[Federal Register: May 6, 2005 (Volume 70, Number 87)]
[Rules and Regulations]
[Page 24167-24261]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my05-11]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 412
Medicare Program; Prospective Payment System for Long-Term Care
Hospitals: Annual Payment Rate Updates, Policy Changes, and
Clarification; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1483-F]
RIN 0938-AN28
Medicare Program; Prospective Payment System for Long-Term Care
Hospitals: Annual Payment Rate Updates, Policy Changes, and
Clarification
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule updates the annual payment rates for the
Medicare prospective payment system (PPS) for inpatient hospital
services provided by long-term care hospitals (LTCHs). The payment
amounts and factors used to determine the updated Federal rates that
are described in this final rule have been determined based on the LTCH
PPS rate year July 1, 2005 through June 30, 2006. The annual update of
the long-term care diagnosis-related group (LTC-DRG) classifications
and relative weights remains linked to the annual adjustments of the
acute care hospital inpatient diagnosis-related group system, and will
continue to be effective each October 1. The outlier threshold for July
1, 2005 through June 30, 2006 is also derived from the LTCH PPS rate
year calculations. We are adopting new labor market area definitions
for the purpose of geographic classification and the wage index. We are
also making policy changes and clarifications.
DATES: This final rule is effective July 1, 2005.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487 (General
information). Judy Richter, (410) 786-2590 (General information,
transition payments, payment adjustments for special cases, and onsite
discharges and readmissions, interrupted stays, co-located providers,
and short-stay outliers). Michele Hudson, (410) 786-5490 (Calculation
of the payment rates, relative weights and case-mix index, market
basket update, and payment adjustments). Mark Zezza, (410) 786-7937
(Calculation of the payment rates wage index, wage index, and payment
adjustments). Ann Fagan, (410) 786-5662 (Patient classification
system). Miechal Lefkowitz, (410) 786-5316 (High-cost outliers and
budget neutrality). Linda McKenna, (410) 786-4537 (Payment adjustments,
interrupted stay, and transition period).
Table of Contents
I. Background
A. Legislative and Regulatory Authority
B. Criteria for Classification as a LTCH
1. Classification as a LTCH
2. Hospitals Excluded from the LTCH PPS
C. Transition Period for Implementation of the LTCH PPS
D. Administrative Simplification Compliance Act and Health
Insurance Portability and Accountability Act Compliance
II. Publication of Proposed Rulemaking
III. Summary of Major Contents of This Final Rule
A. Update Changes
B. Policy Changes
C. MedPAC Report
D. Impact
IV. Long-Term Care Diagnosis-Related Group (LTC-DRG) Classifications
and Relative Weights
A. Background
B. Patient Classifications into DRGs
C. Organization of DRGs
D. Update of LTC-DRGs
E. ICD-9-CM Coding System
1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
2. Maintenance of the ICD-9-CM Coding System
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
F. Method for Updating the LTC-DRG Relative Weights
V. Changes to the LTCH PPS Rates and Changes in Policy for the 2006
LTCH PPS Rate Year
A. Overview of the Development of the Payment Rates
B. Update to the Standard Federal Rate for the 2006 LTCH PPS
Rate Year
1. Standard Federal Rate Update
a. Description of the Market Basket for the 2006 LTCH PPS Rate
Year
b. LTCH Market Basket Increase for the 2006 LTCH PPS Rate Year
2. Standard Federal Rate for the 2006 LTCH PPS Rate year
C. Calculation of LTCH Prospective Payments for the 2006 LTCH
PPS Rate Year
1. Adjustment for Area Wage Levels
a. Background
b. Labor-Related Share
c. Revision of the LTCH PPS Geographic Classifications
1. Current LTCH PPS Labor Market Areas Based on MSAs
2. Core-Based Statistical Areas
3. Revision of the Labor Market Areas
a. New England MSAs
b. Metropolitan Divisions
c. Micropolitan Areas
4. Implementation of the Revised Labor Market Areas Under the
LTCH PPS
d. Wage Index Data
2. Adjustment for Cost-of-Living in Alaska and Hawaii
3. Adjustment for High-Cost Outliers
a. Background
b. Cost-to-charge ratios (CCRs)
c. Establishment of the Fixed-Loss Amount
d. Reconciliation of Outlier Payments Upon Cost Report
Settlement
e. Application of Outlier Policy to Short-Stay Outlier Cases
4. Adjustments for Special Cases
a. General
b. Adjustment for Short-Stay Outlier Cases
5. Hospital-within-Hospitals and Satellites of LTCHs
Notification Requirements
6. Other Payment Adjustments
7. Budget Neutrality Offset to Account for the Transition
Methodology
8. Extension of the Interrupted Stay Policy
9. Onsite Discharges and Readmittances
VI. Computing the Adjusted Federal Prospective Payments for the 2005
LTCH PPS Rate Year
VII. Transition Period
VIII. Payments to New LTCHs
IX. Method of Payment
X. MedPAC Recommendations/Monitoring
XI. Collection of Information Requirements
XII. Regulatory Impact Analysis
Acronyms
Because of the many terms to which we refer by acronym in this
proposed rule, we are listing the acronyms used and their corresponding
terms in alphabetical order below:
BBA Balanced Budget Act of 1997, (Pub. L. 105-33).
BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance
Program] Balanced Budget Refinement Act of 1999, (Pub. L. 106-113).
BIPA Medicare, Medicaid, and SCHIP [State Children's Health Insurance
Program] Benefits Improvement and Protection Act of 2000, (Pub. L. 106-
554).
CBSA Core-Based Statistical Area.
CMS Centers for Medicare & Medicaid Services.
COPS Medicare conditions of participation.
DRGs Diagnosis-related groups.
FY Federal fiscal year.
HCRIS Hospital Cost Report Information System.
HHA Home health agency.
HIPAA Health Insurance Portability and Accountability Act, Pub. L. 104-
191.
IPF Inpatient Psychiatric Facility.
IPPS Acute Care Hospital Inpatient Prospective Payment System.
IRF Inpatient rehabilitation facility.
LTC-DRG Long-term care diagnosis-related group.
LTCH Long-term care hospital.
MedPAC Medicare Payment Advisory Commission.
MedPAR Medicare provider analysis and review file.
OSCAR Online Survey Certification and Reporting (System).
PPS Prospective Payment System.
QIO Quality Improvement Organization (formerly Peer Review Organization
(PRO)).
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RY Rate Year (July 1 through June 30).
SNF Skilled nursing facility.
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, (Pub. L. 97-
248).
I. Background
A. Legislative and Regulatory Authority
The Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113) and the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA) (Pub. L. 106-554) provide for payment
for both the operating and capital-related costs of hospital inpatient
stays in long-term care hospitals (LTCHs) under Medicare Part A based
on prospectively set rates. The Medicare prospective payment system
(PPS) for LTCHs applies to hospitals described in section
1886(d)(1)(B)(iv) of the Social Security Act (the Act), effective for
cost reporting periods beginning on or after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act defines a LTCH as ``a
hospital which has an average inpatient length of stay (as determined
by the Secretary) of greater than 25 days.'' Section
1886(d)(1)(B)(iv)(II) of the Act also provides an alternative
definition of LTCHs: specifically, a hospital that first received
payment under section 1886(d) of the Act in 1986 and has an average
inpatient length of stay (as determined by the Secretary) of greater
than 20 days and has 80 percent or more of its annual Medicare
inpatient discharges with a principal diagnosis that reflects a finding
of neoplastic disease in the 12-month cost reporting period ending in
FY 1997.
Section 123 of the BBRA requires the PPS for LTCHs to be a per
discharge system with a diagnosis-related group (DRG) based patient
classification system that reflects the differences in patient
resources and costs in LTCHs while maintaining budget neutrality.
Section 307(b)(1) of the BIPA, among other things, mandates that
the Secretary shall examine, and may provide for, adjustments to
payments under the LTCH PPS, including adjustments to DRG weights, area
wage adjustments, geographic reclassification, outliers, updates, and a
disproportionate share adjustment.
In a Federal Register document issued on August 30, 2002 (67 FR
55954), we implemented the LTCH PPS authorized under BBRA and BIPA.
This system uses information from LTCH patient records to classify
patients into distinct long-term care diagnosis-related groups (LTC-
DRGs) based on clinical characteristics and expected resource needs.
Payments are calculated for each LTC-DRG and provisions are made for
appropriate payment adjustments. Payment rates under the LTCH PPS are
updated annually and published in the Federal Register.
The LTCH PPS replaced the reasonable cost-based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
(Pub. L. 97-248) for payments for inpatient services provided by a LTCH
with a cost reporting period beginning on or after October 1, 2002.
(The regulations implementing the TEFRA reasonable cost-based payment
provisions are located at 42 CFR part 413.) With the implementation of
the prospective payment system for acute care hospitals authorized by
the Social Security Amendments of 1983 (Pub. L. 98-21), which added
section 1886(d) to the Act, certain hospitals, including LTCHs, were
excluded from the PPS for acute care hospitals and were paid their
reasonable costs for inpatient services subject to a per discharge
limitation or target amount under the TEFRA system. For each cost
reporting period, a hospital-specific ceiling on payments was
determined by multiplying the hospital's updated target amount by the
number of total current year Medicare discharges. The August 30, 2002
final rule further details payment policy under the TEFRA system (67 FR
55954).
In the August 30, 2002 final rule, we presented an in-depth
discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of the BBRA. The
same final rule that established regulations for the LTCH PPS under 42
CFR part 412, subpart O, also contained LTCH provisions related to
covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements.
We refer readers to the August 30, 2002 final (67 FR 55954) rule
for a comprehensive discussion of the research and data that supported
the establishment of the LTCH PPS.
On June 6, 2003, we published a final rule in the Federal Register
(68 FR 34122) that set forth the 2004 annual update of the payment
rates for the Medicare PPS for inpatient hospital services furnished by
LTCHs. It also changed the annual period for which the payment rates
are effective. The annual updated rates are now effective from July 1
through June 30 instead of from October 1 through September 30. We
refer to the July through June time period as a ``long-term care
hospital rate year'' (LTCH PPS rate year). In addition, we changed the
publication schedule for the annual update to allow for an effective
date of July 1. The payment amounts and factors used to determine the
annual update of the LTCH PPS Federal rate is based on a LTCH PPS rate
year. While the LTCH payment rate update is effective July 1, the
annual update of the LTC-DRG classifications and relative weights are
linked to the annual adjustments of the acute care hospital inpatient
diagnosis-related groups and are effective each October 1.
On May 7, 2004 we published a final rule in the Federal Register
(69 FR 25674) that set forth the 2005 LTCH PPS rate year annual update
of the payment rates for the Medicare PPS for inpatient hospital
services provided by LTCHs. We also discussed clarification of the
procedures under which a satellite facility or remote location of a
LTCH may be designated as a separately certified LTCH. In addition, the
final rule included a provision to expand the existing interrupted stay
policy at Sec. 412.531, and a revision to the procedure for computing
the day count in the average length of stay calculation for Medicare
patients for hospitals qualifying as LTCHs at Sec. 412.23(e)(3)(ii).
B. Criteria for Classification as a LTCH
1. Classification as a LTCH
Under the existing regulations at Sec. 412.23(e)(1) and (e)(2)(i),
which implement section 1886(d)(1)(B)(iv)(I) of the Act, to qualify to
be paid under the LTCH PPS, a hospital must have a provider agreement
with Medicare and must have an average Medicare inpatient length of
stay of greater than 25 days. Alternatively, for cost reporting periods
beginning on or after August 5, 1997, a hospital that was first
excluded from the PPS in 1986, and can demonstrate that at least 80
percent of its annual Medicare inpatient discharges in the 12-month
cost reporting period ending in FY 1997 have a principal diagnosis that
reflects a finding of neoplastic disease must have an average inpatient
length of stay for all patients, including both Medicare and non-
Medicare inpatients, of greater than 20 days (Sec. 412.23(e)(2)(ii)).
Regulations at Sec. 412.23(e)(3) provide that, subject to the
provisions of paragraphs (e)(3)(ii) through (e)(3)(iv) of this section,
the average Medicare inpatient length of stay, specified under Sec.
412.23(e)(2)(i) is calculated by dividing the total number of covered
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and noncovered days of stay of Medicare inpatients (less leave or pass
days) by the number of total Medicare discharges for the hospital's
most recent complete cost reporting period. Section 412.23 also
provides that subject to the provisions of paragraphs (e)(3)(ii)
through (e)(3)(iv) of this section, the average inpatient length of
stay specified under Sec. 412.23(e)(2)(ii) is calculated by dividing
the total number of days for all patients, including both Medicare and
non-Medicare inpatients (less leave or pass days) by the number of
total discharges for the hospital's most recent complete cost reporting
period.
In the LTCH PPS final rule published on May 7, 2004, we specified
the procedure for calculating a hospital's inpatient average length of
stay for purposes of classification as a LTCH. That is, if a patient's
stay includes days of care furnished during two or more separate
consecutive cost reporting periods, the total days of a patient's stay
would be reported in the cost reporting period during which the patient
is discharged. (69 FR 25705). Therefore, we have revised the
regulations at Sec. 412.23(e)(3)(ii) to specify that, effective for
cost reporting periods beginning on or after July 1, 2004, in
calculating a hospital's average length of stay, if the days of a stay
of an inpatient involves days of care furnished during two or more
separate consecutive cost reporting periods, the total number of days
of the stay are considered to have occurred in the cost reporting
period during which the inpatient was discharged.
Effective for cost reporting periods beginning on or after July 1,
2004, but before July 1, 2005, a one-year exception is provided in the
event some providers failed to meet the 25-day ALOS criteria due to
this change in policy. In these cases, the fiscal intermediary (FI)
will do an additional calculation to determine if these providers meet
the average length of stay methodology found in Sec. 412.23(e)(3)(i).
FIs verify that LTCHs meet the average length of stay requirements.
We note that the inpatient days of a patient who is admitted to a LTCH
without any remaining Medicare days of coverage, regardless of the fact
that the patient is a Medicare beneficiary, will not be included in the
above calculation. Because Medicare would not be paying for any of the
patient's treatment, data on the patient's stay would not be included
in the Medicare claims processing systems. In order for both covered
and noncovered days of a LTCH hospitalization to be included, a patient
admitted to the LTCH must have at least one remaining benefit day as
described in Sec. 409.61 (68 FR 34123).
The FI's determination of whether or not a hospital qualified as an
LTCH is based on the hospital's discharge data from the hospital's most
recent complete cost reporting period (Sec. 412.23(e)(3)) and is
effective at the start of the hospital's next cost reporting period
(Sec. 412.22(d)). However, if the hospital does not meet the average
length of stay requirement as specified in Sec. 412.23(e)(2)(i) and
(ii), the hospital may provide the intermediary with data indicating a
change in the average length of stay by the same method for the period
of at least 5 months of the immediately preceding 6-month period (69 FR
25676). Our interpretation of the current regulations at Sec.
412.23(e)(3) was to allow hospitals to submit data using a period of at
least 5 months of the most recent data from the immediately preceding
6-month period.
As we stated in the IPPS final rule, published August 1, 2003,
prior to the implementation of the LTCH PPS, we did rely on data from
the most recently submitted cost report for purposes of calculating the
average length of stay. The calculation to determine whether an acute
care hospital qualifies for LTCH status was based on total days and
discharges for LTCH inpatients. However, with the implementation of the
LTCH PPS, with respect to the average length of stay specified under
Sec. 412.23(e)(2)(i), we revised Sec. 412.23(e)(3)(i) to only count
total days and discharges for Medicare inpatients (68 FR 45464). In
addition, the average length of stay specified under Sec.
412.23(e)(2)(ii) is calculated by dividing the total number of days for
all patients, including both Medicare and non-Medicare inpatients (less
leave or pass days) by the number of total discharges for the
hospital's most recent complete cost reporting period. As we pointed
out in the IPPS final rule, we are unable to capture the necessary data
from our present cost reporting forms. We have, therefore, notified
fiscal intermediaries and LTCHs that until the cost reporting forms are
revised, for purposes of calculating the average length of stay, we
will be relying upon census data extracted from MedPAR files that
reflect each LTCH's cost reporting period (68 FR 45464). Requirements
for hospitals seeking classification as LTCHs that have undergone a
change in ownership, as described in Sec. 489.18, are set forth in
Sec. 412.23(e)(3)(iv).
