and cost data from
FYs 1996 through 2000 in HCRIS to estimate payments under the current
reasonable cost-based principles, we have both case-mix and cost data
for 194 LTCHs. Thus, for the impact analyses reflecting the applicable
transition blend percentages of prospective payments and reasonable
cost-based principle payments and the option to elect payment based on
100 percent of the Federal rate (see Table VII. below), we used data
from 194 LTCHs. However, using cases from the FY 2001 MedPAR file, we
had case-mix data for 250 LTCHs. Cost data to determine current
payments under reasonable cost-based principle payments are not needed
to simulate payments based on 100 percent of the Federal rate.
Therefore, for the impact analyses reflecting fully phased-in
prospective payments (see Table VIII. below), we used data from 250
LTCHs.
These impacts reflect the estimated ``losses'' or ``gains'' among
the various classifications of providers for the 12-month period from
October 1, 2002 through September 30, 2003 (Federal FY 2003) compared
to the 12-month period from July 1, 2003 through June 30, 2004
(proposed 2004 LTCH PPS rate year). Proposed 2004 LTCH rate year
prospective payments were based on the proposed standard Federal rate
of $35,726.64 and the hospital's estimated case-mix based on FY 2001
claims data. Prospective payments for Federal FY 2003 were based on the
standard Federal rate of $34,956.15 and the same FY 2001 claims data.
3. Calculation of Prospective Payments
To estimate payments under the LTCH PPS, we simulated payments on a
case-by-case basis by applying the payment policy for short-stay
outliers (as described in section VI.C.4.b. of this proposed rule) and
the adjustments for area wage differences (as described in section
VI.C.1. of this proposed rule) and for the cost-of-living for Alaska
and Hawaii (as described in section VI.C.2. of this proposed rule).
Additional payments would also be made for high-cost outlier cases (as
described in section VI.C.3. of this proposed rule). As noted in
section VI.C.5. of this proposed rule, we are not proposing to make
adjustments for geographic reclassification, indirect medical education
costs, or a disproportionate share of low-income patients.
The adjustment for area wage differences for estimated FY 2003
payments was done by using the applicable LTCH PPS wage index (one-
fifth of the full FY 2002 acute care hospital inpatient wage index
data, without taking into account geographic reclassification under
sections 1886(d)(8) and (d)(10) of the Act (see

[[Page 11261]]

August 30, 2002, 67 FR 56057-56075). For the estimated proposed 2004
LTCH PPS rate year payments, we used a weighted average of a LTCH's
applicable wage index during the period from July 1, 2003, through June
30, 2004, since some providers may experience a change in the wage
index phase-in percentage during the period from July 1, 2003 through
June 30, 2004. For cost reporting periods beginning on or after October
1, 2002 and before September 30, 2003, the applicable proposed LTCH
wage index is one-fifth of the full FY 2002 acute care hospital
inpatient wage index data, without taking into account geographic
reclassification under sections 1886(d)(8) and (d)(10) of the Act. For
cost reporting periods beginning on or after October 1, 2003 and before
September 30, 2004, the applicable LTCH wage index would be two-fifths
of the full FY 2003 acute care hospital inpatient wage index data,
without taking into account geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act. Therefore, a provider with a cost
reporting period beginning October 1, 2003, would have 3 months of
payments under the one-fifth wage index value and 9 months of payment
under the two-fifths wage index value. For this provider, we computed a
blended wage index of 25 percent (3 months/12 months) of the one-fifth
wage index value and 75 percent (9 months/12 months) of the two-fifths
wage index value.
We also calculated payments using the applicable transition blend
percentages. For FY 2003, the applicable transition blend percentage is
80 percent of payment based on reasonable cost-based principles and 20
percent of payment under the LTCH PPS. For the proposed 2004 LTCH PPS
rate year based on the transition blend percentages set forth in Sec.
412.533(a), some providers may experience a change in the transition
blend percentage during the period from July 1, 2003 through June 30,
2004. For example during the 12-month period from July 1, 2003 through
June 30, 2004, a provider with a cost reporting period beginning on
October 1, 2002 (which is paid under the 80/20 transition blend (80
percent of payments based on reasonable cost-based principles and 20
percent of payments under the LTCH PPS) beginning October 1, 2002)
would have 3 months (July 1, 2003 through September 30, 2003) under the
80/20 blend and 9 months (October 1, 2003 through June 30, 2004) of
payment under the 60/40-transition blend (60 percent of payments based
on reasonable cost-based principles and 40 percent of payments under
the LTCH PPS). (The 60 percent/40 percent blend would continue until
the provider is cost report period beginning on October 1, 2004.) In
estimating blended transition payments, we estimated payments based on
reasonable cost-based principles in accordance with the methodology in
section 1886(b) of the Act. We compared the estimated blended
transition payment to the LTCH's estimated payment if it would elect
payment based on 100 percent of the Federal rate. If we estimated that
a LTCH would be paid more based on 100 percent of the Federal rate, we
assumed that it would elect to bypass the transition methodology and to
receive immediate prospective payments.
Then we applied the 6.6 percent reduction to payment to account for
the effect of the 5-year transition methodology and election of payment
based on 100 percent of the Federal rate on Medicare program payments
established in the August 30, 2002 final rule (67 FR 56034) to each
LTCH's estimated payments under the PPS for FY 2003. Similarly, we
applied the proposed 5.7 percent reduction to payment to account for
the effect of the 5-year transition methodology and election of payment
based on 100 percent of the Federal rate on Medicare program payments
(see section VI.C.6. of this proposed rule) to each LTCH's estimated
payments under the PPS for the proposed 2004 LTCH PPS rate year. The
impact based on our projection of whether a LTCH would be paid based on
the transition blend methodology or would elect payment based on 100
percent of the Federal rate is shown below in Table VII.
In Table VIII. below, we also show the impact if the LTCH PPS were
fully implemented; that is, as if there were an immediate transition to
fully Federal prospective payments under the LTCH PPS for Federal FY
2003 and the proposed 2004 LTCH PPS rate year. Accordingly, the
proposed 5.7 percent reduction to account for the 5-year transition
methodology on LTCHs' Medicare program payments for the proposed 2004
LTCH PPS rate year and the 6.6 percent reduction to account for the 5-
year transition methodology on LTCHs' Medicare program payments
established for FY 2003 were not applied to LTCHs' estimated payments
under the PPS.
Tables VII. and VIII. below illustrate the aggregate impact of the
payment system among various classifications of LTCHs. The first
column, LTCH Classification, identifies the type of LTCH. The second
column lists the number of LTCHs of each classification type; the third
column identifies the number of long-term care cases; and the fourth
column shows the estimated payment per discharge for FY 2003; the fifth
column shows the estimated payment per discharge for proposed 2004 LTCH
PPS rate year; and the sixth column shows the percent change of FY 2003
compared to proposed 2004 LTCH PPS rate year.

Table VII.--Projected Impact Reflecting Applicable Transition Blend Percentages of Proposed Prospective Payments
and Reasonable Cost-Based (TEFRA) Payments and Option To Elect Payment Based on 100 Percent of the Federal Rate
\1\
[FY 2003 Payments Compared to Proposed 2004 LTCH Prospective Payment System Rate Year]
----------------------------------------------------------------------------------------------------------------
Average
proposed
Average 2004 LTCH
Number of Number of Federal FY prospective Percent
LTCH classification LTCHs LTCH cases 2003 payment payment change
per case \2\ system rate
year payment
per case \3\
----------------------------------------------------------------------------------------------------------------
All Providers............................. 194 71,811 $26,919 $27,227 1.1
By Location:
Rural................................. 7 2,153 20,668 20,864 1.0
Urban................................. 187 69,658 27,113 27,424 1.1
Large............................. 113 47,705 27,445 27,742 1.1

[[Page 11262]]

Other............................. 74 21,953 26,391 26,733 1.3
By Participation Date:
After October 1993.................... 124 41,876 28,137 28,506 1.3
Before October 1983................... 16 7,836 20,060 20,270 1.0
October 1983--September 1993.......... 45 19,990 27,194 27,427 0.9
Unknown............................... 9 2,109 25,636 25,791 0.6
By Ownership Control:
Voluntary............................. 48 17,730 24,756 25,096 1.4
Proprietary........................... 136 51,626 27,688 27,990 1.1
Government............................ 10 2,455 26,371 26,587 0.8
By Census Region:
New England........................... 14 9,487 20,146 20,320 0.9
Middle Atlantic....................... 9 3,276 28,519 28,714 0.7
South Atlantic........................ 20 6,571 31,310 31,660 1.1
East North Central.................... 33 9,057 28,964 29,238 0.9
East South Central.................... 10 2,863 25,761 25,905 0.6
West North Central.................... 11 2,898 26,611 26,947 1.3
West South Central.................... 71 30,248 26,147 26,479 1.3
Mountain.............................. 15 2,491 28,399 28,933 1.9
Pacific............................... 11 4,920 34,145 34,608 1.4
By Bed Size:
Beds: 0-24............................ 17 2,453 29,299 29,570 0.9
Beds: 25-49........................... 88 21,725 28,091 28,373 1.0
Beds: 50-74........................... 24 8,209 28,492 28,659 0.6
Beds: 75-124.......................... 34 16,306 27,241 27,630 1.4
Beds: 125-199......................... 21 13,820 24,579 24,856 1.1
Beds: 200+............................ 9 9,218 25,231 25,636 1.6
Unknown................................... 1 80 7,787 8,043 3.3
----------------------------------------------------------------------------------------------------------------
\1\ These calculations take into account that some providers may experience a change in the blend percentage
changes during the July 1, 2003 through June 30, 2004 rate cycle. For example, during the 12-month period of
July 1, 2003 through June 30, 2004, a provider with a cost reporting period beginning October 1 would have 3
months (July 1, 2003 through September 30, 2003) of payments under the 80/20 blend and 9 months (October 1,
2003 through June 30, 2004) of payment under the 60/40 blend.
\2\ Average payment per case for the 12-month period of October 1, 2002 through September 30, 2003.
\3\ Average payment per case for the 12-month period of July 1, 2003 through June 30, 2004.

Table VIII.--Projected Impact Reflecting the Fully Phased-In Proposed Prospective Payments
[FY 2003 Payments Compared to Proposed 2004 LTCH Prospective Payment System Rate Year Payments]
----------------------------------------------------------------------------------------------------------------
Average
proposed
Average 2004 LTCH
Number of Number of Federal FY prospective Percent
LTCH classification LTCHs LTCH cases 2003 payment payment change
per case \1\ system rate
year payment
per case \2\
----------------------------------------------------------------------------------------------------------------
All Providers............................. 250 82,625 $26,367 $26,959 2.2
By Location:
Rural................................. 16 4,674 20,851 21,191 1.6
Urban................................. 234 77,951 26,687 27,305 2.3
Large............................. 135 52,256 27,027 27,661 2.3
Other............................. 99 25,695 25,996 26,581 2.2
By Participation Date:
After October 1993.................... 177 51,656 27,308 27,822 1.9
Before October 1983................... 17 7,897 20,826 20,780 -0.2
October 1983--September 1993.......... 45 20,004 26,724 27,719 3.7
Unknown............................... 11 3,068 22,178 23,400 5.5
By Ownership Control:
Voluntary............................. 55 19,853 24,314 25,020 2.9
Proprietary........................... 148 54,269 27,490 28,027 2.0
Government............................ 47 8,503 23,893 24,672 3.3

[[Page 11263]]

By Census Region:
New England........................... 16 9,609 21,094 20,937 -0.7
Middle Atlantic....................... 15 4,162 28,982 29,622 2.2
South Atlantic........................ 23 7,051 30,441 31,329 2.9
East North Central.................... 48 12,145 28,356 28,860 1.8
East South Central.................... 14 3,722 28,561 28,523 -0.1
West North Central.................... 16 3,769 26,347 27,094 2.8
West South Central.................... 87 33,971 24,560 25,363 3.3
Mountain.............................. 19 2,993 26,529 27,705 4.4
Pacific............................... 12 5,203 33,836 34,369 1.6
By Bed Size:
Beds: 0-24............................ 21 3,073 27,130 28,027 3.3
Beds: 25-49........................... 98 24,386 27,954 28,153 0.7
Beds: 50-74........................... 27 9,310 27,556 27,665 0.4
Beds: 75-124............................ 35 16,432 26,222 27,321 4.2
Beds: 125-199......................... 21 13,838 24,945 25,564 2.5
Beds: 200+............................ 11 9,518 25,041 26,099 4.2
Unknown............................... 37 6,068 23,354 24,095 3.2
----------------------------------------------------------------------------------------------------------------
\1\ Average payment per case for the 12-month period of October 1, 2002 through September 30, 2003.
\2\ Average payment per case for the 12-month period of July 1, 2003 through June 30, 2004.

4. Results
We have prepared the following summary of the impact (as shown in
Table VII.) of the LTCH PPS set forth in this proposed rule.
a. Location
The majority of LTCHs are in urban areas. Approximately 3 percent
of the LTCHs are identified as being located in a rural area, and
approximately 3 percent of all LTCH cases are treated in these rural
hospitals. Impact analysis in Table VII. shows that the percent change
in estimated payments per discharge for FY 2003 compared to the
proposed 2004 LTCH PPS rate year for rural LTCHs would be 1.0 percent,
and would be 1.1 percent for urban LTCHs. Large urban LTCHs are
projected to experience a 1.1 percent increase in payments per
discharge percent from FY 2003 compared to the proposed 2004 LTCH PPS
rate year, while other urban LTCHs projected to experience a 1.3
percent increase in payments per discharge percent from FY 2003
compared to the proposed 2004 LTCH PPS rate year. (See Table VII.)
b. Participation Date
LTCHs are grouped by participation date into three categories: (1)
Before October 1983; (2) between October 1983 and September 1993; and
(3) after October 1993. We did not have sufficient OSCAR data on 9
LTCHs, which we labeled as an ``Unknown'' category. The majority,
approximately 58 percent, of the LTCH cases are in hospitals that began
participating after October 1993 and are projected to experience a 1.3
percent increase in payments per discharge percent from FY 2003
compared to the proposed 2004 LTCH PPS rate year. Approximately 11
percent of the cases are in LTCHs that began participating in Medicare
before October 1983 and are projected to experience a 1.0 percent
increase in payments per discharge percent from FY 2003 compared to the
proposed 2004 LTCH PPS rate year. (See Table VII.)
c. Ownership Control
LTCHs are grouped into three categories based on ownership control
type--(1) voluntary; (2) proprietary; and (3) government.
Approximately 25 percent of LTCHs are government run and we expect
that voluntary LTCHs would ``gain'' the most from the proposed changes
based on our projection that they would experience a 1.4 percent
increase in payments per discharge from FY 2003 compared to the
proposed 2004 LTCH PPS rate year. Government and proprietary LTCHs are
projected to experience a 0.8 percent and 1.1 percent increase in
payments per discharge percent from FY 2003 compared to the proposed
2004 LTCH PPS rate year, respectively. (See Table VII.)
d. Census Region
LTCHs located in most regions are expected to experience an
increase in payments per discharge percent from FY 2003 compared to the
proposed 2004 LTCH PPS rate year. Specifically, of the nine census
regions, we expect that LTCHs in the Mountain region would experience
the largest percent increase in payments per discharge percent from FY
2003 compared to the proposed 2004 LTCH PPS rate year (1.9 percent). We
expect LTCHs in the East South Central region would experience the
smallest percent increase in payments per discharge percent from FY
2003 compared to the proposed 2004 LTCH PPS rate year (0.6 percent).
(See Table VII.)
e. Bed Size
LTCHs were grouped into six categories based on bed size--0-24
beds, 25-49 beds, 50-74 beds, 75-124 beds, 125-199 beds, and 200+ beds.
We did not have sufficient OSCAR data on 1 LTCH, which we labeled as an
``Unknown'' category.
The percent increase in payments per discharge percent from FY 2003
compared to the proposed 2004 LTCH PPS rate year are projected to
increase for all bed size categories. Most LTCHs were in bed size
categories where the percent increase in payments per discharge from FY
2003 compared to the proposed 2004 LTCH PPS rate year is

[[Page 11264]]

estimated to be greater than 1.0 percent. Other than the LTCH whose bed
size is unknown, LTCHs with 200 or more beds have the highest estimated
percent change in payments per discharge percent from FY 2003 compared
to the proposed 2004 LTCH PPS rate year (1.6 percent), while LTCHs with
between 50-74 beds have the lowest projected increase in the percent
change in payments per discharge percent from FY 2003 compared to the
proposed 2004 LTCH PPS rate year (0.6 percent). (See Table VII.)
5. Effect on the Medicare Program
Based on actuarial projections resulting from our experience with
other prospective payment systems, we estimate that Medicare spending
(total Medicare program payments) for LTCH services over the next 5
years would be as follows:

