FR Doc 04-23440

[Federal Register: October 22, 2004 (Volume 69, Number 204)]
[Rules and Regulations]
[Page 62123-62162]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22oc04-9]

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Part II

Department of Health and Human Services

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42 CFR Part 484

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Medicare Program; Home Health Prospective Payment System Rate Update
for Calendar Year 2005; Final Rule

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 484

[CMS-1265-F]
RIN 0938-AM93

Medicare Program; Home Health Prospective Payment System Rate
Update for Calendar Year 2005

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

ACTION: Final rule.

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SUMMARY: This final rule sets forth an update to the 60-day national
episode rates and the national per-visit amounts under the Medicare
prospective payment system for home health agencies. As part of this
final rule, we are also rebasing and revising the home health market
basket to ensure it continues to adequately reflect the price changes
of efficiently providing home health services. In addition, we are
revising the fixed dollar loss ratio, which is used in the calculation
of outlier payments. This final rule will be the first update of the
home health prospective payment system (HH PPS) rates on a calendar
year update cycle. HH PPS was moved to a calendar year update cycle as
a result of the provisions of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003.

EFFECTIVE DATE: These regulations are effective on January 1, 2005.

FOR FURTHER INFORMATION CONTACT: Randy Throndset, (410) 786-0131. Debra
Gillespie, (410) 786-4631. Mary Lee Seifert (Market Basket), (410) 786-
0030. Mollie Knight (Market Basket), (410) 786-7948.

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I. Background

A. Statutory Background

The Balanced Budget Act of 1997 (BBA), (Pub. L. 105-33), enacted on
August 5, 1997, significantly changed the way Medicare pays for
Medicare home health services. Until the implementation of a home
health prospective payment system (HH PPS) on October 1, 2000, home
health agencies (HHAs) received payment under a cost-based
reimbursement system. Section 4603 of the BBA governed the development
of the HH PPS.
Section 4603(a) of the BBA provides the authority for the
development of a PPS for all Medicare-covered home health services
provided under a plan of care that were paid on a reasonable cost basis
by adding section 1895, entitled ``Prospective Payment For Home Health
Services,'' to the Social Security Act (the Act).
Section 1895(b)(1) of the Act requires the Secretary to establish a
PPS for all costs of home health services paid under Medicare.
Section 1895(b)(3)(A) of the Act requires that (1) the computation
of a standard prospective payment amount include all costs of home
health services covered and paid for on a reasonable cost basis and be
initially based on the most recent audited cost report data available
to the Secretary, and (2) the prospective payment amounts be
standardized to eliminate the effects of case-mix and wage levels among
HHAs.
Section 1895(b)(3)(B) of the Act addresses the annual update to the
standard prospective payment amounts by the home health applicable
increase percentage as specified in the statute.
Section 1895(b)(4) of the Act governs the payment computation.
Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act require the
standard prospective payment amount to be adjusted for case-mix and
geographic differences in wage levels. Section 1895(b)(4)(B) of the Act
requires the establishment of an appropriate case-mix adjustment factor
that explains a significant amount of the variation in cost among
different units of services. Similarly, section 1895(b)(4)(C) of the
Act requires the establishment of wage adjustment factors that reflect
the relative level of wages and wage-related costs applicable to the
furnishing of home health services in a geographic area compared to the
national average applicable level. These wage-adjustment factors may be
the factors used by the Secretary for the different area wage levels
for purposes of section 1886(d)(3)(E) of the Act.
Section 1895(b)(5) of the Act gives the Secretary the option to
grant additions or adjustments to the payment amount otherwise made in
the case of outliers because of unusual variations in the type or
amount of medically necessary care. Total outlier payments in a given
fiscal year cannot exceed 5 percent of total payments projected or
estimated.

B. Updates

On July 3, 2000, we published a final rule (65 FR 41128) in the
Federal Register to implement the HH PPS legislation. That final rule
established requirements for the new PPS for HHAs as required by
section 4603 of the BBA, and as subsequently amended by section 5101 of
the Omnibus Consolidated and Emergency Supplemental Appropriations Act
(OCESAA) for Fiscal Year 1999, (Pub. L. 105-277), enacted on October
21, 1998; and by sections 302, 305, and 306 of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act (BBRA) of 1999, (Pub. L. 106-
113), enacted on November 29, 1999. The requirements include the
implementation of a PPS for HHAs, consolidated billing requirements,
and a number of other related changes. The PPS described in that rule
replaced the retrospective reasonable-cost-based system that was used
by Medicare for the payment of home health services under Part A and
Part B.
As required by section 1895(b)(3)(B) of the Act, we have
historically updated the HH PPS rates annually in a separate Federal
Register document.

C. System for Payment of Home Health Services

Generally, Medicare makes payment under the HH PPS on the basis of
a national standardized 60-day episode payment, adjusted for case mix
and wage index. For episodes with four or fewer visits, Medicare pays
on the basis of a national per-visit amount by discipline, referred to
as a low utilization payment adjustment (LUPA). Medicare also adjusts
the 60-day episode payment for certain intervening events that give
rise to a partial episode payment adjustment (PEP adjustment) or a
significant change in condition adjustment (SCIC). For certain cases
that exceed a specific cost threshold, an outlier adjustment may also
be

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available. For a complete and full description of the HH PPS as
required by the BBA and as amended by OCESAA and BBRA, see the July 3,
2000 HH PPS final rule (65 FR 41128).

D. Medicare Prescription Drug, Improvement, and Modernization Act of
2003

On December 8, 2003, the Congress enacted the Medicare Prescription
Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-
173). This new legislation affects our update to HH payment rates.
Specifically, section 421 of MMA requires, for home health services
furnished in a rural area (as defined in section 1886(d)(2)(D) of the
Act), with respect to episodes or visits ending on or after April 1,
2004 and before April 1, 2005, that the Secretary increase the payment
amount that otherwise would have been made under section 1895 of the
Act for the services by 5 percent.
The statute waives budget neutrality for the purposes of this
increase as it specifically states that the Secretary will not reduce
the standard prospective payment amount (or amounts) under section 1895
of the Act applicable to home health services furnished during a period
to offset the increase in payments resulting in the application of this
section of the statute.
Section 701 of the MMA changes the yearly update cycle of the HH
PPS rates from that of a fiscal year to a calendar year update cycle
for 2004 and any subsequent year. Generally, section 701(a) of the MMA
changes the references in the statute to refer to the calendar year for
2004 and any subsequent year. The changes result in updates to the HH
PPS rates described as ``fiscal year'' updates for 2002 and 2003 and as
calendar ``year'' updates for 2004 and any subsequent year (section
1895(b)(3)(B)(i) of the Act). In light of these provisions, we will not
be updating the HH PPS rates on October 1, 2004 as HH PPS will now be
updated on a calendar year update cycle.
In addition to changing the update cycle for HH PPS rates, section
701 of the MMA makes adjustments to the home health applicable increase
percentage for 2004, 2005, and 2006. Specifically, section 701(a)(2)(D)
of the MMA leaves unchanged the home health market basket increase for
the last calendar year quarter of 2003 and the first calendar year
quarter of 2004 (section 1895(b)(3)(B)(ii)(II) of the Act).
Furthermore, section 701(b)(4) of the MMA sets the home health
applicable percentage increase for the last 3 quarters of 2004 as the
home health market basket (3.1 percent) minus 0.8 percentage points
(section 1895(b)(3)(B)(ii)(III) of the Act). We implemented this
provision through Pub. 100-20, One Time Notification, Transmittal 59,
issued February 20, 2004. Section 701(b)(4) of the MMA also provides
that updates for CY 2005 and CY 2006 will equal the applicable home
health market basket percentage increase minus 0.8 percentage points.
Lastly, section 701(b)(3) of the MMA revises the statute to provide
that HH PPS rates for CY 2007 and any subsequent year will be updated
by that year's home health market basket percentage increase (section
1895(b)(3)(B)(ii)(IV) of the Act).

E. Requirements for Issuance of Regulations

Section 902 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and
requires the Secretary, in consultation with the Director of the Office
of Management and Budget, to establish and publish timelines for the
publication of Medicare final regulations based on the previous
publication of a Medicare proposed or interim final regulation. Section
902 of the MMA also states that the timelines for these regulations may
vary but shall not exceed 3 years after publication of the preceding
proposed or interim final regulation except under exceptional
circumstances.
This final rule finalizes provisions set forth in proposed rule
published in the Federal Register (69 FR 31248) on June 2, 2004. In
addition, this final rule has been published within the 3-year time
limit imposed by section 902 of the MMA. Therefore, we believe that the
final rule is in accordance with the Congress' intent to ensure timely
publication of final regulations.

II. Provisions of the Proposed Regulations

On June 2, 2004, we published a proposed rule in the Federal
Register (69 FR 31248), proposing to update the 60-day national episode
rates and the national per-visit amounts under the Medicare prospective
payment system for home health agencies. We also proposed to rebase and
revise the home health market basket to ensure it continues to
adequately reflect the price changes of efficiently providing home
health services. We also proposed to revise the fixed dollar loss
ratio, which is used in the calculation of outlier payments.

A. National Standardized 60-Day Episode Rate

Medicare HH PPS has been effective since October 1, 2000. As set
forth in the final rule published July 3, 2000 in the Federal Register
(65 FR 41128), the unit of payment under Medicare HH PPS is a national
standardized 60-day episode rate. As set forth in 42 CFR 484.220, we
adjust the national standardized 60-day episode rate by a case mix
grouping and a wage index value based on the site of service for the
beneficiary. The proposed CY 2005 HH PPS rates used the same case-mix
methodology and application of the wage index adjustment to the labor
portion of the HH PPS rates as set forth in the July 3, 2000 final
rule. We multiplied the national 60-day episode rate by the patient's
applicable case-mix weight. We divided the case-mix adjusted amount
into a labor and non-labor portion. We multiplied the labor portion by
the applicable wage index based on the site of service of the
beneficiary.
As required by section 1895(b)(3)(B) of the Act, we have updated
the HH PPS rates annually in a separate Federal Register document.
Section 484.225 sets forth the specific percentage update for fiscal
years 2001, 2002, and 2003. To reflect the new statutory provisions
enacted by section 701 of the MMA, in Sec. 484.225, we proposed to
redesignate paragraph (d) as paragraph (g) and revise it to read as
follows:
(g) For 2007 and subsequent calendar years, the unadjusted national
rate is equal to the rate for the previous calendar year increased by
the applicable home health market basket index amount.
We also proposed to add new paragraphs (d), (e), and (f) to read as
follows:
(d) For the last calendar quarter of 2003 and the first calendar
quarter of 2004, the unadjusted national prospective 60-day episode
payment rate is equal to the rate from the previous fiscal year (FY
2003) increased by the applicable home health market basket index
amount.
(e) For the last 3 calendar quarters of 2004, the unadjusted
national prospective 60-day episode payment rate is equal to the rate
from the previous fiscal year (FY 2003) increased by the applicable
home health market basket minus 0.8 percentage points.
(f) For each of calendar years 2005 and 2006, the unadjusted
national prospective 60-day episode payment rate is equal to the rate
from the previous calendar year, increased by the applicable home
health market basket minus 0.8 percentage points.

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We also proposed to rebase and revise the home health market
basket. As proposed, the labor related portion of the rebased and
revised home health market basket would be 76.775 percent, and the non-
labor portion would be 23.225 percent. We added the wage-adjusted
portion to the non-labor portion yielding the case-mix and wage-
adjusted 60-day episode rate subject to applicable adjustments.
For CY 2005, we proposed to use again the design and case-mix
methodology described in section III.G of the HH PPS July 3, 2000 final
rule (65 FR 41192 through 41203). For CY 2005, we proposed to base the
wage index adjustment to the labor portion of the PPS rates on the most
recent pre-floor and pre-reclassified hospital wage index that does not
apply the core-based statistical area (CBSA) policy. As discussed in
the July 3, 2000 HH PPS final rule, for episodes with four or fewer
visits, Medicare pays the national per-visit amount by discipline,
referred to as a LUPA. We update the national per-visit amounts by
discipline annually by the applicable home health market basket
percentage. We adjust the national per-visit amount by the appropriate
wage index based on the site of service for the beneficiary as set
forth in Sec. 484.230. We proposed to adjust the labor portion of the
updated national per-visit amounts by discipline used to calculate the
LUPA by the most recent pre-floor and pre-reclassified hospital wage
index that does not apply the CBSA policy.
Medicare pays the 60-day case-mix and wage-adjusted episode payment
on a split percentage payment approach. The split percentage payment
approach includes an initial percentage payment and a final percentage
payment as set forth in Sec. 484.205(b)(1) and (b)(2). We may base the
initial percentage payment on the submission of a request for
anticipated payment and the final percentage payment on the submission
of the claim for the episode, as discussed in Sec. 409.43. The claim
for the episode that the HHA submits for the final percentage payment
determines the total payment amount for the episode and whether we make
an applicable adjustment to the 60-day case-mix and wage-adjusted
episode payment. The end date of the 60-day episode as reported on the
claim determines the rate level at which Medicare will pay the claim
for the fiscal period.
We may also adjust the 60-day case-mix and wage-adjusted episode
payment based on the information submitted on the claim to reflect the
following:
A low utilization payment provided on a per-visit basis as
set forth in Sec. 484.205(c) and Sec. 484.230.
A partial episode payment adjustment as set forth in Sec.
484.205(d) and Sec. 484.235.
A significant change in condition adjustment as set forth
in Sec. 484.205(e) and Sec. 484.237.
An outlier payment as set forth in Sec. 484.205(f) and
Sec. 484.240.
The proposed rule reflected the updated CY 2005 rates that would be
effective January 1, 2005.

B. Rebasing and Revising of the Home Health Market Basket

We also proposed to rebase and revise the home health market basket
to ensure it continues to adequately reflect the price changes of
efficiently providing home health services. In addition to rebasing the
base year cost structure from FY 1993 to FY 2000, we also proposed to
revise the market basket by modifying several categories in the market
basket cost structure. The major revision to the proposed market basket
was the combining of the Administrative and General and Other Expenses
cost categories. [See 69 FR 31251 for a more complete explanation of
the market basket cost structure]

C. Proposed CY 2005 Update to the Home Health Market Basket Index

Section 1895(b)(3)(B) of the Act, as amended by section 701 of the
MMA, requires for CY 2005 that the standard prospective payment amounts
be increased by a factor equal to the applicable home health market
basket increase minus 0.8 percentage points. We proposed to amend the
regulations in Sec. 484.225 to reflect this requirement.
Proposed CY 2005 Adjustments.
In calculating the annual update for the CY 2005 60-day episode
rates, we proposed to first look at the CY 2004 rates as a starting
point. The CY 2004 national 60-day episode rate, as modified by section
701 of the MMA and implemented through Pub. 100-20 One Time
Notification, Transmittal 59 issued February 20, 2004 is $2,213.37.
In order to calculate the CY 2005 national 60-day episode rate, we
proposed to multiply the CY 2004 national 60-day episode rate
($2,213.37) by the applicable home health market basket update, at the
time of publication of the proposed rule, of 3.3 percent for CY 2005
minus 0.8 percentage points.
We proposed to increase the CY 2004 60-day episode payment rate by
the proposed home health market basket increase (3.3 percent) minus 0.8
percentage points ($2,213.37 x 2.5 percent) to yield the proposed
updated CY 2005 national 60-day episode rate ($2,268.70).
National Per-visit Amounts Used to Pay LUPAs and Compute
Imputed Costs Used in Outlier Calculations.
The policies governing the LUPAs and outlier calculations set forth
in the July 3, 2000 HH PPS final rule will continue during CY 2005. In
calculating the annual update for the CY 2005 national per-visit
amounts we use to pay LUPAs and to compute the imputed costs in outlier
calculations, we proposed to look again at the CY 2004 rates as a
starting point. We then proposed to multiply those amounts by the
proposed home health market basket increase minus 0.8 percentage points
for CY 2005 to yield the updated per-visit amounts for each home health
discipline for CY 2005. For details as to the specific LUPA rates that
we proposed for CY 2005, see the proposed rule (69 FR 31256) published
on June 2, 2004.