In the May 7, 2004 final rule (69 FR 25709), we revised the
regulations at Sec. 412.23(e) to clarify our longstanding policy by
stating that a satellite facility or remote location that voluntarily
separates from its parent LTCH in order to become an independent LTCH
must first be considered a State-licensed and Medicare-certified
hospital before seeking classification as a LTCH. In this regard, a
satellite facility or remote location that voluntarily wishes to become
an independent LTCH is required to demonstrate that it meets the
average length of stay requirements, as specified under Sec.
412.23(e)(2)(i) and (ii), based on discharges that occur on or after
the effective date of its participation under Medicare as a separate
hospital. Once the satellite facility or remote location is Medicare
certified, then the hospital may consider using the length of stay data
accumulated as a hospital to satisfy the classification requirements
for becoming a ``specialty'' hospital (in this case, a LTCH). That is,
the hospital must demonstrate that it has a Medicare inpatient length
of stay of greater than 25 days. The data used to calculate the
Medicare average length of stay is based on discharges that occur after
the satellite facility or remote location has established itself as a
separate participating hospital. However, there is an exception to this
policy for satellite facilities and remote locations of LTCHs that are
affected by Sec. 413.65(e)(3) and that were in existence prior to the
effective date of the provider-based location requirements; that is,
cost reporting periods beginning on or after July 1, 2003. We will
assign new Medicare provider numbers to former satellite facilities or
remote locations that have become certified as Medicare participating
hospitals. However, if these newly certified hospitals should fail the
provider-based locations requirements under Sec. 413.65(e)(3), they
may be classified as LTCHs if they meet specific conditions. Under this
exception, calculation of the ALOS for purposes of qualifying as a LTCH
are based on discharge data during the 5 months of the immediate 6
months preceding the facility's separation from the main hospital. This
provision only applies to those facilities or locations that became
subject to the revised provider-based location rules on July 1, 2003,
and that seek classification as LTCHs for Medicare payment purposes.
2. Hospitals Excluded From the LTCH PPS
The following hospitals are paid under special payment provisions,
as described in Sec. 412.22(c) and, therefore, are not subject to the
LTCH PPS rules:
Veterans Administration hospitals.
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Hospitals that are reimbursed under State cost control
systems approved under 42 CFR part 403.
Hospitals that are reimbursed in accordance with
demonstration projects authorized under section 402(a) of Public Law
90-248 (42 U.S.C. 1395b-1) or section 222(a) of Public Law 92-603 (42
U.S.C. 1395b-1 (note)) (statewide all-payer systems, subject to the
rate-of-increase test at section 1814(b) of the Act).
Nonparticipating hospitals furnishing emergency services
to Medicare beneficiaries.
C. Transition Period for Implementation of the LTCH PPS
In the August 30, 2002 final rule, we provided for a 5-year
transition period from reasonable cost-based reimbursement to fully
Federal prospective payment for LTCHs (67 FR 56038). However, LTCHs
have the option to elect to be paid based on 100 percent of the Federal
prospective payment. During the 5-year period, two payment percentages
are to be used to determine a LTCH's total payment under the PPS. The
blend percentages are as follows:
------------------------------------------------------------------------
Reasonable cost-
Cost reporting periods beginning Prospective based
on or after payment Federal reimbursement
rate percentage rate percentage
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October 1, 2002................... 20 80
October 1, 2003................... 40 60
October 1, 2004................... 60 40
October 1, 2005................... 80 20
October 1, 2006................... 100 0
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D. Administrative Simplification Compliance Act and Health Insurance
Portability and Accountability Act Compliance
Claims submitted to Medicare must comply with both the
Administrative Simplification Compliance Act (ASCA), Pub. L. 107-105,
and Health Insurance Portability and Accountability Act (HIPAA).
Section 3 of ASCA requires the Medicare Program, subject to subsection
(h), to deny payment under Part A or Part B for any expenses for items
or services ``for which a claim is submitted other than in an
electronic form specified by the Secretary.'' Subsection (h) provides
that the Secretary shall waive such denial in two types of cases and
may also waive such denial ``in such unusual cases as the Secretary
finds appropriate.'' (Also, see 68 FR 48805 (August 15, 2003).) Section
3 of ASCA operates in the context of the Administrative Simplification
provisions of HIPAA, which include, among other provisions, the
transactions and code sets standards requirements codified as 45 CFR
parts 160 and 162, subparts A and I through R (generally known as the
Transactions Rule). The Transactions Rule requires covered entities,
including covered providers, to conduct covered electronic transactions
according to the applicable transactions and code sets standards.
II. Publication of Proposed Rulemaking
On February 3, 2005, we published a proposed rule in the Federal
Register (70 FR 5724-5805) that set forth the proposed annual update to
the payment rates for the Medicare prospective payment system (PPS) for
inpatient hospital services provided by long-term care hospitals
(LTCHs) for the 2006 LTCH PPS rate year. (The annual update of the LTC-
DRG classifications and relative weights for FY 2006 remains linked to
the annual adjustments of the acute care hospital inpatient DRG system,
which will be published by August 1, and will be effective October 1,
2004.)
In the February 3, 2005 LTCH PPS proposed rule, we discussed the
annual update of LTC-DRG classifications and relative weights and
specified that they remain linked to the annual adjustments of the
acute care hospital inpatient DRG system, which are based on the annual
revisions to the International Classification of Diseases, Ninth
Revision, Clinical Modification (ICD-9-CM) codes, effective each
October 1. (See section V. of this preamble.)
In that same proposed rule, we proposed to adopt new labor market
area definitions for LTCHs which are based on the new Core-Based
Statistical Areas (CBSAs), announced by the OMB late in 2000, which are
effective for acute care inpatient hospitals October 1, 2004 in the FY
2005 IPPS final rule. The CBSAs were adopted for acute care hospitals
under the IPPS (See section V.C.1. of this preamble.)
We also proposed revisions to the wage index, the proposed excluded
hospital with capital market basket that would be applied to the
current standard Federal rate to determine the prospective payment
rates, the applicable adjustments to payment rates, the proposed
outlier threshold, the transition period, and the proposed budget
neutrality factor. (See sections VII. through X. of this preamble.)
We proposed to clarify our notification policy in Sec.
412.22(e)(3) and (h) to require that when a LTCH or satellite of a LTCH
informs its FI of its co-located status, it also is required to include
the name, address and provider numbers of the other co-located
hospitals (that is, acute care hospitals, IRFs, and IPFs).
Additionally, we proposed to clarify and modify the notification
requirement under Sec. 412.532. (Special payment provisions for
patients who are transferred to onsite providers and readmitted to a
long-term care hospital.)
We also proposed to extend the surgical DRG exception to the
``under arrangements'' requirement of the 3-day or less interruption of
stay policy at Sec. 412.531(b)(1)(ii)(A)(1) through the 2006 rate
year, from July 1, 2005 through June 30, 2006. We also propose to
extend the surgical DRG exception to the ``under arrangements''
requirement for the 3-day or less interruption of stay policy at Sec.
412.531(b)(1)(i)(C) from July 1, 2005 through June 30, 2006.
We discussed the recommendations made in the June 2004 Medicare
Payment Advisory Commission (MedPAC) Report concerning the definition
of LTCHs and our continuing monitoring efforts to evaluate the LTCH
PPS, including a review of the QIO's role. (See section X. of this
preamble.)
Lastly, we analyzed the impact of the proposed changes in the
proposed rule on Medicare expenditures and on Medicare-participating
LTCHs and Medicare beneficiaries. (See section XII. of this preamble.)
We received a total of 13 timely items of correspondence containing
multiple comments on the proposed rule. The major issues addressed by
the commenters included: the reduction of the fixed loss amount
pertaining to high-cost outliers, notification in writing to fiscal
intermediaries regarding co-located status, adoption of
[[Page 24172]]
the CBSA designations, extension of the surgical DRGs and MedPAC/
monitoring issues.
Summaries of the public comments received and our responses to
those comments are described below under the appropriate heading.
III. Summary of the Major Contents of This Final Rule
In this final rule, we set forth the annual update to the payment
rates for the Medicare 2006 LTCH PPS rate year and make other policy
changes. The following is a summary of the major areas that we are
addressing in this final rule:
A. Update Changes
In section IV. of this preamble, we discuss the annual
update of the LTC-DRG classifications and relative weights and specify
that they remain linked to the annual adjustments of the acute care
hospital inpatient DRG system, which are based on the annual revisions
to the International Classification of Diseases, Ninth Revision,
Clinical Modification (ICD-9-CM) codes effective each October 1.
In sections V. through X. of this preamble, we specify the
factors and adjustments used to determine the LTCH PPS rates that are
applicable to the 2006 LTCH PPS rate year, including revisions to the
wage index, the excluded hospital with capital market basket that will
be applied to the current standard Federal rate to determine the
prospective payment rates, the applicable adjustments to payments, the
outlier threshold, the short-stay outlier policy for certain LTCHs, the
budget neutrality factor, Core-Based Statistical Areas (CBSAs), and
MedPAC recommendations/monitoring.
B. Policy Changes
In section IV.8. of this preamble, we are extending the surgical
DRG exception in the 3-day or less interruption of stay policy at Sec.
412.531(b)(1)(ii)(A)(1) and Sec. 412.531(b)((1)(i)(C) through the 2006
rate year.
In section V.C.5. of this preamble, we clarify our notification
policy for co-located LTCHs and satellites of LTCHs in Sec.
412.22(e)(3) and (h)(5). We require LTCH HwHs and LTCH satellites to
inform their FI of their co-located status and also provide relevant
identifying information concerning other co-located hospitals.
In section V.C.9. of this preamble, we clarify and modify existing
notification requirements for the purpose of implementing Sec.
412.532.
C. MedPAC Report
In section X. of this preamble, we discuss the recommendations made
in the June 2004 MedPAC Report concerning the definition of LTCHs and
our continuing monitoring efforts to evaluate the LTCH PPS, including a
review of the QIO's role.
D. Impact
In section XII. of this preamble, we analyze the impact of the
changes in this final rule on Medicare expenditures and on Medicare-
participating LTCHs and Medicare beneficiaries.
IV. Long-Term Care Diagnosis-Related Group (LTC-DRG) Classifications
and Relative Weights
A. Background
Section 123 of BBRA specifically requires that the PPS for LTCHs be
a per discharge system with a DRG-based patient classification system
reflecting the differences in patient resources and costs in LTCHs
while maintaining budget neutrality. Section 307(b)(1) of the BIPA
modified the requirements of section 123 of the BBRA by specifically
requiring that the Secretary examine ``the feasibility and the impact
of basing payment under such a system [the LTCH PPS] on the use of
existing (or refined) hospital DRGs that have been modified to account
for different resource use of LTCH patients as well as the use of the
most recently available hospital discharge data.''
In accordance with section 307(b)(1) of BIPA and Sec. 412.515 of
our existing regulations, the LTCH PPS uses information from LTCH
patient records to classify patient cases into distinct LTC-DRGs based
on clinical characteristics and expected resource needs. The LTC-DRGs
used as the patient classification component of the LTCH PPS correspond
to the hospital inpatient DRGs in the IPPS. We apply weights to the
existing hospital inpatient DRGs to account for the difference in
resource use by patients exhibiting the case complexity and multiple
medical problems characteristic of LTCHs.
In a departure from the IPPS, we use low volume LTC-DRGs (less than
25 LTCH cases) in determining the LTC-DRG weights, since LTCHs do not
typically treat the full range of diagnoses as do acute care hospitals.
In order to deal with the large number of low volume DRGs (all DRGs
with fewer than 25 cases), we group low volume DRGs into 5 quintiles
based on average charge per discharge. (A listing of the current
composition of low volume quintiles used in determining the FY 2005
LTC-DRG relative weights appears in the FY 2005 IPPS final rule (August
11, 2004; 69 FR 48986-48989).) We also take into account adjustments to
payments for cases in which the stay at the LTCH is five-sixths of the
geometric average length of stay and classify these cases as short-stay
outlier cases. (A detailed discussion of the application of the Lewin
Group model that was used to develop the LTC-DRGs appears in the August
30, 2002 LTCH PPS final rule at 67 FR 55978.)
B. Patient Classifications Into DRGs
Generally, under the LTCH PPS, Medicare payment is made at a
predetermined specific rate for each discharge; that payment varies by
the LTC-DRG to which a beneficiary's stay is assigned. Cases are
classified into LTC-DRGs for payment based on the following six data
elements:
(1) Principal diagnosis.
(2) Up to eight additional diagnoses.
(3) Up to six procedures performed.
(4) Age.
(5) Sex.
(6) Discharge status of the patient.
As indicated in the August 30, 2002 LTCH PPS final rule, upon the
discharge of the patient from a LTCH, the LTCH must assign appropriate
diagnosis and procedure codes from the most current version of the
International Classification of Diseases, Ninth Edition, Clinical
Modification (ICD-9-CM). HIPAA, Pub. L. 104-191, transactions and code
sets standards regulations (45 CFR parts 160 and 162) require that no
later than October 16, 2003, all covered entities must comply with the
applicable requirements of subparts A and I through R of part 162.
Among other requirements, those provisions direct covered entities that
electronically transmit institutional health care claim or equivalent
encounter information, for instance, to use the ASC X12N 837 Health
Care Claims: Institutional, Volumes 1 and 2, version 4010, and the
applicable standard medical data code sets. (See 45 CFR 162.1002 and 45
CFR 162.1102.)
Medicare fiscal intermediaries enter the clinical and demographic
information into their claims processing systems and subject this
information to a series of automated screening processes called the
Medicare Code Editor (MCE). These screens are designed to identify
cases that require further review before assignment into a DRG can be
made. During this process, the following types of cases are selected
for further development:
Cases that are improperly coded. (For example, diagnoses
are shown that are inappropriate, given the sex of the
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patient. Code 68.6, Radical abdominal hysterectomy, would be an
inappropriate code for a male.)
Cases including surgical procedures not covered under
Medicare. (For example, organ transplant in a non-approved transplant
center.)
Cases requiring more information. (For example, ICD-9-CM
codes are required to be entered at their highest level of specificity.
There are valid 3-digit, 4-digit, and 5-digit codes. That is, code
136.3, Pneumocystosis, contains all appropriate digits, but if it is
reported with either fewer or more than 4 digits, the claim will be
rejected by the MCE as invalid.)
Cases with principal diagnoses that do not usually justify
admission to the hospital. (For example, code 437.9, unspecified
cerebrovascular disease. While this code is valid according to the ICD-
9-CM coding scheme, a more precise code should be used for the
principal diagnosis.)
After screening through the MCE, each claim will be classified into
the appropriate LTC-DRG by the Medicare LTCH GROUPER. As indicated in
August 30, 2002 LTCH PPS final rule, the Medicare GROUPER, which is
used under the LTCH PPS, is specialized computer software, and is the
same GROUPER software program used under the IPPS. The GROUPER software
was developed as a means of classifying each case into a DRG on the
basis of diagnosis and procedure codes and other demographic
information (age, sex, and discharge status). Following the LTC-DRG
assignment, the Medicare fiscal intermediary determines the prospective
payment by using the Medicare PRICER program, which accounts for
hospital-specific adjustments. As provided for under the IPPS, we
provide an opportunity for the LTCH to review the LTC-DRG assignments
made by the fiscal intermediary and to submit additional information
within a specified timeframe (Sec. 412.513(c)).
The GROUPER is used both to classify past cases in order to measure
relative hospital resource consumption to establish the DRG weights and
to classify current cases for purposes of determining payment. The
records for all Medicare hospital inpatient discharges are maintained
in the MedPAR file. The data in this file are used to evaluate possible
DRG classification changes and to recalibrate the DRG weights during
our annual update under both the IPPS (Sec. 412.60(e)) and the LTCH
PPS (Sec. 412.517). As discussed in greater detail below in sections
III.D. and E. of this preamble, with the implementation of section
503(a) of the MMA, there is the possibility that one feature of the
GROUPER software program may be updated twice during a Federal fiscal
year (October 1 and April 1) as required by the statute for the IPPS
(69 FR 48954-48957), August 11, 2004). Specifically, ICD-9 diagnosis
and procedure codes for new medical technology may be created and added
to existing DRGs in the middle of the Federal fiscal year on April 1.