These estimates are based on the current estimate of increase in
the excluded hospital market with capital basket of 2.5 percent for
proposed 2004 LTCH PPS rate year (adjusted to account for the proposed
change in the rate update cycle discussed in section VI.B.1.b. of the
preamble of this proposed rule), 3.1 percent for proposed 2005 LTCH PPS
rate year, 3.0 percent for proposed 2006 LTCH PPS rate year, 2.9
percent for proposed 2007 LTCH PPS rate year, and 3.0 percent for
proposed 2008 LTCH PPS rate year. We currently estimate that there
would be an increase in Medicare beneficiary enrollment of 1.3 percent
in proposed 2004 LTCH PPS rate year, 1.6 percent in proposed 2005 LTCH
PPS rate year, 1.9 percent in proposed 2006 LTCH PPS rate year, 2.0
percent in proposed 2007 LTCH PPS rate year, 2.1 percent in proposed
2008 LTCH PPS rate year, and an estimated increase in the total number
of LTCHs. Consistent with the statutory requirement for budget
neutrality, we intend for estimated aggregate payments under the LTCH
PPS in FY 2003 to equal the estimated aggregate payments that would be
made if the LTCH PPS were not implemented. Our methodology for
estimating payments for purposes of the budget neutrality calculations
uses the best available data and necessarily reflects assumptions. As
we collect data from LTCHs, we will monitor payments and evaluate the
ultimate accuracy of the assumptions used to calculate the budget
neutrality calculations (for example, inflation factors, intensity of
services provided, or behavioral response to the implementation of the
LTCH PPS). To the extent the assumptions significantly differ from
actual experience, the aggregate amount of actual payments may turn out
to be significantly higher or lower than the estimates on which the
budget neutrality calculations are based.
Section 123 of Pub. L. 106-113 and section 307 of Pub. L. 106-554
provide the Secretary with extremely broad authority in developing the
LTCH PPS, including the authority for appropriate adjustments. In
accordance with this broad authority, we may discuss in a future
proposed rule a possible one-time prospective adjustment to the LTCH
PPS rates to maintain budget neutrality so that the effect of the
difference between actual payments and estimated payments for the first
year of LTCH PPS is not perpetuated in the PPS rates for future years.
As the LTCH PPS was only implemented for cost reporting periods
beginning on or after October 1, 2002, we do not yet have sufficient
data to determine whether such an adjustment is warranted.
6. Effect on Medicare Beneficiaries
Under the LTCH PPS, hospitals will receive payment based on the
average resources consumed by patients for each diagnosis. We do not
expect any changes in the quality of care or access to services for
Medicare beneficiaries under the LTCH PPS, but we expect that paying
prospectively for LTCH services will enhance the efficiency of the
Medicare program.

C. Executive Order 12866

In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.

XIV. Response to Public Comments

Because of the large number of items of correspondence we normally
receive on a proposed rule, we are not able to acknowledge or respond
to them individually. However, in preparing the final rule, we will
consider all comments concerning the provisions of this proposed rule
that we receive by the date and time specified in the DATES section of
this preamble and respond to those comments in the preamble to that
rule.

List of Subjects in 42 CFR Part 412

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

In accordance with the discussion in this preamble, the Centers for
Medicare & Medicaid Services proposes to amend 42 CFR chapter IV, part
412, as set forth below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

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

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

2. Section 412.22 is amended by revising paragraph (h)(2) and
adding a new paragraph (h)(6) to read as follows:

Sec. 412.22 Excluded hospitals and hospital units: General rules.

* * * * *
(h) Satellite facilities. * * *
(2) Except as provided in paragraphs (h)(3) and (h)(6) of this
section, effective for cost reporting periods beginning on or after
October 1, 1999, a hospital that has a satellite facility must meet the
following criteria in order to be excluded from the prospective payment
systems for any period:
* * * * *
(6) The provisions of paragraph (h)(2)(i) of this section do not
apply to any long-term care hospital that is subject to the long-term
care hospital prospective payment system under Subpart O of this part,
effective for cost reporting periods occurring on or after October 1,
2002, and that elects to be paid based on 100 percent of the Federal
prospective payment rate as specified in Sec. 412.533(c), beginning
with the first cost reporting period following that election, or to a
new long-term care hospital, as defined in Sec. 412.23(e)(4).
3. Section 412.503 is amended by adding a definition of ``long-term
care hospital prospective payment system rate year'' in alphabetical
order to read as follows:

Sec. 412.503 Definitions.

* * * * *
Long-term care hospital prospective payment system rate year means
the 12-month period of July 1 through June 30.
* * * * *
4. Section 412.523 is amended by revising paragraphs (c)(3) and
(d)(3) to read as follows:

[[Page 11265]]

Sec. 412.523 Methodology for calculating the Federal prospective
payment rates.

* * * * *
(c) * * *
(3) Computation of the standard Federal rate. The standard Federal
rate is computed as follows:
(i) For FY 2003. Based on the updated costs per discharge and
estimated payments for FY 2003 determined in paragraph (c)(2) of this
section, CMS computes a standard Federal rate for FY 2003 that
reflects, as appropriate, the adjustments described in paragraph (d) of
this section. The FY 2003 standard Federal rate is effective for
discharges occurring in cost reporting periods beginning on or after
October 1, 2002 through June 30, 2003.
(ii) For long-term care hospital prospective payment system rate
years beginning July 1, 2003 and after. The standard Federal rate for
long-term care hospital prospective payment system rate years beginning
July 1, 2003 and after will be the standard Federal rate for the
previous long-term care hospital prospective payment system rate year,
updated by the increase factor described in paragraph (a)(2) of this
section, and adjusted as appropriate as described in paragraph (d) of
this section. For the rate year from July 1, 2003 through June 30,
2004, the updated and adjusted standard Federal rate will be offset by
a budget neutrality factor to account for updating the FY 2003 standard
Federal rate on July 1 rather than October 1.
* * * * *
(d) * * *
(3) One-time prospective adjustment. The Secretary will review
payments under this prospective payment system and may make a one-time
prospective adjustment to the long-term care hospital prospective
payment system rates by October 1, 2006, so that the effect of any
significant difference between actual payments and estimated payments
for the first year of the long-term care hospital prospective payment
system is not perpetuated in the prospective payment rates for future
years.
* * * * *
5. Section 412.525 is amended by revising paragraph (a) to read as
follows:

Sec. 412.525 Adjustments to the Federal prospective payment.

(a) Adjustments for high-cost outliers.
(1) CMS provides for an additional payment to a long-term care
hospital if its estimated costs for a patient exceed the adjusted LTC-
DRG payment plus a fixed-loss amount. For each long-term care hospital
rate year, CMS determines a fixed-loss amount that is the maximum loss
that a hospital can incur under the prospective payment system for a
case with unusually high costs.
(2) The fixed-loss amount is determined for the long-term care
hospital rate year using the LTC-DRG relative weights that are in
effect on July 1 of the rate year.
(3) The additional payment equals 80 percent of the difference
between the estimated cost of the patient care (determined by
multiplying the hospital-specific cost-to-charge ratios by the Medicare
allowable covered charge) and the sum of the adjusted Federal
prospective payment for the LTC-DRG prospective payment system payment
and the fixed-loss amount.
(4)(i) For discharges occurring on or after October 1, 2002 through
June 30, 2003, no retroactive adjustments will be made to outlier
payments upon cost report settlement to account for differences between
the estimated cost-to-charge ratio and the actual cost-to-charge ratio
of the case.
(ii) For discharges occurring on or after July 1, 2003, high-cost
outlier payments are subject to the provisions of Sec. 412.84(i) and
(m) for adjustments of cost-to-charge ratios.
* * * * *
6. Section 412.529 is amended by:
A. Revising paragraph (c)(4).
B. In paragraph (d), the term ``LTCH's'' is removed and the term
``long-term care hospital's'' is added in its place.

Sec. 412.529 Special payment provision for short-stay outliers.

* * * * *
(c) * * *
(4)(i) For discharges occurring on or after October 1, 2002 through
June 30, 2003, no retroactive adjustments will be made to short-stay
outlier payments upon cost report settlement to account for differences
between cost-to-charge ratio and the actual cost-to-charge ratio of the
case.
(ii) For discharges occurring on or after July 1, 2003, short-stay
outlier payments are subject to the provisions of Sec. 412.84(i) and
(m) for adjustments of cost-to-charge ratios.
* * * * *
7. Section 412.535 is revised to read as follows:

Sec. 412.535 Publication of the Federal prospective payment rates.

CMS publishes information pertaining to the long-term care hospital
prospective payment system effective for each annual update in the
Federal Register.
(a) Information on the unadjusted Federal payment rates and a
description of the methodology and data used to calculate the payment
rates are published on or before June 1 prior to the start of each
long-term care hospital prospective payment system rate year which
begins July 1.
(b) Information on the LTC-DRG classification and associated
weighting factors is published on or before August 1 prior to the
beginning of each Federal fiscal year.

(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)

Dated: December 20, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: February 14, 2003.
Tommy G. Thompson,
Secretary.

Addendum

This addendum contains the tables referred to throughout the
preamble to this proposed rule. The tables presented below are as
follows:
Table 1.--Proposed Long-Term Care Hospital Wage Index for Urban
Areas for Discharges Occurring from July 1, 2003 through June 30, 2004
Table 2.--Proposed Long-Term Care Hospital Wage Index for Rural
Areas for Discharges Occurring from July 1, 2003 through June 30, 2004
Table 3.--Proposed LTC-DRG Relative Weights, Geometric Mean Length
of Stay, and Short-Stay Five-Sixths Average Length of Stay for the
Period of July 1, 2003 through September 30, 2003

Table 1.--Proposed Long-Term Care Hospital Wage Index for Urban Areas
for Discharges Occurring From July 1, 2003 Through June 30, 2004
------------------------------------------------------------------------
Full \1/5\ \2/5\
Urban area (Constituent wage wage wage
MSA counties) index index index
\1\ \2\ \3\
------------------------------------------------------------------------
0040.............. Abilene, TX

[[Page 11266]]

Taylor, TX.............. 0.7792 0.9558 0.9117
0060.............. Aguadilla, PR
Aguada, PR
Aguadilla, PR
Moca, PR................ 0.4587 0.8917 0.7835
0080.............. Akron, OH
Portage, OH
Summit, OH.............. 0.9600 0.9920 0.9840
0120.............. Albany, GA
Dougherty, GA
Lee, GA................. 1.0594 1.0119 1.0238
0160.............. Albany-Schenectady-Troy,
NY
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY........... 0.8384 0.9677 0.9354
0200.............. Albuquerque, NM
Bernalillo, NM
Sandoval, NM
Valencia, NM............ 0.9315 0.9863 0.9726
0220.............. Alexandria, LA
Rapides, LA............. 0.7859 0.9572 0.9144
0240.............. Allentown-Bethlehem-
Easton, PA
Carbon, PA
Lehigh, PA
Northampton, PA 0.9735 0.9947 0.9894
0280.............. Altoona, PA
Blair, PA............... 0.9225 0.9845 0.9690
0320.............. Amarillo, TX
Potter, TX
Randall, TX............. 0.9034 0.9807 0.9614
0380.............. Anchorage, AK
Anchorage, AK........... 1.2358 1.0472 1.0943
0440.............. Ann Arbor, MI
Lenawee, MI
Livingston, MI
Washtenaw, MI........... 1.1103 1.0221 1.0441
0450.............. Anniston, AL
Calhoun, AL............. 0.8044 0.9609 0.9218
0460.............. Appleton-Oshkosh-Neenah,
WI
Calumet, WI
Outagamie, WI
Winnebago, WI........... 0.8997 0.9799 0.9599
0470.............. Arecibo, PR
Arecibo, PR
Camuy, PR
Hatillo, PR............. 0.4337 0.8867 0.7735
0480.............. Asheville, NC
Buncombe, NC
Madison, NC............. 0.9876 0.9975 0.9950
0500.............. Athens, GA
Clarke, GA
Madison, GA
Oconee, GA.............. 1.0211 1.0042 1.0084
0520.............. Atlanta, GA
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
DeKalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA

[[Page 11267]]

Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA.............. 0.9991 0.9998 0.9996
0560.............. Atlantic-Cape May, NJ
Atlantic, NJ
Cape May, NJ............ 1.1017 1.0203 1.0407
0580.............. Auburn-Opelika, AL
Lee, AL.................. 0.8325 0.9665 0.9330
0600.............. Augusta-Aiken, GA-SC
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC............ 1.0264 1.0053 1.0106
0640.............. Austin-San Marcos, TX
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX.......... 0.9637 0.9927 0.9855
0680.............. Bakersfield, CA
Kern, CA................ 0.9877 0.9975 0.9951
0720.............. Baltimore, MD
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD
Harford, MD
Howard, MD
Queen Anne's, MD........ 0.9929 0.9986 0.9972
0733.............. Bangor, ME
Penobscot, ME........... 0.9664 0.9933 0.9866
0743.............. Barnstable-Yarmouth, MA
Barnstable, MA.......... 1.3202 1.0640 1.1281
0760.............. Baton Rouge, LA
Ascension, LA
East Baton Rouge, LA
Livingston, LA
West Baton Rouge, LA.... 0.8294 0.9659 0.9318
0840.............. Beaumont-Port Arthur, TX
Hardin, TX
Jefferson, TX
Orange, TX.............. 0.8324 0.9665 0.9330
0860.............. Bellingham, WA
Whatcom, WA............. 1.2282 1.0456 1.0913
0870.............. Benton Harbor, MI
Berrien, MI............. 0.8965 0.9793 0.9586
0875.............. Bergen-Passaic, NJ
Bergen, NJ
Passaic, NJ............. 1.2150 1.0430 1.0860
0880.............. Billings, MT
Yellowstone, MT......... 0.9022 0.9804 0.9609
0920.............. Biloxi-Gulfport-
Pascagoula, MS
Hancock, MS
Harrison, MS
Jackson, MS............. 0.8757 0.9751 0.9503
0960.............. Binghamton, NY
Broome, NY
Tioga, NY............... 0.8341 0.9668 0.9336
1000.............. Birmingham, AL
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL.............. 0.9222 0.9844 0.9689

[[Page 11268]]

1010.............. Bismarck, ND
Burleigh, ND
Morton, ND.............. 0.7972 0.9594 0.9189
1020.............. Bloomington, IN
Monroe, IN.............. 0.8907 0.9781 0.9563
1040.............. Bloomington-Normal, IL
McLean, IL.............. 0.9109 0.9822 0.9644
1080.............. Boise City, ID
Ada, ID
Canyon, ID.............. 0.9310 0.9862 0.9724
1123.............. Boston-Worcester-Lawrence-
Lowell-Brockton, MA-NH
(NH Hospitals)
Bristol, MA
Essex, MA
Middlesex, MA
Norfolk, MA
Plymouth, MA
Suffolk, MA
Worcester, MA
Hillsborough, NH
Merrimack, NH
Rockingham, NH
Strafford, NH........... 1.1229 1.0246 1.0492
1125.............. Boulder-Longmont, CO
Boulder, CO............. 0.9689 0.9938 0.9876
1145.............. Brazoria, TX
Brazoria, TX............ 0.8535 0.9707 0.9414
1150.............. Bremerton, WA
Kitsap, WA.............. 1.0944 1.0189 1.0378
1240.............. Brownsville-Harlingen-San
Benito, TX
Cameron, TX............. 0.8880 0.9776 0.9552
1260.............. Bryan-College Station, TX
Brazos, TX.............. 0.8821 0.9764 0.9528
1280.............. Buffalo-Niagara Falls, NY
Erie, NY
Niagara, NY............. 0.9365 0.9873 0.9746
1303.............. Burlington, VT
Chittenden, VT
Franklin, VT
Grand Isle, VT.......... 1.0052 1.0010 1.0021
1310.............. Caguas, PR
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR......... 0.4371 0.8874 0.7748
1320.............. Canton-Massillon, OH
Carroll, OH
Stark, OH............... 0.8932 0.9786 0.9573
1350.............. Casper, WY
Natrona, WY............. 0.9690 0.9938 0.9876
1360.............. Cedar Rapids, IA
Linn, IA................ 0.9056 0.9811 0.9622
1400.............. Champaign-Urbana, IL
Champaign, IL........... 1.0635 1.0127 1.0254
1440.............. Charleston-North
Charleston, SC
Berkeley, SC
Charleston, SC
Dorchester, SC.......... 0.9235 0.9847 0.9694
1480.............. Charleston, WV
Kanawha, WV
Putnam, WV.............. 0.8898 0.9780 0.9559
1520.............. Charlotte-Gastonia-Rock
Hill, NC-SC
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Stanly, NC
Union, NC

[[Page 11269]]