D. Proposed Update to the Outlier Fixed Dollar Loss Ratio

Outlier payments are payments made in addition to regular 60-day
case-mix and wage-adjusted episode payments for episodes that incur
unusually large costs due to patient home health care needs. Outlier
payments are made for episodes whose estimated cost exceeds a threshold
amount. The episode's estimated cost is the sum of the national wage-
adjusted per-visit payment amounts for all visits delivered during the
episode. The outlier threshold for each case-mix group, PEP adjustment,
or total SCIC adjustment is defined as the 60-day episode payment
amount, PEP adjustment, or total SCIC adjustment for that group plus a
fixed dollar loss amount. Both components of the outlier threshold are
wage-adjusted.
The wage-adjusted fixed dollar loss amount (FDL) represents the
amount of loss that an agency must bear before an episode becomes
eligible for outlier payments. The FDL is computed by multiplying the
wage-adjusted 60-day episode payment amount by the fixed dollar loss
ratio, which is a proportion expressed in terms of the national
standardized episode payment amount. The outlier payment is defined to
be a proportion of the wage-adjusted estimated costs beyond the wage-
adjusted threshold. The proportion of additional costs paid as outlier
payments is referred to as the loss-sharing ratio.
Section 1895(b)(5) of the Act requires that estimated total outlier
payments are no more than 5 percent of total estimated HH PPS payments.
In response to the concerns about potential

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financial losses that might result from unusually expensive cases
expressed in comments to the October 28, 1999 proposed rule (64 FR
58133), the July 2000 final rule set the target for estimated outlier
payments at the 5 percent level. The fixed dollar loss ratio and the
loss-sharing ratio were then selected so that estimated total outlier
payments would meet the 5 percent target.
For a given level of outlier payments, there is a trade-off between
the values selected for the fixed dollar loss ratio and the loss-
sharing ratio. A high fixed dollar loss ratio reduces the number of
episodes that can receive outlier payments, but makes it possible to
select a higher loss-sharing ratio and, therefore, increase outlier
payments for outlier episodes. Alternatively, a lower fixed dollar loss
ratio means that more episodes can qualify for outlier payments, but
outlier payments per episode must be lower. As a result of public
comments on the October 28, 1999 proposed rule, in our July 2000 final
rule, we made the decision to attempt to cover a relatively high
proportion of the costs of outlier cases for the most expensive
episodes that would qualify for outlier payments within the 5 percent
constraint.
We chose a value of 0.80 for the loss-sharing ratio, which is
relatively high, but which preserves incentives for agencies to attempt
to provide care efficiently for outlier cases. It is also consistent
with the loss-sharing ratios used in other Medicare PPS outlier
policies. Having made this decision, we estimated the value of the
fixed dollar loss ratio that would yield estimated total outlier
payments that were projected to be no more than 5 percent of total home
health PPS payments. The resulting value for the fixed dollar loss
ratio was 1.13.
Analysis of 100 percent of CY 2001 home health claims data
reflected that outlier episodes represented approximately 3 percent of
total episodes and 3 percent of total HH PPS payments. We proposed to
make no change in the projected 5 percent target for outlier
expenditures as a percent of total HH PPS payments. In addition, we
proposed no change to the loss-sharing ratio of 0.80. Further, section
1895(b)(3)(C) of the Act requires that the episode payment amounts be
adjusted to effectively pay for outlier payments within the same level
of estimated total spending. We proposed no change to the adjustment to
the episode payment amounts for outlier payments. We proposed to change
only the fixed dollar loss ratio, and in turn, the fixed dollar loss
amount.
For the proposed rule, we performed data analysis on CY 2001 HH PPS
analytic data to update the fixed dollar loss ratio to enable the total
estimated outlier payments to be 5 percent of total HH PPS payments.
That analysis indicated that a fixed dollar loss ratio of 0.72 was
consistent with the existing loss-sharing ratio of 0.80 and a target
percentage of estimated outlier payments of the projected 5 percent.
Consequently, we proposed to update the fixed dollar loss ratio from
the current ratio of 1.13 to the fixed dollar loss ratio of 0.72. It
was estimated that a fixed dollar loss ratio of 0.72 would allow
approximately 6.5 percent of episodes to qualify for outlier payments.
The estimated 6.5 percent outlier episodes is greater than the 3.0
percent of episodes that currently qualify for outlier payments, and is
about the same as the 6.8 percent for outlier episodes that we
estimated in our July 2000 final rule.
We believe that our proposed fixed dollar loss ratio of 0.72
preserved a reasonable degree of cost sharing, while allowing a greater
number of episodes to qualify for outlier payments. In our proposed
rule, we indicated our plan to update our estimate of the fixed dollar
loss ratio using the most current, complete year of HH PPS data
available.

E. Rural Add-On as Required by the MMA

Section 421 of the MMA requires, for home health services furnished
in a rural area with respect to episodes and visits ending on or after
April 1, 2004 and before April 1, 2005, that we increase by 5 percent
the payment amount that otherwise would be made for these services. The
statute waives budget neutrality related to this provision. By statute,
the 5 percent rural add-on applies to home health services furnished in
a rural area (as defined in section 1886(d)(2)(D) of the Act) for
episodes and visits ending on or after April 1, 2004 and before April
1, 2005. Therefore, the 5 percent rural add-on ends after the first
quarter of CY 2005 for episodes and visits ending before April 1, 2005.
After the rural add-on is determined, the applicable case-mix and wage
index adjustment is then subsequently applied for the provision of home
health services where the site of service is the non-Metropolitan
Statistical Area (MSA) of the beneficiary. Similarly, the applicable
wage index adjustment is subsequently applied to the LUPA per visit
amounts adjusted for the provision of home health services where the
site of service for the beneficiary is a non-MSA area. We implemented
this provision for CY 2004 on April 1, 2004 through Pub. 100-20 One
Time Notification, Transmittal 59 issued February 20, 2004. For further
details as to the specific rates for HH PPS payments to beneficiaries
in rural areas, see the proposed rule (69 FR 31259) published on June
2, 2004.

F. Hospital Wage Index

our proposed rule, that these new definitions would not be applied to
the CY 2005 wage index used in the proposed update to the HH payment
rates.
On May 18, 2004, we published a proposed rule entitled ``Medicare
Program; Changes to the Hospital Inpatient Prospective Payment Systems
and FY 2005 Rates'' (69 FR 28195), which discusses some of the issues
associated with using these new definitions and proposes to use these
new definitions for the Inpatient Hospital PPS for FY 2005. We
indicated that we believed it would be appropriate to wait until the
public comments on that proposed rule had been submitted and analyzed
before we considered proposing any new labor market definitions in the
home health context.
As discussed previously and set forth in the July 3, 2000 final
rule, the statute provides that the wage adjustment factors may be the
factors used by the Secretary for purposes of section 1886(d)(3)(E) of
the Act for hospital wage adjustment factors. Again, as discussed in
the July 3, 2000 final rule,

[[Page 62128]]

we proposed to use the pre-floor and pre-reclassified hospital wage
index to adjust the labor portion of the HH PPS rates based on the
geographic area in which the beneficiary receives the home health
services. We believe the use of the pre-floor and pre-reclassified
hospital wage index results in the appropriate adjustment to the labor
portion of the costs as required by statute. The most recent pre-floor
and pre-reclassified hospital wage index available for this update of
the CY 2005 home health rates was determined to be that of the 2005
pre-floor and pre-reclassified hospital wage index. Due to the mandated
change from a fiscal year update cycle to that of a calendar year
update cycle, the most recent pre-floor and pre-reclassified hospital
wage index available for this update of the CY 2005 home health payment
rates was determined to be that of the 2005 pre-floor and pre-
reclassified hospital wage index.
Under previous fiscal year updates, the most recent pre-floor and
pre-reclassified hospital wage index available at the time of
publication of the HH PPS fiscal year update was that of the previous
year. Beginning with the CY 2005 update to home health payment rates,
the most recent pre-floor and pre-reclassified hospital wage index
available at the time of publication will be that of the current year.
Consequently, for our proposed CY 2005 update to the home health
payment rates, we proposed to continue to use the most recent pre-floor
and pre-reclassified hospital wage index available at the time of
publication. We recognized that this change to a calendar year update
cycle results in using the current year's wage index values. We also
note that for HH PPS rates addressed in the proposed rule, we
inadvertently published the 2004 pre-floor and pre-reclassified
hospital wage index. Consequently, we published a correction notice in
the Federal Register on July 30, 2004 (69 FR 45640), replacing the
inadvertently published 2004 pre-floor and pre-reclassified hospital
wage index with a preliminary 2005 pre-floor and pre-reclassified
hospital wage index that does not apply the CBSA policy.

III. Analysis of and Responses to Public Comments

We received approximately 25 timely comments on the Home Health
Prospective Payment System Rate Update for Calendar Year 2005 proposed
rule (CMS-1265-P), published on June 2, 2004 (69 FR 31248). We have
also received approximately 6 additional timely comments on the Home
Health Prospective Payment System Rate Update for FY 2004 Notice (CMS-
1473-NC), published on July 2, 2003 (68 FR 39764). We received comments
from HHAs and other health care providers, national industry
associations, suppliers and practitioners, State associations, health
care consulting firms, and private citizens. The comments centered on
issues such as the wage index used to update rates, home health market
basket analysis, metropolitan statistical areas as they relate to the
wage index, reduction in the fixed dollar loss ratio for outlier
episodes, home health resource group (HHRG) payment inadequacies,
responsibility of and payment for supplies in the home health episode,
cost reporting requirements, and finally refinements to the HH PPS in
the areas of: Case mix, LUPAs, RAPs, SCICs, PEPs, outliers, supplies,
and OASIS items (that is, M0175). We have considered all comments
received during the 60-day public comment period on the June 2, 2004
proposed rule, as well as from the July 2, 2003 notice. Our responses
to the comments from both Federal Register publications, the June 2,
2004 proposed rule and the July 2, 2003 notice are set forth in the
following section.
As noted in the proposed rule published in the Federal Register on
June 2, 2004 (69 FR 31248), because of the large number of items of
correspondence we normally receive on Federal Register documents
published for comment, we are unable to respond to them individually.
In this final rule, we address the concerns of the commenters that are
related to the proposed rule and the notice with comment period
published on July 2, 2003 (68 FR 39764). Summaries of the major
concerns and our responses to these comments are set forth below.
Refinements
Comment: There were several comments regarding refinement of the
many different features of the HH PPS outside of the payment update
such as outliers, supplies, PEPs, SCICs, LUPAs, and OASIS that make up
the HH PPS, as well as other related issues such as dual-eligibles,
long-term care patients, and telemedicine.
Response: These comments were generally outside the scope of the
proposed payment updates. Our ongoing research agenda on HH PPS
refinements encompasses review of case mix adjustment and other payment
adjustment provisions introduced as part of the PPS system. Our
continuing work also includes review of overall system performance to
the extent data permit analysis of this topic.
We intend to address the aspects of the HH PPS that are subject to
administrative revision when we initiate a refinement regulation. We
believe it is prudent to avoid piecemeal revisions addressing one
provision or another in isolation. Also, we believe it is common with
new payment systems for providers to go through a period of adaptation.
The adaptation process influences the data we use to study refinements,
and those data lag by a year or more. We believe it is appropriate to
base recommendations on data that reflect the end point of the provider
adaptation process. Our study results will be more effective and
provide a better basis for policy proposals when the data used in the
studies reflect the end point of the adaptation period. Furthermore, we
believe the best approach would be one that allows for analyzing
interrelationships among payment features on the system in general.
Moreover, it is more efficient to make numerous changes at the same
time. Past experience with changes in systems and data collection for
providers has shown that providers believe it is more burdensome when
frequent changes are made to a payment system.
Comment: There were a few comments requesting that ostomy supplies
be exempt from the consolidated billing requirements because of their
high cost.
Response: The Medicare statute governing the home health PPS is
specific to the type of items and services bundled to the HHA. Section
1842(b)(6)(F) of the Act requires that all home health items and
services, including medical supplies, furnished to a beneficiary under
a plan of care are subject to consolidated billing. For example, if a
patient is admitted for a condition that is related to a chronic
condition which requires medical supplies (such as ostomy supplies),
the HHA is required to provide those medical supplies while the patient
is under a home health plan of care during an episode of care. We also
note that costs of medical supplies are included in the HH PPS payment
rate as the statute required that all services, including medical
supplies, that would have been covered under the cost-based
reimbursement system be bundled and paid under HH PPS.
Comment: There were a few comments regarding supplies not covered
under Part B, and a question was posed whether the HHAs are responsible
to bundle these supplies

[[Page 62129]]

while a beneficiary is under a home health plan of care.
Response: Section 1895(b)(1) of the Act specifies that under the HH
PPS system, all services covered and paid for on a reasonable cost
basis under the Medicare home health benefit as of the date of
enactment of this section, including medical supplies, shall be paid
for on the basis of a prospective payment amount determined under that
subsection and applicable to the services involved. In the past, HH PPS
home health agencies provided, and were reimbursed for, non-routine
medical supplies for which Part B codes existed as well as for non-
routine medical supplies for which Part B codes did not exist. The
costs of those supplies are included in the HH PPS rates, as those
costs were built into the visit rates before the implementation of HH
PPS and were part of the calculation of the base HH PPS rates. The
implementation of the HH PPS did not change what home health agencies
are required to provide to their beneficiaries under a plan of care.
Comment: Some commenters requested clarification of the terms
``significant change in condition'' and ``significant change in plan of
care.''
Response: As stated in 42 CFR 484.205(a)(3), a significant change
in condition (SCIC) payment adjustment due to the intervening event is
defined as a significant change in the patient's condition during an
existing 60-day episode. The SCIC adjustment occurs when a beneficiary
experiences a significant change in condition during a 60-day episode
that was not envisioned in the original plan of care.
Comment: One commenter asserted that the requirement to claim an
SCIC with an improvement in an expected outcome of care would lead to a
system that could result in having a lower payment despite a greater
resource use.
Response: As stated in our Pub. 100-2; Medicare Benefit Policy
Manual, Chapter 7, ``Home Health Services'' 10.9 ``Significant Change
in Condition (SCIC) Payment Adjustment'' the agency is not constrained
to bill for a SCIC for a higher home health resource group (HHRG) if
the net effect is a lower payment for the episode than if the SCIC had
not occurred. Because the intent of the SCIC was not to lower the total
episode payment when patients actually required more intensive
services, the HHA is not forced to bill for an SCIC in this
circumstance. However, where the SCIC reflects a lower HHRG due to
unanticipated improvement in patient condition, the SCIC must be
billed. This policy is restated in our Pub. 100-4; Medicare Claims
Processing Manual, Chapter 10, ``Home Health Agency Billing'', 10.1.20
``Adjustments of Episode Payment Significant Change in Condition
(SCIC).''
Comment: Commenters supported the adjustment of the outlier policy
and encouraged us to regularly/annually monitor outlier expenditures so
that further adjustments can be made promptly should the full amount of
outlier funds not be used.
Response: We plan to continue to monitor the outlier expenditures
on a yearly basis and to make adjustments as necessary.
Comment: A commenter requested that we conduct a thorough review of
the PPS over the next year to improve its validity as outlier episodes
were ``underpaid'' in previous years. The commenter also recommended
that we increase the CY 2005 national 60-day episode rate and per visit
amounts by 2 percent in light of the ``underpayments'' of outliers.
Response: We will continue to closely monitor the outlier
expenditures. In accordance with section 1895(b)(5) of the Act, we have
set thresholds and ratios in the outlier calculations so that outlier
payments for the year are projected to be no more than 5 percent of the
total payments projected or estimated for the HH PPS. In doing so, we
use the best Medicare data available.
Many of the factors used to set prospective payment amounts for a
given year are based on estimates. These factors include not only the
outlier threshold, but also the market basket rate of increases used to
establish the update factor to the HH PPS rates. We do not believe that
the Congress intended that the standardized amounts for a given year
should be adjusted (upward or downward) to reflect any difference
between projected and actual outlier payments for a past year.
Under the policy we have maintained since the inception of the HH
PPS, we do not make retroactive adjustments to reconcile differences
between the percentage of outlier payments projected before a given
year and the ``actual'' outlier payments for that year.
Definition of Non-Metropolitan Statistical Area (MSA)/Wage Index
Comment: In general, commenters appreciated that a change to the
new CBSAs will not be undertaken for HH payments this year. Some
commenters went so far as to express their opposition to ever adopting
the CBSAs for HH PPS. There were also requests that if we were to
implement CBSAs for HH PPS, we phase in the CBSAs in a similar fashion
as is being done in the hospital setting. One commenter recommended
using a blended wage index value, stating that HHAs in a given CBSA
would receive the higher of either the wage index value based on data
from hospitals in the new CBSA or the blended wage index value based on
data from all hospitals in counties formerly included in the NECMA but
now in separate CBSAs. The commenter believes that using such a blended
wage index would also smooth out anomalies associated with an HHA
serving patients in two or more different CBSAs. Commenters further
urged us to postpone any change until the proposed IPPS wage index
values could be evaluated.
Response: We will review and analyze the comments to the proposed
rule titled ``Medicare Program; Changes to the Hospital Inpatient
Prospective Payment Systems and FY 2005 Rates'' (69 FR 28195) published
on May 18, 2004 in which the new CBSAs are used before we consider
adopting any new labor market definitions for HH PPS. In addition, we
are currently analyzing the estimated impact that a move to CBSAs under
the HH PPS would have on the home health industry. We plan to conduct a
full study and consider the estimated impact that CBSAs would have on
the home health industry before any revisions to the wage index are
made.
Comment: Commenters wished to see geographic area reclassification
and wage index floors (such as those provided to hospitals) become
available to HHAs. Commenters generally stated that the HHAs should be
allowed to use the reclassified version of the wage index.
Response: We continue to believe that the most recent available
pre-floor and pre-reclassified hospital wage index data results in the
appropriate adjustment to the labor portion of the costs as required by
statute.
Comment: Commenters supported using the most recent hospital wage
index available for HH PPS in CY 2005.
Response: We appreciate the commenters' support. As explained in
the June 2, 2004 proposed rule, we have always used the most recent
hospital wage index available in determining the HH PPS payment rates.
However, as noted previously, the HH PPS update cycle was revised from
that of a fiscal year update to a calendar year update, resulting in
the most recent hospital wage index available at the time of
publication being the current year's hospital wage index.
Comment: One commenter urged us to use the 2004 pre-floor and pre-
reclassified wage index as opposed to using the current year's hospital
wage