This policy change will have no effect, however, on the LTC-DRG
relative weights which will continue to be updated only once a year
(October 1), nor will there be any impact on Medicare payments under
the LTCH PPS.
C. Organization of DRGs
The DRGs are organized into 25 Major Diagnostic Categories (MDCs),
most of which are based on a particular organ system of the body; the
remainder involve multiple organ systems (such as MDC 22, Burns).
Accordingly, the principal diagnosis determines MDC assignment. Within
most MDCs, cases are then divided into surgical DRGs and medical DRGs.
Surgical DRGs are assigned based on a surgical hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. The GROUPER does not recognize all ICD-9-CM
procedure codes as procedures that affect DRG assignment, that is,
procedures which are not surgical (for example, EKG), or minor surgical
procedures (for example, 86.11, Biopsy of skin and subcutaneous
tissue).
The medical DRGs are generally differentiated on the basis of
diagnosis. Both medical and surgical DRGs may be further differentiated
based on age, sex, discharge status, and presence or absence of
complications or comorbidities (CC). We note that CCs are defined by
certain secondary diagnoses not related to, or not inherently a part
of, the disease process identified by the principal diagnosis. (For
example, the GROUPER would not recognize a code from the 800.0x series,
Skull fracture, as a CC when combined with principal diagnosis 850.4,
Concussion with prolonged loss of consciousness, without return to
preexisting conscious level.) In addition, we note that the presence of
additional diagnoses does not automatically generate a CC, as not all
DRGs recognize a comorbid or complicating condition in their
definition. (For example, DRG 466, Aftercare without History of
Malignancy as Secondary Diagnosis, is based solely on the principal
diagnosis, without consideration of additional diagnoses for DRG
determination.)
In its June 2000 Report to Congress, MedPAC recommended that the
Secretary ``* * * improve the hospital inpatient prospective payment
system by adopting, as soon as practicable, diagnosis-related group
refinements that more fully capture differences in severity of illness
among patients,'' (Recommendation 3A, p. 63). We have determined it is
not practical at this time to develop a refinement to inpatient
hospital DRGs based on severity due to time and resource requirements.
However, this does not preclude us from development of a severity-
adjusted DRG refinement in the future. That is, a refinement to the
list of comorbidities and complications could be incorporated into the
existing DRG structure. It is also possible that a more comprehensive
severity adjusted structure may be created if a new code set is
adopted. That is, if ICD-9-CM is replaced by ICD-10-CM (for diagnostic
coding) and ICD-10-PCS (for procedure coding) or by other code sets, a
severity concept may be built into the resulting DRG assignments. Of
course any change to the code set would be adopted through the process
established in the HIPAA Administrative Simplification Standards
provisions.
D. Update of LTC-DRGs
For FY 2005, the LTC-DRG patient classification system is based on
LTCH data from the FY 2003 MedPAR file, which contained hospital bills
data from the March 2004 update. The patient classification system
consists of 520 DRGs that formed the basis of the FY 2005 LTCH PPS
GROUPER. The 520 LTC-DRGs included two ``error DRGs.'' As in the IPPS,
we include two error DRGs in which cases that cannot be assigned to
valid DRGs will be grouped. These two error DRGs are DRG 469 (Principal
Diagnosis Invalid as a Discharge Diagnosis) and DRG 470 (Ungroupable).
(See the FY 2005 IPPS FY 2005 final rule (69 FR 48982-49000).) The
other 518 LTC-DRGs are the same DRGs used in the IPPS GROUPER for FY
2005 (Version 22.0).
In the past, in the health care industry, annual changes to the
ICD-9-CM codes were effective for discharges occurring on or after
October 1 each year. Thus, the manual and electronic versions of the
GROUPER software, which are based on the ICD-9-CM codes, were also
revised annually and effective for discharges occurring on or after
October 1 each year. As discussed earlier, the patient classification
system for the LTCH PPS (LTC-DRGs) is based on the IPPS patient
classification system
[[Page 24174]]
(CMS-DRGs), which had historically been updated annually and was
effective for discharges occurring on or after October 1 through
September 30 each year.
Recently, the ICD-9-CM coding update process has been revised as
discussed in greater detail in the FY 2005 IPPS final rule (69 FR
48954). Specifically, section 503(a) of the MMA includes a requirement
for updating ICD-9-CM codes twice a year instead of the current process
of annual updates on October 1 of each year. This requirement is
included as part of the amendments to the Act relating to recognition
of new medical technology under the IPPS. Section 503(a) of the MMA
amended section 1886(d)(5)(K) of the Act by adding a new clause (vii)
which states that ``the Secretary shall provide for the addition of new
diagnosis and procedure codes by April 1 of each year, but the addition
of such codes shall not require the Secretary to adjust the payment (or
diagnosis-related group classification) * * * until the fiscal year
that begins after such date.'' This requirement will improve the
recognition of new technologies under the IPPS by accounting for the
GROUPER software at an earlier date. Despite the fact that aspects of
the GROUPER software may be updated to recognize any new technology
codes, there will be no impact on either LTC-DRG assignments or
payments under the LTCH PPS. That is, no new LTC-DRGs will be created
or deleted and the relative weights will remain the same.
When we implemented the LTCH PPS, we established that the DRG-based
patient classification system for the LTCH PPS would use the same
GROUPER software as the IPPS (August 30, 2002, 67 FR 55954). IPPS
updates occur each October 1, as set forth in Sec. 412.8(b). In the
June 6, 2003 LTCH PPS final rule (68 FR 34125), when we revised the
annual rate update for the LTCH PPS to a July 1 through June 30
schedule, we specified that updates of the LTC-DRGs and re-weighting of
LTC-DRG weights would remain linked to the IPPS GROUPER update which
functions on an October 1 through September 30 schedule. Therefore,
under this existing policy, during a LTCH PPS rate year, two versions
of the GROUPER software are utilized for purposes of LTC-DRG creation
or deletion and relative weight assignment during the LTCH PPS rate
year that is established each July 1. The updated LTC-DRG
classifications and relative weights in the GROUPER that were finalized
on October 1, preceding the beginning of a LTCH rate year on July 1,
are in effect with the new Federal rate from July 1 through September
30. On October 1, the updated version of the GROUPER with respect to
the LTC-DRG classifications and relative weights will be used from that
October 1 through June 30.
The updated DRGs and GROUPER software, used by both the IPPS and
the LTCH PPS, are based on the ICD-9-CM codes updated. (The use of the
ICD-9-CM codes in this manner is consistent with current usage and the
HIPAA regulations.) As noted above, historically, these codes have been
published annually in the IPPS proposed rule and final rule. Consistent
with historical approaches taken in the IPPS and LTCH PPS, October 1
will continue to be the effective date of revisions to the CMS DRGs and
the LTC-DRGs. However, because of the statutory changes under Section
503(a) of the MMA, new ICD-9-CM codes may become effective on both
October 1 and April 1. In the past, the new or revised ICD-9-CM codes
were not used by the industry for either the IPPS or the LTCH PPS until
the beginning of the Federal fiscal year (effective for discharges
occurring on or after October 1). Beginning with FY 2005, as we
explained above, under the authority of Section 503(a) of the MMA which
amends section 1886(d)(5)(K) of the Act, there is the potential for new
ICD-9-CM codes to become effective both at the beginning of the Federal
fiscal year, October 1, and also on April 1. As we have already noted,
a full discussion along with a description of the implementation of
this provision, was published in the Federal Register in the FY 2005
IPPS final rule (69 FR 48954). We want to emphasize, however, that
although it was established that the IPPS GROUPER, which is also used
by the LTCH PPS, could be calibrated with respect to ICD-9-CM codes two
times each year (October and April), as necessary, to allow the
inclusion of new codes reflecting new medical technologies and
procedures for patients in acute care hospitals. The inclusion of these
new codes in April would not result in the creation or deletion of LTC-
DRGs or changes in the relative weights and, therefore, would not
affect the DRG assigned by the GROUPER for LTC-DRGs, nor payments under
the LTCH PPS.
As noted above, updates to the GROUPER for both the IPPS and the
LTCH PPS (with respect to relative weights and the creation or deletion
of DRGs) are made in the annual IPPS proposed and final rules and are
effective each October 1. We explained in the FY 2005 IPPS final rule
(69 FR 48956), that since we do not publish a mid-year IPPS rule, April
1 code updates discussed above will not be published in a mid-year IPPS
rule. Rather, we will assign any new diagnostic or procedure codes to
the same DRG in which its predecessor code was assigned, so that there
will be no impact on the DRG assignment. Any proposed coding updates
will be available through the websites indicated in the FY 2005 IPPS
final rule (69 FR 48956) and provided below in section III.E.2. of this
preamble and through the Coding Clinic for ICD-9-CM. Publishers and
software vendors currently obtain code changes through these sources in
order to update their code books and software systems. If new codes are
implemented on April 1, revised code books and software systems,
including the GROUPER software program, will be necessary because we
must use current ICD-9-CM codes. Therefore, for purposes of the LTCH
PPS, since each ICD-9-CM code must be included in the GROUPER algorithm
to classify each case into a LTC-DRG, the GROUPER software program used
under the LTCH PPS would need be revised to accommodate any new codes.
As mentioned above, however, an April 1 update of the ICD-9-CM
codes would only result in a change to the CMS DRG GROUPER software
program effective April 1, so that it will recognize the new technology
code and assign it to the appropriate DRG, but will not result in a
change to the relative weights used under either the IPPS or the LTCH
PPS, respectively. Consistent with our current practice, any changes to
the DRGs or relative weights will be made at the beginning of the next
Federal fiscal year (October 1).
As specified in the May 7, 2004 LTCH PPS final rule (69 FR 25674)
and the FY 2005 IPPS final rule (69 FR 48982), and discussed above, we
annually update to the LTCH PPS payment rates effective from July 1
through June 30 each year. As a result, the LTCH PPS currently uses two
GROUPER software programs during a LTCH PPS rate year (July 1 through
June 30): one GROUPER for 3 months (from July 1 through September 30);
and an updated GROUPER for 9 months (from October 1 through June 30).
The need to use two GROUPERs was based upon the October 1 effective
date of the updated ICD-9-CM coding system. As previously discussed,
new ICD-9-CM codes may result in changes to the structure of the DRGs
caused by mapping the new codes to existing DRGs. In order for the
industry to be on the same schedule (for both the IPPS and the LTCH
PPS) for the use of the most current ICD-9-CM codes, it had been
necessary for us to apply two
[[Page 24175]]
GROUPER programs under the LTCH PPS.
With the potential addition of new codes effective on April 1, the
LTCH PPS may now use three GROUPER programs during the LTCH PPS rate
year (July 1 through June 30), if new diagnosis and procedure codes are
added on April 1. Specifically, one GROUPER (GROUPER 1) would be used
for the first 3 months (from July 1 through September 30); a second
GROUPER (GROUPER 2) would be used for the next 6 months (from October 1
through March 31); and the third GROUPER (GROUPER 3) would be used for
the last 3 months (from April 1 through June 30). The need to use three
GROUPER software programs during a single LTCH PPS rate year in the
event of an April 1 ICD-9-CM code update is because it is necessary to
use the updated ICD-9-CM codes (as explained above) in order to
classify each case into a LTC-DRG for payment purposes. The change from
GROUPER 1 to GROUPER 2 (on October 1) would coincide with the annual
update to the LTC-DRGs and relative weights under Sec. 412.517, which
would be effective for that entire Federal fiscal year, just as it has
been since we implemented the LTCH PPS. The change from GROUPER 2 to
GROUPER 3 (on April 1) would only update the CMS DRG structure by
mapping the new code to an existing DRG, and would not result in the
addition or deletion of any DRGs nor would it result in a change to the
LTC-DRG relative weights. If no new diagnoses or procedure codes are
added on April 1, however, there would be no need to update the GROUPER
and we would continue to use 2 GROUPERS during the course of a LTCH PPS
rate year as is currently done. But even with an April 1 update to the
ICD-9-CM codes (and consequently the GROUPER software), only two sets
of LTC-DRG relative weights will be used during a LTCH PPS rate year
(July 1 through June 30), one set from July 1 though September 30 and a
second set from October 1 through June 30, just as we have done since
we moved the annual LTCH PPS update to July 1 (effective beginning July
1, 2003).
As we discussed in the FY 2005 IPPS final rule (69 FR 48956), in
implementing section 503(a) of the MMA, there will only be an April 1
update if new technology codes are requested and approved. In that same
IPPS final rule, we specified that there are no new codes for April 1,
2005 implementation. However, if new codes had been approved for April
1, 2005 implementation, the subsequent changes to the DRG structure
(that is, the mapping of the new codes to existing DRGs), but not to FY
2005 LTC-DRG relative weights and, consequently, LTCH PPS payment
rates, would have resulted in the use of a third GROUPER during the
2005 LTCH PPS rate year. However, as noted above, since there are no
new codes for April 1, 2005 implementation, and the next update to the
ICD-9-CM coding system will not occur until October 1, 2005, only two
GROUPER software programs will be used during the 2005 LTCH PPS rate
year (July 1, 2004 through June 30, 2005): one GROUPER from July 1,
2004 through September 30, 2004, and a second GROUPER from October 1,
2004 through June 30, 2005.
Discharges beginning on or after October 1, 2004 and before October
1, 2005 (Federal FY 2005) are using Version 22.0 of the GROUPER
software for both the IPPS and the LTCH PPS. Consistent with our
current practice, any changes to the DRGs or relative weights will be
made at the beginning of the Federal fiscal year (October 1). We will
notify LTCHs of any revised LTC-DRG relative weights based on the final
DRGs and the applicable GROUPER version for the IPPS that will be
effective October 1, 2005. The proposed changes to the LTC-DRGs and
relative weights based on the proposed Version 23.0 GROUPER, which
would be effective beginning with discharges occurring on or after
October 1, 2005, are discussed in the May 4, 2005 IPPS proposed rule.
Furthermore, as discussed above, we would notify LTCHs of any revisions
to the CMS GROUPER that would be implemented April 1, 2006.
E. ICD-9-CM Coding System
1. Uniform Hospital Discharge Data Set (UHDDS) Definitions
Because the assignment of a case to a particular LTC-DRG will help
determine the amount that will be paid for the case, it is important
that the coding is accurate. Classifications and terminology used in
the LTCH PPS are consistent with the ICD-9-CM and the UHDDS, as
recommended to the Secretary by the National Committee on Vital and
Health Statistics (``Uniform Hospital Discharge Data: Minimum Data Set,
National Center for Health Statistics, April 1980'') and as revised in
1984 by the Health Information Policy Council (HIPC) of the U.S.
Department of Health and Human Services.
We point out that the ICD-9-CM coding terminology and the
definitions of principal and other diagnoses of the UHDDS are
consistent with the requirements of the HIPAA Administrative
Simplification Act of 1996 (45 CFR part 162). Furthermore, the UHDDS
has been used as a standard for the development of policies and
programs related to hospital discharge statistics by both governmental
and nongovernmental sectors for over 30 years. In addition, the
following definitions (as described in the 1984 Revision of the UHDDS,
approved by the Secretary of Health and Human Services for use starting
January 1986) are requirements of the ICD-9-CM coding system, and have
been used as a standard for the development of the CMS-DRGs:
Diagnoses are defined to include all diagnoses that affect
the current hospital stay.
Principal diagnosis is defined as the condition
established after study to be chiefly responsible for occasioning the
admission of the patient to the hospital for care.
Other diagnoses (also called secondary diagnoses or
additional diagnoses) are defined as all conditions that coexist at the
time of admission, that develop subsequently, or that affect the
treatment received or the length of stay or both. Diagnoses that relate
to an earlier episode of care that have no bearing on the current
hospital stay are excluded.