York, SC................ 0.9875 0.9975 0.9950
1540.............. Charlottesville, VA
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA.............. 1.0438 1.0088 1.0175
1560.............. Chattanooga, TN-GA
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN.............. 0.8976 0.9795 0.9590
1580.............. Cheyenne, WY
Laramie, WY............. 0.8628 0.9726 0.9451
1600.............. Chicago, IL
Cook, IL
DeKalb, IL
DuPage, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL................ 1.1044 1.0209 1.0418
1620.............. Chico-Paradise, CA
Butte, CA............... 0.9745 0.9949 0.9898
1640.............. Cincinnati, OH-KY-IN
Dearborn, IN
Ohio, IN
Boone, KY
Campbell, KY
Gallatin, KY
Grant, KY
Kenton, KY
Pendleton, KY
Brown, OH
Clermont, OH
Hamilton, OH
Warren, OH.............. 0.9381 0.9876 0.9752
1660.............. Clarksville-Hopkinsville,
TN-KY
Christian, KY
Montgomery, TN.......... 0.8406 0.9681 0.9362
1680.............. Cleveland-Lorain-Elyria,
OH
Ashtabula, OH
Cuyahoga, OH
Geauga, OH
Lake, OH
Lorain, OH
Medina, OH.............. 0.9670 0.9934 0.9868
1720.............. Colorado Springs, CO
El Paso, CO............. 0.9916 0.9983 0.9966
1740.............. Columbia, MO
Boone, MO............... 0.8496 0.9699 0.9398
1760.............. Columbia, SC
Lexington, SC
Richland, SC............ 0.9307 0.9861 0.9723
1800.............. Columbus, GA-AL
Russell, AL
Chattahoochee, GA
Harris, GA
Muscogee, GA............ 0.8374 0.9675 0.9350
1840.............. Columbus, OH
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH............ 0.9751 0.9950 0.9900
1880.............. Corpus Christi, TX

[[Page 11270]]

Nueces, TX
San Patricio, TX........ 0.8729 0.9746 0.9492
1890.............. Corvallis, OR
Benton, OR.............. 1.1453 1.0291 1.0581
1900.............. Cumberland, MD-WV (WV
Hospital)
Allegany, MD
Mineral, WV............. 0.7847 0.9569 0.9139
1920.............. Dallas, TX
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX............ 0.9998 1.0000 0.9999
1950.............. Danville, VA
Danville City, VA
Pittsylvania, VA........ 0.8859 0.9772 0.9544
1960.............. Davenport-Moline-Rock
Island, IA-IL
Scott, IA
Henry, IL
Rock Island, IL......... 0.8835 0.9767 0.9534
2000.............. Dayton-Springfield, OH
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH.......... 0.9282 0.9856 0.9713
2020.............. Daytona Beach, FL
Flagler, FL
Volusia, FL............. 0.9071 0.9814 0.9628
2030.............. Decatur, AL
Lawrence, AL
Morgan, AL.............. 0.8973 0.9795 0.9589
2040.............. Decatur, IL
Macon, IL............... 0.8055 0.9611 0.9222
2080.............. Denver, CO
Adams, CO
Arapahoe, CO
Denver, CO
Douglas, CO
Jefferson, CO........... 1.0601 1.0120 1.0240
2120.............. Des Moines, IA
Dallas, IA
Polk, IA
Warren, IA.............. 0.8791 0.9758 0.9516
2160.............. Detroit, MI
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI............... 1.0448 1.0090 1.0179
2180.............. Dothan, AL
Dale, AL
Houston, AL............. 0.8137 0.9627 0.9255
2190.............. Dover, DE
Kent, DE................ 0.9356 0.9871 0.9742
2200.............. Dubuque, IA
Dubuque, IA............. 0.8795 0.9759 0.9518
2240.............. Duluth-Superior, MN-WI
St. Louis, MN
Douglas, WI............. 1.0368 1.0074 1.0147
2281.............. Dutchess County, NY
Dutchess, NY............ 1.0684 1.0137 1.0274
2290.............. Eau Claire, WI
Chippewa, WI
Eau Claire, WI.......... 0.8952 0.9790 0.9581
2320.............. El Paso, TX

[[Page 11271]]

El Paso, TX............. 0.9265 0.9853 0.9706
2330.............. Elkhart-Goshen, IN
Elkhart, IN............. 0.9722 0.9944 0.9889
2335.............. Elmira, NY
Chemung, NY............. 0.8416 0.9683 0.9366
2340.............. Enid, OK
Garfield, OK............ 0.8376 0.9675 0.9350
2360.............. Erie, PA
Erie, PA................ 0.8925 0.9785 0.9570
2400.............. Eugene-Springfield, OR
Lane, OR................ 1.0944 1.0189 1.0378
2440.............. Evansville-Henderson, IN-
KY (IN Hospitals)
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY........... 0.8177 0.9635 0.9271
2520.............. Fargo-Moorhead, ND-MN
Clay, MN
Cass, ND................ 0.9684 0.9937 0.9874
2560.............. Fayetteville, NC
Cumberland, NC.......... 0.8889 0.9778 0.9556
2580.............. Fayetteville-Springdale-
Rogers, AR
Benton, AR
Washington, AR.......... 0.8100 0.9620 0.9240
2620.............. Flagstaff, AZ-UT
Coconino, AZ
Kane, UT................ 1.0682 1.0136 1.0273
2640.............. Flint, MI
Genesee, MI............. 1.1135 1.0227 1.0454
2650.............. Florence, AL
Colbert, AL
Lauderdale, AL.......... 0.7792 0.9558 0.9117
2655.............. Florence, SC
Florence, SC............ 0.8780 0.9756 0.9512
2670.............. Fort Collins-Loveland, CO
Larimer, CO............. 1.0066 1.0013 1.0026
2680.............. Ft. Lauderdale, FL
Broward, FL............. 1.0297 1.0059 1.0119
2700.............. Fort Myers-Cape Coral, FL
Lee, FL................. 0.9680 0.9936 0.9872
2710.............. Fort Pierce-Port St.
Lucie, FL
Martin, FL
St. Lucie, FL........... 0.9823 0.9965 0.9929
2720.............. Fort Smith, AR-OK
Crawford, AR
Sebastian, AR
Sequoyah, OK............ 0.7895 0.9579 0.9158
2750.............. Fort Walton Beach, FL
Okaloosa, FL............ 0.9693 0.9939 0.9877
2760.............. Fort Wayne, IN
Adams, IN
Allen, IN
De Kalb, IN
Huntington, IN
Wells, IN
Whitley, IN............. 0.9457 0.9891 0.9783
2800.............. Forth Worth-Arlington, TX
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX............. 0.9446 0.9889 0.9778
2840.............. Fresno, CA
Fresno, CA
Madera, CA.............. 1.0169 1.0034 1.0068
2880.............. Gadsden, AL
Etowah, AL.............. 0.8505 0.9701 0.9402
2900.............. Gainesville, FL
Alachua, FL............. 0.9871 0.9974 0.9948
2920.............. Galveston-Texas City, TX

[[Page 11272]]

Galveston, TX........... 0.9465 0.9893 0.9786
2960.............. Gary, IN
Lake, IN
Porter, IN.............. 0.9584 0.9917 0.9834
2975.............. Glens Falls, NY
Warren, NY
Washington, NY.......... 0.8281 0.9656 0.9312
2980.............. Goldsboro, NC
Wayne, NC................ 0.8892 0.9778 0.9557
2985.............. Grand Forks, ND-MN
Polk, MN
Grand Forks, ND......... 0.8897 0.9779 0.9559
2995.............. Grand Junction, CO
Mesa, CO................ 0.9456 0.9891 0.9782
3000.............. Grand Rapids-Muskegon-
Holland, MI
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI.............. 0.9525 0.9905 0.9810
3040.............. Great Falls, MT
Cascade, MT............. 0.8950 0.9790 0.9580
3060.............. Greeley, CO
Weld, CO................ 0.9237 0.9847 0.9695
3080.............. Green Bay, WI
Brown, WI............... 0.9502 0.9900 0.9801
3120.............. Greensboro-Winston-Salem-
High Point, NC
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC.............. 0.9282 0.9856 0.9713
3150.............. Greenville, NC
Pitt, NC................ 0.9100 0.9820 0.9640
3160.............. Greenville-Spartanburg-
Anderson, SC
Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC......... 0.9122 0.9824 0.9649
3180.............. Hagerstown, MD
Washington, MD.......... 0.9268 0.9854 0.9707
3200.............. Hamilton-Middletown, OH
Butler, OH.............. 0.9418 0.9884 0.9767
3240.............. Harrisburg-Lebanon-
Carlisle, PA
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA............... 0.9223 0.9845 0.9689
3283.............. Hartford, CT
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT............. 1.1549 1.0310 1.0620
3285.............. \2\ Hattiesburg, MS
Forrest, MS
Lamar, MS............... 0.7659 0.9532 0.9064
3290.............. Hickory-Morganton-Lenoir,
NC
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC............. 0.9028 0.9806 0.9611
3320.............. Honolulu, HI
Honolulu, HI............ 1.1457 1.0291 1.0583
3350.............. Houma, LA
Lafourche, LA
Terrebonne, LA.......... 0.8317 0.9663 0.9327

[[Page 11273]]

3360.............. Houston, TX
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX.............. 0.9892 0.9978 0.9957
3400.............. Huntington-Ashland, WV-KY-
OH
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV............... 0.9636 0.9927 0.9854
3440.............. Huntsville, AL
Limestone, AL
Madison, AL............. 0.8903 0.9781 0.9561
3480.............. Indianapolis, IN
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN.............. 0.9717 0.9943 0.9887
3500.............. Iowa City, IA
Johnson, IA............. 0.9587 0.9917 0.9835
3520.............. Jackson, MI
Jackson, MI............. 0.9532 0.9906 0.9813
3560.............. Jackson, MS
Hinds, MS
Madison, MS
Rankin, MS.............. 0.8607 0.9721 0.9443
3580.............. Jackson, TN
Madison, TN
Chester, TN............. 0.9275 0.9855 0.9710
3600.............. Jacksonville, FL
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL........... 0.9381 0.9876 0.9752
3605.............. Jacksonville, NC
Onslow, NC.............. 0.8239 0.9648 0.9296
3610.............. Jamestown, NY
Chautauqua, NY.......... 0.7976 0.9595 0.9190
3620.............. Janesville-Beloit, WI
Rock, WI................ 0.9849 0.9970 0.9940
3640.............. Jersey City, NJ
Hudson, NJ.............. 1.1190 1.0238 1.0476
3660.............. Johnson City-Kingsport-
Bristol, TN-VA
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA.......... 0.8268 0.9654 0.9307
3680.............. Johnstown, PA
Cambria, PA
Somerset, PA............ 0.8329 0.9666 0.9332
3700.............. Jonesboro, AR
Craighead, AR........... 0.7749 0.9550 0.9100
3710.............. Joplin, MO
Jasper, MO
Newton, MO.............. 0.8613 0.9723 0.9445
3720.............. Kalamazoo-Battlecreek, MI

[[Page 11274]]

Calhoun, MI
Kalamazoo, MI
Van Buren, MI........... 1.0595 1.0119 1.0238
3740.............. Kankakee, IL
Kankakee, IL............ 1.0790 1.0158 1.0316
3760.............. Kansas City, KS-MO
Johnson, KS
Leavenworth, KS
Miami, KS
Wyandotte, KS
Cass, MO
Clay, MO
Clinton, MO
Jackson, MO
Lafayette, MO
Platte, MO
Ray, MO................. 0.9736 0.9947 0.9894
3800.............. Kenosha, WI
Kenosha, WI............. 0.9686 0.9937 0.9874
3810.............. Killeen-Temple, TX
Bell, TX
Coryell, TX............. 1.0399 1.0080 1.0160
3840.............. Knoxville, TN
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN............... 0.8970 0.9794 0.9588
3850.............. Kokomo, IN
Howard, IN
Tipton, IN.............. 0.8971 0.9794 0.9588
3870.............. La Crosse, WI-MN
Houston, MN
La Crosse, WI........... 0.9400 0.9880 0.9760
3880.............. Lafayette, LA
Acadia, LA
Lafayette, LA
St. Landry, LA
St. Martin, LA.......... 0.8452 0.9690 0.9381
3920.............. Lafayette, IN
Clinton, IN
Tippecanoe, IN.......... 0.9278 0.9856 0.9711
3960.............. Lake Charles, LA
Calcasieu, LA........... 0.7965 0.9593 0.9186
3980.............. Lakeland-Winter Haven, FL
Polk, FL................ 0.9357 0.9871 0.9743
4000.............. Lancaster, PA
Lancaster, PA........... 0.9078 0.9816 0.9631
4040.............. Lansing-East Lansing, MI
Clinton, MI
Eaton, MI
Ingham, MI.............. 0.9726 0.9945 0.9890
4080.............. Laredo, TX
Webb, TX................ 0.8472 0.9694 0.9389
4100.............. Las Cruces, NM
Dona Ana, NM............ 0.8745 0.9749 0.9498
4120.............. Las Vegas, NV-AZ
Mohave, AZ
Clark, NV
Nye, NV................. 1.1521 1.0304 1.0608
4150.............. Lawrence, KS
Douglas, KS............. 0.8323 0.9665 0.9329
4200.............. Lawton, OK
Comanche, OK............ 0.8315 0.9663 0.9326
4243.............. Lewiston-Auburn, ME
Androscoggin, ME........ 0.9179 0.9836 0.9672
4280.............. Lexington, KY
Bourbon, KY

[[Page 11275]]

Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY............ 0.8581 0.9716 0.9432
4320.............. Lima, OH
Allen, OH
Auglaize, OH............ 0.9483 0.9897 0.9793
4360.............. Lincoln, NE
Lancaster, NE........... 0.9892 0.9978 0.9957
4400.............. Little Rock-North Little
Rock, AR
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR.............. 0.9097 0.9819 0.9639
4420.............. Longview-Marshall, TX
Gregg, TX
Harrison, TX
Upshur, TX.............. 0.8629 0.9726 0.9452
4480.............. Los Angeles-Long Beach,
CA
Los Angeles, CA......... 1.2001 1.0400 1.0800
4520.............. \1\ Louisville, KY-IN
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY.............. 0.9276 0.9855 0.9710
4600.............. Lubbock, TX
Lubbock, TX............. 0.9646 0.9929 0.9858
4640.............. Lynchburg, VA
Amherst, VA
Bedford, VA
Bedford City, VA
Campbell, VA
Lynchburg City, VA...... 0.9219 0.9844 0.9688
4680.............. Macon, GA
Bibb, GA
Houston, GA
Jones, GA
Peach, GA
Twiggs, GA.............. 0.9204 0.9841 0.9682
4720.............. Madison, WI
Dane, WI................ 1.0467 1.0093 1.0187
4800.............. Mansfield, OH
Crawford, OH
Richland, OH............ 0.8900 0.9780 0.9560
4840.............. Mayaguez, PR
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR.......... 0.4914 0.8983 0.7966
4880.............. McAllen-Edinburg-Mission,
TX
Hidalgo, TX............. 0.8428 0.9686 0.9371
4890.............. Medford-Ashland, OR
Jackson, OR............. 1.0498 1.0100 1.0199
4900.............. Melbourne-Titusville-Palm
Bay, FL
Brevard, FL............. 1.0253 1.0051 1.0101
4920.............. Memphis, TN-AR-MS
Crittenden, AR
DeSoto, MS
Fayette, TN
Shelby, TN
Tipton, TN.............. 0.8920 0.9784 0.9568
4940.............. Merced, CA

[[Page 11276]]

Merced, CA.............. 0.9742 0.9948 0.9897
5000.............. Miami, FL
Dade, FL................ 0.9802 0.9960 0.9921
5015.............. Middlesex-Somerset-
Hunterdon, NJ
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ............ 1.1213 1.0243 1.0485
5080.............. Milwaukee-Waukesha, WI
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI............ 0.9893 0.9979 0.9957
5120.............. Minneapolis-St. Paul, MN-
WI
Anoka, MN
Carver, MN
Chisago, MN
Dakota, MN
Hennepin, MN
Isanti, MN
Ramsey, MN
Scott, MN
Sherburne, MN
Washington, MN
Wright, MN
Pierce, WI
St. Croix, WI........... 1.0903 1.0181 1.0361
5140.............. Missoula, MT
Missoula, MT............. 0.9157 0.9831 0.9663
5160.............. Mobile, AL
Baldwin, AL
Mobile, AL.............. 0.8108 0.9622 0.9243
5170.............. Modesto, CA
Stanislaus, CA.......... 1.0498 1.0100 1.0199
5190.............. Monmouth-Ocean, NJ
Monmouth, NJ
Ocean, NJ............... 1.0674 1.0135 1.0270
5200.............. Monroe, LA
Ouachita, LA............ 0.8137 0.9627 0.9255
5240.............. Montgomery, AL
Autauga, AL
Elmore, AL
Montgomery, AL.......... 0.7734 0.9547 0.9094
5280.............. Muncie, IN
Delaware, IN............ 0.9284 0.9857 0.9714
5330.............. Myrtle Beach, SC
Horry, SC............... 0.8976 0.9795 0.9590
5345.............. Naples, FL
Collier, FL............. 0.9754 0.9951 0.9902
5360.............. Nashville, TN
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford TN
Sumner, TN
Williamson, TN
Wilson, TN.............. 0.9578 0.9916 0.9831
5380.............. Nassau-Suffolk, NY
Nassau, NY
Suffolk, NY............. 1.3357 1.0671 1.1343
5483.............. New Haven-Bridgeport-
Stamford-Waterbury-
Danbury, CT
Fairfield, CT
New Haven, CT........... 1.2408 1.0482 1.0963
5523.............. New London-Norwich, CT
New London, CT.......... 1.1767 1.0353 1.0707
5560.............. New Orleans, LA
Jefferson, LA
Orleans, LA