[[Page 62130]]

index data to provide a more equitable wage index transition and avoid
abrupt changes due to skipping an update year.
Response: As noted in the previous comment, we have always used the
most recent available hospital wage index data in determining the HH
PPS update. We continue to believe using the most recent available wage
index better reflects current wages and salaries.
Comment: Commenters supported creating a joint HH industry/CMS
technical advisory group to explore the accuracy of the current wage
index as well as options for a refined wage index that more accurately
reflects the true wage costs experienced by the HH industry.
Response: We appreciate the comment, however, we do not believe
such a group is necessary. We have always received input from the
industry on various aspects of our Medicare payment systems, and we
anticipate this practice will continue into the future. More recently,
the ``open-door'' forums, initiated by CMS, provide the public with an
opportunity to provide input and comment on the wage index used in the
HH PPS.
Comment: Commenters wished to see a comprehensive impact analysis
before instituting wage index changes. They believe that no changes in
the wage index should be implemented without adequate (one full year's)
notice.
Response: To provide a more comprehensive impact analysis and one
year's notice of wage index changes would necessitate that we not use
the most recent available hospital wage index for HH PPS. As noted
previously, we have always used the most recent available pre-floor and
pre-reclassified hospital wage index at the time of publication as we
believe it better reflects current wages and salaries.
Comment: Commenters were concerned about the time to comment on the
wage index that was published in the correction notice. One commenter
suggested that the comment period be extended 30 days with respect to
the wage index.
Response: We believe commenters were given adequate notice to
timely comment on the wage index. As stated in the proposed rule, the
proposed wage indices were not final. The final wage index values are
in the addendum to this final rule. The inadvertent inclusion of the
wrong wage index was a technical error. We published the correct wage
index on our Web site and as soon as possible thereafter in the Federal
Register, once the inadvertent technical error was noted.
Comment: Commenters are concerned about treatment of wage index
values in Connecticut, and other parts of New England, and requested a
reconsideration of the proposed decreases to the wage indices. The
commenters were specifically concerned that we unilaterally changed the
designation of three hospitals in Litchfield County from their
placement in the Hartford MSA to the rural region, thereby lowering
both regions' wage indices. Commenters requested that this be reversed
and those three hospitals be designated to the Hartford MSA as per
previous longstanding CMS policy. One commenter also suggested that the
re-designation of hospitals in Hartford was done as part of our
proposal for revised MSA definitions. If so, then this is in conflict
with our stated intent not to apply expanded MSA definitions for HHAs
in CY 2005.
Response: We did not intend to implement any of the CBSA
designations for CY 2005 in the HH PPS. Upon thorough review of the
commenter's concern, we have determined that only Sharon Hospital of
Litchfield County, Connecticut was inadvertently designated to the
rural Connecticut area in our July 30, 2004 correction notice (69 FR
45640). In this final rule, we are publishing an updated and corrected
pre-floor and pre-reclassified hospital wage index that reflects Sharon
Hospital's correct designation to the Hartford MSA (3283). In doing so,
rural Connecticut's wage index value changes from 1.1586 in the
proposed CY 2005 wage index published in the above correction notice,
to 1.1917 in the final wage index published in this final rule.
Conversely, the Hartford MSA wage index value changes from a value of
1.1068 to 1.1055. In addition, our review determined that there were
technical errors in the hospital wage index calculation process for FY
2005 that had a slight overall impact to the wage index that we
published in our correction notice (69 FR 45640). These technical
errors have been corrected in the wage index published in this final
rule.
Comment: Commenters questioned how their wage index values could
decrease so dramatically at a time when the wages they pay their staff
have increased and their health insurance and dental insurance have
increased. Commenters further requested to see our assessment of the
impact of those declines, as agencies are already having trouble
covering costs of serving isolated elders, as well as information as to
how we arrived at the wage data used to compute the proposed wage index
values.
Response: As we noted in the final HH PPS rule on July 3, 2000 (65
FR 41165), we do not have a home health specific wage index because of
industry concerns with the methodology used to develop a HH specific
wage index and the lack of applicable home health specific data.
Accordingly, we use the hospital wage index as we believe it results in
the most appropriate adjustment to the labor portion of the cost and
best reflects the current wages and salaries.
For the convenience of the public, we have recently published in
the HH PPS rate updates, a comparison of wage index values from the
current year to the upcoming year, as an illustration of the changes in
the wage index from year to year. We are publishing a comparison table
as part of this rule in Addendum C.
For specifics regarding the information on the hospital wage data
used in computing the hospital wage index, please refer to the August
11, 2004 IPPS final rule (69 FR 48915).
Comment: Commenters stated that a ``hold harmless'' provision
should be available to HHAs to limit a wage index reduction
(specifically to 2 percent from one year to the next) where there is a
sudden reduction in the local wage index. Relief for providers that are
negatively impacted should not come at the expense of providers that
benefit from the changes.
Response: Although we have sometimes implemented ``hold harmless''
provisions for groups of hospitals that are negatively impacted by
significant changes in the wage index calculation or geographic
classification, no such changes in methodology have taken place under
the HH PPS. We note that, even for hospitals, there exists no precedent
for a ``hold harmless'' provision based solely on percentage decreases
in wage index values.
Home Health Market Basket
Comment: Several commenters claimed the proposed rule had
inadequate detail to evaluate the accuracy of the proposed changes.
Specifically, they were unable to determine whether the market basket
captures the costs of HIPAA compliance and outcome-based quality
assurance activities and whether the blending of the price proxies
accurately captures the growth of nursing wage costs.
Response: We believe the detail provided in the proposed rule was
adequate for the public to meaningfully comment on the proposed changes
to the market basket. The proposed rule described the methodology,
provided data sources, and discussed alternatives

[[Page 62131]]

considered for the proposed rebasing of the market basket.
As for the HIPAA compliance and quality assurance activities, the
HH market basket will only reflect these costs since they impact the
rate of change in prices. For example, if there are overall increases
in wage levels due to staffing changes associated with HIPAA compliance
and/or quality assurance activities, these price changes may be
reflected in the price proxies. However, costs associated with
purchasing new equipment or hiring more staff for HIPAA compliance and/
or quality assurance activities will only be reflected in the base year
weights when the index is rebased to reflect a year in which these
costs were present.
We also believe the blending of the price proxies accurately
captures the growth of nursing wage costs. We continued to use a 50/50
split of ECI for Professional Specialty & Technical Workers and
Civilian Hospital Workers for both wages and benefits in order to
reflect the competition between HHAs and hospitals for registered
nurses, while still capturing the overall wage trends for professional
and technical workers. We explained the need for this process as there
is no specific wage or benefit measure for HHAs that holds skill mix
constant. The increase in the Skilled Nursing & Therapist & Other
Professional/Technical wages cost weight from the 1993-based (45.758 of
the total wage cost category or 29.389 percent of the total index) to
the proposed 2000-based HH market basket (53.816 percent of the wage
cost category or 35.393 percent of the total index) is a reflection of
the increase in skilled nursing, therapist, and other professional/
technical wage costs relative to other market basket costs. The blended
home health wage proxy, composed of ECIs which keep the skill mix
constant, increased 35 percent from 1995 through 2003, while the
Average Hourly Earnings for Nonsupervisory Home Health Workers grew by
24 percent.
The market basket is an important component of the PPS system, but
it is also important to review total provider reimbursement and costs
when assessing the adequacy of Medicare payments. In April 2004, MedPAC
reported that the Medicare margin for home health providers was 16.8
percent in 2004, and recommended that no update be provided for 2005.
The MMA, however, requires the market basket update minus 0.8 percent,
which results in a 2.3 percent increase for 2005, which this final rule
implements.
Comment: Several commenters strongly supported the rebasing and
revising of the home health market basket and hoped that CMS would be
capable of rebasing more frequently.
Response: Section 404 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) mandated that we study
and report on the possibility of rebasing the Inpatient Prospective
Payment System hospital market basket more often than once every 5
years. After our report is completed, we plan to study the rebasing
frequency for our other market baskets, such as the Skilled Nursing
Facility and the Home Health market basket. We plan to use that
information to determine an appropriate frequency for rebasing the home
health market basket. It has always been our policy to rebase an index
when appropriate. We will continue to monitor the home health market
basket index to ensure it continues to adequately reflect the price of
goods and services purchased by HHAs in providing an efficient level of
home health care services.
Comment: Some commenters questioned whether the home health market
basket reflects current market forces. Specifically, they questioned
whether the market basket captured the increase in worker's
compensation, transportation, and professional liability insurance
costs.
Response: While all cost categories are not identified specifically
and separately in the market basket, they are included in the weights,
and the proxies attempt to reflect price changes associated with them.
The price proxies are forecasted based on current price trends, thus
reflecting current market forces. For the CY 2005 update, the
forecasted price proxies include historical percent changes through
2004, 2nd quarter.
Comment: One commenter suggested that we convene a technical panel
of industry and government experts in order to develop a more
representative market basket. In addition, a few suggested that our use
of the Medicare cost reports for home health agencies yields a flawed
market basket and suggested combining cost report data and inputs from
industry sources to develop the home health market basket.

Response: In the past we have worked with industry, academic,
government, and private sector experts on the development and update of
the market basket, and we will continue to do so when necessary. When
we rebase or revise the market, we generally provide a 60-day comment
period for the rule which gives an opportunity for public input as do
``open-door'' forums. We have always considered input from industry
sources and evaluated them against other data sources based on our
requirements of reliability, relevance, timeliness, and public
availability.
The Medicare cost reports provide actual cost share data for home
health agencies serving Medicare patients. We believe that home health
agencies understand the value we place upon accurate cost report data,
and have provided us with reliable cost data, which aid our rebasing
and revising of the home health market basket.
Comment: Some commenters questioned if the market basket increase
(in CY 2005 3.1 percent) is supposed to cover the costs of an efficient
home health agency, then why is the HH PPS update equal to the home
health market basket increase minus 0.8 percentage points.
Response: The HH PPS update is dictated by statute. Section 701 of
the MMA mandated that the CY 2005 HH PPS update be equal to the HH
market basket increase minus 0.8 percentage points. Therefore, the
update factor for CY 2005 was required to be reduced. While the
deduction from the market basket increase is mandated in the MMA, we
believe the market basket, as revised and rebased, is a technically
accurate measure for price changes that reflect the true costs to a
home health agency for efficiently providing services. This methodology
is consistent with the market basket methodologies for Hospital,
Skilled Nursing Facility, and Physician.
Comment: A commenter was concerned about services such as
telemonitoring/telehealth that are not included in the margin analysis.
The commenter requested that the cost report be simplified to allow all
costs associated with Medicare home care patients to be included in the
cost report.
Response: The instructions to Form 1728-94 were modified in June
2001 to identify the direct and indirect costs of telemedicine services
(including telemonitoring and telehealth) as a non-reimbursable cost
center on the home health agency cost report to aide in trend analysis
of telemedicine costs. However, as a non-reimbursable cost center these
services are not a recognized visit or service under HH PPS.
Specifically, in section 1895(e)(1)(B) of the Act, telecommunications
services are not considered a home health visit for the purposes of
eligibility or payment under this title.

[[Page 62132]]

Rural 5 Percent Rural Add-On
Comment: Commenters questioned why the 5 percent increase is only
for 1 year.
Response: The statute is very specific as to the time frame for the
rural add-on. Section 421 of the MMA requires, for home health services
furnished in a rural area with respect to episodes and visits ending on
or after April 1, 2004 and before April 1, 2005, an increase by 5
percent of the payment amount that otherwise would be made for these
services. Therefore, the 5 percent rural add-on ends after the first
quarter of CY 2005, that is, for episodes and visits ending before
April 1, 2005.
General Comments
Comment: A commenter requested that we consider the issuance of
public status reports regarding our efforts concerning the HH PPS, such
as a rebasing of the HH PPS payment rates, revisions to the payment
structure, and revisions to the HHRG case mix adjuster. This would
provide an early opportunity for input and comment relative to the
potential direction in that regard.
Response: We appreciate the comment. Any significant changes to the
HH PPS will continue to be provided with sufficient notice to the
public. In addition, our ``open door'' forum is an opportunity for the
public to express concerns and have issues addressed.
IPPS-Related Comments
Comment: We received a small number of comments that were
particular to the Inpatient Hospital PPS proposed rule of May 18, 2004
(69 FR 28196). Issues ranged from expanded wage areas that would change
status due to the redefinition of rural and urban areas, to suggestions
of modernizing the geographic reclassification criteria to protect
providers when they are ``redistricted'' out of a high wage area, to
issues regarding Critical Access Hospital status and the applicable
wage index calculation.
Response: These comments are specific to IPPS and outside the scope
of the HH PPS update.
Comments on Home Health Prospective Payment System Rate Update for FY
2004 Notice, Published on July 2, 2003 (68 FR 39764)
As noted previously, we received 6 comments on the 2004 update
notice for HH PPS. A summary of those comments and our responses are
noted below.
Comment: Commenters requested that we publish the pre-floor and
pre-reclassified hospital wage index annually as part of the notice and
comment rulemaking for inpatient hospital PPS. This would allow for
prior public comment on the wage index applied to HHAs.
Response: The methodology as to how wage indicies are used in the
calculation of the HH PPS payment rates has not changed since the
implementation of the HH PPS. Because it is only the updating of data
used to determine the wage index values between versions of a
particular year's wage index file, and not the changing of methodology,
we do not believe that prior public notice or a separate publication
(outside the publication of the HH PPS update) is warranted. As to the
specific wage index tables for the HH PPS for a given year, although it
applies a rural floor and reclassifications, generally the hospital
wage index files published in the IPPS rules, (which are published
before the HH PPS update) would provide a good indication of the wage
index used in a HH PPS update.
Comment: One commenter had several comments on potential
legislation, including urging us to assert to Congressional leadership
that HHAs need to receive the full market basket increase of 3.3
percent. The commenter also criticized the loss of the rural add-on and
the threat of copayments.
Response: We note that recently passed legislation addresses the
commenters' concerns regarding market basket updates and the rural add-
on. The MMA addresses the market basket increase in section 701.
Specifically, section 701(b) of the MMA states that for the last 3
calendar quarters of 2004, the unadjusted prospective 60-day episode
payment rate is equal to the rate from the previous fiscal year (FY
2003) increased by the applicable home health market basket minus 0.8
percentage points. For each of calendar years 2005 and 2006, the
unadjusted national prospective 60-day episode payment rate is equal to
the rate from the previous calendar year, increased by the applicable
home health market basket minus 0.8 percentage points. Regarding the
rural add-on, section 421 of the MMA requires, for home health services
furnished in a rural area with respect to episodes and visits ending on
or after April 1, 2004 and before April 1, 2005, that we increase by 5
percent the payment amount that otherwise would be made for the
services. The MMA did not include copayments for Medicare home health
services.

IV. Provisions of the Final Regulations

This final rule incorporates the provisions of the regulations text
of the proposed rule [69 FR 31248]. We have adopted the proposed
changes from the above captioned proposed rule with regards to the
rebasing and revising of the home health market basket, differing only
in that through the use of updated data, the final CY 2005 market
basket increase is 3.1 percent, as compared to 3.3 percent in the
proposed rule. Consequently, we will update the national 60-day episode
rate and the per-visit payment amounts per discipline for CY 2005 for
LUPAs by the final determined market basket percentage of 3.1 percent
minus 0.8 percentage points for an update to the HH PPS rates of 2.3
percent. In addition, we will update, by 5 percent, the 60-day episode
payment amounts and the LUPA, per-visit payment amounts for services
furnished in a rural area with respect to episodes and visits ending on
or after April 1, 2004 and before April 1, 2005. We have also updated
the fixed dollar loss (FDL) ratio, used in the determination of outlier
payments, from the proposed ratio of 0.72 in the proposed rule to 0.70,
using the most recent available HH PPS data. Finally, this final rule
includes the most recent version of the pre-floor and pre-reclassified
hospital wage index, that does not apply the CBSA policy, used by the
HH PPS.

A. Rebasing and Revising of the Home Health Market Basket

1. Rebasing Results
Section 1895(b)(3)(B) of the Act, as amended by the MMA, requires
the standard prospective payment amounts to be paid on a calendar year
basis for 2004 and any subsequent year. Previous market basket updates
were calculated on a fiscal year basis. Table 1 shows that the
forecasted rate of growth for CY 2005, beginning January 1, 2005, for
the rebased and revised home health market basket is 3.1 percent, while
the forecasted rate of growth for the current 1993-based home health
market basket is also 3.1 percent. This final update for CY 2005 is
based on the Global Insight, Inc 2004, 3rd quarter forecast with
historical data through 2004, 2nd quarter. The proposed CY 2005 update
was based on a forecast with historical data through 2003, 3rd quarter.
As previously mentioned, we rebase the home health market basket
periodically so the cost category weights continue to reflect changes
in the mix of goods and services that HHAs purchase in furnishing home
health care.

[[Page 62133]]

Table 1.--Forecasted Annual Percent Change in the 1993-Based and 2000-Based Home Health Market Baskets
----------------------------------------------------------------------------------------------------------------
Difference
Home health Home health (2000-based
Calendar year beginning January 1 market basket, market basket, less 1993-
1993-based 2000-based based)
----------------------------------------------------------------------------------------------------------------
January 2005, CY 2005........................................ 3.1 3.1 0.0
----------------------------------------------------------------------------------------------------------------

Table 2 shows the percent changes for CY 2005 based on the 2004,
3rd quarter forecast for each cost category in the home health market
basket.