All procedures performed will be reported. This includes
those that are surgical in nature, carry a procedural risk, carry an
anesthetic risk, or require specialized training.
We provide LTCHs with a 60-day window after the date of the notice
of the initial LTC-DRG assignment to request review of that assignment.
Additional information may be provided by the LTCH to the fiscal
intermediary as part of that review.
2. Maintenance of the ICD-9-CM Coding System
The ICD-9-CM Coordination and Maintenance (C&M) Committee is a
Federal interdepartmental committee, co-chaired by the National Center
for Health Statistics (NCHS) and CMS, that is, charged with maintaining
and updating the ICD-9-CM system. The C&M Committee is jointly
responsible for approving coding changes, and developing errata,
addenda, and other modifications to the ICD-9-CM to reflect newly
developed procedures and technologies and newly identified diseases.
The C&M Committee is also responsible for promoting the use of Federal
and non-Federal educational programs and other communication techniques
with a view toward standardizing coding applications and
[[Page 24176]]
upgrading the quality of the classification system.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
CMS has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The C&M Committee encourages participation by health-related
organizations in the above process and holds public meetings for
discussion of educational issues and proposed coding changes twice a
year at the CMS Central Office located in Baltimore, Maryland. The
agenda and dates of the meetings can be accessed on our Web site at:
http://www.cms.gov/ paymentsystems/icd9.
As discussed above, section 503(a) of the MMA includes a
requirement for updating ICD-9-CM codes twice a year instead of the
current process of annual updates on October 1 of each year. This
requirement will improve the recognition of new technologies under the
IPPS by accounting for them in the GROUPER software at an earlier date.
Because this new statutory requirement could have a significant impact
on health care providers, coding staff, publishers, system maintainers,
and software systems, among others, we solicited comments on our
proposed provisions to implement this requirement as part of the FY
2005 IPPS proposed rule (69 FR 28220). We responded to comments and
published our new policy regarding the updating of ICD-9-CM codes in
the FY 2005 IPPS final rule (69 FR 48954-48957).
While this new requirement states that the Secretary shall not
adjust the payment of the DRG classification for any codes created for
use on April 1, DRG software and other systems will have to be updated
in order to recognize and accept the new codes. Because, as discussed
above, the LTC-DRGs are the same DRGs used under the IPPS, this means
that the Medicare GROUPER software program used under both the IPPS and
the LTCH PPS would need to be revised to reflect ICD-9-CM codes, if any
coding changes were implemented on April 1. Furthermore, although the
CMS GROUPER software used under both the IPPS and the LTCH PPS would
need to be revised to accommodate the new codes effective April 1,
there would be no additions or deletions of DRGs nor would the relative
weights used under the IPPS and the LTCH PPS, respectively, be changed
until the annual update October 1 (to the extent that those changes are
warranted), just as they have been historically updated. As the LTCH
PPS is based on the IPPS, we will adopt the same approach used under
the IPPS for potential April 1 ICD-9-CM coding changes. That is, we
will assign any new diagnosis codes or procedure codes to the same DRG
in which its predecessor code was assigned, so there will be no DRG
impact in terms of potential DRG assignment until the following October
1. We will maintain the current method of publicizing any new code
changes, as noted below. Current addendum and code title information is
published on the CMS Web page at: http://www.cms.hhs.gov/
paymentsystem/icd9. Summary tables showing new, revised, and deleted
code titles are also posted on the following CMS Web page: http://www.cms.hhs.gov/medlearn/icd9code.asp.
Information on ICD-9-CM
diagnosis codes can be found at http://www.cdc.gov/nchs/icd9.htm.
Information on new, revised, and deleted ICD-9-CM codes is also
available in the AHA publication Coding Clinic for ICD-9-CM. AHA also
distributes information to publishers and software vendors. We also
send copies of all ICD-9-CM coding changes to our contractors for use
in updating their systems and providing education to providers.
If the April 1 changes are made to ICD-9-CM diagnosis or procedure
codes, LTCHs will be required to obtain the new codes, coding books, or
encoder updates, and make other system changes in order to capture and
report the new codes. We indicated in the IPPS final rule that we were
aware of the additional burden this will have on health care providers.
It should be noted that any new codes created for April 1
implementation will be limited to those diagnosis and procedure code
revisions primarily needed to describe new technologies and medical
services. However, we reiterate that the process for discussing updates
to the ICD-9-CM has been an open process through the ICD-9-CM C&M
Committee since 1995. Any requestor who makes a clear and convincing
case for the need to update ICD-9-CM codes for purposes of the IPPS new
technology add-on payment process through an April 1 update will be
given the opportunity to present the merits of their proposed new code.
To reiterate, at the October 2004 C&M Committee meeting, no new
codes were proposed for update on April 1, 2005. While no DRG additions
or deletions or changes to relative weights will occur prior to the
usual October 1 update, in the event any new codes had been created to
describe new technologies and medical services through an April 1, 2005
update, under our policy, LTCH systems would have been expected to
recognize and report those new codes through the channels as described
above in this section.
As discussed above, the ICD-9-CM coding changes that have been
adopted by the C&M Committee could become effective either at the
beginning of each Federal fiscal year, October 1, or, in the case of
codes created to capture new technology, April 1 of each year. Coders
will be expected to use the most current updated ICD-9-CM codes, as
updated. Because we do not publish a mid-year IPPS rule, the currently
accepted avenues of information dissemination will be used to inform
all ICD-9-CM code users of any changes to the coding system. These
avenues were described above in section IV.D. of this preamble and have
been discussed at length in the FY 2005 IPPS final rule (69 FR 48956).
Coders in LTCHs using the updated ICD-9-CM coding system will be on the
same schedule as the rest of the health care industry. In the past, the
updated ICD-9-CM was not available for use until October 1 of each
year.
Therefore, because the LTCH PPS and the IPPS uses the identical
GROUPER software, the LTCH PPS will be directly affected by the
statutory mandates directed at the IPPS, published in section 503(a) of
the MMA. (We note that there is no statutory requirement in the LTCH
PPS to make additional payments for new technology.) The practical
effect of this provision is that the GROUPER software must accept new
ICD-9 codes reflecting the incorporation of new technologies into
inpatient treatment at an acute care hospital prior to the scheduled
annual update of the GROUPER software. While DRG assignments would not
change from October 1 through September 30, it is possible that there
could be additional new ICD-9-CM diagnosis and procedure codes during
that time, which would be assigned to predecessor DRGs (as described
above). For both the IPPS and LTCH coders, it is possible that there
will be ICD-9-CM codes in effect from October 1 through March 31, with
additional ICD-9-CM codes in effect from April 1 through September 30.
Presently, as there were no coding changes suggested for an April 1,
2005 update, the ICD-9-CM coding set implemented on October 1, 2004
will continue through September 30, 2005 (FY 2005).
Of particular note to LTCHs are the invalid diagnosis codes (Table
6C) and the invalid procedure codes (Table 6D) located in the annual
proposed and final rules for the IPPS. Claims with invalid
[[Page 24177]]
codes are not processed by the Medicare claims processing system.
3. Coding Rules and Use of ICD-9-CM Codes in LTCHs
We emphasize the need for proper coding by LTCHs. Inappropriate
coding of cases can adversely affect the uniformity of cases in each
LTC-DRG and produce inappropriate weighting factors at recalibration.
We continue to urge LTCHs to focus on improved coding practices.
Because of concerns raised by LTCHs concerning correct coding, we have
asked the American Hospital Association (AHA) to provide additional
clarification or instruction on proper coding in the LTCH setting. The
AHA will provide this instruction via their established process of
addressing questions through their publication ``Coding Clinic for ICD-
9-CM.'' Written questions or requests for clarification may be
addressed to the Central Office on ICD-9-CM, American Hospital
Association, One North Franklin, Chicago, IL 60606. A form for the
question(s) is available to be downloaded and mailed on AHA's Web site
at: http://www.ahacentraloffice.org. In addition, current coding
guidelines are available at the National Center for Health Statistics
(NCHS) Web site: http://www.cdc.gov/nchs.icd9.htm.
In conjunction with the cooperating parties (AHA, the American
Health Information Management Association (AHIMA), and NCHS), we
reviewed actual medical records and are concerned about the quality of
the documentation under the LTCH PPS, as was the case at the beginning
of the IPPS. We fully believe that, with experience, the quality of the
documentation and coding will improve, just as it did for the IPPS. As
noted above, the cooperating parties have plans to assist their members
with improvement in documentation and coding issues for the LTCHs
through specific questions and coding guidelines. The importance of
good documentation is emphasized in the revised ICD-9-CM Official
Guidelines for Coding and Reporting: ``A joint effort between the
attending physician and coder is essential to achieve complete and
accurate documentation, code assignment, and reporting of diagnoses and
procedures. The importance of consistent, complete documentation in the
medical record cannot be overemphasized. Without such documentation,
the application of all coding guidelines is a difficult, if not
impossible, task.'' (Coding Clinic for ICD-9-CM, Fourth Quarter 2002,
page 115.)
To improve medical record documentation, LTCHs should be aware that
if the patient is being admitted for continuation of treatment of an
acute or chronic condition, guidelines at Section I.B.10 of the Coding
Clinic for ICD-9-CM, Fourth Quarter 2002 (page 129) are applicable
concerning selection of principal diagnosis. To clarify coding advice
issued in the August 30, 2002 final rule (67 FR 55979), we would like
to point out that at Guideline I.B.12, Late Effects, a late effect is
considered to be the residual effect (condition produced) after the
acute phase of an illness or injury has terminated (Coding Clinic for
ICD-9-CM, Fourth Quarter 2002, page 129). Regarding whether a LTCH
should report the ICD-9-CM code(s) for an unresolved acute condition
instead of the code(s) for late effect of rehabilitation, we emphasize
that each case must be evaluated on its unique circumstances and coded
appropriately. Depending on the documentation in the medical record,
either a code reflecting the acute condition or rehabilitation could be
appropriate in a LTCH.
Since implementation of the LTCH PPS, our Medicare fiscal
intermediaries have been conducting training and providing assistance
to LTCHs in correct coding. We have also issued manuals containing
procedures as well as coding instructions to LTCHs and fiscal
intermediaries. We will continue to conduct such training and provide
guidance on an as-needed basis. We also refer readers to the detailed
discussion on correct coding practices in the August 30, 2002 LTCH PPS
final rule (67 FR 55979). Additional coding instructions and examples
will be published in Coding Clinic for ICD-9-CM.
F. Method for Updating the LTC-DRG Relative Weights
As discussed in the May 7, 2004 LTCH PPS final rule (68 FR 25681),
under the LTCH PPS, each LTCH will receive a payment that represents an
appropriate amount for the efficient delivery of care to Medicare
patients. The system must be able to account adequately for each LTCH's
case-mix in order to ensure both fair distribution of Medicare payments
and access to adequate care for those Medicare patients whose care is
more costly. Therefore, in accordance with Sec. 412.523(c), we adjust
the standard Federal PPS rate by the LTC-DRG relative weights in
determining payment to LTCHs for each case.
Under this payment system, relative weights for each LTC-DRG are a
primary element used to account for the variations in cost per
discharge and resource utilization among the payment groups (Sec.
412.515). To ensure that Medicare patients who are classified to each
LTC-DRG have access to an appropriate level of services and to
encourage efficiency, we calculate a relative weight for each LTC-DRG
that represents the resources needed by an average inpatient LTCH case
in that LTC-DRG. For example, cases in a LTC-DRG with a relative weight
of 2 will, on average, cost twice as much as cases in a LTC-DRG with a
weight of 1.
As we discussed in the FY 2005 IPPS final rule (69 FR 48982), the
LTC-DRG relative weights effective under the LTCH PPS for Federal FY
2005 were calculated using the March 2004 update of FY 2003 MedPAR data
and Version 22.0 of the CMS GROUPER software. We use total days and
total charges in the calculation of the LTC-DRG relative weights.
By nature, LTCHs often specialize in certain areas, such as
ventilator-dependent patients and rehabilitation and wound care. Some
case types (DRGs) may be treated, to a large extent, in hospitals that
have, from a perspective of charges, relatively high (or low) charges.
Distribution of cases with relatively high (or low) charges in specific
LTC-DRGs has the potential to inappropriately distort the measure of
average charges. To account for the fact that cases may not be randomly
distributed across LTCHs, we use a hospital-specific relative value
method to calculate relative weights. We believe this method removes
this hospital-specific source of bias in measuring average charges.
Specifically, we reduce the impact of the variation in charges across
providers on any particular LTC-DRG relative weight by converting each
LTCH's charge for a case to a relative value based on that LTCH's
average charge. (See the FY 2005 IPPS final rule (69 FR 48984) for
further information on the hospital-specific relative value
methodology.)
In order to account for LTC-DRGs with low volume (that is, with
fewer than 25 LTCH cases), we grouped those low volume LTC-DRGs into
one of five categories (quintiles) based on average charges, for the
purposes of determining relative weights. For FY 2005 based on the FY
2003 MedPAR data, we identified 172 LTC-DRGs that contained between 1
and 24 cases. This list of low volume LTC-DRGs was then divided into
one of the five low volume quintiles, each containing a minimum of 34
LTC-DRGs (172/5 = 34 with 2 LTC-DRG as a remainder). Each of the low
volume LTC-DRGs grouped to a specific quintile received the same
relative
[[Page 24178]]
weight and average length of stay using the formula applied to the
regular LTC-DRGs (25 or more cases), as described below. (See the FY
2005 IPPS final rule (69 FR 48988-48989) for further explanation of the
development and composition of each of the five low volume quintiles
for FY 2005.)
After grouping the cases in the appropriate LTC-DRG, we calculated
the relative weights by first removing statistical outliers and cases
with a length of stay of 7 days or less. Next, we adjusted the number
of cases in each LTC-DRG for the effect of short-stay outlier cases
under Sec. 412.529. The short-stay adjusted discharges and
corresponding charges were used to calculate ``relative adjusted
weights'' in each LTC-DRG using the hospital-specific relative value
method described above. (See the FY 2005 IPPS final rule (69 FR 48989)
for further details on the steps for calculating the LTC-DRG relative
weights.)
We also adjusted the LTC-DRG relative weights to account for
nonmonotonically increasing relative weights. That is, we made an
adjustment if cases classified to the LTC-DRG ``with comorbidities
(CCs)'' of a ``with CC''/``without CC'' pair had a lower average charge
than the corresponding LTC-DRG ``without CCs'' by assigning the same
weight to both LTC-DRGs in the ``with CC''/``without CC'' pair. (See FY
2005 IPPS final rule, 69 FR 48991-48992.) In addition, of the 520 LTC-
DRGs in the LTCH PPS for FY 2005, based on the FY 2003 MedPAR data, we
identified 171 LTC-DRGs for which there were no LTCH cases in the
database. That is, no patients who would have been classified to those
DRGs were treated in LTCHs during FY 2003 and, therefore, no charge
data were reported for those DRGs. Thus, in the process of determining
the relative weights of LTC-DRGs, we were unable to determine weights
for these 171 LTC-DRGs using the method described above. However, since
patients with a number of the diagnoses under these LTC-DRGs may be
treated at LTCHs beginning in FY 2005, we assigned relative weights to
each of the 171 ``no volume'' LTC-DRGs based on clinical similarity and
relative costliness to one of the remaining 349 (520 - 171 = 349) LTC-
DRGs for which we were able to determine relative weights, based on the
FY 2003 claims data. (A list of the current no-volume LTC-DRGs and
further explanation of their FY 2005 relative weight assignment can be
found in the FY 2005 IPPS final rule (69 FR 48992-48999).)
Furthermore, for FY 2005, we established LTC-DRG relative weights
of 0.0000 for heart, kidney, liver, lung, and simultaneous pancreas/
kidney transplants (LTC-DRGs 103, 302, 480, 495, 512 and 513,
respectively) because Medicare will only cover these procedures if they
are performed at a hospital that has been certified for the specific
procedures by Medicare and presently no LTCH has been so certified. If
in the future, however, a LTCH applies for certification as a Medicare-
approved transplant center, we believe that the application and
approval procedure would allow sufficient time for us to propose
appropriate weights for the LTC-DRGs affected. At the present time,
though, we included these six transplant LTC-DRGs in the GROUPER
program for administrative purposes. As the LTCH PPS uses the same
GROUPER program for LTCHs as is used under the IPPS, removing these
DRGs would be administratively burdensome.