[[Page 11277]]

Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John The Baptist, LA
St. Tammany, LA......... 0.9046 0.9809 0.9618
5600.............. New York, NY
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY......... 1.4414 1.0883 1.1766
5640.............. Newark, NJ
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ.............. 1.1381 1.0276 1.0552
5660.............. Newburgh, NY-PA
Orange, NY
Pike, PA................ 1.1387 1.0277 1.0555
5720.............. Norfolk-Virginia Beach-
Newport News, VA-NC
Currituck, NC
Chesapeake City, VA
Gloucester, VA
Hampton City, VA
Isle of Wight, VA
James City, VA
Mathews, VA
Newport News City, VA
Norfolk City, VA
Poquoson City, VA
Portsmouth City, VA
Suffolk City, VA
Virginia Beach City VA
Williamsburg City, VA
York, VA................ 0.8574 0.9715 0.9430
5775.............. Oakland, CA
Alameda, CA
Contra Costa, CA........ 1.5072 1.1014 1.2029
5790.............. Ocala, FL
Marion, FL.............. 0.9402 0.9880 0.9761
5800.............. Odessa-Midland, TX
Ector, TX
Midland, TX............. 0.9397 0.9879 0.9759
5880.............. Oklahoma City, OK
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK........ 0.8900 0.9780 0.9560
5910.............. Olympia, WA
Thurston, WA............ 1.0960 1.0192 1.0384
5920.............. Omaha, NE-IA
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE.......... 0.9978 0.9996 0.9991
5945.............. Orange County, CA
Orange, CA.............. 1.1474 1.0295 1.0590
5960.............. Orlando, FL
Lake, FL
Orange, FL
Osceola, FL

[[Page 11278]]

Seminole, FL............ 0.9640 0.9928 0.9856
5990.............. Owensboro, KY
Daviess, KY............. 0.8344 0.9669 0.9338
6015.............. Panama City, FL
Bay, FL................. 0.8865 0.9773 0.9546
6020.............. Parkersburg-Marietta, WV-
OH
Washington, OH
Wood, WV................ 0.8127 0.9625 0.9251
6080.............. Pensacola, FL
Escambia, FL
Santa Rosa, FL.......... 0.8610 0.9722 0.9444
6120.............. Peoria-Pekin, IL
Peoria, IL
Tazewell, IL
Woodford, IL............ 0.8739 0.9748 0.9496
6160.............. Philadelphia, PA-NJ
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA........ 1.0713 1.0143 1.0285
6200.............. Phoenix-Mesa, AZ
Maricopa, AZ
Pinal, AZ............... 0.9820 0.9964 0.9928
6240.............. Pine Bluff, AR
Jefferson, AR........... 0.7962 0.9592 0.9185
6280.............. Pittsburgh, PA
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA........ 0.9365 0.9873 0.9746
6323.............. Pittsfield, MA
Berkshire, MA........... 1.0235 1.0047 1.0094
6340.............. Pocatello, ID
Bannock, ID............. 0.9372 0.9874 0.9749
6360.............. Ponce, PR
Guayanilla, PR
Juana Diaz, PR
Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR............... 0.5169 0.9034 0.8068
6403.............. Portland, ME
Cumberland, ME
Sagadahoc, ME
York, ME................ 0.9794 0.9959 0.9918
6440.............. Portland-Vancouver, OR-WA
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA............... 1.0667 1.0133 1.0267
6483.............. Providence-Warwick-
Pawtucket, RI
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI.......... 1.0854 1.0171 1.0342
6520.............. Provo-Orem, UT
Utah, UT................ 0.9984 0.9997 0.9994
6560.............. Pueblo, CO
Pueblo, CO.............. 0.8820 0.9764 0.9528

[[Page 11279]]

6580.............. Punta Gorda, FL
Charlotte, FL........... 0.9218 0.9844 0.9687
6600.............. Racine, WI
Racine, WI.............. 0.9334 0.9867 0.9734
6640.............. Raleigh-Durham-Chapel
Hill, NC
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC................ 0.9990 0.9998 0.9996
6660.............. Rapid City, SD
Pennington, SD.......... 0.8846 0.9769 0.9538
6680.............. Reading, PA
Berks, PA............... 0.9295 0.9859 0.9718
6690.............. Redding, CA
Shasta, CA.............. 1.1135 1.0227 1.0454
6720.............. Reno, NV
Washoe, NV.............. 1.0648 1.0130 1.0259
6740.............. Richland-Kennewick-Pasco,
WA
Benton, WA
Franklin, WA............ 1.1491 1.0298 1.0596
6760.............. Richmond-Petersburg, VA
Charles City County, VA
Chesterfield, VA
Colonial Heights City,
VA
Dinwiddie, VA
Goochland, VA
Hanover, VA
Henrico, VA
Hopewell City, VA
New Kent, VA
Petersburg City, VA
Powhatan, VA
Prince George, VA
Richmond City, VA....... 0.9477 0.9895 0.9791
6780.............. Riverside-San Bernardino,
CA
Riverside, CA
San Bernardino, CA...... 1.1365 1.0273 1.0546
6800.............. Roanoke, VA
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA.......... 0.8614 0.9723 0.9446
6820.............. Rochester, MN
Olmsted, MN............. 1.2139 1.0428 1.0856
6840.............. Rochester, NY
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY............... 0.9194 0.9839 0.9678
6880.............. Rockford, IL
Boone, IL
Ogle, IL
Winnebago, IL........... 0.9625 0.9925 0.9850
6895.............. Rocky Mount, NC
Edgecombe, NC
Nash, NC................ 0.9228 0.9846 0.9691
6920.............. Sacramento, CA
El Dorado, CA
Placer, CA
Sacramento, CA.......... 1.1500 1.0300 1.0600
6960.............. Saginaw-Bay City-Midland,
MI
Bay, MI
Midland, MI
Saginaw, MI............. 0.9650 0.9930 0.9860
6980.............. St. Cloud, MN

[[Page 11280]]

Benton, MN
Stearns, MN............. 0.9700 0.9940 0.9880
7000.............. St. Joseph, MO
Andrew, MO
Buchanan, MO............ 0.9544 0.9909 0.9818
7040.............. St. Louis, MO-IL
Clinton, IL
Jersey, IL
Madison, IL
Monroe, IL
St. Clair, IL
Franklin, MO
Jefferson, MO
Lincoln, MO
St. Charles, MO
St. Louis, MO
St. Louis City, MO
Warren, MO.............. 0.8855 0.9771 0.9542
7080.............. Salem, OR
Marion, OR
Polk, OR................ 1.0500 1.0100 1.0200
7120.............. Salinas, CA
Monterey, CA............ 1.4623 1.0925 1.1849
7160.............. Salt Lake City-Ogden, UT
Davis, UT
Salt Lake, UT
Weber, UT............... 0.9945 0.9989 0.9978
7200.............. San Angelo, TX
Tom Green, TX........... 0.8374 0.9675 0.9350
7240.............. San Antonio, TX
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX.............. 0.8753 0.9751 0.9501
7320.............. San Diego, CA
San Diego, CA........... 1.1131 1.0226 1.0452
7360.............. San Francisco, CA
Marin, CA
San Francisco, CA
San Mateo, CA........... 1.4142 1.0828 1.1657
7400.............. San Jose, CA
Santa Clara, CA......... 1.4145 1.0829 1.1658
7440.............. San Juan-Bayamon, PR
Aguas Buenas, PR
Barceloneta, PR
Bayamon, PR
Canovanas, PR
Carolina, PR
Catano, PR
Ceiba, PR
Comerio, PR
Corozal, PR
Dorado, PR
Fajardo, PR
Florida, PR
Guaynabo, PR
Humacao, PR
Juncos, PR
Los Piedras, PR
Loiza, PR
Luguillo, PR
Manati, PR
Morovis, PR
Naguabo, PR
Naranjito, PR
Rio Grande, PR
San Juan, PR
Toa Alta, PR
Toa Baja, PR

[[Page 11281]]

Trujillo Alto, PR
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR............. 0.4741 0.8948 0.7896
7460.............. San Luis Obispo-
Atascadero-Paso Robles,
CA
San Luis Obispo, CA..... 1.1271 1.0254 1.0508
7480.............. Santa Barbara-Santa Maria-
Lompoc, CA
Santa Barbara, CA....... 1.0481 1.0096 1.0192
7485.............. Santa Cruz-Watsonville,
CA
Santa Cruz, CA........... 1.3646 1.0729 1.1458
7490.............. Santa Fe, NM
Los Alamos, NM
Santa Fe, NM............ 1.0712 1.0142 1.0285
7500.............. Santa Rosa, CA
Sonoma, CA.............. 1.3046 1.0609 1.1218
7510.............. Sarasota-Bradenton, FL
Manatee, FL
Sarasota, FL............ 0.9425 0.9885 0.9770
7520.............. Savannah, GA
Bryan, GA
Chatham, GA
Effingham, GA........... 0.9376 0.9875 0.9750
7560.............. Scranton--Wilkes-Barre-
Hazleton, PA
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA............. 0.8599 0.9720 0.9440
7600.............. Seattle-Bellevue-Everett,
WA
Island, WA
King, WA
Snohomish, WA........... 1.1474 1.0295 1.0590
7610.............. Sharon, PA
Mercer, PA.............. 0.7869 0.9574 0.9148
7620.............. Sheboygan, WI
Sheboygan, WI........... 0.8697 0.9739 0.9479
7640.............. Sherman-Denison, TX
Grayson, TX............. 0.9255 0.9851 0.9702
7680.............. Shreveport-Bossier City,
LA
Bossier, LA
Caddo, LA
Webster, LA............. 0.8987 0.9797 0.9595
7720.............. Sioux City, IA-NE
Woodbury, IA
Dakota, NE.............. 0.9046 0.9809 0.9618
7760.............. Sioux Falls, SD
Lincoln, SD
Minnehaha, SD........... 0.9257 0.9851 0.9703
7800.............. South Bend, IN
St. Joseph, IN.......... 0.9802 0.9960 0.9921
7840.............. Spokane, WA
Spokane, WA............. 1.0852 1.0170 1.0341
7880.............. Springfield, IL
Menard, IL
Sangamon, IL............ 0.8659 0.9732 0.9464
7920.............. Springfield, MO
Christian, MO
Greene, MO
Webster, MO............. 0.8424 0.9685 0.9370
8003.............. Springfield, MA
Hampden, MA
Hampshire, MA........... 1.0927 1.0185 1.0371
8050.............. State College, PA
Centre, PA.............. 0.8941 0.9788 0.9576
8080.............. Steubenville-Weirton, OH-
WV (WV Hospitals)
Jefferson, OH
Brooke, WV
Hancock, WV............. 0.8804 0.9761 0.9522
8120.............. Stockton-Lodi, CA
San Joaquin, CA......... 1.0506 1.0101 1.0202

[[Page 11282]]

8140.............. Sumter, SC
Sumter, SC.............. 0.8273 0.9655 0.9309
8160.............. Syracuse, NY
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY.............. 0.9714 0.9943 0.9886
8200.............. Tacoma, WA
Pierce, WA.............. 1.0940 1.0188 1.0376
8240.............. Tallahassee, FL
Gadsden, FL
Leon, FL................ 0.8504 0.9701 0.9402
8280.............. Tampa-St. Petersburg-
Clearwater, FL
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL............ 0.9065 0.9813 0.9626
8320.............. Terre Haute, IN
Clay, IN
Vermillion, IN
Vigo, IN................ 0.8599 0.9720 0.9440
8360.............. Texarkana, AR-Texarkana,
TX
Miller, AR
Bowie, TX............... 0.8088 0.9618 0.9235
8400.............. Toledo, OH
Fulton, OH
Lucas, OH
Wood, OH................ 0.9810 0.9962 0.9924
8440.............. Topeka, KS
Shawnee, KS............. 0.9199 0.9840 0.9680
8480.............. Trenton, NJ
Mercer, NJ.............. 1.0432 1.0086 1.0173
8520.............. Tucson, AZ
Pima, AZ................ 0.8911 0.9782 0.9564
8560.............. Tulsa, OK
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK............. 0.8332 0.9666 0.9333
8600.............. Tuscaloosa, AL
Tuscaloosa, AL.......... 0.8130 0.9626 0.9252
8640.............. Tyler, TX
Smith, TX............... 0.9521 0.9904 0.9808
8680.............. Utica-Rome, NY
Herkimer, NY
Oneida, NY.............. 0.8465 0.9693 0.9386
8720.............. Vallejo-Fairfield-Napa,
CA
Napa, CA
Solano, CA.............. 1.3354 1.0671 1.1342
8735.............. Ventura, CA
Ventura, CA............. 1.1096 1.0219 1.0438
8750.............. Victoria, TX
Victoria, TX............ 0.8756 0.9751 0.9502
8760.............. Vineland-Millville-
Bridgeton, NJ
Cumberland, NJ.......... 1.0031 1.0006 1.0012
8780.............. Visalia-Tulare-
Porterville, CA
Tulare, CA.............. 0.9418 0.9884 0.9767
8800.............. Waco, TX
McLennan, TX............ 0.8073 0.9615 0.9229
8840.............. Washington, DC-MD-VA-WV
District of Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges, MD
Alexandria City, VA
Arlington, VA

[[Page 11283]]

Clarke, VA
Culpeper, VA
Fairfax, VA
Fairfax City, VA
Falls Church City, VA
Fauquier, VA
Fredericksburg City, VA
King George, VA
Loudoun, VA
Manassas City, VA
Manassas Park City, VA
Prince William, VA
Spotsylvania, VA
Stafford, VA
Warren, VA
Berkeley, WV
Jefferson, WV........... 1.0851 1.0170 1.0340
8920.............. Waterloo-Cedar Falls, IA
Black Hawk, IA.......... 0.8069 0.9614 0.9228
8940.............. Wausau, WI
Marathon, WI............ 0.9782 0.9956 0.9913
8960.............. West Palm Beach-Boca
Raton, FL
Palm Beach, FL.......... 0.9939 0.9988 0.9976
9000.............. Wheeling, WV-OH
Belmont, OH
Marshall, WV
Ohio, WV................ 0.7670 0.9534 0.9068
9040.............. Wichita, KS
Butler, KS
Harvey, KS
Sedgwick, KS............ 0.9520 0.9904 0.9808
9080.............. Wichita Falls, TX
Archer, TX
Wichita, TX............. 0.8498 0.9700 0.9399
9140.............. Williamsport, PA
Lycoming, PA............ 0.8544 0.9709 0.9418
9160.............. Wilmington-Newark, DE-MD
New Castle, DE
Cecil, MD............... 1.1173 1.0235 1.0469
9200.............. Wilmington, NC
New Hanover, NC
Brunswick, NC........... 0.9640 0.9928 0.9856
9260.............. Yakima, WA
Yakima, WA.............. 1.0569 1.0114 1.0228
9270.............. Yolo, CA
Yolo, CA................ 0.9434 0.9887 0.9774
9280.............. York, PA
York, PA................ 0.9026 0.9805 0.9610
9320.............. Youngstown-Warren, OH
Columbiana, OH
Mahoning, OH
Trumbull, OH............. 0.9358 0.9872 0.9743
9340.............. Yuba City, CA
Sutter, CA
Yuba, CA................ 1.0276 1.0055 1.0110
9360.............. Yuma, AZ
Yuma, AZ 0.8589 0.9718 0.9436
------------------------------------------------------------------------
\1\ Prereclassification wage index from Federal FY 2003 based on fiscal
year 1999 audited acute care hospital inpatient wage data that
excludes wages for services provided by teaching physicians, interns
and residents, and nonphysician anesthetists under Part B of the
Medicare program.
\2\ One-fifth of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2002 through
September 30, 2003 (Federal FY 2203). For example, for a LTCH's cost
reporting period begins during Federal in FY 2003 and located in
Chicago, Illinois (MSA 1600), the \1/5\ of the wage index value is
computed as (1.1044 + 4)/5 = 1.0209. For further details on the 5-year
phase-in of the wage index, see section VI.C.1. of this proposed rule.