Table 2.--CY 2005 Forecasted Annual Percent Change for All Cost Categories in the 2000-Based Home Health Market
Basket
----------------------------------------------------------------------------------------------------------------
Forecasted
annual percent
Cost categories Weight Price proxy change for CY
2005
----------------------------------------------------------------------------------------------------------------
Total...................................... 100.000 ................................... 3.1
Compensation............................... 76.775 ................................... 3.3
Wages and Salaries..................... 65.766 Home Health Occupational Wage Index 3.0
Employee Benefits...................... 11.009 Home Health Occupational Benefits 5.0
Index.
Operations & Maintenance................... 0.825 CPI Fuel & Other Utilities......... 2.8
Administrative & General & Other Expenses.. 16.633 ................................... 2.6
Telephone.............................. 0.850 CPI Telephone Services............. 0.9
Postage................................ 0.563 CPI Postage........................ 2.0
Professional Fees*..................... 1.405 ECI for Compensation for 3.6
Professional and Technical Workers.
Other Products*........................ 6.419 CPI All Items Less Food and Energy. 2.1
Other Services*........................ 7.396 ECI for Compensation for Service 3.1
Workers.
Transportation............................. 2.744 CPI Private Transportation......... 0.3
Capital-Related............................ 3.023 ................................... 2.5
Insurance.............................. 0.275 CPI Household Insurance............ 3.3
Fixed Capital.......................... 1.777 CPI Owner's Equivalent Rent........ 3.1
Movable Capital........................ 0.971 PPI Machinery & Equipment.......... 1.0
----------------------------------------------------------------------------------------------------------------
*New break-out in cost structure when compared with the 1993-based home health market basket.

B. CY 2005 Update to the Home Health Market Basket Index

CY 2005 Adjustments

To calculate the CY 2005 national 60-day episode rate, we multiply
the CY 2004 (as of April 1, 2004) national 60-day episode rate
($2,213.37) by the applicable home health market basket update of 3.1
percent for CY 2005 minus 0.8 percentage points.
We increase the CY 2004 60-day episode payment rate by the proposed
home health market basket increase (3.1 percent) minus 0.8 percentage
points ($2,213.37 x 2.3 percent) to yield the updated CY 2005 national
60-day episode rate ($2,264.28) (see Table 4 below).

Table 4.--National 60-Day Episode Amounts Updated by the Applicable Home
Health Market Basket CY 2005, Minus 0.8 Percentage Points, Before Case-
Mix Adjustment, Wage Index Adjustment Based on the Site of Service for
the Beneficiary or Applicable Payment Adjustment
------------------------------------------------------------------------
Multiply by the
applicable home
Total prospective payment health market CY 2005 updated
amount per 60-day episode for basket increase national 60-day
CY 2004 (as of 04/01/04) (3.1 percent) minus episode rate
0.8 percentage
points
------------------------------------------------------------------------
$2,213.37..................... x 1.023 $2,264.28
------------------------------------------------------------------------

[[Page 62134]]

C. National Per-Visit Amounts Used To Pay LUPAs and Compute Imputed
Costs Used in Outlier Calculations

As discussed previously in this final rule, the policies governing
the LUPAs and outlier calculations set forth in the July 3, 2000 HH PPS
final rule will continue during CY 2005. In calculating the annual
update for the CY 2005 national per-visit amounts we use to pay LUPAs
and to compute the imputed costs in outlier calculations, we look again
at the CY 2004 (as of April 1, 2004) rates as a starting point. We then
multiply those amounts by the home health market basket increase minus
0.8 percentage points for CY 2005 to yield the updated per-visit
amounts for each home health discipline for CY 2005. (See Table 5
below.)

Table 5.--National Per-Visit Amounts for LUPAs and Outlier Calculations Updated by the Applicable Home Health
Market Basket Increase for CY 2005, Minus 0.8 Percentage Points, Before Wage Index Adjustment Based on the Site
of Service for the Beneficiary
----------------------------------------------------------------------------------------------------------------
Multiply by the
Final per-visit applicable home Per-visit
amounts per 60- health market payment amount
Home health discipline type day episode for basket (3.1 per discipline
CY 2004 for percent) minus for CY 2005 for
LUPAs (as of 04/ 0.8 percentage LUPAs
01/04) points
----------------------------------------------------------------------------------------------------------------
Home Health Aide.......................................... $43.75 x 1.023 $44.76
Medical Social Services................................... 154.89 x 1.023 158.45
Occupational Therapy...................................... 106.36 x 1.023 108.81
Physical Therapy.......................................... 105.65 x 1.023 108.08
Skilled Nursing........................................... 96.63 x 1.023 98.85
Speech-Language Pathology................................. 114.80 x 1.023 117.44
----------------------------------------------------------------------------------------------------------------

D. Update to the Outlier Fixed Dollar Loss Ratio

For the rule, we performed analysis of CY 2001 home health claims
data. The results of that analysis reflected that outlier episodes
represented approximately 3 percent of total episodes and 3 percent of
total HH PPS payments. For this final rule, we have performed the same
analysis on CY 2002 and CY 2003 home health claims data and have found
the number of outlier episodes and payments to continue to hold at
approximately 3 percent of total episodes and total HH PPS payments,
respectively.
In the rule, we also performed data analysis on CY 2001 HH PPS
analytic data to update the fixed dollar loss (FDL) ratio to enable the
total estimated outlier payments to be a projected 5 percent of total
HH PPS payments. The results of that analysis indicated that a fixed
dollar loss ratio of 0.72 was consistent with the existing loss-sharing
ratio of 0.80 and a projected target percentage of estimated outlier
payments of 5 percent. For this final rule, we have performed the same
analysis on CY 2003 HH PPS analytic data to update the fixed dollar
loss ratio. The results of this analysis indicate that a fixed dollar
loss ratio of 0.70 is consistent with the existing loss-sharing ratio
of 0.80 and a projected target percentage of estimated outlier payments
of 5 percent. Consequently, we are updating the fixed dollar loss ratio
from the current ratio of 1.13 to the fixed dollar loss ratio of 0.70.
Our analysis shows that reducing the fixed dollar loss ratio from 1.13
to 0.70 will allow approximately 5.9 percent of episodes to qualify for
outlier payments. The estimated 5.9 percent outlier episodes are
greater than the 3.0 percent of episodes that currently qualify for
outlier payments.
Expressed in terms of a fixed dollar loss amount, the fixed dollar
loss ratio of 0.70 implies that providers would absorb approximately
$1,585 of their costs (before wage adjustment), in addition to their
loss-sharing portion of the estimated cost in excess of the outlier
threshold. This fixed dollar loss amount of approximately $1,585 is
computed by multiplying the standard 60-day episode payment amount
($2,264.28) by the fixed dollar loss ratio (0.70). Using the current
fixed dollar loss ratio (1.13), the fixed dollar loss amount would be
approximately $2,558 ($2,264.28 x 1.13).
We believe that a fixed dollar loss ratio of 0.70 preserves a
reasonable degree of cost sharing, while allowing a greater number of
episodes to qualify for outlier payments.
The following analytical Tables 6-a through 6-d, derived from
analysis of CY 2003 HH PPS claims data, characterize outlier episodes,
and estimate how different types of providers and providers in
different parts of the country will do under an outlier scenario that
employs a fixed dollar loss ratio of 0.70 as compared to the current
fixed dollar loss ratio of 1.13.
The new FDL of 0.70 will increase outlier payments to all types of
home health providers in all areas of the country. Generally speaking,
it has been estimated that, under a scenario where the FDL is equal to
0.70, for home health providers whose outlier payments are historically
a lesser percentage of their total HH PPS payments, their outlier
payments will increase at a greater rate than will outlier payments for
home health providers whose outlier payments are historically of a
greater percentage of their total HH PPS payments.
For example, non-profit home health agencies were estimated to
receive outlier payments equal to approximately 1.9 percent of their
total HH PPS payments under the current scenario where the FDL = 1.13.
Under the same scenario, for-profit home health agencies were estimated
to receive outlier payments equal to approximately 5.1 percent of their
total HH PPS payments. While a scenario where the FDL = 0.70 increases
the percentage of outlier payments to total HH PPS payments, the
overall increase in outlier payments to non-profit home health agencies
increases by an estimated 77.6 percent while the outlier payments for
for-profit home health agencies increase by approximately 33.8 percent.
Similarly, while outlier payments to both provider-based and free-
standing home health agencies will increase under a scenario where FDL
= 0.70, outlier payments to provider-based home health agencies are
estimated to increase by approximately 97.3 percent, while payments to
free-standing home health agencies are estimated to increase

[[Page 62135]]

by approximately 41 percent. For areas of the county where outlier
payments are estimated to be of a lesser percentage to their total HH
PPS payments, their overall percentage increase in outlier payments is
estimated to be greater than for those areas of the country where
outlier payments have been estimated to be of a greater percentage of
their total HH PPS payments. Finally, while both urban and rural
providers will benefit from increased outlier payments under the FDL of
0.70 scenario, rural providers will see their outlier payments increase
by an estimated 81.5 percent, while urban providers will see an
estimated increase of approximately 43.2 percent.

Table 6-a.--Comparison of Estimated Outlier Payments as a Percentage of Total HH PPS Payments Under the Current
FDL = 1.13 to Estimated Outlier Payments as Percentage of Total HH PPS Under the FDL = 0.70 by Type of Control
----------------------------------------------------------------------------------------------------------------
Percentage of outlier payments to Percent change
total HH PPS payments in outlier
Type of control ------------------------------------ payments from
FDL = 1.13 to
FDL = 1.13 FDL = 0.70 FDL = 0.70
----------------------------------------------------------------------------------------------------------------
Non-Profit................................................ 1.9 3.4 77.6
Profit.................................................... 5.1 6.7 33.8
Government................................................ 2.1 3.1 77.5
----------------------------------------------------------------------------------------------------------------

Table 6-b.--Comparison of Estimated Outlier Payments as a Percentage of Total HH PPS Payments Under the Current
FDL = 1.13 to Estimated Outlier Payments as Percentage of Total HH PPS Under the FDL = 0.70 by Type of Facility
----------------------------------------------------------------------------------------------------------------
Percentage of outlier payments to Percent change
total HH PPS payments in outlier
Type of control ------------------------------------ payments from
FDL = 1.13 to
FDL = 1.13 FDL = 0.70 FDL = 0.70
----------------------------------------------------------------------------------------------------------------
Free Standing............................................. 4.1 5.7 41.0
Provider Based............................................ 1.4 2.7 97.3
----------------------------------------------------------------------------------------------------------------

Table 6-c.--Comparison of Estimated Outlier Payments as a Percentage of Total HH PPS Payments Under the Current
FDL = 1.13 to Estimated Outlier Payments as Percentage of Total HH PPS Under the FDL = 0.70 by Region
----------------------------------------------------------------------------------------------------------------
Percentage of outlier payments to Percent change
total HH PPS payments in outlier
Region ------------------------------------ payments from
FDL = 1.13 to
FDL = 1.13 FDL = 0.70 FDL = 0.70
----------------------------------------------------------------------------------------------------------------
Region I: Boston.......................................... 2.8 4.9 76.6
Region II: New York....................................... 3.3 5.4 66.6
Region III: Philadelphia.................................. 1.0 2.0 97.5
Region IV: Atlanta........................................ 3.5 4.9 43.6
Region V: Chicago......................................... 1.1 2.1 96.9
Region VI: Dallas......................................... 3.7 5.2 41.5
Region VII: Kansas City................................... 1.2 2.3 102.5
Region VIII: Denver....................................... 3.5 5.1 47.6
Region IX: San Francisco.................................. 9.9 12.0 24.6
Region X: Seattle......................................... 0.5 1.3 151.7
----------------------------------------------------------------------------------------------------------------

Table 6-d.--Comparison of Estimated Outlier Payments as a Percentage of Total HH PPS Payments Under the Current
FDL = 1.13 to Estimated Outlier Payments as Percentage of Total HH PPS Under the FDL = 0.70 by Urban/Rural
----------------------------------------------------------------------------------------------------------------
Percentage of outlier payments to Percent change
total HH PPS payments in outlier
Urban/rural ------------------------------------ payments from
FDL = 1.13 to
FDL = 1.13 FDL = 0.70 FDL = 0.70
----------------------------------------------------------------------------------------------------------------
Urban..................................................... 4.0 5.6 43.2
Rural..................................................... 1.4 2.5 81.5
----------------------------------------------------------------------------------------------------------------

[[Page 62136]]

E. Rural Add-On as Required by MMA

As discussed in the proposed rule, section 421 of the MMA requires,
for home health services furnished in a rural area with respect to
episodes and visits ending on or after April 1, 2004 and before April
1, 2005, that we increase by 5 percent the payment amount that
otherwise would be made for the services.
The CY 2005 5 percent rural add-on to the 60-day episode
standardized payment and the per-visit LUPA payments, as required by
section 421 of the MMA, is noted in tables 7 and 8 below.

Table 7.--CY 2005 Rural Add-On to 60-Day Episode Payment Amounts Ending
on or After April 1, 2004 and Before April 1, 2005 for Beneficiaries Who
Reside in a Non-MSA Area Before Case-Mix Adjustment, Wage Index
Adjustment Based on the Site of Service for the Beneficiary or
Applicable Payment Adjustment
------------------------------------------------------------------------
CY 2005 final
payment amount
per 60-day
episode ending
Total prospective payment amount per 5 percent rural before April 1,
60-day episode for CY 2005 add-on 2005 for a
beneficiary who
resides in a Non-
MSA area
------------------------------------------------------------------------
$2,264.28........................... x 1.05 $2,377.49
------------------------------------------------------------------------

Table 8.--CY 2005 Add-On to LUPA Per-Visit Amounts for Visits Ending on or After April 1, 2004 and Before April
1, 2005, Before Wage Index Adjustment Based on the Site of Service of the Beneficiary Who Resides in a Non-MSA
Area or Payment Applicable Adjustment
----------------------------------------------------------------------------------------------------------------
CY 2005 per-
visit payment
amounts per 60-
Per-visit day episode
payment amounts 5 percent rural ending before
Home health discipline type per 60-day add-on April 1, 2005
episode for CY for LUPAs for a
2005 for LUPAs beneficiary who
resides in a
non-MSA area
----------------------------------------------------------------------------------------------------------------
Home Health Aide.......................................... $44.76 x 1.05 $47.00
Medical Social Services................................... 158.45 x 1.05 166.37
Occupational Therapy...................................... 108.81 x 1.05 114.25
Physical Therapy.......................................... 108.08 x 1.05 113.48
Skilled Nursing........................................... 98.85 x 1.05 103.79
Speech-Language Pathology................................. 117.44 x 1.05 123.31
----------------------------------------------------------------------------------------------------------------

F. Hospital Wage Index

Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to establish area wage adjustment factors that reflect the
relative level of wages and wage-related costs applicable to the
furnishing of home health services and to provide appropriate
adjustments to the episode payment amounts under HH PPS to account for
area wage differences. We have consistently used the most recent pre-
floor and pre-reclassified hospital wage index available in determining
HH PPS updates.
In our June 2, 2004 proposed rule (69 FR 31260), we proposed to
continue to use the most recent pre-floor and pre-reclassified hospital
wage index available at the time of the final rule. At the time of
publication of the proposed rule, only preliminary versions of the wage
index used by HH PPS were available. We indicated in the proposed rule
that we would incorporate updated wage data for the wage index to be
used in the final rule for the CY 2005 HH PPS update. Subsequent to the
proposed rule, we published a correction notice on July 30, 2004 (69 FR
45640) in which we indicated that in our publishing of the proposed
rule, we inadvertently published the 2004 pre-floor and pre-
reclassified wage index tables instead of the intended 2005 pre-floor
and pre-reclassified wage index tables. As part of that correction
notice, we published the appropriate 2005 pre-floor and pre-
reclassified wage index tables.
Since the publication of the correction notice, we have determined
that there exists some labeling and other technical errors in the
proposed wage index.
We note a labeling error in the wage index tables used in the HH
PPS. That labeling error is the listing of Stanly County, NC as one of
the areas under MSA 1520 when, in fact, we consider Stanly County, NC
to be a rural area in North Carolina. Stanly County wage data have
always been correctly treated as rural in the actual creation of the
home health wage index values, and it has only been the listing of
Stanly County under MSA 1520 that was in error. Consequently, the wage
index table in this final rule correctly removes Stanly County from the
list of areas that fall under the MSA 1520 wage index. As this is
strictly a labeling correction that does not affect the actual
computation of the wage index values, home health providers in Stanly
County, NC will continue to fall under, and use, the wage index for
rural North Carolina.
In addition, we have determined that Sharon Hospital of Litchfield
County, Connecticut was inadvertently designated to the rural
Connecticut area in our July 30, 2004 correction notice (69 FR 45640).
Consequently, the updated CY 2005 pre-floor and pre-reclassified
hospital wage index published in this final rule correctly designates
Sharon Hospital to the

[[Page 62137]]

Hartford MSA (3283). In doing so, rural Connecticut's wage index value
increases from 1.1586 in the proposed CY 2005 wage index to 1.1917 in
the final CY 2005 wage index published in this final rule. Conversely,
the Hartford MSA wage index value changes from a value of 1.1068 to
1.1055. In addition, our review determined that there were technical
errors in the hospital wage index calculation process for FY 2005 that
had a slight overall impact to the wage index that we published in our
correction notice (69 FR 45640). These technical errors have been
corrected in the wage index published in this final rule.
See Addenda A and B of this final rule, respectively, for the rural
and urban hospital wage indexes. Furthermore, we have added an Addendum
C that shows a side-by-side comparison of the FY 2003 pre-floor and
pre-reclassified hospital wage index and the CY 2005 pre-floor and pre-
reclassified hospital wage index, that does not apply the CBSA policy,
for CY 2005 HH PPS.