As we stated in the FY 2005 IPPS final rule, we will continue to
use the same LTC-DRGs and relative weights for FY 2005 until October 1,
2005. Accordingly, Table 3 in the Addendum to this final rule lists the
LTC-DRGs and their respective relative weights and arithmetic mean
length of stay that we will continue to use for the period of July 1,
2005 through September 30, 2005. (This table is the same as Table 11 of
the Addendum to the FY 2005 IPPS final rule (69 FR 49738-49754),
including the revisions to Table 11 published in the October 7, 2004
correction notice (69 FR 60267-60271)). As we noted above, the next
proposed update to the ICD-9-CM coding system is presented in the May
4, 2005 FY 2006 IPPS proposed rule (since there were no April 1 updates
to the ICD-9-CM coding system). The final update to the ICD-9-CM coding
system that will be effective beginning October 1, 2005, and the final
DRGs and GROUPER for FY 2006 that will be used for the IPPS and the
LTCH PPS, effective October 1, 2005, will be presented in the IPPS FY
2006 proposed and final rule in the Federal Register. The final LTC-DRG
relative weights that will be established in the FY 2006 IPPS final
rule will be used in determining payments for discharges occurring
between October 1, 2005 and September 30, 2006 (We note that if there
is an April 1, 2006 update to the ICD-9-CM coding system, there will be
a change in the GROUPER software effective April 1, 2006; however,
there would be no change to the LTC-DRG relative weights, as discussed
above).
V. Changes to the LTCH PPS Rates and Changes in Policy for the 2006
LTCH PPS Rate Year
A. Overview of the Development of the Payment Rates
The LTCH PPS was effective for a LTCH's first cost reporting period
beginning on or after October 1, 2002. Effective with that cost
reporting period, LTCHs are paid, during a 5-year transition period, on
the basis of an increasing proportion of the LTCH PPS Federal rate and
a decreasing proportion of a hospital's payment under reasonable cost-
based payment system, unless the hospital makes a one-time election to
receive payment based on 100 percent of the Federal rate (see Sec.
412.533). New LTCHs (as defined at Sec. 412.23(e)(4)) are paid based
on 100 percent of the Federal rate, with no phase-in transition
payments.
The basic methodology for determining LTCH PPS Federal prospective
payment rates is set forth in the regulations at Sec. 412.515 through
Sec. 412.532. Below we discuss the factors that will be used to update
the LTCH PPS standard Federal rate for the 2006 LTCH PPS rate year that
will be effective for LTCHs discharges occurring on or after July 1,
2005 through June 30, 2006. When we implemented the LTCH PPS in the
August 30, 2002 LTCH PPS final rule (67 FR 56029), we computed the LTCH
PPS standard Federal payment rate for FY 2003 by updating the best
available (FY 1998 or FY 1999) Medicare inpatient operating and capital
costs per case data, using the excluded hospital market basket.
Section 123(a)(1) of the BBRA requires that the PPS developed for
LTCHs be budget neutral. Therefore, in calculating the standard Federal
rate under Sec. 412.523(d)(2), we set total estimated LTCH PPS
payments equal to estimated payments that would have been made under
the reasonable cost-based payment methodology had the PPS for LTCHs not
been implemented. Section 307(a) of the BIPA specified that the
increases to the hospital-specific target amounts and cap on the target
amounts for LTCHs for FY 2002 provided for by section 307(a)(1) of BIPA
shall not be taken into account in the development and implementation
of the LTCH PPS.
Furthermore, as specified at Sec. 412.523(d)(1), the standard
Federal rate is reduced by an adjustment factor to account for the
estimated proportion of outlier payments under the LTCH PPS to total
estimated LTCH PPS payments (8 percent). For further details on the
development of the FY 2003 standard Federal rate, see the August 30,
[[Page 24179]]
2002 LTCH PPS final rule (67 FR 56027), for the 2004 LTCH PPS rate year
rate, see the June 6, 2003 final rule (68 FR 34122-34190), and for the
2005 LTCH PPS rate year rate, see the May 7, 2004 LTCH PPS final rule
(69 FR 25674-25748). Under the existing regulations at Sec.
412.523(c)(3)(ii), we update the standard Federal rate annually to
adjust for the most recent estimate of the projected increases in
prices for LTCH inpatient hospital services.
B. Update to the Standard Federal Rate for the 2006 LTCH PPS Rate Year
As established in the May 7, 2004 LTCH PPS final rule (69 FR
25683), based on the most recent estimate of the excluded hospital with
capital market basket, adjusted to account for the change in the LTCH
PPS rate year update cycle, the current LTCH PPS standard Federal rate
which is effective from July 1, 2004 through June 30, 2005 (the 2005
LTCH PPS rate year), is $36,833.69.
In the discussion that follows, we explain how we developed the
standard Federal rate for the 2006 LTCH PPS rate year. The standard
Federal rate for the 2006 LTCH PPS rate year will be calculated based
on the update factor of 1.034. Thus, the standard Federal rate for the
2006 LTCH PPS rate year will increase 3.4 percent compared to the 2005
LTCH PPS rate year standard Federal rate due to the final update to the
LTCH PPS Federal rate established in this final rule.
1. Standard Federal Rate Update
Under Sec. 412.523, the annual update to the LTCH PPS standard
Federal rate must be equal to the percentage change in the excluded
hospital with capital market basket. As we discussed in the August 30,
2002 LTCH PPS final rule (67 FR 56087), in the future we may propose to
develop a framework to update payments to LTCHs that would account for
other appropriate factors that affect the efficient delivery of
services and care provided to Medicare patients. As we discussed in the
February 3, 2005 proposed rule (70 FR 5735), we have not yet collected
sufficient data to allow for the analysis and development of an update
framework under the LTCH PPS because the LTCH PPS has only been
implemented for slightly more than 2 years (that is, for cost reporting
periods beginning on or after October 1, 2002). Therefore, we did not
address an update framework for the 2006 LTCH PPS rate year in that
same proposed rule or in this final rule. However, we note that a
conceptual basis for the proposal of developing an update framework in
the future can be found in Appendix B of the August 30, 2002 LTCH PPS
final rule (67 FR 56086).
a. Description of the Market Basket for LTCHs for the 2006 LTCH PPS
Rate Year
A market basket has historically been used in the Medicare program
to account for price increases of the services furnished by providers.
The market basket used for the LTCH PPS includes both operating and
capital-related costs of LTCHs because the LTCH PPS uses a single
payment rate for both operating and capital-related costs. The
development of the LTCH PPS standard Federal rate is discussed in
further detail in the August 30, 2002 LTCH PPS final rule (67 FR
56027).
Under the reasonable cost-based payment system, the excluded
hospital market basket was used to update the hospital-specific limits
on payment for operating costs of LTCHs. Currently, the excluded
hospital market basket is based on operating costs from cost report
data from FY 1997 and includes data from Medicare-participating long-
term care, rehabilitation, psychiatric, cancer, and children's
hospitals. Since the costs of LTCH are included in the excluded
hospital market basket, this market basket index, in part, also
reflects the costs of LTCHs. However, in order to capture the total
costs (operating and capital-related) of LTCHs, we added a capital
component to the excluded hospital market basket for use under the LTCH
PPS. We refer to this index as the excluded hospital with capital
market basket.
As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR
56016 and 56086), beginning with the implementation of the LTCH PPS in
FY 2003, the excluded hospital with capital market basket, based on FY
1992 Medicare cost report data, has been used for updating payments to
LTCHs. In the May 7, 2004 LTCH PPS final rule (69 FR 25683), we revised
and rebased the excluded hospital with capital market basket, using
more recent data, that is, using FY 1997 base year data beginning with
the 2004 LTCH PPS rate year. (For further details on the development of
the FY 1997-based LTCH PPS market basket, see the May 7, 2004 LTCH PPS
final rule (69 FR 25683)).
In the August 30, 2002 LTCH PPS final rule (67 FR 56016 and 56085-
56086), we discussed why we believe the excluded hospital with capital
market basket provides a reasonable measure of the price changes facing
LTCHs. In the May 7, 2004 LTCH PPS final rule (69 FR 25682-25683), we
discussed our research into the feasibility of developing a market
basket specific to LTCH services. However, based on this research, we
did not develop a market basket specific to LTCH services. In that same
final rule, we explained why we continue to believe that the excluded
hospital with capital market basket is the appropriate market basket
for the LTCH PPS.
As we explained in the February 3, 2005 proposed rule (70 FR 5737),
for the reasons discussed in those final rules (August 30, 2002 and May
7, 2004), we continue to believe that an excluded hospital with capital
market basket adequately reflects the price changes facing LTCHs. We
considered whether we would propose the use of a new ``Rehabilitation,
Psychiatric and Long-Term Care (RPL) market basket'' instead of the
existing excluded hospital with capital market basket for IRFs, IPFs,
and LTCHs. The RPL market basket would have been based on the operating
and capital costs of IRFs, IPFs, and LTCHs, which are almost all paid
under a prospective payment systems. (We note that not all IPFs have
begun to be paid under the IPF PPS yet because it was implemented for
cost reporting periods beginning on or after January 1, 2005.) Because
the development of the RPL market basket was not completed in time for
us to consider proposing its use for the proposed 2006 LTCH PPS rate
year update, we were unable to discuss it in the February 3, 2005 LTCH
PPS proposed rule, and, therefore, we proposed to continue to use the
excluded hospital with capital market basket. Thus, in that same
proposed rule (70 FR 5737), we did not propose to revise the market
basket used under the LTCH PPS because, as we explain above, we believe
that the excluded hospital with capital market basket was the most
appropriate market basket available at that time to use in determining
the proposed update to the Federal rate for the 2006 LTCH PPS rate
year.
Therefore, although we are considering the development of the RPL
market basket because we did not propose to use the RPL market basket
under the LTCH PPS for the 2006 LTCH PPS rate year, we are not
discussing its use under the LTCH PPS for the 2006 rate year in this
final rule. We will consider proposing the use of the RPL market basket
under the LTCH PPS in the future and will analyze its applicability for
the LTCH PPS. We intend to present our analyses in the 2007 LTCH PPS
rate year proposed rule. Any future revisions to the LTCH PPS market
basket will be proposed and subject to public comment.
[[Page 24180]]
We received no comments on our continued use of the FY 1997-based
excluded hospital with capital market basket under the LTCH PPS.
Accordingly, in this final rule, we will continue to use the FY 1997-
based excluded hospital with capital market basket as the LTCH PPS
market basket for determining the update to the LTCH PPS standard
Federal rate for the 2006 LTCH PPS rate year. Even though we did not
receive any comments on our continued use of the FY 1997-based excluded
hospital with capital market basket under the LTCH PPS, in future
proposed rules, we will continue to solicit comments about issues
particular to LTCHs that should be considered in relation to the
appropriate market basket to use under the LTCH PPS and to encourage
suggestions for additional data sources that may be available.
b. LTCH Market Basket Increase for the 2006 LTCH Rate Year
As we discussed in the May 7, 2004 LTCH PPS final rule (69 FR
25683), for the update to the 2005 LTCH PPS rate year, we calculated
the estimated increase between the 2004 LTCH PPS rate year (July 1,
2003 through June 30, 2004) and the 2005 LTCH PPS rate year (July 1,
2004 through June 30, 2005) based on Global Insight's forecast of the
revised and rebased FY 1997-based excluded hospital with capital market
basket using data available through the fourth quarter of 2003. The
market basket for the 2005 LTCH PPS rate year was 3.1 percent (69 FR
25683).
Consistent with our historical practice of estimating market basket
increases based on Global Insight's forecast of the FY 1997-based
excluded hospital with capital market basket, in the February 3, 2005
proposed rule (70 FR 5735), we proposed a 3.1 percent update to the
Federal rate based on the most recent available data at that time (that
is, data through the third quarter of 2004). Global Insights, Inc. is a
nationally recognized economic and financial forecasting firm that
contracts with CMS to forecast components of the market basket. In this
final rule, consistent with our historical practice of estimating
market basket increases based on Global Insight's forecast of the FY
1997-based excluded hospital with capital market basket, using more
recent data through the first quarter of 2005, we are using a 3.4
percent update to the Federal rate for the 2006 LTCH PPS rate year. In
accordance with Sec. 412.523, this update will represent the most
recent estimate of the increase in the excluded hospital with capital
market basket for the 2006 LTCH PPS rate year.
2. Standard Federal Rate for the 2006 LTCH PPS Rate Year
In the May 7, 2004 LTCH PPS final rule (69 FR 25683), we
established a standard Federal rate of $36,833.69 for the 2005 LTCH PPS
rate year that was based on the best available data and policies
established in that final rule. In the February 3, 2005 proposed rule
(70 FR 5736), we proposed a standard Federal rate of $37,975.53 for the
2006 LTCH PPS rate year based on a proposed market basket update of 3.1
percent. Since the proposed standard Federal rate for the 2006 LTCH PPS
rate year had already been adjusted for differences in case-mix, wages,
cost-of-living, and high-cost outlier payments, we did not propose to
make any additional adjustments in the standard Federal rate for those
factors.
In this final rule, in accordance with Sec. 412.523, we are
establishing a standard Federal rate of $38,086.04 based on the most
recent estimate of the LTCH PPS market basket of 3.4 percent. Since the
standard Federal rate for the 2006 LTCH PPS rate year has already been
adjusted for differences in case-mix, wages, cost-of-living, and high-
cost outlier payments, we did not make any additional adjustments in
the standard Federal rate for these factors.
C. Calculation of LTCH Prospective Payments for the 2006 LTCH PPS Rate
Year
The basic methodology for determining prospective payment rates for
LTCH inpatient operating and capital-related costs is set forth in
Sec. 412.515 through Sec. 412.532. In accordance with Sec. 412.515,
we assign appropriate weighting factors to each LTC-DRG to reflect the
estimated relative cost of hospital resources used for discharges
within that group as compared to discharges classified within other
groups. The amount of the prospective payment is based on the standard
Federal rate, established under Sec. 412.523, and adjusted for the
LTC-DRG relative weights, differences in area wage levels, cost-of-
living in Alaska and Hawaii, high-cost outliers, and other special
payment provisions (short-stay outliers under Sec. 412.529 and
interrupted stays under Sec. 412.531).
In accordance with Sec. 412.533, during the 5-year transition
period, payment is based on the applicable transition blend percentage
of the adjusted Federal rate and the reasonable cost-based payment rate
unless the LTCH makes a one-time election to receive payment based on
100 percent of the Federal rate. A LTCH defined as ``new'' under Sec.
412.23(e)(4) is paid based on 100 percent of the Federal rate with no
blended transition payments (Sec. 412.533(d)). As discussed in the
August 30, 2002 final rule (67 FR 56038), and in accordance with Sec.
412.533(a), the applicable transition blends are as follows:
------------------------------------------------------------------------
Reasonable cost-
Cost reporting periods beginning Federal rate based payment
on or after percentage rate percentage
------------------------------------------------------------------------
October 1, 2002................... 20 80
October 1, 2003................... 40 60
October 1, 2004................... 60 40
October 1, 2005................... 80 20
October 1, 2006................... 100 0
------------------------------------------------------------------------
Accordingly, for cost reporting periods beginning during FY 2005
(that is, on or after October 1, 2004, and before September 30, 2005),
blended payments under the transition methodology are based on 40
percent of the LTCH's reasonable cost-based payment rate and 60 percent
of the adjusted LTCH PPS Federal rate. For cost reporting periods that
begin during FY 2006 (that is, on or after October 1, 2005 and before
September 30, 2006), blended payments under the transition methodology
will be based on 20 percent of the LTCH's reasonable cost-based payment
rate and 80 percent of the adjusted LTCH PPS Federal rate.