\3\ Two-fifths of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2003 through
September 30, 2003 (Federal FY 2004). For example, for a LTCH's cost
reporting period begins during Federal in FY 2004 and located in
Chicago, Illinois (MSA 1600), the \2/5\ of the wage index value is
computed as ((2*1.1044) + 3))/5 = 1.0418. For further details on the 5-
year phase-in of the wage index, see section VI.C.1. of this proposed
rule.

[[Page 11284]]

Table 2.--Proposed Long-Term Care Hospital Wage Index for Rural Areas
for Discharges Occurring From July 1, 2003 Through June 30, 2004
------------------------------------------------------------------------
Full \1/5\ \2/5\
wage wage wage
Nonurban area index index index
\1\ \2\ \3\
------------------------------------------------------------------------
Alabama...................................... 0.7660 0.9532 0.9064
Alaska....................................... 1.2293 1.0459 1.0917
Arizona...................................... 0.8493 0.9699 0.9397
Arkansas..................................... 0.7666 0.9533 0.9066
California................................... 0.9899 0.9980 0.9960
Colorado..................................... 0.9015 0.9803 0.9606
Connecticut.................................. 1.2394 1.0479 1.0958
Delaware..................................... 0.9128 0.9826 0.9651
Florida...................................... 0.8827 0.9765 0.9531
Georgia...................................... 0.8230 0.9646 0.9292
Hawaii....................................... 1.0255 1.0051 1.0102
Idaho........................................ 0.8747 0.9749 0.9499
Illinois..................................... 0.8204 0.9641 0.9282
Indiana...................................... 0.8755 0.9751 0.9502
Iowa......................................... 0.8315 0.9663 0.9326
Kansas....................................... 0.7900 0.9580 0.9160
Kentucky..................................... 0.8079 0.9616 0.9232
Louisiana.................................... 0.7580 0.9516 0.9032
Maine........................................ 0.8874 0.9775 0.9550
Maryland..................................... 0.8946 0.9789 0.9578
Massachusetts................................ 1.1288 1.0258 1.0515
Michigan..................................... 0.9009 0.9802 0.9604
Minnesota.................................... 0.9151 0.9830 0.9660
Mississippi.................................. 0.7680 0.9536 0.9072
Missouri..................................... 0.7881 0.9576 0.9152
Montana...................................... 0.8481 0.9696 0.9392
Nebraska..................................... 0.8204 0.9641 0.9282
Nevada....................................... 0.9577 0.9915 0.9831
New Hampshire................................ 0.9839 0.9968 0.9936
New Jersey \4\............................... ....... ....... .......
New Mexico................................... 0.8872 0.9774 0.9549
New York..................................... 0.8542 0.9708 0.9417
North Carolina............................... 0.8669 0.9734 0.9468
North Dakota................................. 0.7788 0.9558 0.9115
Ohio......................................... 0.8613 0.9723 0.9445
Oklahoma..................................... 0.7590 0.9518 0.9036
Oregon....................................... 1.0259 1.0052 1.0104
Pennsylvania................................. 0.8462 0.9692 0.9385
Puerto Rico.................................. 0.4356 0.8871 0.7742
Rhode Island \4\............................. ....... ....... .......
South Carolina............................... 0.8607 0.9721 0.9443
South Dakota................................. 0.7815 0.9563 0.9126
Tennessee.................................... 0.7877 0.9575 0.9151
Texas........................................ 0.7821 0.9564 0.9128
Utah......................................... 0.9312 0.9862 0.9725
Vermont...................................... 0.9345 0.9869 0.9738
Virginia..................................... 0.8504 0.9701 0.9402
Washington................................... 1.0179 1.0036 1.0072
West Virginia................................ 0.7975 0.9595 0.9190
Wisconsin.................................... 0.9162 0.9832 0.9665
Wyoming...................................... 0.9007 0.9801 0.9603

------------------------------------------------------------------------
\1\ Pre-reclassification wage index from Federal FY 2003 based on fiscal
year 1999 audited acute care hospital inpatient wage data that exclude
wages for services provided by teaching physicians, residents, and
nonphysician anesthetists under Part B of the Medicare program.
\2\ One-fifth of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2002 through
September 30, 2003 (Federal FY 2203). For example, for a LTCH's cost
reporting period begins during Federal in FY 2003 and located in rural
Illinois, the \1/5\ of the wage index value is computed as (0.8204 +
4)/5 = 0.9641. For further details on the 5-year phase-in of the wage
index, see section VI.C.1. of this proposed rule.
\3\ Two-fifths of the full wage index value, applicable for LTCH's cost
reporting period beginning on or after October 1, 2003 through
September 30, 2003 (Federal FY 2004). For example, for a LTCH's cost
reporting period begins during Federal in FY 2004 and located in rural
Illinois, the \2/5\ of the wage index value is computed as ((2*0.8204)
+ 3))/5 = 0.9282. For further details on the 5-year phase-in of the
wage index, see section VI.C.1. of this proposed rule.
\4\ All counties within the State are classified as urban.

[[Page 11285]]

Table 3.--Proposed LTC-DRG Relative Weights, Geometric Mean Length of
Stay, and Short-Stays of Five-Sixths Average Length of Stay for the
Period of July 1, 2003 Through September 30, 2003
------------------------------------------------------------------------
Short-
Geometric stays of
Relative mean \5/6\
LTC-DRG Description weight length of average
stay length of
stay
------------------------------------------------------------------------
1.............. CRANIOTOMY AGE 17 W CC \5\.
2.............. CRANIOTOMY AGE 17 W/O CC \5\.
3.............. CRANIOTOMY AGE 0-17*.. 1.8783 46.3 38.5
4.............. SPINAL PROCEDURES \4\. 1.2493 31.3 26.0
5.............. EXTRACRANIAL VASCULAR 1.2493 31.3 26.0
PROCEDURES \4\.
6.............. CARPAL TUNNEL RELEASE* 0.4055 16.8 14.0
7.............. PERIPH & CRANIAL NERVE 1.7829 43.8 36.5
& OTHER NERV SYST
PROC W CC.
8.............. PERIPH & CRANIAL NERVE 1.2493 31.3 26.0
& OTHER NERV SYST
PROC W/O CC4.
9.............. SPINAL DISORDERS & 1.4118 34.6 28.8
INJURIES.
10............. NERVOUS SYSTEM 0.8537 24.5 20.4
NEOPLASMS W CC \7\.
11............. NERVOUS SYSTEM 0.8537 24.5 20.4
NEOPLASMS W/O CC \7\.
12............. DEGENERATIVE NERVOUS 0.7773 27.1 22.5
SYSTEM DISORDERS.
13............. MULTIPLE SCLEROSIS & 0.7207 25.6 21.3
CEREBELLAR ATAXIA.
14............. INTERCRANIAL 0.8816 26.6 22.1
HEMORRHAGE & STROKE W
INFARCT.
15............. NONSPECIFIC CVA & 0.9053 29.4 24.5
PRECEREBRAL
OCCULUSION W/O
INFARCT.
16............. NONSPECIFIC 0.8864 27.0 22.5
CEREBROVASCULAR
DISORDERS W CC.
17............. NONSPECIFIC 0.6655 21.9 18.2
CEREBROVASCULAR
DISORDERS W/O CC \2\.
18............. CRANIAL & PERIPHERAL 0.7770 24.9 20.7
NERVE DISORDERS W CC.
19............. CRANIAL & PERIPHERAL 0.5486 22.0 18.3
NERVE DISORDERS W/O
CC.
20............. NERVOUS SYSTEM 1.2331 29.3 24.4
INFECTION EXCEPT
VIRAL MENINGITIS.
21............. VIRAL MENINGITIS \1\.. 0.4055 16.8 14.0
22............. HYPERTENSIVE 0.6655 21.9 18.2
ENCEPHALOPATHY \2\.
23............. NONTRAUMATIC STUPOR & 0.9623 27.2 22.6
COMA.
24............. SEIZURE & HEADACHE AGE 0.8831 24.8 20.6
17 W CC.
25............. SEIZURE & HEADACHE AGE 0.4830 20.4 17.0
17 W/O CC.
26............. SEIZURE & HEADACHE AGE 0.4055 16.8 14.0
0-17*.
27............. TRAUMATIC STUPOR & 1.1126 31.6 26.3
COMA, COMA 1 HR.
28............. TRAUMATIC STUPOR & 1.1507 29.0 24.1
COMA, COMA <1 HR
AGE17 W CC.
29............. TRAUMATIC STUPOR & 0.9268 27.2 22.6
COMA, COMA <1 HR
AGE17 W/O
CC.
30............. TRAUMATIC STUPOR & 0.8284 23.3 19.4
COMA, COMA <1 HR AGE
0-17*.
31............. CONCUSSION AGE 17 W CC \2\.
32............. CONCUSSION AGE 17 W/O CC*.
33............. CONCUSSION AGE 0-17*.. 0.4055 16.8 14.0
34............. OTHER DISORDERS OF 0.8385 25.1 20.9
NERVOUS SYSTEM W CC.
35............. OTHER DISORDERS OF 0.6561 25.3 21.0
NERVOUS SYSTEM W/O CC.
36............. RETINAL PROCEDURES*... 0.4055 16.8 14.0
37............. ORBITAL PROCEDURES*... 0.4055 16.8 14.0
38............. PRIMARY IRIS 0.4055 16.8 14.0
PROCEDURES*.
39............. LENS PROCEDURES WITH 0.4055 16.8 14.0
OR WITHOUT
VITRECTOMY*.
40............. EXTRAOCULAR PROCEDURES 0.4055 16.8 14.0
EXCEPT ORBIT AGE 17*.
41............. EXTRAOCULAR PROCEDURES 0.4055 16.8 14.0
EXCEPT ORBIT AGE 0-
17*.
42............. INTRAOCULAR PROCEDURES 0.4055 16.8 14.0
EXCEPT RETINA, IRIS &
LENS*.
43............. HYPHEMA \3\........... 0.8284 23.3 19.4
44............. ACUTE MAJOR EYE 0.6655 21.9 18.2
INFECTIONS \2\.
45............. NEUROLOGICAL EYE 0.4055 16.8 14.0
DISORDERS \1\.
46............. OTHER DISORDERS OF THE 0.6655 21.9 18.2
EYE AGE 17
W CC \2\.
47............. OTHER DISORDERS OF THE 0.4055 16.8 14.0
EYE AGE 17
W/O CC \1\.
48............. OTHER DISORDERS OF THE 0.4055 16.8 14.0
EYE AGE 0-17*.
49............. MAJOR HEAD & NECK 1.8783 46.3 38.5
PROCEDURES*.
50............. SIALOADENECTOMY*...... 0.6655 21.9 18.2
51............. SALIVARY GLAND 0.6655 21.9 18.2
PROCEDURES EXCEPT
SIALOADENECTOMY*.
52............. CLEFT LIP & PALATE 0.6655 21.9 18.2
REPAIR*.
53............. SINUS & MASTOID 0.6655 21.9 18.2
PROCEDURES AGE 17*.
54............. SINUS & MASTOID 0.6655 21.9 18.2
PROCEDURES AGE 0-17*.
55............. MISCELLANEOUS EAR, 0.6655 21.9 18.2
NOSE, MOUTH & THROAT
PROCEDURES \2\.
56............. RHINOPLASTY*.......... 0.6655 21.9 18.2
57............. T&A PROC, EXCEPT 0.6655 21.9 18.2
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY,
AGE 17*.
58............. T&A PROC, EXCEPT 0.6655 21.9 18.2
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY,
AGE 0-17*.
59............. TONSILLECTOMY &/OR 0.6655 21.9 18.2
ADENOIDECTOMY ONLY,
AGE 17*.
60............. TONSILLECTOMY &/OR 0.6655 21.9 18.2
ADENOIDECTOMY ONLY,
AGE 0-17*.
61............. MYRINGOTOMY W TUBE 1.8783 46.3 38.5
INSERTION AGE 17 \5\.
62............. MYRINGOTOMY W TUBE 0.6655 21.9 18.2
INSERTION AGE 0-17*.
63............. OTHER EAR, NOSE, MOUTH 1.8783 46.3 38.5
& THROAT O.R.
PROCEDURES \5\.
64............. EAR, NOSE, MOUTH & 1.0447 25.5 21.2
THROAT MALIGNANCY.
65............. DYSEQUILIBRIUM........ 0.5056 19.8 16.5
66............. EPISTAXIS \1\......... 0.4055 16.8 14.0

[[Page 11286]]

67............. EPIGLOTTITIS \1\...... 0.4055 16.8 14.0
68............. OTITIS MEDIA & URI AGE 0.8284 23.3 19.4
17 W CC
\3\.
69............. OTITIS MEDIA & URI AGE 0.8284 23.3 19.4
17 W/O CC
\3\.
70............. OTITIS MEDIA & URI AGE 0.4055 16.8 14.0
0-17*.
71............. LARYNGOTRACHEITIS*.... 0.4055 16.8 14.0
72............. NASAL TRAUMA & 0.4055 16.8 14.0
DEFORMITY \1\.
73............. OTHER EAR, NOSE, MOUTH 0.8097 23.7 19.7
& THROAT DIAGNOSES
AGE 17.
74............. OTHER EAR, NOSE, MOUTH 0.4055 16.8 14.0
& THROAT DIAGNOSES
AGE 0-17*.
75............. MAJOR CHEST PROCEDURES 1.8783 46.3 38.5
\5\.
76............. OTHER RESP SYSTEM O.R. 2.7674 50.6 42.1
PROCEDURES W CC.
77............. OTHER RESP SYSTEM O.R. 1.8783 46.3 38.5
PROCEDURES W/O CC \5\.
78............. PULMONARY EMBOLISM.... 0.6348 20.5 17.0
79............. RESPIRATORY INFECTIONS 0.8916 22.2 18.5
& INFLAMMATIONS AGE
17 W CC.
80............. RESPIRATORY INFECTIONS 0.7947 22.8 19.0
& INFLAMMATIONS AGE
17 W/O CC.
81............. RESPIRATORY INFECTIONS 0.4055 16.8 14.0
& INFLAMMATIONS AGE 0-
17*.
82............. RESPIRATORY NEOPLASMS. 0.7976 20.9 17.4
83............. MAJOR CHEST TRAUMA W 0.7384 24.8 20.6
CC.
84............. MAJOR CHEST TRAUMA W/O 0.4055 16.8 14.0
CC \1\.
85............. PLEURAL EFFUSION W CC. 0.8207 23.6 19.6
86............. PLEURAL EFFUSION W/O 0.6194 21.1 17.5
CC.
87............. PULMONARY EDEMA & 1.6597 32.3 26.9
RESPIRATORY FAILURE.
88............. CHRONIC OBSTRUCTIVE 0.7532 20.9 17.4
PULMONARY DISEASE.
89............. SIMPLE PNEUMONIA & 0.8533 23.6 19.6
PLEURISY AGE 17 W CC.
90............. SIMPLE PNEUMONIA & 0.7921 23.0 19.1
PLEURISY AGE 17 W/O CC.
91............. SIMPLE PNEUMONIA & 0.8284 23.3 19.4
PLEURISY AGE 0-17*.
92............. INTERSTITIAL LUNG 0.7251 19.1 15.9
DISEASE W CC.
93............. INTERSTITIAL LUNG 0.5573 18.5 15.4
DISEASE W/O CC.
94............. PNEUMOTHORAX W CC..... 0.7885 22.7 18.9
95............. PNEUMOTHORAX W/O CC 0.4055 16.8 14.0
\1\.
96............. BRONCHITIS & ASTHMA 0.8173 24.2 20.1
AGE 17 W
CC.
97............. BRONCHITIS & ASTHMA 0.5940 17.9 14.9
AGE 17 W/O
CC.
98............. BRONCHITIS & ASTHMA 0.4055 16.8 14.0
AGE 0-17*.
99............. RESPIRATORY SIGNS & 1.1164 27.3 22.7
SYMPTOMS W CC.
100............ RESPIRATORY SIGNS & 1.0015 25.4 21.1
SYMPTOMS W/O CC.
101............ OTHER RESPIRATORY 0.9763 23.4 19.5
SYSTEM DIAGNOSES W CC.
102............ OTHER RESPIRATORY 0.9313 24.5 20.4
SYSTEM DIAGNOSES W/O
CC.
103............ HEART TRANSPLANT \6\.. 0.0000 0.0 0.0
104............ CARDIAC VALVE & OTHER 1.8783 46.3 38.5
MAJOR CARDIOTHORACIC
PROC W CARDIAC CATH*.
105............ CARDIAC VALVE & OTHER 1.8783 46.3 38.5
MAJOR CARDIOTHORACIC
PROC W/O CARDIAC
CATH*.
106............ CORONARY BYPASS W 1.8783 46.3 38.5
PTCA*.
107............ CORONARY BYPASS W 1.8783 46.3 38.5
CARDIAC CATH*.
108............ OTHER CARDIOTHORACIC 0.6655 21.9 18.2
PROCEDURES \2\.
109............ CORONARY BYPASS W/O 1.8783 46.3 38.5
PTCA OR CARDIAC CATH*.
110............ MAJOR CARDIOVASCULAR 1.8783 46.3 38.5
PROCEDURES W CC \5\.
111............ MAJOR CARDIOVASCULAR 1.8783 46.3 38.5
PROCEDURES W/O CC \5\.
113............ AMPUTATION FOR CIRC 1.4103 36.9 30.7
SYSTEM DISORDERS
EXCEPT UPPER LIMB &
TOE.
114............ UPPER LIMB & TOE 1.3377 40.2 33.5
AMPUTATION FOR CIRC
SYSTEM DISORDERS.
115............ PRM CARD PACEM IMPL W 1.8783 46.3 38.5
AMI,HRT FAIL OR
SHK,OR AICD LEAD OR
GNRTR P \5\.
116............ OTH PERM CARD PACEMAK 0.8284 23.3 19.4
IMPL OR PTCA W
CORONARY ARTERY STENT
IMPLNT \3\.
117............ CARDIAC PACEMAKER 0.4055 16.8 14.0
REVISION EXCEPT
DEVICE REPLACEMENT*.
118............ CARDIAC PACEMAKER 0.4055 16.8 14.0
DEVICE REPLACEMENT
\1\.
119............ VEIN LIGATION & 0.6655 21.9 18.2
STRIPPING*.
120............ OTHER CIRCULATORY 1.4091 36.4 30.3
SYSTEM O.R.
PROCEDURES.
121............ CIRCULATORY DISORDERS 0.7167 21.6 18.0
W AMI & MAJOR COMP,
DISCHARGED ALIVE.
122............ CIRCULATORY DISORDERS 0.5144 19.0 15.8
W AMI W/O MAJOR COMP,
DISCHARGED ALIVE.
123............ CIRCULATORY DISORDERS 0.9412 20.9 17.4
W AMI, EXPIRED.
124............ CIRCULATORY DISORDERS 0.8284 23.3 19.4
EXCEPT AMI, W CARD
CATH & COMPLEX DIAG
\3\.
125............ CIRCULATORY DISORDERS 1.8783 46.3 38.5
EXCEPT AMI, W CARD
CATH W/O COMPLEX DIAG
\5\.
126............ ACUTE & SUBACUTE 0.7689 24.8 20.6
ENDOCARDITIS.
127............ HEART FAILURE & SHOCK. 0.7616 22.4 18.6
128............ DEEP VEIN 0.6042 20.8 17.3
THROMBOPHLEBITIS.
129............ CARDIAC ARREST, 1.0534 20.9 17.4
UNEXPLAINED.
130............ PERIPHERAL VASCULAR 0.7914 24.8 20.6
DISORDERS W CC.
131............ PERIPHERAL VASCULAR 0.7081 23.7 19.7
DISORDERS W/O CC.
132............ ATHEROSCLEROSIS W CC.. 0.8183 21.8 18.1
133............ ATHEROSCLEROSIS W/O CC 0.5484 18.5 15.4