V. Collection of Information Requirements

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

VI. Regulatory Impact Analysis

A. Overall Impact

We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties) directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
The update set forth in this final rule would apply to Medicare
payments under HH PPS in CY 2005. Accordingly, the following analysis
describes the impact in CY 2005 only. We estimate that there will be an
additional $250 million in CY 2005 expenditures attributable to the CY
2005 market basket (3.1 percent), minus 0.8 percentage points, an
estimated increase of 2.3 percent.
Section 421 of the MMA provides for a 5 percent increase in home
health payments to rural providers for episodes and visits ending after
April 1, 2004 and before April 1, 2005. This increase is not subject to
budget neutrality. Consequently, this increase in payments to rural
providers will result in an estimated increase in expenditures of $50
million in CY 2004 and $60 million in CY 2005.
Section 701 of the MMA includes a provision that changes the update
cycle for HH PPS, and thus the home health market basket update, from a
fiscal year basis to that of a calendar year basis in 2004. This
results in a projected reduction in expenditures of approximately $90
million in FY 2005.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. 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 $6
million to $29 million or less annually (for details, see the Small
Business Administration's regulation that set forth size standards for
health care industries at 65 FR 69432). For purposes of the RFA,
approximately 75 percent of HHAs are considered small businesses
according to the Small Business Administration's size standards with
total revenues of $11.5 million or less in 1 year. Individuals and
States are not included in the definition of a small entity. As stated
above, this final rule updates all of the HHAs for CY 2005 as required
by statute. This rule will have a significant positive effect upon
small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area (MSA) and has fewer than 100 beds. We have determined
that this final rule would not have a significant economic impact on
the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $110 million. We believe that this final rule would not
mandate expenditures in that amount.
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 reviewed this rule under the threshold criteria
of Executive Order 13132, Federalism. We have determined that this
final rule would not have substantial direct effects on the rights,
roles, and responsibilities of States.

B. Anticipated Effects

In accordance with the requirements of section 1895(b)(3) of the
Act, we publish an update for each subsequent fiscal year that will
provide an update to the payment rates. Section 1895(b)(3)(B) of the
Act, as amended by section 701 of the MMA, requires us, for CY 2005, to
increase the prospective payment amounts by the applicable home health
market basket increase minus 0.8 percentage points. We estimate that
with a home health market basket of 3.1 percent minus 0.8 percentage
points, the increase for CY 2005 is 2.3 percent.
1. Effects on the Medicare Program
This final rule provides a percentage update to all Medicare HHAs.
Therefore, we have not furnished any impact tables. We increased the
payment to each Medicare HHA equally by the home health market basket
update for CY 2005, minus 0.8 percentage points, as required by
statute. There is no differential impact among provider types. The
impact is in the aggregate. We can show the impact that the CY 2005
wage index would have on providers. Addendum C shows a side-by-side
comparison of the FY 2003 pre-floor and pre-reclassified hospital wage
index and the CY 2005 pre-floor and pre-reclassified hospital wage
index, that does not apply the CBSA policy, for the CY 2005 HH PPS
update final rule. We estimate that there would be an additional $250
million in CY 2005 expenditures attributable to the CY 2005 market
basket (3.1 percent), minus 0.8 percentage points, resulting in a 2.3
percent increase. Thus, the anticipated expenditures outlined in this
final rule

[[Page 62138]]

would exceed the $100 million annual threshold for a major rule as
defined in Title 5, U.S.C., section 804(2).
The applicable home health market basket (minus 0.8 percentage
points) increase of 2.3 percent for CY 2005 applies to all Medicare-
participating HHAs. We do not believe there is a differential impact
due to the aggregate nature of the update.

Table 9
------------------------------------------------------------------------
Additional CY
2005 Medicare
Home Health
CY 2005 update to Home Health PPS rates required by estimated
the Act expenditures due
to annual update
required by law
------------------------------------------------------------------------
Section 1895(b)(3)(B) of the Act requires HH PPS $250 Million.
rates increased by applicable home health market
basket increase (3.1 percent) minus 0.8 percentage
points, yielding 2.3 percent........................
------------------------------------------------------------------------
Source: President's FY 2004 Budget.

2. Effects on Providers
We believe that this rule would have a positive effect on providers
of Medicare home health services by increasing their rate of Medicare
payments. We do not anticipate specific effects on other providers.
This final rule reflects the statutorily required annual update to the
HH PPS rates. We do not believe there is a differential impact due to
the consistent and aggregate nature of the update.

C. Alternatives Considered

This final rule reflects an annual update to the HH PPS rates as
required by statute. We believe that the statute provides no latitude
for alternatives other than the approach set forth in this final rule
reflecting the CY 2005 annual update to the HH PPS rates. Other than
the positive effect of the market basket increase, this final rule
would not have a significant economic impact nor would it impose an
additional burden on small entities. When a regulation or notice
imposes additional burden on small entities, we are required under the
RFA to examine alternatives for reducing burden.
This final rule rebases and revises the home health market basket
by moving the base year from FY 1993 to FY 2000 to reflect the latest
available, thorough data on the structure of HHA costs. We periodically
rebase and revise market baskets for multiple types of health care
providers, generally on a 5-year cycle. We continue to believe that by
rebasing and revising the home health market basket periodically, cost
category weights will better reflect changes in the mix of goods and
services that HHAs purchase in furnishing home health care. The
alternative to not rebase and revise the market basket would be to
delay the inevitable task of rebasing and revising the home health
market basket to some later date. For this final rule, the forecasted
rate of growth for CY 2005 for both the rebased and revised home health
market basket and the current 1993-based home health market basket is
3.1 percent (see Table 1 of this rule). Future updates will be better
served by using a more up-to-date cost structure, as is accomplished in
the revised and rebased home health market basket.
Section 1895(b)(5) of the Act states that the total amount of
payments for outliers, under HH PPS, may not exceed 5 percent of the
total payments projected or estimated to be made for a given fiscal
year or year. As discussed in section IV, ``Provisions of the Final
Regulations'', we are reducing the fixed dollar loss ratio used in the
formula to determine outlier cases in HH PPS, from that of 1.13 to
0.70. Analysis indicates that a fixed dollar loss ratio of 0.70 is
consistent with the existing loss-sharing ratio of 0.80 and our target
percentage of estimated outlier payments of 5 percent of total home
health payments. Other alternatives considered in the updating of the
formula for determining outlier cases included updating/changing the
loss-sharing ratio from that of 0.80 as well as changing the outlier
payment target of to less than 5 percent of total home health payments.
We believe that a value of 0.80 for the loss-sharing ratio is
appropriate in that it preserves incentives for agencies to provide
care efficiently for outlier cases. Similarly, we continue to believe
that the total outlier payment target of 5 percent of total home health
payments appropriately targets the most costly cases under HH PPS.

D. Conclusion

We have examined the economic impact of this final rule on small
entities and have determined that the economic impact is positive,
significant, and that all HHAs would be affected. To the extent that
small rural hospitals are affiliated with HHAs, the impact on these
facilities would also be positive. Finally, we have determined that the
economic effects described above are largely the result of the specific
statutory provisions, which this final rule serves to announce.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 484

Health facilities, Health professions, Medicare, Reporting and
record-keeping requirements.

0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 484--HOME HEALTH SERVICES

0
1. The authority citation for part 484 continues to read as follows:

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

0
2. Section 484.225 is amended as follow:
0
A. Paragraph (d) is redesignated as paragraph (g) and is revised.
0
B. New paragraph (d) is added.
0
C. New paragraph (e) is added.
0
D. New paragraph (f) is added.
The revisions and additions read as follows:

Sec. 484.225 Annual update of the unadjusted national prospective 60-
day episode payment rate.

* * * * *
(d) For the last calendar quarter of 2003 and the first calendar
quarter of 2004, the unadjusted national prospective 60-day episode
payment rate is equal to the rate from the previous fiscal year (FY
2003) increased by the applicable home health market basket index
amount.
(e) For the last the 3 calendar quarters of 2004, the unadjusted
national

[[Page 62139]]

prospective 60-day episode payment rate is equal to the rate from the
previous fiscal year (FY 2003) increased by the applicable home health
market basket minus 0.8 percentage points.
(f) For each calendar year of 2005 and 2006, the unadjusted
national prospective 60-day episode payment rate is equal to the rate
from the previous calendar year, increased by the applicable home
health market basket minus 0.8 percentage points.
(g) For 2007 and subsequent calendar years, the unadjusted national
rate is equal to the rate for the previous calendar year increased by
the applicable home health market basket index amount.

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

Dated: September 14, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Dated: October 7, 2004.
Tommy G. Thompson,
Secretary.

Note: The following addenda will not be published in the Code of
Federal Regulations.

Addendum A.--Wage Index for Rural Areas-Applicable Pre-Floor and Pre-
Reclassified Hospital Wage Index
[CY 2005]
------------------------------------------------------------------------
Wage
MSA name index
------------------------------------------------------------------------
Alabama...................................................... 0.7637
Alaska....................................................... 1.1637
Arizona...................................................... 0.9140
Arkansas..................................................... 0.7704
California................................................... 1.0297
Colorado..................................................... 0.9368
Connecticut.................................................. 1.1917
Delaware..................................................... 0.9504
Florida...................................................... 0.8789
Georgia...................................................... 0.8247
Guam......................................................... 0.9611
Hawaii....................................................... 1.0522
Idaho........................................................ 0.8826
Illinois..................................................... 0.8341
Indiana...................................................... 0.8736
Iowa......................................................... 0.8550
Kansas....................................................... 0.8088
Kentucky..................................................... 0.7844
Louisiana.................................................... 0.7291
Maine........................................................ 0.9039
Maryland..................................................... 0.9179
Massachusetts................................................ 1.0217
Michigan..................................................... 0.8741
Minnesota.................................................... 0.9339
Mississippi.................................................. 0.7583
Missouri..................................................... 0.7829
Montana...................................................... 0.8701
Nebraska..................................................... 0.9035
Nevada....................................................... 0.9833
New Hampshire................................................ 0.9940
New Jersey \1\............................................... .........
New Mexico................................................... 0.8529
New York..................................................... 0.8403
North Carolina............................................... 0.8501
North Dakota................................................. 0.7743
Ohio......................................................... 0.8760
Oklahoma..................................................... 0.7537
Oregon....................................................... 1.0050
Pennsylvania................................................. 0.8348
Puerto Rico.................................................. 0.4047
Rhode Island \1\............................................. .........
South Carolina............................................... 0.8640
South Dakota................................................. 0.8393
Tennessee.................................................... 0.7876
Texas........................................................ 0.7910
Utah......................................................... 0.8843
Vermont...................................................... 0.9375
Virginia..................................................... 0.8480
Virgin Islands............................................... 0.7457
Washington................................................... 1.0072
West Virginia................................................ 0.8084
Wisconsin.................................................... 0.9498
Wyoming...................................................... 0.9182
------------------------------------------------------------------------
\1\ All counties within the State are classified urban.

Addendum B.--CY 2005 Wage Index for Urban Areas Pre-Floor and Pre-
Reclassified Hospital Wage Index
------------------------------------------------------------------------
Urban area (constituent
MSA counties or county Wage
equivalents) index
------------------------------------------------------------------------
0040.......................... Abilene, TX................... 0.8009
Taylor, TX
0060.......................... Aguadilla, PR................. 0.4294
Aguada, PR
Aguadilla, PR
Moca, PR
0080.......................... Akron, OH..................... 0.9055
Portage, OH
Summit, OH
0120.......................... Albany, GA.................... 1.1266
Dougherty, GA
Lee, GA
0160.......................... Albany-Schenectady-Troy, NY... 0.8570
Albany, NY
Montgomery, NY
Rensselaer, NY
Saratoga, NY
Schenectady, NY
Schoharie, NY
0200.......................... Albuquerque, NM............... 1.0485
Bernalillo, NM
Sandoval, NM
Valencia, NM
0220.......................... Alexandria, LA................ 0.8171
Rapides, LA
0240.......................... Allentown-Bethlehem-Easton, PA 0.9536
Carbon, PA
Lehigh, PA
Northampton, PA
0280.......................... Altoona, PA................... 0.8462
Blair, PA
0320.......................... Amarillo, TX.................. 0.9178

[[Page 62140]]

Potter, TX
Randall, TX
0380.......................... Anchorage, AK................. 1.2109
Anchorage, AK
0440.......................... Ann Arbor, MI................. 1.0817
Lenawee, MI
Livingston, MI
Washtenaw, MI
0450.......................... Anniston,AL................... 0.7881
Calhoun, AL
0460.......................... Appleton-Oshkosh-Neenah, WI... 0.9115
Calumet, WI
Outagamie, WI
Winnebago, WI
0470.......................... Arecibo, PR................... 0.3757
Arecibo, PR
Camuy, PR
Hatillo, PR
0480.......................... Asheville, NC................. 0.9502
Buncombe, NC
Madison, NC
0500.......................... Athens, GA.................... 1.0203
Clarke, GA
Madison, GA
Oconee, GA
0520.......................... Atlanta, GA................... 0.9971
Barrow, GA
Bartow, GA
Carroll, GA
Cherokee, GA
Clayton, GA
Cobb, GA
Coweta, GA
De Kalb, GA
Douglas, GA
Fayette, GA
Forsyth, GA
Fulton, GA
Gwinnett, GA
Henry, GA
Newton, GA
Paulding, GA
Pickens, GA
Rockdale, GA
Spalding, GA
Walton, GA
0560.......................... Atlantic City-Cape May, NJ.... 1.0907
Atlantic City, NJ
Cape May, NJ
0580.......................... Auburn-Opelika, AL............ 0.8215
Lee, AL
0600.......................... Augusta-Aiken, GA-SC.......... 0.9208
Columbia, GA
McDuffie, GA
Richmond, GA
Aiken, SC
Edgefield, SC
0640.......................... Austin-San Marcos, TX......... 0.9596
Bastrop, TX
Caldwell, TX
Hays, TX
Travis, TX
Williamson, TX
0680.......................... Bakersfield, CA............... 1.0036
Kern, CA
0720.......................... Baltimore, MD................. 0.9908
Anne Arundel, MD
Baltimore, MD
Baltimore City, MD
Carroll, MD

[[Page 62141]]

Harford, MD
Howard, MD
Queen Annes, MD
0733.......................... Bangor, ME.................... 0.9955
Penobscot, ME
0743.......................... Barnstable-Yarmouth, MA....... 1.2335
Barnstable, MA
0760.......................... Baton Rouge, LA............... 0.8354
Ascension, LA
East Baton Rouge
Livingston, LA
West Baton Rouge, LA
0840.......................... Beaumont-Port Arthur, TX...... 0.8616
Hardin, TX
Jefferson, TX
Orange, TX
0860.......................... Bellingham, WA................ 1.1643
Whatcom, WA
0870.......................... Benton Harbor, MI............. 0.8847
Berrien, MI
0875.......................... Bergen-Passaic, NJ............ 1.1967
Bergen, NJ
Passaic, NJ
0880.......................... Billings, MT.................. 0.8961
Yellowstone, MT
0920.......................... Biloxi-Gulfport-Pascagoula, MS 0.8649
Hancock, MS
Harrison, MS
Jackson, MS
0960.......................... Binghamton, NY................ 0.8447
Broome, NY
Tioga, NY
1000.......................... Birmingham, AL................ 0.9199
Blount, AL
Jefferson, AL
St. Clair, AL
Shelby, AL
1010.......................... Bismarck, ND.................. 0.7505
Burleigh, ND
Morton, ND
1020.......................... Bloomington, IN............... 0.8588
Monroe, IN
1040.......................... Bloomington-Normal, IL........ 0.9111
McLean, IL
1080.......................... Boise City, ID................ 0.9352
Ada, ID
Canyon, ID
1123.......................... Boston-Worcester-Lawrence- 1.1291
Lowell-Brockton, MA-NH.
Bristol, MA
Essex, MA
Middlesex, MA
Norfolk, MA
Plymouth, MA
Suffolk, MA
Worcester, MA
Hillsborough, NH
Merrimack, NH
Rockingham, NH
Strafford, NH
1125.......................... Boulder-Longmont, CO.......... 1.0046
Boulder, CO
1145.......................... Brazoria, TX.................. 0.8525
Brazoria, TX
1150.......................... Bremerton, WA................. 1.0614
Kitsap, WA
1240.......................... Brownsville-Harlingen-San 1.0125
Benito, TX.
Cameron, TX
1260.......................... Bryan-College Station, TX..... 0.9219
Brazos, TX
1280.......................... Buffalo-Niagara Falls, NY..... 0.9339

[[Page 62142]]