1. Adjustment for Area Wage Levels
a. Background
Under the authority of section 307(b) of the BBA, we established an
adjustment to the LTCH PPS Federal rate to account for differences in
LTCH area wage levels at Sec. 412.525(c). The labor-related share of
the LTCH PPS Federal rate, estimated by the excluded
[[Page 24181]]
hospital with capital market basket, is adjusted to account for
geographic differences in area wage levels by applying the applicable
LTCH PPS wage index. The applicable LTCH PPS wage index is computed
using wage data from inpatient acute care hospitals without regard to
reclassification under section 1886(d)(8) or section 1886(d)(10) of the
Act. Furthermore, as we discussed in the August 30, 2002 LTCH PPS final
rule (67 FR 56015), we established a 5-year transition to the full wage
adjustment. The applicable wage index phase-in percentages are based on
the start of a LTCH's cost reporting period as shown in the following
table:
------------------------------------------------------------------------
Cost reporting periods beginning on or Phase-in percentage of the
after full wage index
------------------------------------------------------------------------
October 1, 2002........................... \1/5\th (20)
October 1, 2003........................... \2/5\ths (40)
October 1, 2004........................... \3/5\ths (60)
October 1, 2005........................... \4/5\ths (80)
October 1, 2006........................... \5/5\ths (100)
------------------------------------------------------------------------
For example, for cost reporting periods beginning on or after
October 1, 2004 and on or before September 30, 2005 (FY 2005), the
applicable LTCH wage index value is three-fifths of the applicable full
LTCH PPS wage index value. Similarly, for cost reporting periods
beginning on or after October 1, 2005 and on or before September 30,
2006 (FY 2006), the applicable LTCH wage index value will be four-
fifths of the applicable full LTCH PPS wage index value. As we
established in the August 30, 2002 LTCH PPS final rule (67 FR 56018),
the applicable full LTCH PPS wage index value is calculated from acute-
care hospital inpatient wage index data without taking into account
geographic reclassification under sections 1886(d)(8) and (d)(10) of
the Act.
In that same final rule (67 FR 56018), we stated that we would
continue to reevaluate LTCH data as they become available and would
propose to adjust the phase-in if subsequent data support a change. As
we discussed in the February 3, 2005 proposed rule (70 FR 5736),
because the LTCH PPS has only been recently implemented (slightly over
2 years) and because of the lag time in availability of cost report
data, sufficient new data have not been generated that would enable us
to conduct a comprehensive reevaluation of the appropriateness of
adjusting the phase-in. However, as we discussed in that same proposed
rule, we have reviewed the most recent cost report and claims data (FY
2001-FY 2003) available and did not find any evidence to support a
change in the 5-year phase-in of the wage index. Specifically, our
statistical analysis still does not show a significant relationship
between LTCHs' costs and their geographic location. Accordingly, in the
February 3, 2005 proposed rule, we did not propose a change in the
phase-in of the adjustment for area wage levels under Sec. 412.525(c).
Comment: One commenter urges us to immediately implement 100
percent area wage index adjustment instead of the existing five-year
phase-in of the wage index adjustment.
Response: As noted above, we have reevaluated our wage-index phase-
in policy and for the 2006 LTCH PPS rate year, we will not be
implementing a full wage index adjustment for LTCHs. In the August 30,
2002 LTCH PPS final rule in which we described our determinations
regarding the inclusion of various payment adjustments in the new LTCH
PPS, we included a highly detailed description of the full range of
data analyses and reasoning upon which we based our decision to include
a 5-year phase-in to a full wage-index adjustment for the LTCH PPS (67
FR 55954 and 56015-56019). As we discussed in greater detail in that
same final rule (67 FR 56018), ``the limitations in the current data
from LTCHs and we noted that although ``* * * the statistical analysis
did not show a significant relationship between LTCHs' costs and their
geographic location, we believe that it is appropriate to include some
adjustment for area wages.'' We also explained that the conceptual
reasons for having a wage index adjustment support transitioning to a
wage adjustment despite the data problems and issues with the
regression analyis. Accordingly, we adopted the suggestion of one of
our commenters and established a 5-year phase-in for the area-wage
adjustment with an assurance to revisit relevant data as it became
available and that we would propose to adjust the phase-in if
subsequent data support a change. As we discussed in the May 7, 2004
LTCH PPS final rule (69 FR 25684), because the LTCH PPS has only been
recently implemented (slightly over 2 years) and because of the lag
time in availability of cost report data, sufficient new data have not
been generated that would enable us to conduct a comprehensive
reevaluation of the appropriateness of adjusting the phase-in. In the
August 30, 2002 LTCH PPS final rule (67 FR 56018), we stated that we
would continue to reevaluate LTCH data as they become available and
would propose to adjust the phase-in if subsequent data support a
change. As we noted above and as we discussed in the February 3,
proposed rule, upon review of the most recent data (FY 2001-FY 2003),
we did not find any evidence to support a change in the 5-year phase-in
of the wage index. Specifically, our statistical analysis still does
not show a significant relationship between LTCHs' costs and their
geographic location that would justify a full 100 percent
implementation of an area wage index adjustment for LTCHs. Therefore,
at this time, we are not adjusting the phase-in of the wage index
adjustment in this final rule. The 5-year phase-in of the wage index
adjustment will continue as shown in the table above (as we established
in the August 30, 2002 final rule (67 FR 56015)).
Finally, we note that section 505 of the MMA established new
section 1886(d)(13) of the Act, which requires that the Secretary
establish a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees. We believe that this
requirement for an ``out-commuting'' or ``out-migration'' adjustment
applies specifically to the acute care hospitals paid under the IPPS.
Therefore, we did not propose such an adjustment under the LTCH PPS in
the February 3, 2005 proposed rule, nor are we establishing such an
adjustment under the LTCH PPS in this final rule.
b. Labor-Related Share
In the August 30, 2002 LTCH PPS final rule (67 FR 56016), we
established a labor-related share of 72.885 percent based on the
relative importance of the labor-related share of operating costs
(wages and salaries, employee benefits, professional fees, postal
services, and all other labor-intensive services) and capital costs of
the excluded hospital with capital market basket based on FY 1992 data.
In the March 7, 2003 proposed rule (68 FR 11249), in conjunction with
our revision and rebasing of the excluded hospital with capital market
basket from a FY 1992 to a FY 1997 base year, we discussed revising the
labor-related share based on the relative importance of the labor-
related share of operating and capital costs of the excluded hospital
with capital market basket based on FY 1997 data. However, in the June
6, 2003 final rule (68 FR 34142), while we adopted the revised and
rebased FY 1997-based LTCH PPS market basket as the LTCH PPS update
factor for the 2004 LTCH PPS rate year, we decided not to update the
labor-related share under the LTCH PPS pending further analysis of the
current labor share methodology.
In the August 1, 2002 IPPS final rule, we did not update the IPPS
or excluded hospital labor-related shares for FY 2003 (67 FR 50041),
and we discussed our research into the appropriateness of this
[[Page 24182]]
policy. Specifically, we discussed the methods that we were reviewing
for establishing the labor-related share and our intention to continue
to explore all options for alternative data and a methodology for
determining the labor-related share. We also stated that we would
propose to update the IPPS and excluded hospital labor-related shares,
if necessary, once our research is complete.
As we discussed in greater detail in the May 7, 2004 LTCH PPS final
rule (69 FR 25685), the LTCH PPS was modeled after the IPPS for short-
term, acute care hospitals. Specifically, the LTCH PPS uses the same
patient classification system (that is, the DRGs) as the IPPS, and many
of the case-level and facility-level adjustments explored or adopted
for the LTCH PPS are payment adjustments under the IPPS (69 FR 25686).
In fact, LTCHs are certified as acute care hospitals to participate as
a hospital in the Medicare program, and in general, qualify for payment
under the LTCH PPS instead of the IPPS solely because their Medicare
inpatient average length of stay is greater than 25 days (69 FR 25686).
In addition, prior to qualifying as a LTCH, hospitals generally are
paid under the IPPS during the period in which they demonstrate that
they have an average Medicare inpatient length of stay of greater than
25 days (69 FR 25686).
The primary reason that we did not update the LTCH PPS labor-
related share for the 2004 and 2005 LTCH PPS rate years was the same
reason that we explained for not updating the labor-related share under
the IPPS for FY 2004 (see August 1, 2003; 68 FR 27226) and FY 2005 (see
FY 2005 IPPS final rule (69 FR 49069)), which are equally applicable to
the LTCH PPS. As we noted above, and as we explained in the May 7, 2004
LTCH PPS final rule (69 R 5686), we did not revise the labor-related
share under the IPPS based on the revised and rebased FY 1997 hospital
market basket and the excluded hospital market basket because of data
and methodological concerns. We indicated that we would conduct further
analysis to determine the most appropriate methodology and data for
determining the labor-related share.
The IPPS labor-related share of 71.066 percent was established in
the August 29, 1997 IPPS final rule (62 FR 45995), effective for IPPS
discharges occurring on or after October 1, 1997 (FY 1998). This
(71.066 percent) is the most recent estimate of ``the proportion (as
estimated by CMS from time to time) of Federal rates'' under the IPPS
adjusted to account for different area wage levels and labor-related
costs (Sec. 412.62(k)). As also explained in the August 29, 1997 IPPS
final rule (62 FR 45995), the labor-related portion of the IPPS
operating standardized amounts is determined by summing the labor-
related items of the revised 1992-based operating prospective payment
hospital market basket (that is, wages and salaries, employee benefits,
professional fees, business services, computer and data processing
services, postage, and all other labor intensive services). This is the
same methodology used to determine the operating portion of the current
LTCH PPS labor-related share established in the August 30, 2002 LTCH
PPS final rule (67 FR 56016), which is effective for LTCH PPS
discharges occurring in cost reporting periods beginning on or after
October 1, 2002 (FY 2003). (Note, as discussed in the August 30, 2002
LTCH PPS final rule (67 FR 56016), because the LTCH PPS standard
Federal rate includes both operating and capital costs, the LTCH PPS
labor-related share includes the labor-related share of capital costs
as well as the labor-related share of operating costs.)
As noted above, the IPPS labor-related share of 71.066 percent
became effective for IPPS discharges occurring on or after October 1,
1997. As we also discussed in the February 3, 2005 proposed rule (70 FR
5737), for purposes of payment under the IPPS, section 403 of MMA
amended section 1886(d) of the Act to provide that for discharges
occurring on or after October 1, 2004, the Secretary must employ 62
percent as the labor-related share under the IPPS, unless this ``would
result in lower payments to a hospital than would otherwise be made.''
That is, beginning in FY 2005 under the IPPS, the labor-related share
remains 71.066 percent for acute-care hospitals with a wage index
greater than 1.0, while the labor-related share is equal to 62 percent
for acute-care hospitals under the IPPS with a wage index less than or
equal to 1.0 (69 FR 49070). This alternative labor-related share is
only applicable to acute care hospitals paid under the IPPS and does
not apply to LTCHs.
The current LTCH PPS labor share (72.885 percent) was developed
using the same methodology used to develop the existing IPPS labor
share (71.066). The statutory alternative (62 percent) is limited to
acute care hospitals paid under the IPPS and does not apply to
hospitals paid under the LTCH PPS. Since we had not yet completed the
research of the labor-share methodology used to establish the current
IPPS labor-related share estimated by CMS from time (71.066 percent)
and the current LTCH PPS labor-related share (72.885 percent), we did
not change the LTCH PPS labor-share for the 2005 LTCH PPS rate year.
Since we are continuing our research into updating the hospital
labor-related share and because we have not implemented a change in the
methodology for determining both the existing IPPS labor-related share
estimated by CMS from time to time (as discussed in the FY 2005 IPPS
final rule (69 FR 49069)) and the current LTCH PPS labor-related share,
in the February 3, 2005 proposed rule, we did not propose to change the
LTCH PPS labor-related share at this time. We received no comments on
our proposal not to revise the labor-related share for the 2006 LTCH
PPS rate year. Accordingly, under the broad authority in section 123 of
the BBRA and section 307(b)(1) of BIPA, the labor-related share for the
2006 LTCH PPS rate year will remain at 72.885 percent. As is the case
under the IPPS, once our research on the labor-related share is
complete, any future revisions to the LTCH PPS labor-related share will
be proposed and subject to public comment in a future rule.
c. Revision of LTCH PPS Geographic Classifications
As discussed in the August 30, 2002 LTCH PPS final rule, which
implemented the LTCH PPS (67 FR 56015), in establishing an adjustment
for area wage levels under Sec. 412.525(c), the labor-related portion
of a LTCH's Federal prospective payment is adjusted by using an
appropriate wage index. As set forth in Sec. 412.525(c), a LTCH's wage
index is determined based on the location of the LTCH in an urban or
rural area as defined in Sec. 412.62(f)(1)(ii) and (f)(1)(iii),
respectively. An urban area, under the LTCH PPS, is defined at Sec.
412.62(f)(1)(ii)(A) and (B). In general, an urban area is defined as a
Metropolitan Statistical Area (MSA) or New England County Metropolitan
Area (NECMA) as defined by the Office of Management and Budget (OMB).
(In addition, a few counties located outside of MSAs are considered
urban as specified at Sec. 412.62(f)(1)(ii)(B).) Under Sec.
412.62(f)(1)(iii), a rural area is defined as any area outside of an
urban area. The geographic classifications defined in Sec.
412.62(f)(1)(ii) and (f)(1)(iii), respectively, were used under the
IPPS from FYs 1984 through 2004 (Sec. 412.62(f) and Sec. 412.63(b)),
and have been used under the LTCH PPS since it was implemented for cost
reporting periods beginning on or after October 1, 2002 (FY 2003).
Under the IPPS, the wage index is calculated and assigned to
hospitals on the basis of the labor market area in
[[Page 24183]]
which the hospital is located or geographically reclassified to in
accordance with sections 1886(d)(8) and (d)(10) of the Act. Under the
LTCH PPS, the wage index is calculated using IPPS wage index data (as
discussed below in section V.C.1.d of this preamble) on the basis of
the labor market area in which the hospital is located, but without
taking into account geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act. The applicable LTCH wage index value
is assigned to a LTCH on the basis of the labor market area in which
the LTCH is geographically located.
The current LTCH PPS labor market areas are defined based on the
definitions of MSAs, Primary MSAs (PMSAs), and NECMAs issued by the OMB
(commonly referred to collectively as MSAs). These MSA definitions,
which are discussed in greater detail below, are currently used under
the LTCH PPS and other non-IPPS prospective payment systems (that is,
the inpatient rehabilitation facility PPS (IRF PPS), the inpatient
psychiatric facility PPS (IPF PPS), the home health agency PPS (HHA
PPS), and the skilled nursing facility PPS (SNF PPS)). In the FY 2005
IPPS final rule (67 FR 49026-49034), revised labor market area
definitions were adopted under the IPPS (Sec. 412.64(b)), which were
effective October 1, 2004. These new standards, called Core-Based
Statistical Areas (CBSAs), were announced by the OMB late in 2000 and
are discussed in greater detail below.
1. Current LTCH PPS Labor Market Areas Based on MSAs
Below, we will provide a description of the current labor markets
that have been used for area wage adjustments under the LTCH PPS since
its implementation for cost reporting periods beginning on or after
October 1, 2002. As we discussed in the February 3, 2005 proposed rule,
previously, we have not described the labor market areas used under the
LTCH PPS in detail, although we have published each area's wage index
in tables, in the LTCH PPS final rules, each year and noted the use of
the geographic area (MSA) in applying the wage index adjustment in LTCH
PPS payment examples in the final regulation implementing the LTCH PPS
(August 30, 2002, 67 FR 56037). The LTCH industry has also understood
that the same labor market areas in use under the IPPS (from the time
LTCH PPS was implemented, for cost reporting periods beginning on or
after October 1, 2002) would be used under the LTCH PPS. As we also
explained in the February 3, 2005 proposed rule, because OMB has
adopted new statistical area definitions (as discussed in greater
detail below) and we proposed to adopt new labor market area
definitions based on these areas under the LTCH PPS (as discussed in
greater detail below), we believe it is helpful to provide a more
detailed description of the current LTCH PPS labor market areas, in
order to better understand the change to the LTCH PPS labor market
areas presented below in this final rule.