[[Page 11287]]

134............ HYPERTENSION.......... 0.6985 24.0 20.0
135............ CARDIAC CONGENITAL & 0.7331 20.3 16.9
VALVULAR DISORDERS
AGE 17 W
CC.
136............ CARDIAC CONGENITAL & 0.7075 21.0 17.5
VALVULAR DISORDERS
AGE 17 W/O
CC.
137............ CARDIAC CONGENITAL & 0.6655 21.9 18.2
VALVULAR DISORDERS
AGE 0-17*.
138............ CARDIAC ARRHYTHMIA & 0.7187 23.4 19.5
CONDUCTION DISORDERS
W CC.
139............ CARDIAC ARRHYTHMIA & 0.6482 20.4 17.0
CONDUCTION DISORDERS
W/O CC.
140............ ANGINA PECTORIS....... 0.7690 20.1 16.7
141............ SYNCOPE & COLLAPSE W 0.6252 23.2 19.3
CC.
142............ SYNCOPE & COLLAPSE W/O 0.5452 21.5 17.9
CC.
143............ CHEST PAIN............ 0.7316 22.7 18.9
144............ OTHER CIRCULATORY 0.7870 21.9 18.2
SYSTEM DIAGNOSES W CC.
145............ OTHER CIRCULATORY 0.7637 25.0 20.8
SYSTEM DIAGNOSES W/O
CC.
146............ RECTAL RESECTION W CC 1.2493 31.3 26.0
\4\.
147............ RECTAL RESECTION W/O 1.2493 31.3 26.0
CC*.
148............ MAJOR SMALL & LARGE 2.8488 47.6 39.6
BOWEL PROCEDURES W CC.
149............ MAJOR SMALL & LARGE 0.6655 21.9 18.2
BOWEL PROCEDURES W/O
CC \2\.
150............ PERITONEAL 0.4055 16.8 14.0
ADHESIOLYSIS W CC \1\.
151............ PERITONEAL 0.4055 16.8 14.0
ADHESIOLYSIS W/O CC*.
152............ MINOR SMALL & LARGE 1.2493 31.3 26.0
BOWEL PROCEDURES W CC
\4\.
153............ MINOR SMALL & LARGE 0.8284 23.3 19.4
BOWEL PROCEDURES W/O
CC*.
154............ STOMACH, ESOPHAGEAL & 1.2493 31.3 26.0
DUODENAL PROCEDURES
AGE 17 W
CC \4\.
155............ STOMACH, ESOPHAGEAL & 0.8284 23.3 19.4
DUODENAL PROCEDURES
AGE 17 W/O
CC*.
156............ STOMACH, ESOPHAGEAL & 0.8284 23.3 19.4
DUODENAL PROCEDURES
AGE 0-17*.
157............ ANAL & STOMAL 0.4055 16.8 14.0
PROCEDURES W CC \1\.
158............ ANAL & STOMAL 0.4055 16.8 14.0
PROCEDURES W/O CC*.
159............ HERNIA PROCEDURES 1.2493 31.3 26.0
EXCEPT INGUINAL &
FEMORAL AGE 17 W CC \4\.
160............ HERNIA PROCEDURES 0.6655 21.9 18.2
EXCEPT INGUINAL &
FEMORAL AGE 17 W/O CC*.
161............ INGUINAL & FEMORAL 0.6655 21.9 18.2
HERNIA PROCEDURES AGE
17 W CC*.
162............ INGUINAL & FEMORAL 0.6655 21.9 18.2
HERNIA PROCEDURES AGE
17 W/O CC*.
163............ HERNIA PROCEDURES AGE 0.6655 21.9 18.2
0-17*.
164............ APPENDECTOMY W 0.8284 23.3 19.4
COMPLICATED PRINCIPAL
DIAG W CC*.
165............ APPENDECTOMY W 0.8284 23.3 19.4
COMPLICATED PRINCIPAL
DIAG W/O CC*.
166............ APPENDECTOMY W/O 0.6655 21.9 18.2
COMPLICATED PRINCIPAL
DIAG W CC*.
167............ APPENDECTOMY W/O 0.6655 21.9 18.2
COMPLICATED PRINCIPAL
DIAG W/O CC*.
168............ MOUTH PROCEDURES W CC 0.8284 23.3 19.4
\3\.
169............ MOUTH PROCEDURES W/O 0.6655 21.9 18.2
CC*.
170............ OTHER DIGESTIVE SYSTEM 1.5543 35.0 29.1
O.R. PROCEDURES W CC.
171............ OTHER DIGESTIVE SYSTEM 0.8284 23.3 19.4
O.R. PROCEDURES W/O
CC \3\.
172............ DIGESTIVE MALIGNANCY W 0.8553 24.2 20.1
CC.
173............ DIGESTIVE MALIGNANCY W/ 0.5513 18.9 15.7
O CC.
174............ G.I. HEMORRHAGE W CC.. 0.8741 23.6 19.6
175............ G.I. HEMORRHAGE W/O CC 0.8359 25.6 21.3
176............ COMPLICATED PEPTIC 0.7661 24.4 20.3
ULCER.
177............ UNCOMPLICATED PEPTIC 0.8284 23.3 19.4
ULCER W CC \3\.
178............ UNCOMPLICATED PEPTIC 0.6655 21.9 18.2
ULCER W/O CC \2\.
179............ INFLAMMATORY BOWEL 1.0975 23.4 19.5
DISEASE.
180............ G.I. OBSTRUCTION W CC. 0.8457 22.8 19.0
181............ G.I. OBSTRUCTION W/O 0.5638 19.5 16.2
CC.
182............ ESOPHAGITIS, GASTROENT 0.8829 25.9 21.5
& MISC DIGEST
DISORDERS AGE 17 W CC.
183............ ESOPHAGITIS, GASTROENT 0.6913 21.5 17.9
& MISC DIGEST
DISORDERS AGE 17 W/O CC.
184............ ESOPHAGITIS, GASTROENT 0.6655 21.9 18.2
& MISC DIGEST
DISORDERS AGE 0-17*.
185............ DENTAL & ORAL DIS 0.8284 23.3 19.4
EXCEPT EXTRACTIONS &
RESTORATIONS, AGE 17 \3\.
186............ DENTAL & ORAL DIS 0.8284 23.3 19.4
EXCEPT EXTRACTIONS &
RESTORATIONS, AGE 0-
17*.
187............ DENTAL EXTRACTIONS & 0.8284 23.3 19.4
RESTORATIONS*.
188............ OTHER DIGESTIVE SYSTEM 1.0490 24.2 20.1
DIAGNOSES AGE 17 W CC.
189............ OTHER DIGESTIVE SYSTEM 0.5852 17.4 14.5
DIAGNOSES AGE 17 W/O CC.
190............ OTHER DIGESTIVE SYSTEM 0.6655 21.9 18.2
DIAGNOSES AGE 0-17*.
191............ PANCREAS, LIVER & 1.8783 46.3 38.5
SHUNT PROCEDURES W CC
\5\.
192............ PANCREAS, LIVER & 1.2493 31.3 26.0
SHUNT PROCEDURES W/O
CC*.
193............ BILIARY TRACT PROC 1.2493 31.3 26.0
EXCEPT ONLY CHOLECYST
W OR W/O C.D.E. W CC
\4\.
194............ BILIARY TRACT PROC 0.8284 23.3 19.4
EXCEPT ONLY CHOLECYST
W OR W/O C.D.E. W/O
CC*.
195............ CHOLECYSTECTOMY W 0.8284 23.3 19.4
C.D.E. W CC*.
196............ CHOLECYSTECTOMY W 0.8284 23.3 19.4
C.D.E. W/O CC*.
197............ CHOLECYSTECTOMY EXCEPT 1.8783 46.3 38.5
BY LAPAROSCOPE W/O
C.D.E. W CC \5\.
198............ CHOLECYSTECTOMY EXCEPT 1.8783 46.3 38.5
BY LAPAROSCOPE W/O
C.D.E. W/O CC \5\.
199............ HEPATOBILIARY 0.8284 23.3 19.4
DIAGNOSTIC PROCEDURE
FOR MALIGNANCY \3\.

[[Page 11288]]

200............ HEPATOBILIARY 1.2493 31.3 26.0
DIAGNOSTIC PROCEDURE
FOR NON-MALIGNANCY
\4\.
201............ OTHER HEPATOBILIARY OR 1.8783 46.3 38.5
PANCREAS O.R.
PROCEDURES \5\.
202............ CIRRHOSIS & ALCOHOLIC 0.5736 18.4 15.3
HEPATITIS.
203............ MALIGNANCY OF 0.5897 18.2 15.1
HEPATOBILIARY SYSTEM
OR PANCREAS.
204............ DISORDERS OF PANCREAS 0.9444 22.1 18.4
EXCEPT MALIGNANCY.
205............ DISORDERS OF LIVER 0.6825 21.5 17.9
EXCEPT MALIG,CIRR,ALC
HEPA W CC.
206............ DISORDERS OF LIVER 0.6655 21.9 18.2
EXCEPT MALIG,CIRR,ALC
HEPA W/O CC \2\.
207............ DISORDERS OF THE 0.6979 21.5 17.9
BILIARY TRACT W CC.
208............ DISORDERS OF THE 0.4055 16.8 14.0
BILIARY TRACT W/O CC
\1\.
209............ MAJOR JOINT & LIMB 1.8783 46.3 38.5
REATTACHMENT
PROCEDURES OF LOWER
EXTREMITY \5\.
210............ HIP & FEMUR PROCEDURES 1.2493 31.3 26.0
EXCEPT MAJOR JOINT
AGE 17 W
CC \4\.
211............ HIP & FEMUR PROCEDURES 0.8284 23.3 19.4
EXCEPT MAJOR JOINT
AGE 17 W/O
CC*.
212............ HIP & FEMUR PROCEDURES 0.8284 23.3 19.4
EXCEPT MAJOR JOINT
AGE 0-17*.
213............ AMPUTATION FOR 1.2591 33.0 27.5
MUSCULOSKELETAL
SYSTEM & CONN TISSUE
DISORDERS.
216............ BIOPSIES OF 1.2493 31.3 26.0
MUSCULOSKELETAL
SYSTEM & CONNECTIVE
TISSUE \4\.
217............ WND DEBRID & SKN GRFT 1.3602 38.8 32.3
EXCEPT HAND,FOR
MUSCSKELET & CONN
TISS DIS.
218............ LOWER EXTREM & HUMER 0.8284 23.3 19.4
PROC EXCEPT
HIP,FOOT,FEMUR AGE
17 W CC
\3\.
219............ LOWER EXTREM & HUMER 0.8284 23.3 19.4
PROC EXCEPT
HIP,FOOT,FEMUR AGE
17 W/O CC*.
220............ LOWER EXTREM & HUMER 0.8284 23.3 19.4
PROC EXCEPT
HIP,FOOT,FEMUR AGE 0-
17*.
223............ MAJOR SHOULDER/ELBOW 1.2493 31.3 26.0
PROC, OR OTHER UPPER
EXTREMITY PROC W CC
\4\.
224............ SHOULDER,ELBOW OR 0.4055 16.8 14.0
FOREARM PROC,EXC
MAJOR JOINT PROC, W/O
CC \1\.
225............ FOOT PROCEDURES \4\... 1.2493 31.3 26.0
226............ SOFT TISSUE PROCEDURES 1.2493 31.3 26.0
W CC \4\.
227............ SOFT TISSUE PROCEDURES 0.8284 23.3 19.4
W/O CC \3\.
228............ MAJOR THUMB OR JOINT 0.6655 21.9 18.2
PROC,OR OTH HAND OR
WRIST PROC W CC*.
229............ HAND OR WRIST PROC, 0.6655 21.9 18.2
EXCEPT MAJOR JOINT
PROC, W/O CC \2\.
230............ LOCAL EXCISION & 0.4055 16.8 14.0
REMOVAL OF INT FIX
DEVICES OF HIP &
FEMUR \1\.
231............ LOCAL EXCISION & 1.8783 46.3 38.5
REMOVAL OF INT FIX
DEVICES EXCEPT HIP &
FEMUR \5\.
232............ ARTHROSCOPY*.......... 0.4055 16.8 14.0
233............ OTHER MUSCULOSKELET 1.2493 31.3 26.0
SYS & CONN TISS O.R.
PROC W CC \4\.
234............ OTHER MUSCULOSKELET 0.4055 16.8 14.0
SYS & CONN TISS O.R.
PROC W/O CC \1\.
235............ FRACTURES OF FEMUR.... 0.7540 28.5 23.7
236............ FRACTURES OF HIP & 0.7381 27.2 22.6
PELVIS.
237............ SPRAINS, STRAINS, & 0.6655 21.9 18.2
DISLOCATIONS OF HIP,
PELVIS & THIGH \2\.
238............ OSTEOMYELITIS......... 0.8275 27.5 22.9
239............ PATHOLOGICAL FRACTURES 0.6689 21.9 18.2
& MUSCULOSKELETAL &
CONN TISS MALIGNANCY.
240............ CONNECTIVE TISSUE 0.9260 26.0 21.6
DISORDERS W CC.
241............ CONNECTIVE TISSUE 0.5805 22.7 18.9
DISORDERS W/O CC.
242............ SEPTIC ARTHRITIS...... 0.7725 26.3 21.9
243............ MEDICAL BACK PROBLEMS. 0.6596 23.4 19.5
244............ BONE DISEASES & 0.5756 20.6 17.1
SPECIFIC
ARTHROPATHIES W CC.
245............ BONE DISEASES & 0.4426 17.5 14.5
SPECIFIC
ARTHROPATHIES W/O CC.
246............ NON-SPECIFIC 0.6053 21.4 17.8
ARTHROPATHIES.
247............ SIGNS & SYMPTOMS OF 0.5590 20.4 17.0
MUSCULOSKELETAL
SYSTEM & CONN TISSUE.
248............ TENDONITIS, MYOSITIS & 0.7288 23.9 19.9
BURSITIS.
249............ AFTERCARE, 0.8005 27.1 22.5
MUSCULOSKELETAL
SYSTEM & CONNECTIVE
TISSUE.
250............ FX, SPRN, STRN & DISL 0.8373 31.8 26.5
OF FOREARM, HAND,
FOOT AGE 17 W CC.
251............ FX, SPRN, STRN & DISL 0.6904 26.0 21.6
OF FOREARM, HAND,
FOOT AGE 17 W/O CC.
252............ FX, SPRN, STRN & DISL 0.4055 16.8 14.0
OF FOREARM, HAND,
FOOT AGE 0-17*.
253............ FX, SPRN, STRN & DISL 0.8054 28.0 23.3
OF UPARM,LOWLEG EX
FOOT AGE 17 W CC.
254............ FX, SPRN, STRN & DISL 0.6999 26.4 22.0
OF UPARM,LOWLEG EX
FOOT AGE 17 W/O CC.
255............ FX, SPRN, STRN & DISL 0.4055 16.8 14.0
OF UPARM,LOWLEG EX
FOOT AGE 0-17*.
256............ OTHER MUSCULOSKELETAL 0.8002 25.1 20.9
SYSTEM & CONNECTIVE
TISSUE DIAGNOSES.
257............ TOTAL MASTECTOMY FOR 0.6655 21.9 18.2
MALIGNANCY W CC \2\.
258............ TOTAL MASTECTOMY FOR 0.6655 21.9 18.2
MALIGNANCY W/O CC*.
259............ SUBTOTAL MASTECTOMY 0.6655 21.9 18.2
FOR MALIGNANCY W CC*.
260............ SUBTOTAL MASTECTOMY 0.6655 21.9 18.2
FOR MALIGNANCY W/O
CC*.
261............ BREAST PROC FOR NON- 0.4055 16.8 14.0
MALIGNANCY EXCEPT
BIOPSY & LOCAL
EXCISION*.
262............ BREAST BIOPSY & LOCAL 0.4055 16.8 14.0
EXCISION FOR NON-
MALIGNANCY \1\.
263............ SKIN GRAFT &/OR DEBRID 1.5388 45.0 37.5
FOR SKN ULCER OR
CELLULITIS W CC.
264............ SKIN GRAFT &/OR DEBRID 1.1645 38.8 32.3
FOR SKN ULCER OR
CELLULITIS W/O CC.
265............ SKIN GRAFT &/OR DEBRID 1.6569 45.6 38.0
EXCEPT FOR SKIN ULCER
OR CELLULITIS W CC.
266............ SKIN GRAFT &/OR DEBRID 0.8284 23.3 19.4
EXCEPT FOR SKIN ULCER
OR CELLULITIS W/O CC
\3\.
267............ PERIANAL & PILONIDAL 0.4055 16.8 14.0
PROCEDURES*.
268............ SKIN, SUBCUTANEOUS 1.2493 31.3 26.0
TISSUE & BREAST
PLASTIC PROCEDURES
\4\.
269............ OTHER SKIN, SUBCUT 1.3915 41.7 34.7
TISS & BREAST PROC W
CC.