Erie, NY
Niagara, NY
1303.......................... Burlington, VT................ 0.9322
Chittenden, VT
Franklin, VT
Grand Isle, VT
1310.......................... Caguas, PR.................... 0.4061
Caguas, PR
Cayey, PR
Cidra, PR
Gurabo, PR
San Lorenzo, PR
1320.......................... Canton-Massillon, OH.......... 0.8895
Carroll, OH
Stark, OH
1350.......................... Casper, WY.................... 0.9244
Natrona, WY
1360.......................... Cedar Rapids, IA.............. 0.8975
Linn, IA
1400.......................... Champaign-Urbana, IL.......... 0.9527
Champaign, IL
1440.......................... Charleston-North Charleston, 0.9420
SC.
Berkeley, SC
Charleston, SC
Dorchester, SC
1480.......................... Charleston, WV................ 0.8876
Kanawha, WV
Putnam, WV
1520.......................... Charlotte-Gastonia-Rock Hill, 0.9712
NC-SC.
Cabarrus, NC
Gaston, NC
Lincoln, NC
Mecklenburg, NC
Rowan, NC
Union, NC
York, SC
1540.......................... Charlottesville, VA........... 1.0295
Albemarle, VA
Charlottesville City, VA
Fluvanna, VA
Greene, VA
1560.......................... Chattanooga, TN-GA............ 0.9207
Catoosa, GA
Dade, GA
Walker, GA
Hamilton, TN
Marion, TN
1580.......................... Cheyenne, WY.................. 0.8980
Laramie, WY
1600.......................... Chicago, IL................... 1.0852
Cook, IL
De Kalb, IL
Du Page, IL
Grundy, IL
Kane, IL
Kendall, IL
Lake, IL
McHenry, IL
Will, IL
1620.......................... Chico-Paradise, CA............ 1.0543
Butte, CA
1640.......................... Cincinnati, OH-KY-IN.......... 0.9595
Dearborn, IN
Ohio, IN
Boone, KY
Campbell, KY
Gallatin, KY
Grant, KY
Kenton, KY
Pendleton, KY

[[Page 62143]]

Brown, OH
Clermont, OH
Hamilton, OH
Warren, OH
1660.......................... Clarksville-Hopkinsville, TN- 0.8022
KY.
Christian, KY
Montgomery, TN
1680.......................... Cleveland-Lorain-Elyria, OH... 0.9626
Ashtabula, OH
Geauga, OH
Cuyahoga, OH
Lake, OH
Lorain, OH
Medina, OH
1720.......................... Colorado Springs, CO.......... 0.9793
El Paso, CO
1740.......................... Columbia MO................... 0.8396
Boone, MO
1760.......................... Columbia, SC.................. 0.9450
Lexington, SC
Richland, SC
1800.......................... Columbus, GA-AL............... 0.8690
Russell,AL
Chattanoochee, GA
Harris, GA
Muscogee, GA
1840.......................... Columbus, OH.................. 0.9753
Delaware, OH
Fairfield, OH
Franklin, OH
Licking, OH
Madison, OH
Pickaway, OH
1880.......................... Corpus Christi, TX............ 0.8647
Nueces, TX
San Patricio, TX
1890.......................... Corvallis, OR................. 1.0545
Benton, OR
1900.......................... Cumberland, MD-WV............. 0.8662
Allegany MD
Mineral WV
1920.......................... Dallas, TX.................... 1.0049
Collin, TX
Dallas, TX
Denton, TX
Ellis, TX
Henderson, TX
Hunt, TX
Kaufman, TX
Rockwall, TX
1950.......................... Danville, VA.................. 0.8643
Danville City, VA
Pittsylvania, VA
1960.......................... Davenport-Moline-Rock Island, 0.8774
IA-IL.
Scott, IA
Henry, IL
Rock Island, IL
2000.......................... Dayton-Springfield, OH........ 0.9232
Clark, OH
Greene, OH
Miami, OH
Montgomery, OH
2020.......................... Daytona Beach, FL............. 0.8900
Flagler, FL
Volusia, FL
2030.......................... Decatur, AL................... 0.8894
Lawrence, AL
Morgan, AL
2040.......................... Decatur, IL................... 0.8122
Macon, IL

[[Page 62144]]

2080.......................... Denver, CO.................... 1.0905
Adams, CO
Arapahoe, CO
Broomfield, CO
Denver, CO
Douglas, CO
Jefferson, CO
2120.......................... Des Moines, IA................ 0.9267
Dallas, IA
Polk, IA
Warren, IA
2160.......................... Detroit, MI................... 1.0227
Lapeer, MI
Macomb, MI
Monroe, MI
Oakland, MI
St. Clair, MI
Wayne, MI
2180.......................... Dothan, AL.................... 0.7597
Dale, AL
Houston, AL
2190.......................... Dover, DE..................... 0.9825
Kent, DE
2200.......................... Dubuque, IA................... 0.8748
Dubuque, IA
2240.......................... Duluth-Superior, MN-WI........ 1.0356
St. Louis, MN
Douglas, WI
2281.......................... Dutchess County, NY........... 1.1658
Dutchess, NY
2290.......................... Eau Claire, WI................ 0.9139
Chippewa, WI
Eau Claire, WI
2320.......................... El Paso, TX................... 0.9065
El Paso, TX
2330.......................... Elkhart-Goshen, IN............ 0.9279
Elkhart, IN
2335.......................... Elmira, NY.................... 0.8445
Chemung, NY
2340.......................... Enid, OK...................... 0.9001
Garfield, OK
2360.......................... Erie, PA...................... 0.8699
Erie, PA
2400.......................... Eugene-Springfield, OR........ 1.0940
Lane, OR
2440.......................... Evansville-Henderson, IN-KY... 0.8395
Posey, IN
Vanderburgh, IN
Warrick, IN
Henderson, KY
2520.......................... Fargo-Moorhead, ND-MN......... 0.9115
Clay, MN
Cass, ND
2560.......................... Fayetteville, NC.............. 0.9363
Cumberland, NC
2580.......................... Fayetteville-Springdale- 0.8637
Rogers, AR.
Benton, AR
Washington, AR
2620.......................... Flagstaff, AZ-UT.............. 1.0611
Coconino, AZ
Kane, UT
2640.......................... Flint, MI..................... 1.1178
Genesee, MI
2650.......................... Florence, AL.................. 0.7883
Colbert, AL
Lauderdale, AL
2655.......................... Florence, SC.................. 0.8961
Florence, SC
2670.......................... Fort Collins-Loveland, CO..... 1.0219
Larimer, CO

[[Page 62145]]

2680.......................... Ft. Lauderdale, FL............ 1.0165
Broward, FL
2700.......................... Fort Myers-Cape Coral, FL..... 0.9372
Lee, FL
2710.......................... Fort Pierce-Port St. Lucie, FL 1.0046
Martin, FL
St. Lucie, FL
2720.......................... Fort Smith, AR-OK............. 0.8303
Crawford, AR
Sebastian, AR
Sequoyah, OK
2750.......................... Fort Walton Beach, FL......... 0.8786
Okaloosa, FL
2760.......................... Fort Wayne, IN................ 0.9737
Adams, IN
Allen, IN
De Kalb, IN
Huntington, IN
Wells, IN
Whitley, IN
2800.......................... Forth Worth-Arlington, TX..... 0.9538
Hood, TX
Johnson, TX
Parker, TX
Tarrant, TX
2840.......................... Fresno, CA.................... 1.0408
Fresno, CA
Madera, CA
2880.......................... Gadsden, AL................... 0.8049
Etowah, AL
2900.......................... Gainesville, FL............... 0.9459
Alachua, FL
2920.......................... Galveston-Texas City, TX...... 0.9403
Galveston, TX
2960.......................... Gary, IN...................... 0.9343
Lake, IN
Porter, IN
2975.......................... Glens Falls, NY............... 0.8467
Warren, NY
Washington, NY
2980.......................... Goldsboro, NC................. 0.8779
Wayne, NC
2985.......................... Grand Forks, ND-MN............ 0.9092
Polk, MN
Grand Forks, ND
2995.......................... Grand Junction, CO............ 0.9900
Mesa, CO
3000.......................... Grand Rapids-Muskegon-Holland, 0.9520
MI.
Allegan, MI
Kent, MI
Muskegon, MI
Ottawa, MI
3040.......................... Great Falls, MT............... 0.8810
Cascade, MT
3060.......................... Greeley, CO................... 0.9444
Weld, CO
3080.......................... Green Bay, WI................. 0.9586
Brown, WI
3120.......................... Greensboro-Winston-Salem-High 0.9312
Point, NC.
Alamance, NC
Davidson, NC
Davie, NC
Forsyth, NC
Guilford, NC
Randolph, NC
Stokes, NC
Yadkin, NC
3150.......................... Greenville, NC................ 0.9183
Pitt, NC
3160.......................... Greenville-Spartanburg- 0.9400
Anderson, SC.

[[Page 62146]]

Anderson, SC
Cherokee, SC
Greenville, SC
Pickens, SC
Spartanburg, SC
3180.......................... Hagerstown, MD................ 0.9940
Washington, MD
3200.......................... Hamilton-Middletown, OH....... 0.9066
Butler, OH
3240.......................... Harrisburg-Lebanon-Carlisle, 0.9286
PA.
Cumberland, PA
Dauphin, PA
Lebanon, PA
Perry, PA
3283.......................... Hartford, CT.................. 1.1055
Hartford, CT
Litchfield, CT
Middlesex, CT
Tolland, CT
3285.......................... Hattiesburg, MS............... 0.7362
Forrest, MS
Lamar, MS
3290.......................... Hickory-Morganton-Lenoir, NC.. 0.9502
Alexander, NC
Burke, NC
Caldwell, NC
Catawba, NC
3320.......................... Honolulu, HI.................. 1.1014
Honolulu, HI
3350.......................... Houma, LA..................... 0.7721
Lafourche, LA
Terrebonne, LA
3360.......................... Houston, TX................... 1.0117
Chambers, TX
Fort Bend, TX
Harris, TX
Liberty, TX
Montgomery, TX
Waller, TX
3400.......................... Huntington-Ashland, WV-KY-OH.. 0.9565
Boyd, KY
Carter, KY
Greenup, KY
Lawrence, OH
Cabell, WV
Wayne, WV
3440.......................... Huntsville, AL................ 0.8851
Limestone, AL
Madison, AL
3480.......................... Indianapolis, IN.............. 1.0039
Boone, IN
Hamilton, IN
Hancock, IN
Hendricks, IN
Johnson, IN
Madison, IN
Marion, IN
Morgan, IN
Shelby, IN
3500.......................... Iowa City, IA................. 0.9655
Johnson, IA
3520.......................... Jackson, MI................... 0.9146
Jackson, MI
3560.......................... Jackson, MS................... 0.8406
Hinds, MS
Madison, MS
Rankin, MS
3580.......................... Jackson, TN................... 0.8900
Chester, TN
Madison, TN

[[Page 62147]]

3600.......................... Jacksonville, FL.............. 0.9548
Clay, FL
Duval, FL
Nassau, FL
St. Johns, FL
3605.......................... Jacksonville, NC.............. 0.8402
Onslow, NC
3610.......................... Jamestown, NY................. 0.7589
Chautaqua, NY
3620.......................... Janesville-Beloit, WI......... 0.9583
Rock, WI
3640.......................... Jersey City, NJ............... 1.0923
Hudson, NJ
3660.......................... Johnson City-Kingsport- 0.8203
Bristol, TN-VA.
Carter, TN
Hawkins, TN
Sullivan, TN
Unicoi, TN
Washington, TN
Bristol City, VA
Scott, VA
Washington, VA
3680.......................... Johnstown, PA................. 0.7981
Cambria, PA
Somerset, PA
3700.......................... Jonesboro, AR................. 0.7934
Craighead, AR
3710.......................... Joplin, MO.................... 0.8721
Jasper, MO
Newton, MO
3720.......................... Kalamazoo-Battlecreek, MI..... 1.0350
Calhoun, MI
Kalamazoo, MI
Van Buren, MI
3740.......................... Kankakee, IL.................. 1.0603
Kankakee, IL
3760.......................... Kansas City, KS-MO............ 0.9642
Johnson, KS
Leavenworth, KS
Miami, KS
Wyandotte, KS
Cass, MO
Clay, MO
Clinton, MO
Jackson, MO
Lafayette, MO
Platte, MO
Ray, MO
3800.......................... Kenosha, WI................... 0.9772
Kenosha, WI
3810.......................... Killeen-Temple, TX............ 0.9242
Bell, TX
Coryell, TX
3840.......................... Knoxville, TN................. 0.8509
Anderson, TN
Blount, TN
Knox, TN
Loudon, TN
Sevier, TN
Union, TN
3850.......................... Kokomo, IN.................... 0.8986
Howard, IN
Tipton, IN
3870.......................... La Crosse, WI-MN.............. 0.9290
Houston, MN
La Crosse, WI
3880.......................... Lafayette, LA................. 0.8105
Acadia, LA
Lafayette, LA
St. Landry, LA

[[Page 62148]]

St. Martin, LA
3920.......................... Lafayette, IN................. 0.9068
Clinton, IN
Tippecanoe, IN
3960.......................... Lake Charles, LA.............. 0.7959
Calcasieu, LA
3980.......................... Lakeland-Winter Haven, FL..... 0.8931
Polk, FL
4000.......................... Lancaster, PA................. 0.9883
Lancaster, PA
4040.......................... Lansing-East Lansing, MI...... 0.9659
Clinton, MI
Eaton, MI
Ingham, MI
4080.......................... Laredo, TX.................... 0.8747
Webb, TX
4100.......................... Las Cruces, NM................ 0.8784
Dona Ana, NM
4120.......................... Las Vegas, NV-AZ.............. 1.1121
Mohave, AZ
Clark, NV
Nye, NV
4150.......................... Lawrence, KS.................. 0.8644
Douglas, KS
4200.......................... Lawton, OK.................... 0.8212
Comanche, OK
4243.......................... Lewiston-Auburn, ME........... 0.9562
Androscoggin, ME
4280.......................... Lexington, KY................. 0.8053
Bourbon, KY
Clark, KY
Fayette, KY
Jessamine, KY
Madison, KY
Scott, KY
Woodford, KY
4320.......................... Lima, OH...................... 0.9258
Allen, OH
Auglaize, OH
4360.......................... Lincoln, NE................... 1.0208
Lancaster, NE
4400.......................... Little Rock-North Little, AR.. 0.8827
Faulkner, AR
Lonoke, AR
Pulaski, AR
Saline, AR
4420.......................... Longview-Marshall, TX......... 0.8739
Gregg, TX
Harrison, TX
Upshur, TX
4480.......................... Los Angeles-Long Beach, CA.... 1.1732
Los Angeles, CA
4520.......................... Louisville, KY-IN............. 0.9163
Clark, IN
Floyd, IN
Harrison, IN
Scott, IN
Bullitt, KY
Jefferson, KY
Oldham, KY
4600.......................... Lubbock, TX................... 0.8777
Lubbock, TX
4640.......................... Lynchburg, VA................. 0.9018
Amherst, VA
Bedford City, VA
Bedford, VA
Campbell, VA
Lynchburg City, VA
4680.......................... Macon, GA..................... 0.9596
Bibb, GA

[[Page 62149]]

Houston, GA
Jones, GA
Peach, GA
Twiggs, GA
4720.......................... Madison, WI................... 1.0395
Dane, WI
4800.......................... Mansfield, OH................. 0.9105
Crawford, OH
Richland, OH
4840.......................... Mayaguez, PR.................. 0.4769
Anasco, PR
Cabo Rojo, PR
Hormigueros, PR
Mayaguez, PR
Sabana Grande, PR
San German, PR
4880.......................... McAllen-Edinburg-Mission, TX.. 0.8602
Hidalgo, TX
4890.......................... Medford-Ashland, OR........... 1.0534
Jackson, OR
4900.......................... Melbourne-Titusville-Palm Bay, 0.9633
FL.
Brevard, FL
4920.......................... Memphis, TN-AR-MS............. 0.9234
Crittenden, AR
De Soto, MS
Fayette, TN
Shelby, TN
Tipton, TN
4940.......................... Merced, CA.................... 1.0576
Merced, CA
5000.......................... Miami, FL..................... 1.0026
Dade, FL
5015.......................... Middlesex-Somerset-Hunterdon, 1.1360
NJ.
Hunterdon, NJ
Middlesex, NJ
Somerset, NJ
5080.......................... Milwaukee-Waukesha, WI........ 1.0076
Milwaukee, WI
Ozaukee, WI
Washington, WI
Waukesha, WI
5120.......................... Minneapolis-St. Paul, MN-WI... 1.1067
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
5140.......................... Missoula, MT.................. 0.9618
Missoula, MT
5160.......................... Mobile, AL.................... 0.7933
Baldwin, AL
Mobile, AL
5170.......................... Modesto, CA................... 1.1966
Stanislaus, CA
5190.......................... Monmouth-Ocean, NJ............ 1.0889
Monmouth, NJ
Ocean, NJ
5200.......................... Monroe, LA.................... 0.7913
Ouachita, LA
5240.......................... Montgomery, AL................ 0.8300
Autauga, AL
Elmore, AL

[[Page 62150]]