As mentioned earlier, since the implementation of the LTCH PPS in
the August 30, 2002 LTCH PPS final rule, we have used labor market
areas to further characterize urban and rural areas as determined under
Sec. 412.62(f)(1)(ii) and (iii). To this end, we have defined labor
market areas under the LTCH PPS based on the definitions of MSAs,
PMSAs, and NECMAs issued by the OMB, which is consistent with the IPPS
approach (prior to the adoption of the new CBSA-based labor market
areas under the IPPS rule beginning in FY 2005). Prior to modifying its
statistical area definitions. The OMB also designates Consolidated MSAs
(CMSAs). A CMSA is a metropolitan area with a population of one million
or more, comprising two or more PMSAs (identified by their separate
economic and social character). For purposes of the LTCH PPS wage
index, we use the PMSAs rather than CMSAs because they allow a more
precise breakdown of labor costs. If a metropolitan area is not
designated as part of a PMSA, we use the applicable MSA.
These different designations use counties as the building blocks
upon which they are based. Therefore, under the LTCH PPS, hospitals are
assigned to either an MSA, PMSA, or NECMA based on whether the county
in which the LTCH is located is part of that area. All of the counties
in a State outside a designated MSA, PMSA, or NECMA are designated as
rural. Specifically, for purposes of calculating the wage index, we
currently combine all of the counties in a State outside a designated
MSA, PMSA, or NECMA together to calculate the statewide rural wage
index for each State. The labor market area definitions currently used
under the LTCH PPS are the same as those used for acute care inpatient
hospitals under the IPPS prior to FY 2005 (69 FR 49026).
2. Core-Based Statistical Areas
The OMB reviews its Metropolitan Area definitions preceding each
decennial census. As discussed in the FY 2005 IPPS final rule (69 FR
49027), in the fall of 1998, the OMB chartered the Metropolitan Area
Standards Review Committee to examine the Metropolitan Area standards
and develop recommendations for possible changes to those standards.
Three notices related to the review of the standards, providing an
opportunity for public comment on the recommendations of the Committee,
were published in the Federal Register on the following dates: December
21, 1998 (63 FR 70526); October 20, 1999 (64 FR 56628); and August 22,
2000 (65 FR 51060).
In the December 27, 2000 Federal Register (65 FR 82228), OMB
announced its new standards. In that notice, OMB defines a CBSA,
beginning in 2003, as ``a geographic entity associated with at least
one core of 10,000 or more population, plus adjacent territory that has
a high degree of social and economic integration with the core as
measured by commuting ties. The standards designate and define two
categories of CBSAs: MSAs and Micropolitan Statistical Areas.'' (65 FR
82236)
According to OMB, MSAs are based on urbanized areas of 50,000 or
more population, and Micropolitan Statistical Areas (referred to in
this discussion as Micropolitan Areas) are based on urban clusters of
at least 10,000 population, but less than 50,000 population. Counties
that do not fall within CBSAs (either MSAs or Micropolitan Areas) are
deemed ``Outside CBSAs.'' In the past, the OMB defined MSAs around
areas with a minimum core population of 50,000, and smaller areas were
``Outside MSAs.'' On June 6, 2003, OMB announced the new CBSAs,
comprised of MSAs and the new Micropolitan Areas based on Census 2000
data. (A copy of the announcement may be obtained at the following
Internet address: http://www.whitehouse.gov/omb/bulletins/fy04/b04-03.html.
) The new CBSA designations recognize 49 new MSAs and 565 new
Micropolitan Areas, and extensively revise the composition of many of
the existing MSAs. There are 1,090 counties in MSAs under the new CBSA
designations (previously, there were 848 counties in MSAs). Of these
1,090 counties, 737 are in the same MSA as they were prior to the
change in designations, 65 are in a different MSA, and 288 were not
previously designated to any MSA. There are 674 counties in
Micropolitan Areas. Of these, 41 were previously in an MSA, while 633
were not previously designated to an MSA. There are five counties that
previously were designated to an MSA but are no longer designated to
either an MSA or a new Micropolitan Area: Carter County,
[[Page 24184]]
KY; St. James Parish, LA; Kane County, UT; Culpepper County, VA; and
King George County, VA. For a more detailed discussion of the
conceptual basis of the new CBSAs, refer to the FY 2005 IPPS final rule
(67 FR 49026-49034).
3. Revision of the LTCH PPS Labor Market Areas
In its June 6, 2003 announcement, OMB cautioned that these new
definitions ``should not be used to develop and implement Federal,
State, and local nonstatistical programs and policies without full
consideration of the effects of using these definitions for such
purposes. These areas should not serve as a general-purpose geographic
framework for nonstatistical activities, and they may or may not be
suitable for use in program funding formulas.''
As discussed in the FY 2005 IPPS final rule (69 FR 49027), we have
previously examined alternatives to the use of MSAs for the purpose of
establishing labor market areas for Medicare wage indices in general.
For purposes of the proposed changes to the LTCH PPS labor market
areas, we examined the same alternatives to the use of MSAs as examined
under the IPPS. In the May 27, 1994, IPPS proposed rule (59 FR 27724),
we presented our latest research concerning possible future refinements
to the labor market areas. Specifically, we discussed and solicited
comment on the proposal by the Prospective Payment Assessment
Commission (ProPAC), a predecessor organization to the MedPAC, for
hospital-specific labor market areas based on each hospital's nearest
neighbors, and our research and analysis on alternative labor market
areas. Even though we found that none of the alternative labor market
areas that we studied provided a distinct improvement over the use of
MSAs, we presented an option using the MSA-based wage index, but
generally giving a hospital's own wages a higher weight than under the
current system. We also described for comment a State labor market
option, under which hospitals would be allowed to design labor market
areas within their own State boundaries.
We described the comments we received in the June 2, 1995 IPPS
proposed rule (60 FR 29219). Specifically, as we discussed in that same
proposed rule, there was no consensus among the commenters on the
choice for new labor market areas. Many individual hospitals that
commented on that proposed rule expressed dissatisfaction with all of
the proposals. However, several State hospital associations that
commented on that proposed rule stated that the options merited further
study. Therefore, at that time we contacted the association
representatives that participated in our November 1993 meeting on labor
market issues in which we solicited ideas for additional types of labor
market research to conduct. None of the individuals we contacted
suggested any ideas for further research. After considering these same
options for the LTCH PPS, we conclude that there is no basis for
believing that either the nearest neighbor option or the State labor
market option would result in a wage index adjustment that would be
more appropriate for LTCHs than the MSA-based wage index adjustment. As
discussed in the June 2, 1995 IPPS proposed rule (60 FR 29219), these
options could inappropriately reward the highest cost hospitals with
higher wage indexes and there would likely be less than full consent by
hospitals to participate in the alternative options, particularly if
hospitals face lower reimbursement due to the change.
Consequently, consistent with the approach taken under the IPPS, we
have used MSAs to define labor market areas for purposes of Medicare
wage indices in the LTCH PPS since its implementation for cost
reporting periods beginning on or after October 1, 2002. In fact, MSAs
are also used to define labor market areas for purposes of the wage
index for many of the other Medicare payment systems (for example, IRF
PPS, SNF PPS, HHA PPS, Outpatient PPS, and IPF PPS). While we recognize
MSAs are not designed specifically to define labor market areas, we
believe they do represent a reasonable and appropriate proxy for this
purpose, because they are based upon characteristics we believe also
generally reflect the characteristics of unified labor market areas.
For example, CBSAs reflect a core population plus an adjacent territory
that reflects a high degree of social and economic integration. This
integration is measured by commuting ties, thus, demonstrating that
these areas may draw workers from the same general areas. In addition,
the most recent CBSAs reflect the most up to date information. The OMB
reviews its Metropolitan Area definitions preceding each decennial
census to reflect recent population changes and the CBSAs are based on
the Census 2000 data. Our analysis and discussion here are focused on
issues related to adopting the new CBSA-based designations to define
labor market areas for purposes of the IPPS and for purposes of
proposing them for LTCH PPS.
Historically, Medicare PPSs have utilized Metropolitan Area
definitions developed by OMB. The labor market areas currently used
under the LTCH PPS (described above in section V.C.1.c.1. of this
preamble) are based on the Metropolitan Area definitions issued by OMB.
As noted above, OMB reviews its definitions preceding each decennial
census to reflect more Metropolitan Area recent population changes. As
discussed in greater detail above in section V.C.1.c.2., the CBSAs are
the OMB's latest Metropolitan Area definitions based on the Census 2000
data. As we discussed in the February 3, 2005 proposed rule (70 FR
5739), because we believe that OMB's latest Metropolitan Area
designations more accurately reflect the local economies and wage
levels of the areas in which hospitals are currently located, under the
LTCH PPS we proposed to adopt revised labor market area designations
based on the OMB's CBSA designations which were adopted under the IPPS.
Comment: Five commenters supported our proposed adoption of revised
labor market area designations under the LTCH PPS based on the OMB's
CBSA designations, stating that they believe that as the CBSA
designations more precisely defines distinct labor market areas for
LTCHs. We received no comments opposing the proposed revisions to the
LTCH PPS labor market area definitions.
Response: We appreciate the commenters' support for the adoption of
the proposed changes to the LTCH PPS labor market area definitions
based on OMB's new CBSA designations for, as noted above, and we agree
with the commenters that the proposed changes to the LTCH PPS labor
market area definitions would more precisely define distinct labor
market areas for LTCHs. Accordingly, in this final rule, under the
broad authority of section 123 of Pub. L. 106-113 and section 307(b)(1)
of Pub. L. 106-554, we are adopting revised labor market area
definitions under the LTCH PPS based on OMB's new CBSA designations, as
discussed in greater detail below. When we implemented the wage index
adjustment at Sec. 412.525(c) under the LTCH PPS in the August 30,
2002 LTCH PPS final rule (67 FR 56016), we explained that the LTCH PPS
wage index adjustment was intended to reflect the relative hospital
wage levels in the geographic area of the hospital as compared to the
national average hospital wage level. Because we believe that OMB's
CBSA designations based on Census 2000 data reflect the most recent
available geographic classifications (Metropolitan Area definitions),
we are revising the labor market area definitions used under the LTCH
PPS based on OMB's CBSA
[[Page 24185]]
designations to ensure that the LTCH PPS wage index adjustment most
appropriately accounts for and reflects the relative hospital wage
levels in the geographic area of the hospital as compared to the
national average hospital wage level. Specifically, we are revising the
LTCH PPS labor market definitions based on OMB's new CBSA designations
(as discussed in greater detail below) effective for LTCH PPS
discharges occurring on or after July 1, 2005. Accordingly, as we
proposed in the February 3, 2005 proposed rule (70 FR 5739), we are
revising Sec. 412.525(c) to specify that for discharges occurring on
or after July 1, 2005, the application of the wage index under the LTCH
PPS will be made on the basis of the location of the facility in an
urban or rural area as defined in Sec. 412.64(b)(1)(ii)(A)-(C). (As a
conforming change, as we proposed in the February 3, 2005 LTCH PPS
proposed rule, we are also revising Sec. 412.525(c) to specify when
the current labor area definitions in the existing Sec. 412.525(c) are
applicable. We note that in this final rule, we are revising the final
regulations text at Sec. 412.525(c)(1) to explicitly state that the
current MSA-based labor area definitions are effective ``for cost
reporting periods beginning on or after October 1, 2002, with respect
to discharges occurring during the period covered by such cost reports
but before July 1, 2005.'' We are clarifying the regulations text
because we do not want the public to misinterpret the ``July 1, 2005''
date as referring to ``cost reporting periods'' when in fact it applies
to ``discharges.'' In addition, we want to make it clear that the urban
and rural definitions in Sec. 412.62(f)(1)(iii), respectively, apply
to a LTCH's discharges occurring no earlier than the date upon which
the LTCH became subject to the LTCH PPS. Although we did our best to
convey this in the proposed regulations text presented in the February
3, 2005 proposed rule, we believe that the regulations text could be
improved to better reflect this clarification. While this revision is
not a change in the policy presented in the February 3, 2005 LTCH PPS
proposed rule (70 FR 5739), we believe that this language change more
clearly articulates that the current MSA-based labor market definitions
are effective for LTCH discharges occurring before July 1, 2005 that
are subject to the LTCH PPS (that is, occurring in cost reporting
periods beginning on or after October 1, 2002). We also note that these
are the same labor market area definitions (based on the OMB's new CBSA
designations) implemented for acute care inpatient hospitals under the
IPPS at Sec. 412.64(b), which were effective for those hospitals
beginning October 1, 2004 as discussed in the FY 2005 IPPS final rule
(69 FR 49026).
As discussed above in section V.C.1.b. of this preamble, the LTCH
PPS was modeled after the IPPS for short-term acute care inpatient
hospitals. The similarity between the IPPS and the LTCH PPS includes
the adoption in the initial implementation of the LTCH PPS of the same
labor market area definitions under the LTCH PPS that existed under the
IPPS at that time, as well as the use of acute care inpatient
hospitals' wage data in calculating the LTCH PPS wage index. Therefore,
besides reflecting the most recent available geographic classifications
and, consequently, more accurately reflecting the current labor markets
(which is the primary reason for adopting OMB's new CBSA-based
designations), we believe that this revision to the LTCH PPS labor
market area definitions based on OMB's new CBSA-based designations is
also consistent with our historical practice of modeling LTCH PPS
policy after IPPS policy.
Below, we discuss the composition of the LTCH PPS labor market
areas based on the OMB's new CBSA designations, as we proposed in the
February 3, 2005 proposed rule. It should be noted that OMB's new CBSA
designations are comprised of several county-based area definitions as
explained above, which include Metropolitan Areas, Micropolitan Areas,
and areas ``outside CBSAs.'' Under the LTCH PPS, since the
implementation of the LTCH PPS, we have used two types of labor market
areas, urban and rural. As discussed in greater detail below, in this
final rule, in adopting revised labor market areas under the LTCH PPS
based on OMB's new CBSA-based designations, we will continue to have 2
types of labor market areas (urban and rural). In the discussion that
follows, we explain our recognition of Metropolitan Areas, which
include New England MSAs and Metropolitan Divisions, as urban. We also
explain our recognition of Micropolitan Areas and areas ``outside
CBSAs'' as rural. The following discussion, which was presented in the
February 3, 2005 proposed rule (70 FR 5739-5742), describes the
methodology for mapping OMB's CBSA-based designations into the LTCH PPS
(urban area or rural area) format.
a. New England MSAs
As stated above, under the LTCH PPS, we currently use NECMAs to
define labor market areas in New England, because these are county-
based designations rather than the 1990 MSA definitions for New
England, which used minor civil divisions such as cities and towns.
Under the current MSA definitions, NECMAs provided more consistency in
labor market definitions for New England compared with the rest of the
country, where MSAs are county-based. Under the new CBSAs, OMB has now
defined the MSAs and Micropolitan Areas in New England on the basis of
counties. OMB also established New England City and Town Areas, which
are similar to the previous New England MSAs.
In order to create consistency across all LTCH labor market areas,
in the February 3, 2005 proposed rule (70 FR 5740), under the LTCH PPS,
we proposed to use the county-based areas for all MSAs in the nation,
including those in New England. The OMB has now defined the New England
area based on counties, creating a city and town-based system as an
alternative. As we explained in that same proposed rule, we believe
that adopting county-based labor market areas for the entire country
except those in New England would lead to inconsistencies in our
designations. Adopting county-based labor market areas for the entire
country provides consistency and stability in Medicare program payment
because all of the labor market areas throughout the country, including
New England, would be defined using the same system (that is, counties)
rather than different systems in different areas of the country, and
minimizes programmatic complexity.
In addition, we have consistently employed a county-based system
for New England for precisely that reason: To maintain consistency with
the labor market definitions used throughout the country. Because we
have never used cities and towns for defining LTCH labor market areas,
employing a county-based system in New England maintains that
consistent practice. We note that this is consistent with the
implementation of the CBSA-based designations under the IPPS for New
England (69 FR 49028). Accordingly, under the LTCH PPS we will use the
New England MSAs as determined under the new CBSA-based labor market
area definitions in defining the revised LTCH PPS labor market areas.