[[Page 11289]]

270............ OTHER SKIN, SUBCUT 1.3879 41.6 34.6
TISS & BREAST PROC W/
O CC.
271............ SKIN ULCERS........... 0.9714 31.1 25.9
272............ MAJOR SKIN DISORDERS W 0.6846 21.0 17.5
CC.
273............ MAJOR SKIN DISORDERS W/ 0.6655 21.9 18.2
O CC \2\.
274............ MALIGNANT BREAST 0.7872 22.0 18.3
DISORDERS W CC \7\.
275............ MALIGNANT BREAST 0.7872 22.0 18.3
DISORDERS W/O CC \7\.
276............ NON-MALIGANT BREAST 0.6655 21.9 18.2
DISORDERS \2\.
277............ CELLULITIS AGE 17 W CC.
278............ CELLULITIS AGE 17 W/O CC.
279............ CELLULITIS AGE 0-17*.. 0.6655 21.9 18.2
280............ TRAUMA TO THE SKIN, 1.0097 30.9 25.7
SUBCUT TISS & BREAST
AGE 17 W
CC.
281............ TRAUMA TO THE SKIN, 0.7363 27.4 22.8
SUBCUT TISS & BREAST
AGE 17 W/O
CC.
282............ TRAUMA TO THE SKIN, 0.6655 21.9 18.2
SUBCUT TISS & BREAST
AGE 0-17*.
283............ MINOR SKIN DISORDERS W 0.8574 24.8 20.6
CC.
284............ MINOR SKIN DISORDERS W/ 0.4055 16.8 14.0
O CC \1\.
285............ AMPUTAT OF LOWER LIMB 1.3692 31.7 26.4
FOR
ENDOCRINE,NUTRIT,&
METABOL DISORDERS.
286............ ADRENAL & PITUITARY 1.2493 31.3 26.0
PROCEDURES*.
287............ SKIN GRAFTS & WOUND 1.3195 39.6 33.0
DEBRID FOR ENDOC,
NUTRIT & METAB
DISORDERS.
288............ O.R. PROCEDURES FOR 1.8783 46.3 38.5
OBESITY \5\.
289............ PARATHYROID 0.4055 16.8 14.0
PROCEDURES*.
290............ THYROID PROCEDURES \1\ 0.4055 16.8 14.0
291............ THYROGLOSSAL 0.4055 16.8 14.0
PROCEDURES*.
292............ OTHER ENDOCRINE, 1.2493 31.3 26.0
NUTRIT & METAB O.R.
PROC W CC \4\.
293............ OTHER ENDOCRINE, 0.6655 21.9 18.2
NUTRIT & METAB O.R.
PROC W/O CC*.
294............ DIABETES AGE 35.
295............ DIABETES AGE 0-35 \3\. 0.8284 23.3 19.4
296............ NUTRITIONAL & MISC 0.7710 24.3 20.2
METABOLIC DISORDERS
AGE 17 W
CC.
297............ NUTRITIONAL & MISC 0.6321 21.1 17.5
METABOLIC DISORDERS
AGE 17 W/O
CC.
298............ NUTRITIONAL & MISC 0.6655 21.9 18.2
METABOLIC DISORDERS
AGE 0-17*.
299............ INBORN ERRORS OF 0.8284 23.3 19.4
METABOLISM \3\.
300............ ENDOCRINE DISORDERS W 0.8670 23.3 19.4
CC.
301............ ENDOCRINE DISORDERS W/ 0.4055 16.8 14.0
O CC \1\.
302............ KIDNEY TRANSPLANT \6\. 0.0000 0.0 0.0
303............ KIDNEY, URETER & MAJOR 1.8783 46.3 38.5
BLADDER PROCEDURES
FOR NEOPLASM \5\.
304............ KIDNEY, URETER & MAJOR 1.2493 31.3 26.0
BLADDER PROC FOR NON-
NEOPL W CC \4\.
305............ KIDNEY, URETER & MAJOR 0.6655 21.9 18.2
BLADDER PROC FOR NON-
NEOPL W/O CC \2\.
306............ PROSTATECTOMY W CC \3\ 0.8284 23.3 19.4
307............ PROSTATECTOMY W/O CC 0.4055 16.8 14.0
\1\.
308............ MINOR BLADDER 0.8284 23.3 19.414.0
PROCEDURES W CC \3\.
309............ MINOR BLADDER 0.4055 16.8 26.0
PROCEDURES W/O CC*.
310............ TRANSURETHRAL 1.2493 31.3 14.0
PROCEDURES W CC \4\.
311............ TRANSURETHRAL 0.4055 16.8 38.5
PROCEDURES W/O CC \1\.
312............ URETHRAL PROCEDURES, 1.8783 46.3 14.0
AGE 17 W
CC \5\.
313............ URETHRAL PROCEDURES, 0.4055 16.8 14.0
AGE 17 W/O
CC*.
314............ URETHRAL PROCEDURES, 0.4055 16.8 14.0
AGE 0-17*.
315............ OTHER KIDNEY & URINARY 1.5800 39.5 32.9
TRACT O.R. PROCEDURES.
316............ RENAL FAILURE......... 0.9308 24.1 20.0
317............ ADMIT FOR RENAL 1.2493 31.3 26.0
DIALYSIS \4\.
318............ KIDNEY & URINARY TRACT 0.8075 21.5 17.9
NEOPLASMS W CC.
319............ KIDNEY & URINARY TRACT 0.6655 21.9 18.2
NEOPLASMS W/O CC \2\.
320............ KIDNEY & URINARY TRACT 0.7424 23.9 19.9
INFECTIONS AGE 17 W CC.
321............ KIDNEY & URINARY TRACT 0.6123 20.4 17.0
INFECTIONS AGE 17 W/O CC.
322............ KIDNEY & URINARY TRACT 0.6655 21.9 18.2
INFECTIONS AGE 0-17*.
323............ URINARY STONES W CC, &/ 0.6655 21.9 18.2
OR ESW LITHOTRIPSY
\2\.
324............ URINARY STONES W/O CC 0.6655 21.9 18.2
\2\.
325............ KIDNEY & URINARY TRACT 0.8123 26.7 22.2
SIGNS & SYMPTOMS AGE
17 W CC.
326............ KIDNEY & URINARY TRACT 0.6655 21.9 18.2
SIGNS & SYMPTOMS AGE
17 W/O CC
\2\.
327............ KIDNEY & URINARY TRACT 0.4055 16.8 14.0
SIGNS & SYMPTOMS AGE
0-17*.
328............ URETHRAL STRICTURE AGE 0.6655 21.9 18.2
17 W CC*.
329............ URETHRAL STRICTURE AGE 0.4055 16.8 14.0
17 W/O CC
\1\.
330............ URETHRAL STRICTURE AGE 0.4055 16.8 14.0
0-17*.
331............ OTHER KIDNEY & URINARY 0.9267 24.6 20.5
TRACT DIAGNOSES AGE
17 W CC.
332............ OTHER KIDNEY & URINARY 0.6393 20.9 17.4
TRACT DIAGNOSES AGE
17 W/O CC.
333............ OTHER KIDNEY & URINARY 0.4055 16.8 14.0
TRACT DIAGNOSES AGE 0-
17*.
334............ MAJOR MALE PELVIC 1.2493 31.3 26.0
PROCEDURES W CC*.
335............ MAJOR MALE PELVIC 0.8284 23.3 19.4
PROCEDURES W/O CC*.

[[Page 11290]]

336............ TRANSURETHRAL 0.8284 23.3 19.4
PROSTATECTOMY W CC
\3\.
337............ TRANSURETHRAL 0.6655 21.9 18.2
PROSTATECTOMY W/O CC*.
338............ TESTES PROCEDURES, FOR 0.6655 21.9 18.2
MALIGNANCY*.
339............ TESTES PROCEDURES, NON- 0.4055 16.8 14.0
MALIGNANCY AGE 17 \1\.
340............ TESTES PROCEDURES, NON- 0.4055 16.8 14.0
MALIGNANCY AGE 0-17*.
341............ PENIS PROCEDURES \2\.. 0.6655 21.9 18.2
342............ CIRCUMCISION AGE 17 \4\.
343............ CIRCUMCISION AGE 0-17. 0.4055 16.8 14.0
344............ OTHER MALE 1.2493 31.3 26.0
REPRODUCTIVE SYSTEM
O.R. PROCEDURES FOR
MALIGNANCY \4\.
345............ OTHER MALE 0.8284 23.3 19.4
REPRODUCTIVE SYSTEM
O.R. PROC EXCEPT FOR
MALIGNANCY \3\.
346............ MALIGNANCY, MALE 0.7070 21.6 18.0
REPRODUCTIVE SYSTEM,
W CC.
347............ MALIGNANCY, MALE 0.6655 21.9 18.2
REPRODUCTIVE SYSTEM,
W/O CC \2\.
348............ BENIGN PROSTATIC 0.4055 16.8 14.0
HYPERTROPHY W CC \1\.
349............ BENIGN PROSTATIC 0.4055 16.8 14.0
HYPERTROPHY W/O CC*.
350............ INFLAMMATION OF THE 0.6058 19.9 16.5
MALE REPRODUCTIVE
SYSTEM.
351............ STERILIZATION, MALE*.. 0.4055 16.8 14.0
352............ OTHER MALE 0.8284 23.3 19.4
REPRODUCTIVE SYSTEM
DIAGNOSES \3\.
353............ PELVIC EVISCERATION, 1.8783 46.3 38.5
RADICAL HYSTERECTOMY
& RADICAL VULVECTOMY*.
354............ UTERINE, ADNEXA PROC 1.2493 31.3 26.0
FOR NON-OVARIAN/
ADNEXAL MALIG W CC*.
355............ UTERINE, ADNEXA PROC 1.2493 31.3 26.0
FOR NON-OVARIAN/
ADNEXAL MALIG W/O CC*.
356............ FEMALE REPRODUCTIVE 1.2493 31.3 26.0
SYSTEM RECONSTRUCTIVE
PROCEDURES*.
357............ UTERINE & ADNEXA PROC 1.2493 31.3 26.0
FOR OVARIAN OR
ADNEXAL MALIGNANCY*.
358............ UTERINE & ADNEXA PROC 1.8783 46.3 38.5
FOR NON-MALIGNANCY W
CC \5\.
359............ UTERINE & ADNEXA PROC 0.4055 16.8 14.0
FOR NON-MALIGNANCY W/
O CC \1\.
360............ VAGINA, CERVIX & VULVA 0.4055 16.8 14.0
PROCEDURES \1\.
361............ LAPAROSCOPY & 0.6655 21.9 18.2
INCISIONAL TUBAL
INTERRUPTION*.
362............ ENDOSCOPIC TUBAL 0.6655 21.9 18.2
INTERRUPTION*.
363............ D&C, CONIZATION & 0.8284 23.3 19.4
RADIO-IMPLANT, FOR
MALIGNANCY*.
364............ D&C, CONIZATION EXCEPT 0.6655 21.9 18.2
FOR MALIGNANCY*.
365............ OTHER FEMALE 1.8783 46.3 38.5
REPRODUCTIVE SYSTEM
O.R. PROCEDURES \5\.
366............ MALIGNANCY, FEMALE 0.9654 23.9 19.9
REPRODUCTIVE SYSTEM W
CC.
367............ MALIGNANCY, FEMALE 0.8284 23.3 19.4
REPRODUCTIVE SYSTEM W/
O CC \3\.
368............ INFECTIONS, FEMALE 1.2493 31.3 26.0
REPRODUCTIVE SYSTEM
\4\.
369............ MENSTRUAL & OTHER 0.6655 21.9 18.2
FEMALE REPRODUCTIVE
SYSTEM DISORDERS \2\.
370............ CESAREAN SECTION W CC* 0.8284 23.3 19.4
371............ CESAREAN SECTION W/O 0.6655 21.9 18.2
CC*.
372............ VAGINAL DELIVERY W 0.6655 21.9 18.2
COMPLICATING
DIAGNOSES*.
373............ VAGINAL DELIVERY W/O 0.4055 16.8 14.0
COMPLICATING
DIAGNOSES*.
374............ VAGINAL DELIVERY W 0.4055 16.8 14.0
STERILIZATION &/OR
D&C*.
375............ VAGINAL DELIVERY W 0.4055 16.8 14.0
O.R. PROC EXCEPT
STERIL &/OR D&C*.
376............ POSTPARTUM & POST 0.4055 16.8 14.0
ABORTION DIAGNOSES W/
O O.R. PROCEDURE*.
377............ POSTPARTUM & POST 0.4055 16.8 14.0
ABORTION DIAGNOSES W
O.R. PROCEDURE*.
378............ ECTOPIC PREGNANCY*.... 0.6655 21.9 18.2
379............ THREATENED ABORTION*.. 0.4055 16.8 14.0
380............ ABORTION W/O D&C*..... 0.4055 16.8 14.0
381............ ABORTION W D&C, 0.4055 16.8 14.0
ASPIRATION CURETTAGE
OR HYSTEROTOMY*.
382............ FALSE LABOR*.......... 0.4055 16.8 14.0
383............ OTHER ANTEPARTUM 0.4055 16.8 14.0
DIAGNOSES W MEDICAL
COMPLICATIONS*.
384............ OTHER ANTEPARTUM 0.4055 16.8 14.0
DIAGNOSES W/O MEDICAL
COMPLICATIONS*.
385............ NEONATES, DIED OR 0.4055 16.8 14.0
TRANSFERRED TO
ANOTHER ACUTE CARE
FACILITY*.
386............ EXTREME IMMATURITY*... 0.6655 21.9 18.2
387............ PREMATURITY W MAJOR 0.6655 21.9 18.2
PROBLEMS*.
388............ PREMATURITY W/O MAJOR 0.4055 16.8 14.0
PROBLEMS*.
389............ FULL TERM NEONATE W 1.2493 31.3 26.0
MAJOR PROBLEMS \4\.
390............ NEONATE W OTHER 0.6655 21.9 18.2
SIGNIFICANT PROBLEMS*.
391............ NORMAL NEWBORN*....... 0.4055 16.8 14.0
392............ SPLENECTOMY AGE 17*.
393............ SPLENECTOMY AGE 0-17*. 0.6655 21.9 18.2
394............ OTHER O.R. PROCEDURES 1.8783 46.3 38.5
OF THE BLOOD AND
BLOOD FORMING ORGANS
\5\.
395............ RED BLOOD CELL 0.8584 25.1 20.9
DISORDERS AGE 17.
396............ RED BLOOD CELL 0.4055 16.8 14.0
DISORDERS AGE 0-17*.
397............ COAGULATION DISORDERS. 0.7567 19.4 16.1
398............ RETICULOENDOTHELIAL & 0.9008 23.4 19.5
IMMUNITY DISORDERS W
CC.
399............ RETICULOENDOTHELIAL & 0.4055 16.8 14.0
IMMUNITY DISORDERS W/
O CC \1\.
400............ LYMPHOMA & LEUKEMIA W 0.8284 23.3 19.4
MAJOR O.R. PROCEDURE
\3\.
401............ LYMPHOMA & NON-ACUTE 1.2493 31.3 26.0
LEUKEMIA W OTHER O.R.
PROC W CC \4\.