Montgomery, AL
5280.......................... Muncie, IN.................... 0.8580
Delaware, IN
5330.......................... Myrtle Beach, SC.............. 0.9022
Horry, SC
5345.......................... Naples, FL.................... 1.0596
Collier, FL
5360.......................... Nashville, TN................. 1.0108
Cheatham, TN
Davidson, TN
Dickson, TN
Robertson, TN
Rutherford, TN
Sumner, TN
Williamson, TN
Wilson, TN
5380.......................... Nassau-Suffolk, NY............ 1.2921
Nassau, NY
Suffolk, NY
5483.......................... New Haven-Bridgeport-Stamford- 1.2254
Waterbury-Danbury, CT.
Fairfield, CT
New Haven, CT
5523.......................... New London-Norwich, CT........ 1.1596
New London, CT
5560.......................... New Orleans, LA............... 0.9103
Jefferson, LA
Orleans, LA
Plaquemines, LA
St. Bernard, LA
St. Charles, LA
St. James, LA
St. John The Baptist, LA
St. Tammany, LA
5600.......................... New York, NY.................. 1.3588
Bronx, NY
Kings, NY
New York, NY
Putnam, NY
Queens, NY
Richmond, NY
Rockland, NY
Westchester, NY
5640.......................... Newark, NJ.................... 1.1625
Essex, NJ
Morris, NJ
Sussex, NJ
Union, NJ
Warren, NJ
5660.......................... Newburgh, NY-PA............... 1.1171
Orange, NY
Pike, PA
5720.......................... Norfolk-Virginia Beach-Newport 0.8895
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
5775.......................... Oakland, CA................... 1.5221
Alameda, CA
Contra Costa, CA

[[Page 62151]]

5790.......................... Ocala, FL..................... 0.9153
Marion, FL
5800.......................... Odessa-Midland, TX............ 0.9632
Ector, TX
Midland, TX
5880.......................... Oklahoma City, OK............. 0.8966
Canadian, OK
Cleveland, OK
Logan, OK
McClain, OK
Oklahoma, OK
Pottawatomie, OK
5910.......................... Olympia, WA................... 1.1007
Thurston, WA
5920.......................... Omaha, NE-IA.................. 0.9754
Pottawattamie, IA
Cass, NE
Douglas, NE
Sarpy, NE
Washington, NE
5945.......................... Orange County, CA............. 1.1612
Orange, CA
5960.......................... Orlando, FL................... 0.9742
Lake, FL
Orange, FL
Osceola, FL
Seminole, FL
5990.......................... Owensboro, KY................. 0.8434
Daviess, KY
6015.......................... Panama City, FL............... 0.8124
Bay, FL
6020.......................... Parkersburg-Marietta, WV-OH... 0.8288
Washington, OH
Wood, WV
6080.......................... Pensacola, FL................. 0.8306
Escambia, FL
Santa Rosa, FL
6120.......................... Peoria-Pekin, IL.............. 0.8886
Peoria, IL
Tazewell, IL
Woodford, IL
6160.......................... Philadelphia, PA-NJ........... 1.0824
Burlington, NJ
Camden, NJ
Gloucester, NJ
Salem, NJ
Bucks, PA
Chester, PA
Delaware, PA
Montgomery, PA
Philadelphia, PA
6200.......................... Phoenix-Mesa, AZ.............. 0.9982
Maricopa, AZ
Pinal, AZ
6240.......................... Pine Bluff, AR................ 0.8673
Jefferson, AR
6280.......................... Pittsburgh, PA................ 0.8756
Allegheny, PA
Beaver, PA
Butler, PA
Fayette, PA
Washington, PA
Westmoreland, PA
6323.......................... Pittsfield, MA................ 1.0439
Berkshire, MA
6340.......................... Pocatello, ID................. 0.9602
Bannock, ID
6360.......................... Ponce, PR..................... 0.4954
Guayanilla, PR
Juana Diaz, PR

[[Page 62152]]

Penuelas, PR
Ponce, PR
Villalba, PR
Yauco, PR
6403.......................... Portland, ME.................. 1.0112
Cumberland, ME
Sagadahoc, ME
York, ME
6440.......................... Portland-Vancouver, OR-WA..... 1.1403
Clackamas, OR
Columbia, OR
Multnomah, OR
Washington, OR
Yamhill, OR
Clark, WA
6483.......................... Providence-Warwick-Pawtucket, 1.1062
RI.
Bristol, RI
Kent, RI
Newport, RI
Providence, RI
Washington, RI
6520.......................... Provo-Orem, UT................ 0.9613
Utah, UT
6560.......................... Pueblo, CO.................... 0.8752
Pueblo, CO
6580.......................... Punta Gorda, FL............... 0.9441
Charlotte, FL
6600.......................... Racine, WI.................... 0.9045
Racine, WI
6640.......................... Raleigh-Durham-Chapel Hill, NC 1.0258
Chatham, NC
Durham, NC
Franklin, NC
Johnston, NC
Orange, NC
Wake, NC
6660.......................... Rapid City, SD................ 0.8912
Pennington, SD
6680.......................... Reading, PA................... 0.9216
Berks, PA
6690.......................... Redding, CA................... 1.1835
Shasta, CA
6720.......................... Reno, NV...................... 1.0456
Washoe, NV
6740.......................... Richland-Kennewick-Pasco, WA.. 1.0520
Benton, WA
Franklin, WA
6760.......................... Richmond-Petersburg, VA....... 0.9398
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
6780.......................... Riverside-San Bernardino, CA.. 1.0975
Riverside, CA
San Bernardino, CA
6800.......................... Roanoke, VA................... 0.8429
Botetourt, VA
Roanoke, VA
Roanoke City, VA
Salem City, VA
6820.......................... Rochester, MN................. 1.1504

[[Page 62153]]

Olmsted, MN
6840.......................... Rochester, NY................. 0.9196
Genesee, NY
Livingston, NY
Monroe, NY
Ontario, NY
Orleans, NY
Wayne, NY
6880.......................... Rockford, IL.................. 0.9626
Boone, IL
Ogle, IL
Winnebago, IL
6895.......................... Rocky Mount, NC............... 0.8998
Edgecombe, NC
Nash, NC
6920.......................... Sacramento, CA................ 1.1849
El Dorado, CA
Placer, CA
Sacramento, CA
6960.......................... Saginaw-Bay City-Midland, MI.. 0.9696
Bay, MI
Midland, MI
Saginaw, MI
6980.......................... St. Cloud, MN................. 1.0215
Benton, MN
Stearns, MN
7000.......................... St. Joseph, MO................ 1.0013
Andrews, MO
Buchanan, MO
7040.......................... St. Louis, MO-IL.............. 0.9081
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
Sullivan City, MO
7080.......................... Salem, OR..................... 1.0557
Marion, OR
Polk, OR
7120.......................... Salinas, CA................... 1.3823
Monterey, CA
7160.......................... Salt Lake City-Ogden, UT...... 0.9487
Davis, UT
Salt Lake, UT
Weber, UT
7200.......................... San Angelo, TX................ 0.8168
Tom Green, TX
7240.......................... San Antonio, TX............... 0.9023
Bexar, TX
Comal, TX
Guadalupe, TX
Wilson, TX
7320.......................... San Diego, CA................. 1.1267
San Diego, CA
7360.......................... San Francisco, CA............. 1.4712
Marin, CA
San Francisco, CA
San Mateo, CA
7400.......................... San Jose, CA.................. 1.4744
Santa Clara, CA
7440.......................... San Juan-Bayamon, PR.......... 0.4802
Aguas Buenas, PR
Barceloneta, PR

[[Page 62154]]

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
Trujillo Alto, PR
Vega Alta, PR
Vega Baja, PR
Yabucoa, PR
7460.......................... San Luis Obispo-Atascadero- 1.1118
Paso Robles, CA.
San Luis Obispo, CA
7480.......................... Santa Barbara-Santa Maria- 1.0771
Lompoc, CA.
Santa Barbara, CA
7485.......................... Santa Cruz-Watsonville, CA.... 1.4780
Santa Cruz, CA
7490.......................... Santa Fe, NM.................. 1.0590
Los Alamos, NM
Santa Fe, NM
7500.......................... Santa Rosa, CA................ 1.2962
Sonoma, CA
7510.......................... Sarasota-Bradenton, FL........ 0.9630
Manatee, FL
Sarasota, FL
7520.......................... Savannah, GA.................. 0.9460
Bryan, GA
Chatham, GA
Effingham, GA
7560.......................... Scranton--Wilkes-Barre-- 0.8523
Hazleton, PA.
Columbia, PA
Lackawanna, PA
Luzerne, PA
Wyoming, PA
7600.......................... Seattle-Bellevue-Everett, WA.. 1.1479
Island, WA
King, WA
Snohomish, WA
7610.......................... Sharon, PA.................... 0.7881
Mercer, PA
7620.......................... Sheboygan, WI................. 0.8949
Sheboygan, WI
7640.......................... Sherman-Denison, TX........... 0.9617
Grayson, TX
7680.......................... Shreveport-Bossier City, LA... 0.9112
Bossier, LA
Caddo, LA
Webster, LA
7720.......................... Sioux City, IA-NE............. 0.9094
Woodbury, IA
Dakota, NE
7760.......................... Sioux Falls, SD............... 0.9441
Lincoln, SD

[[Page 62155]]

Minnehaha, SD
7800.......................... South Bend, IN................ 0.9447
St. Joseph, IN
7840.......................... Spokane, WA................... 1.0661
Spokane, WA
7880.......................... Springfield, IL............... 0.8738
Menard, IL
Sangamon, IL
7920.......................... Springfield, MO............... 0.8597
Christian, MO
Greene, MO
Webster, MO
8003.......................... Springfield, MA............... 1.0174
Hampden, MA
Hampshire, MA
8050.......................... State College, PA............. 0.8462
Centre, PA
8080.......................... Steubenville-Weirton, OH-WV... 0.8281
Jefferson, OH
Brooke, WV
Hancock, WV
8120.......................... Stockton-Lodi, CA............. 1.0564
San Joaquin, CA
8140.......................... Sumter, SC.................... 0.8520
Sumter, SC
8160.......................... Syracuse, NY.................. 0.9394
Cayuga, NY
Madison, NY
Onondaga, NY
Oswego, NY
8200.......................... Tacoma, WA.................... 1.1078
Pierce, WA
8240.......................... Tallahassee, FL............... 0.8656
Gadsden, FL
Leon, FL
8280.......................... Tampa-St. Petersburg- 0.9024
Clearwater, FL.
Hernando, FL
Hillsborough, FL
Pasco, FL
Pinellas, FL
8320.......................... Terre Haute, IN............... 0.8582
Clay, IN
Vermillion, IN
Vigo, IN
8360.......................... Texarkana, AR-Texarkana, TX... 0.8414
Miller, AR
Bowie, TX
8400.......................... Toledo, OH.................... 0.9525
Fulton, OH
Lucas, OH
Wood, OH
8440.......................... Topeka, KS.................... 0.8904
Shawnee, KS
8480.......................... Trenton, NJ................... 1.0276
Mercer, NJ
8520.......................... Tucson, AZ.................... 0.8926
Pima, AZ
8560.......................... Tulsa, OK..................... 0.8729
Creek, OK
Osage, OK
Rogers, OK
Tulsa, OK
Wagoner, OK
8600.......................... Tuscaloosa, AL................ 0.8440
Tuscaloosa, AL
8640.......................... Tyler, TX..................... 0.9502
Smith, TX
8680.......................... Utica-Rome, NY................ 0.8295
Herkimer, NY
Oneida, NY

[[Page 62156]]

8720.......................... Vallejo-Fairfield-Napa, CA.... 1.3517
Napa, CA
Solano, CA
8735.......................... Ventura, CA................... 1.1105
Ventura, CA
8750.......................... Victoria, TX.................. 0.8469
Victoria, TX
8760.......................... Vineland-Millville-Bridgeton, 1.0573
NJ.
Cumberland, NJ
8780.......................... Visalia-Tulare-Porterville, CA 0.9964
Tulare, CA
8800.......................... Waco, TX...................... 0.8146
McLennan, TX
8840.......................... Washington, DC-MD-VA-WV....... 1.0971
District of Columbia, DC
Calvert, MD
Charles, MD
Frederick, MD
Montgomery, MD
Prince Georges, MD
Alexandria City, VA
Arlington, VA
Clarke, VA
Culpepper, 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
8920.......................... Waterloo-Cedar Falls, IA...... 0.8633
Black Hawk, IA
8940.......................... Wausau, WI.................... 0.9570
Marathon, WI
8960.......................... West Palm Beach-Boca Raton, FL 1.0059
Palm Beach, FL
9000.......................... Wheeling, OH-WV............... 0.7449
Belmont, OH
Marshall, WV
Ohio, WV
9040.......................... Wichita, KS................... 0.9473
Butler, KS
Harvey, KS
Sedgwick, KS
9080.......................... Wichita Falls, TX............. 0.8395
Archer, TX
Wichita, TX
9140.......................... Williamsport, PA.............. 0.8486
Lycoming, PA
9160.......................... Wilmington-Newark, DE-MD...... 1.1121
New Castle, DE
Cecil, MD
9200.......................... Wilmington, NC................ 0.9237
New Hanover, NC
Brunswick, NC
9260.......................... Yakima, WA.................... 1.0323
Yakima, WA
9270.......................... Yolo, CA...................... 0.9378
Yolo, CA
9280.......................... York, PA...................... 0.9150
York, PA

[[Page 62157]]

9320.......................... Youngstown-Warren, OH......... 0.9518
Columbiana, OH
Mahoning, OH
Trumbull, OH
9340.......................... Yuba City, CA................. 1.0364
Sutter, CA
Yuba, CA
9360.......................... Yuma, AZ...................... 0.8871
Yuma, AZ
------------------------------------------------------------------------

Addendum C.--Comparison of Pre-Floor and Pre-Reclassified Hospital Wage Index for FY 2003 and CY 2005
----------------------------------------------------------------------------------------------------------------
FY 2003 Wage CY 2005 Wage Percent change,
Rural area index index FY 2003-CY 2005
----------------------------------------------------------------------------------------------------------------
ALABAMA................................................ 0.7660 0.7637 -0.30
ALASKA................................................. 1.2293 1.1637 -5.34
ARIZONA................................................ 0.8493 0.9140 7.62
ARKANSAS............................................... 0.7666 0.7704 0.50
CALIFORNIA............................................. 0.9840 1.0297 4.64
COLORADO............................................... 0.9015 0.9368 3.92
CONNECTICUT............................................ 1.2394 1.1917 -3.85
DELAWARE............................................... 0.9128 0.9504 4.12
FLORIDA................................................ 0.8814 0.8789 -0.28
GEORGIA................................................ 0.8230 0.8247 0.21
GUAM................................................... 0.9611 0.9611 0.00
HAWAII................................................. 1.0255 1.0522 2.60
IDAHO.................................................. 0.8747 0.8826 0.90
ILLINOIS............................................... 0.8204 0.8341 1.67
INDIANA................................................ 0.8755 0.8736 -0.22
IOWA................................................... 0.8315 0.8550 2.83
KANSAS................................................. 0.7923 0.8088 2.08
KENTUCKY............................................... 0.8079 0.7844 -2.91
LOUISIANA.............................................. 0.7567 0.7291 -3.65
MAINE.................................................. 0.8874 0.9039 1.86
MARYLAND............................................... 0.8946 0.9179 2.60
MASSACHUSETTS.......................................... 1.1288 1.0217 -9.49
MICHIGAN............................................... 0.9000 0.8741 -2.88
MINNESOTA.............................................. 0.9151 0.9339 2.05
MISSISSIPPI............................................ 0.7680 0.7583 -1.26
MISSOURI............................................... 0.8021 0.7829 -2.39
MONTANA................................................ 0.8481 0.8701 2.59
NEBRASKA............................................... 0.8204 0.9035 10.13
NEVADA................................................. 0.9577 0.9833 2.67
NEW HAMPSHIRE.......................................... 0.9796 0.9940 1.47
New Jersey............................................. ................. ................. .................
NEW MEXICO............................................. 0.8872 0.8529 -3.87
NEW YORK............................................... 0.8542 0.8403 -1.63
NORTH CAROLINA......................................... 0.8666 0.8501 -1.90
NORTH DAKOTA........................................... 0.7788 0.7743 -0.58
OHIO................................................... 0.8613 0.8760 1.71
OKLAHOMA............................................... 0.7590 0.7537 -0.70
OREGON................................................. 1.0303 1.0050 -2.46
PENNSYLVANIA........................................... 0.8462 0.8348 -1.35
PUERTO RICO............................................ 0.4356 0.4047 -7.09
RHODE ISLAND........................................... ................. ................. .................
SOUTH CAROLINA......................................... 0.8607 0.8640 0.38
SOUTH DAKOTA........................................... 0.7815 0.8393 7.40
TENNESSEE.............................................. 0.7877 0.7876 -0.01
TEXAS.................................................. 0.7821 0.7910 1.14
UTAH................................................... 0.9312 0.8843 -5.04
VERMONT................................................ 0.9345 0.9375 0.32
VIRGINIA............................................... 0.8504 0.8480 -0.28
VIRGIN ISLANDS......................................... 0.7845 0.7457 -4.95
WASHINGTON............................................. 1.0179 1.0072 -1.05
WEST VIRGINIA.......................................... 0.7975 0.8084 1.37
WISCONSIN.............................................. 0.9162 0.9498 3.67
WYOMING................................................ 0.9007 0.9182 1.94
----------------------------------------------------------------------------------------------------------------

[[Page 62158]]

----------------------------------------------------------------------------------------------------------------
FY 2003 wage CY 2005 wage Percent change,
Urban MSA index index FY 2003-CY 2005
----------------------------------------------------------------------------------------------------------------
0040................................................... 0.7792 0.8009 2.78
0060................................................... 0.4587 0.4294 -6.39
0080................................................... 0.9600 0.9055 -5.68
0120................................................... 1.0594 1.1266 6.34
0160................................................... 0.8384 0.8570 2.22
0200................................................... 0.9315 1.0485 12.56
0220................................................... 0.7859 0.8171 3.97
0240................................................... 0.9735 0.9536 -2.04
0280................................................... 0.9225 0.8462 -8.27
0320................................................... 0.9034 0.9178 1.59
0380................................................... 1.2358 1.2109 -2.01
0440................................................... 1.1103 1.0817 -2.58
0450................................................... 0.8044 0.7881 -2.03
0460................................................... 0.8997 0.9115 1.31
0470................................................... 0.4337 0.3757 -13.37
0480................................................... 0.9876 0.9502 -3.79
0500................................................... 1.0211 1.0203 -0.08
0520................................................... 0.9991 0.9971 -0.20
0560................................................... 1.1017 1.0907 -1.00
0580................................................... 0.8325 0.8215 -1.32
0600................................................... 1.0264 0.9208 -10.29
0640................................................... 0.9637 0.9596 -0.43
0680................................................... 0.9899 1.0036 1.38
0720................................................... 0.9929 0.9908 -0.21
0733................................................... 0.9664 0.9955 3.01
0743................................................... 1.3202 1.2335 -6.57
0760................................................... 0.8294 0.8354 0.72
0840................................................... 0.8324 0.8616 3.51
0860................................................... 1.2282 1.1643 -5.20
0870................................................... 0.9042 0.8847 -2.16
0875................................................... 1.2150 1.1967 -1.51
0880................................................... 0.9022 0.8961 -0.68
0920................................................... 0.8757 0.8649 -1.23
0960................................................... 0.8341 0.8447 1.27
1000................................................... 0.9222 0.9199 -0.25
1010................................................... 0.7972 0.7505 -5.86
1020................................................... 0.8907 0.8588 -3.58
1040................................................... 0.9109 0.9111 0.02
1080................................................... 0.9310 0.9352 0.45
1123................................................... 1.1235 1.1291 0.50
1125................................................... 0.9689 1.0046 3.68
1145................................................... 0.8535 0.8525 -0.12
1150................................................... 1.0944 1.0614 -3.02
1240................................................... 0.8880 1.0125 14.02
1260................................................... 0.8821 0.9219 4.51
1280................................................... 0.9365 0.9339 -0.28
1303................................................... 1.0052 0.9322 -7.26
1310................................................... 0.4371 0.4061 -7.09
1320................................................... 0.8932 0.8895 -0.41
1350................................................... 0.9690 0.9244 -4.60
1360................................................... 0.9056 0.8975 -0.89
1400................................................... 1.0635 0.9527 -10.42
1440................................................... 0.9235 0.9420 2.00
1480................................................... 0.8898 0.8876 -0.25
1520................................................... 0.9850 0.9712 -1.40
1540................................................... 1.0438 1.0295 -1.37
1560................................................... 0.8976 0.9207 2.57
1580................................................... 0.8628 0.8980 4.08
1600................................................... 1.1044 1.0852 -1.74
1620................................................... 0.9745 1.0543 8.19
1640................................................... 0.9381 0.9595 2.28
1660................................................... 0.8406 0.8022 -4.57
1680................................................... 0.9670 0.9626 -0.46
1720................................................... 0.9916 0.9793 -1.24
1740................................................... 0.8496 0.8396 -1.18
1760................................................... 0.9307 0.9450 1.54
1800................................................... 0.8374 0.8690 3.77
1840................................................... 0.9751 0.9753 0.02
1880................................................... 0.8729 0.8647 -0.94
1890................................................... 1.1453 1.0545 -7.93
1900................................................... 0.7847 0.8662 10.39
1920................................................... 0.9998 1.0049 0.51
1950................................................... 0.8859 0.8643 -2.44

[[Page 62159]]

1960................................................... 0.8835 0.8774 -0.69
2000................................................... 0.9282 0.9232 -0.54
2020................................................... 0.9062 0.8900 -1.79
2030................................................... 0.8973 0.8894 -0.88
2040................................................... 0.8055 0.8122 0.83
2080................................................... 1.0601 1.0905 2.87
2120................................................... 0.8791 0.9267 5.41
2160................................................... 1.0448 1.0227 -2.12
2180................................................... 0.8137 0.7597 -6.64
2190................................................... 0.9356 0.9825 5.01
2200................................................... 0.8795 0.8748 -0.53
2240................................................... 1.0368 1.0356 -0.12
2281................................................... 1.0684 1.1658 9.12
2290................................................... 0.8952 0.9139 2.09
2320................................................... 0.9265 0.9065 -2.16
2330................................................... 0.9722 0.9279 -4.56
2335................................................... 0.8416 0.8445 0.34
2340................................................... 0.8376 0.9001 7.46
2360................................................... 0.8925 0.8699 -2.53
2400................................................... 1.0944 1.0940 -0.04
2440................................................... 0.8177 0.8395 2.67
2520................................................... 0.9684 0.9115 -5.88
2560................................................... 0.8889 0.9363 5.33
2580................................................... 0.8100 0.8637 6.63
2620................................................... 1.0682 1.0611 -0.66
2640................................................... 1.1135 1.1178 0.39
2650................................................... 0.7792 0.7883 1.17
2655................................................... 0.8780 0.8961 2.06
2670................................................... 1.0066 1.0219 1.52
2680................................................... 1.0297 1.0165 -1.28
2700................................................... 0.9680 0.9372 -3.18
2710................................................... 0.9823 1.0046 2.27
2720................................................... 0.7895 0.8303 5.17
2750................................................... 0.9693 0.8786 -9.36
2760................................................... 0.9457 0.9737 2.96
2800................................................... 0.9446 0.9538 0.97
2840................................................... 1.0216 1.0408 1.88
2880................................................... 0.8505 0.8049 -5.36
2900................................................... 0.9871 0.9459 -4.17
2920................................................... 0.9465 0.9403 -0.66
2960................................................... 0.9584 0.9343 -2.51
2975................................................... 0.8281 0.8467 2.25
2980................................................... 0.8892 0.8779 -1.27
2985................................................... 0.8897 0.9092 2.19
2995................................................... 0.9456 0.9900 4.70
3000................................................... 0.9525 0.9520 -0.05
3040................................................... 0.8950 0.8810 -1.56
3060................................................... 0.9237 0.9444 2.24
3080................................................... 0.9502 0.9586 0.88
3120................................................... 0.9282 0.9312 0.32
3150................................................... 0.9100 0.9183 0.91
3160................................................... 0.9122 0.9400 3.05
3180................................................... 0.9268 0.9940 7.25
3200................................................... 0.9418 0.9066 -3.74
3240................................................... 0.9223 0.9286 0.68
3283................................................... 1.1549 1.1055 -4.28
3285................................................... 0.7659 0.7362 -3.88
3290................................................... 0.9028 0.9502 5.25
3320................................................... 1.1457 1.1014 -3.87
3350................................................... 0.8385 0.7721 -7.92
3360................................................... 0.9892 1.0117 2.27
3400................................................... 0.9636 0.9565 -0.74
3440................................................... 0.8903 0.8851 -0.58
3480................................................... 0.9717 1.0039 3.31
3500................................................... 0.9587 0.9655 0.71
3520................................................... 0.9532 0.9146 -4.05
3560................................................... 0.8607 0.8406 -2.34
3580................................................... 0.9275 0.8900 -4.04
3600................................................... 0.9381 0.9548 1.78
3605................................................... 0.8239 0.8402 1.98
3610................................................... 0.7976 0.7589 -4.85
3620................................................... 0.9849 0.9583 -2.70
3640................................................... 1.1190 1.0923 -2.39

[[Page 62160]]

3660................................................... 0.8268 0.8203 -0.79
3680................................................... 0.8329 0.7981 -4.18
3700................................................... 0.7749 0.7934 2.39
3710................................................... 0.8613 0.8721 1.25
3720................................................... 1.0595 1.0350 -2.31
3740................................................... 1.0790 1.0603 -1.73
3760................................................... 0.9736 0.9642 -0.97
3800................................................... 0.9686 0.9772 0.89
3810................................................... 1.0399 0.9242 -11.13
3840................................................... 0.8970 0.8509 -5.14
3850................................................... 0.8971 0.8986 0.17
3870................................................... 0.9400 0.9290 -1.17
3880................................................... 0.8475 0.8105 -4.37
3920................................................... 0.9278 0.9068 -2.26
3960................................................... 0.7965 0.7959 -0.08
3980................................................... 0.9357 0.8931 -4.55
4000................................................... 0.9078 0.9883 8.87
4040................................................... 0.9726 0.9659 -0.69
4080................................................... 0.8472 0.8747 3.25
4100................................................... 0.8745 0.8784 0.45
4120................................................... 1.1521 1.1121 -3.47
4150................................................... 0.7923 0.8644 9.10
4200................................................... 0.8315 0.8212 -1.24
4243................................................... 0.9179 0.9562 4.17
4280................................................... 0.8581 0.8053 -6.15
4320................................................... 0.9483 0.9258 -2.37
4360................................................... 0.9892 1.0208 3.19
4400................................................... 0.9097 0.8827 -2.97
4420................................................... 0.8629 0.8739 1.27
4480................................................... 1.2001 1.1732 -2.24
4520................................................... 0.9276 0.9163 -1.22
4600................................................... 0.9646 0.8777 -9.01
4640................................................... 0.9219 0.9018 -2.18
4680................................................... 0.9204 0.9596 4.26
4720................................................... 1.0467 1.0395 -0.69
4800................................................... 0.8900 0.9105 2.30
4840................................................... 0.4914 0.4769 -2.95
4880................................................... 0.8428 0.8602 2.06
4890................................................... 1.0498 1.0534 0.34
4900................................................... 1.0253 0.9633 -6.05
4920................................................... 0.8920 0.9234 3.52
4940................................................... 0.9837 1.0576 7.51
5000................................................... 0.9802 1.0026 2.29
5015................................................... 1.1213 1.1360 1.31
5080................................................... 0.9893 1.0076 1.85
5120................................................... 1.0903 1.1067 1.50
5140................................................... 0.9157 0.9618 5.03
5160................................................... 0.8108 0.7933 -2.16
5170................................................... 1.0498 1.1966 13.98
5190................................................... 1.0674 1.0889 2.01
5200................................................... 0.8137 0.7913 -2.75
5240................................................... 0.7734 0.8300 7.32
5280................................................... 0.9284 0.8580 -7.58
5330................................................... 0.8976 0.9022 0.51
5345................................................... 0.9754 1.0596 8.63
5360................................................... 0.9578 1.0108 5.53
5380................................................... 1.3357 1.2921 -3.26
5483................................................... 1.2408 1.2254 -1.24
5523................................................... 1.1767 1.1596 -1.45
5560................................................... 0.9046 0.9103 0.63
5600................................................... 1.4414 1.3588 -5.73
5640................................................... 1.1381 1.1625 2.14
5660................................................... 1.1387 1.1171 -1.90
5720................................................... 0.8574 0.8895 3.74
5775................................................... 1.5072 1.5221 0.99
5790................................................... 0.9402 0.9153 -2.65
5800................................................... 0.9397 0.9632 2.50
5880................................................... 0.8900 0.8966 0.74
5910................................................... 1.0960 1.1007 0.43
5920................................................... 0.9978 0.9754 -2.24
5945................................................... 1.1474 1.1612 1.20
5960................................................... 0.9640 0.9742 1.06
5990................................................... 0.8344 0.8434 1.08

[[Page 62161]]

6015................................................... 0.8865 0.8124 -8.36
6020................................................... 0.8127 0.8288 1.98
6080................................................... 0.8645 0.8306 -3.92
6120................................................... 0.8739 0.8886 1.68
6160................................................... 1.0713 1.0824 1.04
6200................................................... 0.9820 0.9982 1.65
6240................................................... 0.7962 0.8673 8.93
6280................................................... 0.9365 0.8756 -6.50
6323................................................... 1.0235 1.0439 1.99
6340................................................... 0.9372 0.9602 2.45
6360................................................... 0.5169 0.4954 -4.16
6403................................................... 0.9794 1.0112 3.25
6440................................................... 1.0667 1.1403 6.90
6483................................................... 1.0854 1.1062 1.92
6520................................................... 0.9984 0.9613 -3.72
6560................................................... 0.8820 0.8752 -0.77
6580................................................... 0.9218 0.9441 2.42
6600................................................... 0.9334 0.9045 -3.10
6640................................................... 0.9990 1.0258 2.68
6660................................................... 0.8846 0.8912 0.75
6680................................................... 0.9295 0.9216 -0.85
6690................................................... 1.1135 1.1835 6.29
6720................................................... 1.0648 1.0456 -1.80
6740................................................... 1.1491 1.0520 -8.45
6760................................................... 0.9477 0.9398 -0.83
6780................................................... 1.1365 1.0975 -3.43
6800................................................... 0.8614 0.8429 -2.15
6820................................................... 1.2139 1.1504 -5.23
6840................................................... 0.9194 0.9196 0.02
6880................................................... 0.9625 0.9626 0.01
6895................................................... 0.9228 0.8998 -2.49
6920................................................... 1.1500 1.1849 3.03
6960................................................... 0.9650 0.9696 0.48
6980................................................... 0.9700 1.0215 5.31
7000................................................... 0.8021 1.0013 24.83
7040................................................... 0.8855 0.9081 2.55
7080................................................... 1.0367 1.0557 1.83
7120................................................... 1.4623 1.3823 -5.47
7160................................................... 0.9945 0.9487 -4.61
7200................................................... 0.8374 0.8168 -2.46
7240................................................... 0.8753 0.9023 3.08
7320................................................... 1.1131 1.1267 1.22
7360................................................... 1.4142 1.4712 4.03
7400................................................... 1.4145 1.4744 4.23
7440................................................... 0.4741 0.4802 1.29
7460................................................... 1.1271 1.1118 -1.36
7480................................................... 1.0481 1.0771 2.77
7485................................................... 1.3646 1.4780 8.31
7490................................................... 1.0712 1.0590 -1.14
7500................................................... 1.3046 1.2962 -0.64
7510................................................... 0.9425 0.9630 2.18
7520................................................... 0.9376 0.9460 0.90
7560................................................... 0.8599 0.8523 -0.88
7600................................................... 1.1474 1.1479 0.04
7610................................................... 0.7869 0.7881 0.15
7620................................................... 0.8697 0.8949 2.90
7640................................................... 0.9255 0.9617 3.91
7680................................................... 0.8987 0.9112 1.39
7720................................................... 0.9046 0.9094 0.53
7760................................................... 0.9257 0.9441 1.99
7800................................................... 0.9802 0.9447 -3.62
7840................................................... 1.0852 1.0661 -1.76
7880................................................... 0.8659 0.8738 0.91
7920................................................... 0.8424 0.8597 2.05
8003................................................... 1.0927 1.0174 -6.89
8050................................................... 0.8941 0.8462 -5.36
8080................................................... 0.8804 0.8281 -5.94
8120................................................... 1.0506 1.0564 0.55
8140................................................... 0.8273 0.8520 2.99
8160................................................... 0.9714 0.9394 -3.29
8200................................................... 1.0940 1.1078 1.26
8240................................................... 0.8504 0.8656 1.79
8280................................................... 0.9065 0.9024 -0.45

[[Page 62162]]

8320................................................... 0.8599 0.8582 -0.20
8360................................................... 0.8088 0.8414 4.03
8400................................................... 0.9810 0.9525 -2.91
8440................................................... 0.9199 0.8904 -3.21
8480................................................... 1.0432 1.0276 -1.50
8520................................................... 0.8911 0.8926 0.17
8560................................................... 0.8332 0.8729 4.76
8600................................................... 0.8130 0.8440 3.81
8640................................................... 0.9521 0.9502 -0.20
8680................................................... 0.8465 0.8295 -2.01
8720................................................... 1.3354 1.3517 1.22
8735................................................... 1.1096 1.1105 0.08
8750................................................... 0.8756 0.8469 -3.28
8760................................................... 1.0031 1.0573 5.40
8780................................................... 0.9429 0.9964 5.67
8800................................................... 0.8073 0.8146 0.90
8840................................................... 1.0851 1.0971 1.11
8920................................................... 0.8069 0.8633 6.99
8940................................................... 0.9782 0.9570 -2.17
8960................................................... 0.9939 1.0059 1.21
9000................................................... 0.7670 0.7449 -2.88
9040................................................... 0.9520 0.9473 -0.49
9080................................................... 0.8498 0.8395 -1.21
9140................................................... 0.8544 0.8486 -0.68
9160................................................... 1.1173 1.1121 -0.47
9200................................................... 0.9640 0.9237 -4.18
9260................................................... 1.0569 1.0323 -2.33
9270................................................... 0.9434 0.9378 -0.59
9280................................................... 0.9026 0.9150 1.37
9320................................................... 0.9358 0.9518 1.71
9340................................................... 1.0276 1.0364 0.86
9360................................................... 0.8589 0.8871 3.28
----------------------------------------------------------------------------------------------------------------

[FR Doc. 04-23440 Filed 10-15-04; 4:00 pm]

BILLING CODE 4120-01-P