[[Page 11291]]

402............ LYMPHOMA & NON-ACUTE 0.8284 23.3 19.4
LEUKEMIA W OTHER O.R.
PROC W/O CC*.
403............ LYMPHOMA & NON-ACUTE 0.9651 23.9 19.9
LEUKEMIA W CC.
404............ LYMPHOMA & NON-ACUTE 0.8980 19.1 15.9
LEUKEMIA W/O CC.
405............ ACUTE LEUKEMIA W/O 0.6655 21.9 18.2
MAJOR O.R. PROCEDURE
AGE 0-17*.
406............ MYELOPROLIF DISORD OR 1.8783 46.3 38.5
POORLY DIFF NEOPL W
MAJ O.R.PROC W CC \5\.
407............ MYELOPROLIF DISORD OR 0.8284 23.3 19.4
POORLY DIFF NEOPL W
MAJ O.R.PROC W/O CC*.
408............ MYELOPROLIF DISORD OR 1.2493 31.3 26.0
POORLY DIFF NEOPL W
OTHER O.R.PROC \4\.
409............ RADIOTHERAPY.......... 0.5220 19.5 16.2
410............ CHEMOTHERAPY W/O ACUTE 0.4055 16.8 14.0
LEUKEMIA AS SECONDARY
DIAGNOSIS \1\.
411............ HISTORY OF MALIGNANCY 0.4055 16.8 14.0
W/O ENDOSCOPY*.
412............ HISTORY OF MALIGNANCY 0.4055 16.8 14.0
W ENDOSCOPY*.
413............ OTHER MYELOPROLIF DIS 0.9061 23.7 19.7
OR POORLY DIFF NEOPL
DIAG W CC \7\.
414............ OTHER MYELOPROLIF DIS 0.9061 23.7 19.7
OR POORLY DIFF NEOPL
DIAG W/O CC \7\.
415............ O.R. PROCEDURE FOR 1.4933 38.7 32.2
INFECTIOUS &
PARASITIC DISEASES.
416............ SEPTICEMIA AGE 17.
417............ SEPTICEMIA AGE 0-17*.. 0.8284 23.3 19.4
418............ POSTOPERATIVE & POST- 0.8771 25.8 21.5
TRAUMATIC INFECTIONS.
419............ FEVER OF UNKNOWN 0.5948 20.5 17.0
ORIGIN AGE 17 W CC.
420............ FEVER OF UNKNOWN 0.4055 16.8 14.0
ORIGIN AGE 17 W/O CC \1\.
421............ VIRAL ILLNESS AGE 17 \4\.
422............ VIRAL ILLNESS & FEVER 0.4055 16.8 14.0
OF UNKNOWN ORIGIN AGE
0-17*.
423............ OTHER INFECTIOUS & 0.8701 24.7 20.5
PARASITIC DISEASES
DIAGNOSES.
424............ O.R. PROCEDURE W 1.8783 46.3 38.5
PRINCIPAL DIAGNOSES
OF MENTAL ILLNESS \5\.
425............ ACUTE ADJUSTMENT 0.6177 26.0 21.6
REACTION &
PSYCHOLOGICAL
DYSFUNCTION.
426............ DEPRESSIVE NEUROSES... 0.5739 26.9 22.4
427............ NEUROSES EXCEPT 0.6655 21.9 18.2
DEPRESSIVE \2\.
428............ DISORDERS OF 1.2493 31.3 26.0
PERSONALITY & IMPULSE
CONTROL \4\.
429............ ORGANIC DISTURBANCES & 0.5466 25.0 20.8
MENTAL RETARDATION.
430............ PSYCHOSES............. 0.4479 22.9 19.0
431............ CHILDHOOD MENTAL 0.4345 22.7 18.9
DISORDERS.
432............ OTHER MENTAL DISORDER 0.6655 21.9 18.2
DIAGNOSES \2\.
433............ ALCOHOL/DRUG ABUSE OR 0.2489 13.1 10.9
DEPENDENCE, LEFT AMA.
439............ SKIN GRAFTS FOR 1.3200 42.5 35.4
INJURIES.
440............ WOUND DEBRIDEMENTS FOR 1.3567 40.1 33.4
INJURIES.
441............ HAND PROCEDURES FOR 0.6655 21.9 18.2
INJURIES*.
442............ OTHER O.R. PROCEDURES 1.6442 39.7 33.0
FOR INJURIES W CC.
443............ OTHER O.R. PROCEDURES 0.6655 21.9 18.2
FOR INJURIES W/O CC
\2\.
444............ TRAUMATIC INJURY AGE 0.9614 30.7 25.5
17 W CC.
445............ TRAUMATIC INJURY AGE 0.8448 27.3 22.7
17 W/O CC.
446............ TRAUMATIC INJURY AGE 0- 0.8284 23.3 19.4
17*.
447............ ALLERGIC REACTIONS AGE 0.6655 21.9 18.2
17 \2\.
448............ ALLERGIC REACTIONS AGE 0.4055 16.8 14.0
0-17*.
449............ POISONING & TOXIC 0.8284 23.3 19.4
EFFECTS OF DRUGS AGE
17 W CC
\3\.
450............ POISONING & TOXIC 0.6655 21.9 18.2
EFFECTS OF DRUGS AGE
17 W/O CC
\2\.
451............ POISONING & TOXIC 0.4055 16.8 14.0
EFFECTS OF DRUGS AGE
0-17*.
452............ COMPLICATIONS OF 0.9596 25.5 21.2
TREATMENT W CC.
453............ COMPLICATIONS OF 0.6666 23.1 19.2
TREATMENT W/O CC.
454............ OTHER INJURY, 0.8284 23.3 19.4
POISONING & TOXIC
EFFECT DIAG W CC \3\.
455............ OTHER INJURY, 0.4055 16.8 14.0
POISONING & TOXIC
EFFECT DIAG W/O CC
\1\.
461............ O.R. PROC W DIAGNOSES 1.3383 38.0 31.6
OF OTHER CONTACT W
HEALTH SERVICES.
462............ REHABILITATION........ 0.6469 23.5 19.5
463............ SIGNS & SYMPTOMS W CC. 0.7618 26.8 22.3
464............ SIGNS & SYMPTOMS W/O 0.6234 24.3 20.2
CC.
465............ AFTERCARE W HISTORY OF 0.8284 23.3 19.4
MALIGNANCY AS
SECONDARY DIAGNOSIS
\3\.
466............ AFTERCARE W/O HISTORY 0.8119 23.9 19.9
OF MALIGNANCY AS
SECONDARY DIAGNOSIS.
467............ OTHER FACTORS 0.6655 21.9 18.2
INFLUENCING HEALTH
STATUS \2\.
468............ EXTENSIVE O.R. 2.2177 45.5 37.9
PROCEDURE UNRELATED
TO PRINCIPAL
DIAGNOSIS.
469............ PRINCIPAL DIAGNOSIS 0.0000 0.0 0.0
INVALID AS DISCHARGE
DIAGNOSIS \6\.
470............ UNGROUPABLE \6\....... 0.0000 0.0 0.0
471............ BILATERAL OR MULTIPLE 1.8783 46.3 38.5
MAJOR JOINT PROCS OF
LOWER EXTREMITY*.
473............ ACUTE LEUKEMIA W/O 0.8047 17.1 14.2
MAJOR O.R. PROCEDURE
AGE 17.
475............ RESPIRATORY SYSTEM 2.0906 35.5 29.5
DIAGNOSIS WITH
VENTILATOR SUPPORT.
476............ PROSTATIC O.R. 1.8783 46.3 38.5
PROCEDURE UNRELATED
TO PRINCIPAL
DIAGNOSIS \5\.
477............ NON-EXTENSIVE O.R. 1.6791 39.7 33.0
PROCEDURE UNRELATED
TO PRINCIPAL
DIAGNOSIS.
478............ OTHER VASCULAR 1.6244 37.8 31.5
PROCEDURES W CC.
479............ OTHER VASCULAR 0.6655 21.9 18.2
PROCEDURES W/O CC \2\.

[[Page 11292]]

480............ LIVER TRANSPLANT \6\.. 0.0000 0.0 0.0
481............ BONE MARROW 1.8783 46.3 38.5
TRANSPLANT*.
482............ TRACHEOSTOMY FOR FACE, 0.6655 21.9 18.2
MOUTH & NECK
DIAGNOSES*.
483............ TRACH W MECH VENT 96+ 3.2319 54.6 45.5
HRS OR PDX EXCEPT
FACE, MOUTH & NECK
DIAG.
484............ CRANIOTOMY FOR 1.8783 46.3 38.5
MULTIPLE SIGNIFICANT
TRAUMA*.
485............ LIMB REATTACHMENT, HIP 1.8783 46.3 38.5
AND FEMUR PROC FOR
MULTIPLE SIGNIFICANT
TR*.
486............ OTHER O.R. PROCEDURES 0.8284 23.3 19.4
FOR MULTIPLE
SIGNIFICANT TRAUMA
\3\.
487............ OTHER MULTIPLE 1.0885 29.5 24.5
SIGNIFICANT TRAUMA.
488............ HIV W EXTENSIVE O.R. 1.8783 46.3 38.5
PROCEDURE \5\.
489............ HIV W MAJOR RELATED 0.8846 22.9 19.0
CONDITION.
490............ HIV W OR W/O OTHER 0.6952 20.4 17.0
RELATED CONDITION.
491............ MAJOR JOINT & LIMB 1.8783 46.3 38.5
REATTACHMENT
PROCEDURES OF UPPER
EXTREMITY*.
492............ CHEMOTHERAPY W ACUTE 0.8284 23.3 19.4
LEUKEMIA AS SECONDARY
DIAGNOSIS \3\.
493............ LAPAROSCOPIC 0.8284 23.3 19.4
CHOLECYSTECTOMY W/O
C.D.E. W CC \3\.
494............ LAPAROSCOPIC 0.4055 16.8 14.0
CHOLECYSTECTOMY W/O
C.D.E. W/O CC \1\.
495............ LUNG TRANSPLANT \6\... 0.0000 0.0 0.0
496............ COMBINED ANTERIOR/ 1.2493 31.3 26.0
POSTERIOR SPINAL
FUSION*.
497............ SPINAL FUSION W CC \5\ 1.8783 46.3 38.5
498............ SPINAL FUSION W/O CC 0.8284 23.3 19.4
\3\.
499............ BACK & NECK PROCEDURES 1.8783 46.3 38.5
EXCEPT SPINAL FUSION
W CC \5\.
500............ BACK & NECK PROCEDURES 0.8284 23.3 19.4
EXCEPT SPINAL FUSION
W/O CC*.
501............ KNEE PROCEDURES W PDX 1.8783 46.3 38.5
OF INFECTION W CC \5\.
502............ KNEE PROCEDURES W PDX 0.8284 23.3 19.4
OF INFECTION W/O CC*.
503............ KNEE PROCEDURES W/O 1.8783 46.3 38.5
PDX OF INFECTION \5\.
504............ EXTENSIVE 3RD DEGREE 1.8783 46.3 38.5
BURNS W SKIN GRAFT*.
505............ EXTENSIVE 3RD DEGREE 1.2493 31.3 26.0
BURNS W/O SKIN GRAFT
\4\.
506............ FULL THICKNESS BURN W 1.8783 46.3 38.5
SKIN GRAFT OR INHAL
INJ W CC OR SIG
TRAUMA \5\.
507............ FULL THICKNESS BURN W 0.8284 23.3 19.4
SKIN GRFT OR INHAL
INJ W/O CC OR SIG
TRAUMA*.
508............ FULL THICKNESS BURN W/ 0.8284 23.3 19.4
O SKIN GRFT OR INHAL
INJ W CC OR SIG
TRAUMA \3\.
509............ FULL THICKNESS BURN W/ 0.8284 23.3 19.4
O SKIN GRFT OR INH
INJ W/O CC OR SIG
TRAUMA \3\.
510............ NON-EXTENSIVE BURNS W 1.0734 32.2 26.8
CC OR SIGNIFICANT
TRAUMA.
511............ NON-EXTENSIVE BURNS W/ 0.8284 23.3 19.4
O CC OR SIGNIFICANT
TRAUMA \3\.
512............ SIMULTANEOUS PANCREAS/ 0.0000 0.0 0.0
KIDNEY TRANSPLANT \6\.
513............ PANCREAS TRANSPLANT 0.0000 0.0 0.0
\6\.
514............ CARDIAC DEFIBRILATOR 0.8284 23.3 19.4
IMPLANT W CARDIAC
CATH*.
515............ CARDIAC DEFIBRILATOR 1.2493 31.3 26.0
IMPLANT W/O CARDIAC
CATH \4\.
516............ PERCUTANEOUS 0.8284 23.3 19.4
CARDIVASCULAR
PROCEDURE W AMI*.
517............ PERCUTANEOUS 1.8783 46.3 38.5
CARDIVASCULAR PROC W
NON-DRUG ELUTING
STENT W/O AMI \5\.
518............ PERCUTANEOUS 1.2493 31.3 26.0
CARDIVASCULAR PROC W/
O CORONARY ARTERY
STENT OR AMI \4\.
519............ CERVICAL SPINAL FUSION 0.8284 23.3 19.4
W CC \3\.
520............ CERVICAL SPINAL FUSION 0.6655 21.9 18.2
W/O CC \2\.
521............ ALCOHOL/DRUG ABUSE OR 0.3755 18.6 15.5
DEPENDENCE W CC.
522............ ALCOHOL/DRUG ABUSE OR 0.4055 16.8 14.0
DEPENDENCE W
REHABILITATION
THERAPY W/O CC \1\.
523............ ALCOHOL/DRUG ABUSE OR 0.3860 21.2 17.6
DEPENDENCE W/O
REHABILITATION
THERAPY W/O CC.
524............ TRANSIENT ISCHEMIA.... 0.6250 23.1 19.2
525............ HEART ASSIST SYSTEM 1.8783 46.3 38.5
IMPLANT*.
526............ PERCUTANEOUS 0.8284 23.3 19.4
CARVIOVASCULAR PROC W
DRUG-ELUTING STENT W
AMI*.
527............ PERCUTANEOUS 0.8284 23.3 19.4
CARVIOVASCULAR PROC W
DRUG-ELUTING STENT W/
O AMI*.
------------------------------------------------------------------------
* Relative weights for these LTC-DRGs were determined by assigning these
cases to the appropriate low volume quintile because they had no LTCH
cases in the FY 2001 MedPAR.
\1\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 1.
\2\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 2.
\3\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 3.
\4\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 4.
\5\ Relative weights for these LTC-DRGs were determined by assigning
these cases to low volume quintile 5.
\6\ Relative weights for these LTC-DRGs were assigned a value of 0.0.
\7\ Relative weights for these LTC-DRGs were determined after adjusting
to account for nonmonotonically (see step 5 above).

[FR Doc. 03-5206 Filed 3-3-03; 10:29 am]

BILLING CODE 4120-01-P