We did not receive any comments regarding the proposed use of county-
based areas for all MSAs in the nation, including those in New England,
in our proposal to make revisions to the LTCH PPS labor market area
definitions based on OMB's CBSA designations. Therefore, under the
broad authority of section 123 of Pub. L. 106-113 and section 307(b)(1)
of Pub. L. 106-554, we are adopting this
[[Page 24186]]
policy as final as part of the changes to the LTCH PPS labor market
area definitions we are establishing in this final rule for the reasons
explained above.
b. Metropolitan Divisions
Under the OMB's new CBSA designations, a Metropolitan Division is a
county or group of counties within a CBSA that contains a core
population of at least 2.5 million, representing an employment center,
plus adjacent counties associated with the main county or counties
through commuting ties. A county qualifies as a main county if 65
percent or more of its employed residents work within the county and
the ratio of the number of jobs located in the county to the number of
employed residents is at least 0.75. A county qualifies as a secondary
county if 50 percent or more, but less than 65 percent, of its employed
residents work within the county and the ratio of the number of jobs
located in the county to the number of employed residents is at least
0.75. After all the main and secondary counties are identified and
grouped, each additional county that already has qualified for
inclusion in the MSA falls within the Metropolitan Division associated
with the main/secondary county or counties with which the county at
issue has the highest employment interchange measure. Counties in a
Metropolitan Division must be contiguous. (65 FR 82236)
The construct of relatively large MSAs being comprised of
Metropolitan Divisions is similar to the current construct of CMSAs
comprised of PMSAs. As noted above, in the past, the OMB designated
CMSAs as Metropolitan Areas with a population of one million or more
and comprised of two or more PMSAs. Under the LTCH PPS, we currently
use the PMSAs rather than CMSAs to define labor market areas because
they comprise a smaller geographic area with potentially varying labor
costs due to different local economies. As we discussed in the February
3, 2005 proposed rule (70 FR 5740), we believe that CMSAs may be too
large of an area with a relatively large number of hospitals, to
accurately reflect the local labor costs of all of the individual
hospitals included in that relatively ``large'' area. A large market
area designation increases the likelihood of including many hospitals
located in areas with very different labor market conditions within the
same market area designation. This variation could increase the
difficulty in calculating a single wage index that would be relevant
for all hospitals within the market area designation. Similarly, we
believe that MSAs with a population of 2.5 million or greater may be
too large of an area to accurately reflect the local labor costs of all
of the individual hospitals included in that relatively ``large'' area.
Furthermore, as indicated above, Metropolitan Divisions represent the
closest approximation to PMSAs, the building block of the current LTCH
PPS labor market area definitions, and, therefore, would most
accurately maintain our current structuring of the LTCH PPS labor
market areas. Therefore, as implemented under the IPPS (69 FR 49029),
under the LTCH PPS we proposed to use the Metropolitan Divisions where
applicable (as described below) under the new CBSA-based labor market
area definitions. We did not receive any comments regarding our
proposed use of Metropolitan Divisions under our proposed revisions to
the LTCH PPS labor market area definitions based on OMB's new CBSA
designations. Therefore, under the broad authority of section 123 of
Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, we are
adopting this policy as final as part of the changes we are making to
the LTCH PPS labor market area definitions in this final rule for the
reasons explained above.
In addition to being comparable to the organization of the labor
market areas under current MSA designations (that is, the use of PMSAs
rather than CMSAs), we believe that using Metropolitan Divisions where
applicable (as described below) under the LTCH PPS will result in a
more accurate adjustment for the variation in local labor market areas
for LTCHs. Specifically, if we recognize the relatively ``larger'' CBSA
that comprises two or more Metropolitan Divisions as an independent
labor market area for purposes of the wage index, it will be too large
and will include the data from too many hospitals to compute a wage
index that would accurately reflect the various local labor costs of
all of the individual hospitals included in that relatively ``large''
CBSA. As mentioned earlier, a large market area designation increases
the likelihood of including many hospitals located in areas with very
different labor market conditions within the same market area
designation. This variation could increase the difficulty in
calculating a single wage index that would be relevant for all
hospitals within the market area designation. Rather, by recognizing
Metropolitan Divisions where applicable (as described below) under the
new CBSA-based labor market area definitions under the LTCH PPS, we
believe that in addition to more accurately maintaining the current
structuring of the LTCH PPS labor market areas, the local labor costs
will be more accurately reflected, thereby resulting in a wage index
adjustment that better reflects the variation in the local labor costs
of the local economies of the LTCHs located in these relatively
``smaller'' areas.
As discussed below, and in the February 3, 2005 proposed rule (70
FR 5741), we describe where Metropolitan Divisions will be applicable
under the new CBSA-based labor market area definitions under the LTCH
PPS.
Under OMB's new CBSA-based designations, there are 11 MSAs
containing Metropolitan Divisions: Boston; Chicago; Dallas; Detroit;
Los Angeles; Miami; New York; Philadelphia; San Francisco; Seattle; and
Washington, DC. Although these MSAs were also CMSAs under the prior
definitions, in some cases these areas have been significantly altered.
Under the current LTCH PPS MSA designations, Boston is a single NECMA.
Under the CBSA-based labor market area designations, it will be
comprised of 4 Metropolitan Divisions. Los Angeles will go from 4 PMSAs
under the current LTCH PPS MSA designations to 2 Metropolitan Divisions
under the CBSA-based labor market area designations because 2 MSAs
became separate MSAs. The New York CMSA will go from 15 PMSAs under the
current LTCH PPS MSA designations down to only 4 Metropolitan Divisions
under the CBSA-based labor market area designations. Five PMSAs in
Connecticut under the current LTCH PPS MSA designations will become
separate MSAs under the CBSA-based labor market area designations, and
the number of PMSAs in New Jersey under the current LTCH PPS MSA
designations will go from 5 to 2, with the consolidation of 2 New
Jersey PMSAs (Bergen-Passaic and Jersey City) into the New York-Wayne-
White Plains, NY-NJ Division, under the CBSA-based labor market area
designations. In San Francisco, under the CBSA-based labor market area
designations, only 2 Divisions will remain where there were once 6
PMSAs some of which are now separate MSAs under the current LTCH PPS
labor market area designations.
Under the current LTCH PPS labor market area designations,
Cincinnati, Cleveland, Denver, Houston, Milwaukee, Portland,
Sacramento, and San Juan are all designated as CMSAs, but will no
longer be designated as CMSAs under the CBSA-based labor
[[Page 24187]]
market area designations. As noted previously, the population threshold
to be designated a CMSA under the current LTCH PPS labor market area
designations is one million. In most of these cases, counties currently
in a PMSA under the current LTCH PPS labor market area designations
will become separate, independent MSAs under the CBSA-based labor
market area designations.
c. Micropolitan Areas
Under the OMB's new CBSA-based designations, Micropolitan Areas are
essentially a third area definition made up mostly of currently rural
areas, but also include some or all of areas that are currently
designated as an urban MSA. As discussed in greater detail in the FY
2005 IPPS final rule (69 FR 49029), how these areas are treated would
have significant impacts on the calculation and application of the wage
index. Specifically, whether or not Micropolitan Areas are included as
part of the respective statewide rural wage indices would impact the
value of statewide rural wage index of any State that contains a
Micropolitan Area because a hospital's classification as urban or rural
affects which hospitals' wage data are included in the statewide rural
wage index. As discussed above in section V.C.1.c.1., we combine all of
the counties in a State outside a designated urban area together to
calculate the statewide rural wage index for each State.
In general, as discussed in the February 3, 2005 proposed rule (70
FR 5741), including Micropolitan Areas as part of the statewide rural
labor market area would result in an increase to the statewide rural
wage index because hospitals located in those Micropolitan Areas
typically have higher labor costs than other rural hospitals in the
State. Alternatively, as discussed in greater detail below, if
Micropolitan Areas would be recognized as independent labor market
areas, because there would be so few hospitals in each labor market
area, the wage indices for LTCHs in those areas could become relatively
unstable as they would change considerably from year to year.
Because we currently use MSAs to define urban labor market areas
and we group all the hospitals in counties within each State that are
not assigned to an MSA together into a statewide rural labor market
area, we have used the terms ``urban'' and ``rural'' wage indexes in
the past for ease of reference. However, the introduction of
Micropolitan Areas by the OMB potentially complicates this terminology
because these areas include many hospitals that are currently included
in the statewide rural labor market areas.
In the February 3, 2005 proposed rule (70 FR 5741), we proposed to
treat Micropolitan Areas as rural labor market areas under the LTCH PPS
for the reasons outlined below. That is, counties that are assigned to
a Micropolitan area under the CBSA-based designations would be treated
the same as other ``rural'' counties that are not assigned to either an
MSA (Metropolitan Statistical Area) or a Micropolitan Area. We received
no comments on our proposal to treat Micropolitian Areas as rural labor
market areas under the LTCH PPS. Therefore, for the reasons discussed
above and under the broad authority of section 123 of Pub. L. 106-113
and section 307(b)(1) of Pub. L. 106-554, we are adopting this policy
as final as part of the changes we are making to the LTCH PPS labor
market area definitions in this final rule. Accordingly, in determining
a LTCH's applicable wage index (based on IPPS hospital wage index data,
as discussed in greater detail below in section V.C.d. of this
preamble), a LTCH in a Micropolitan Area under the OMB's CBSA-based
designations will be classified as ``rural'' and will be assigned the
statewide rural wage index for the State in which it resides.
In the FY 2005 IPPS final rule (69 FR 49029-49032), we discuss our
evaluation of the impact of treating Micropolitan Areas as part of the
statewide rural labor market area instead of treating Micropolitan
Areas as independent labor market areas for hospitals paid under the
IPPS. As an alternative to treating Micropolitan Areas as part of the
statewide rural labor market area for purposes of the LTCH PPS, we
examined treating Micropolitan Areas as separate (urban) labor market
areas, just as we did when implementing the revised labor market areas
under the IPPS. As discussed in that same final rule, one of the
reasons Micropolitan Areas have such a dramatic impact on the wage
index is, because Micropolitan Areas encompass smaller populations than
MSAs, they tend to include fewer hospitals per Micropolitan Area. There
were only 25 MSAs with one hospital in the MSA. However, under the new
CBSA-based definitions, there are 373 Micropolitan Areas with one
hospital, and 49 MSAs with only one hospital.
This large number of labor market areas with only one hospital and
the increased potential for dramatic shifts in the wage indexes from 1
year to the next is a problem for several reasons. First, it creates
instability in the wage index from year to year for a large number of
hospitals. Second, it reduces the averaging effect (This averaging
effect allows for more data points to be used to calculate a
representative standard of measured labor costs within a market area.)
lessening some of the incentive for hospitals to operate efficiently.
This incentive is inherent in a system based on the average hourly
wages for a large number of hospitals, as hospitals could profit more
by operating below that average. In labor market areas with a single
hospital, high wage costs are passed directly into the wage index with
no counterbalancing averaging with lower wages paid at nearby competing
hospitals. Third, it creates an arguably inequitable system when so
many hospitals have wage indexes based solely on their own wages, while
other hospitals' wage indexes are based on an average hourly wage
across many hospitals.
For the reasons noted above, and consistent with the treatment of
these areas under the IPPS, we are not adopting Micropolitan Areas as
independent labor market areas under the LTCH PPS, but instead,
Micropolitan Areas, under the CBSA-based labor market area definitions,
will be considered part of the statewide rural labor market area.
Accordingly, the LTCH PPS statewide rural wage index will be determined
using acute-care IPPS hospital wage data (the rationale for using IPPS
hospital wage data is discussed in greater detail below in section
V.C.1.d. of this preamble) from hospitals located in non-MSA areas (for
example, rural areas, including Micropolitan Areas) and that statewide
rural wage index will be assigned to LTCHs located in those non-MSA
areas.
Comment: One commenter brought to our attention the fact that that
we included two Micropolitian Areas, Enid, OK (CBSA 21240) and
Jamestown, NY (CBSA 27640), in our Table of proposed urban area wage
indexes (as shown in Table 1 of the addendum to the February 3, 2005
proposed rule (70 FR 5772)).
Response: We thank the commenter for bringing this inadvertent
error to our attention. We have removed those two Micropolitan areas
(which we proposed to treat as rural) from Table 1 (urban area wage
indexes) of the Addendum to this final rule. We also want to note that,
despite this error, the statewide average rural wage indexes in Table 2
for rural OK and NY, respectively, correctly included the wage data for
these Micropolitan areas.
[[Page 24188]]
4. Implementation of the Revised Labor Market Areas Under the LTCH PPS
As we discussed in the February 3, 2005 proposed rule (70 FR 5742),
consistent with our policy under the IPPS, we did not propose to adopt
the new labor market area definitions themselves in a budget neutral
manner. We did not receive any comments and, therefore, under the
generally broad authority conferred upon the Secretary to develop the
LTCH PPS under section 123 of Pub. L. 106-113 and section 307 of Pub.
L. 106-554, are not adopting the new labor market area definitions
under the LTCH PPS in a budget neutral manner, just as implemented
under the IPPS.
Furthermore, as we also discussed in that same proposed rule and as
we discussed in the August 30, 2002 LTCH PPS final rule, under section
123 of the BBRA, and section 307 of the BIPA, the Secretary generally
has broad authority in developing the LTCH PPS, including whether and
how to make adjustments to the LTCH PPS. In that same final rule we
state that we will consider whether it is appropriate for us to propose
a budget neutrality adjustment in the annual update of some aspects of
the LTCH PPS under our broad discretionary authority under the statute
to provide ``appropriate adjustments'' to the LTCH PPS. Until the 5-
year transition from cost-based reimbursement to prospective payment is
complete, including the end of the phase-in of the wage index
adjustment under Sec. 412.525(c), as we explained in the February 3,
2005 proposed rule, we believe that it would not be appropriate to
update any aspects of the LTCH PPS in a budget neutral manner. A
primary reason for waiting until after the transition is complete
before evaluating aspects of the LTCH PPS, including the budget
neutrality issue, is that the data available to analyze such issues is
very limited because the LTCH PPS is still relatively new and there is
a lag time in data availability. Also, the fact that a number of LTCHs
were and some still are transitioning to 100 percent of the Federal
prospective payment rate may make the available data even less
appropriate for an analysis, since hospitals may still be modifying
their behavior based on their transition to prospective payment and our
data may not yet replace any operational changes LTCHs may have made in
response to prospective payment. Once the transition is complete, we
will have a better opportunity to evaluate the impacts of the
implementation of this new payment system based on a number of years of
LTCH PPS data.
To facilitate an understanding of the policies related to the
change to the LTCH PPS labor market areas discussed above, in Table 4
of the Addendum of this final rule, we are providing a listing of each
LTCH's State and county location; existing labor market area
designation; and its new CBSA-based labor market area designation based
on the best available cost report data from HCRIS (FYs 1999-2003) and
county information from our OSCAR database. Any questions or
corrections (including additions or deletions) to the information
provided in Table 4 should be e-mailed to the following CMS Web
address: cmsltchpps@cms.hhs.gov. A link to this address can be found on
the following CMS Web page http://www.cms.hhs.gov/providers/longterm/default.asp.
We also note that a crosswalk file is available on the CMS
Web page http://www.cms.hhs.gov/providers/longterm/frnotices.asp, which
shows, by county, a crosswalk of the MSA-based labor market areas to
the new CBSA-based labor-market areas adopted in this final rule.
As we discussed in the February 3, 2005 proposed rule (70 FR 5743),
when the revised labor market areas based on the OMB's new CBSA-based
designations were adopted under the acute care hospital IPPS beginning
on October 1, 2004, a transition to the new labor market area
designations was established due to the scope and significant
implications of these new boundaries and to buffer the subsequent
significant impacts it may have on payments to numerous hospitals. As
discussed in the FY 2005 IPPS final rule (69 FR 49032), during FY 2005,
a blend of wage indexes is calculated for those acute care IPPS
hospitals experiencing a drop in their wage indexes because of the
adoption of the new labor market areas. Also, as described in that same
final rule (69 FR 49032), under the IPPS, hospitals that previously
were located in an urban MSA, but then became rural under the new CBSA-
based definitions are assigned the wage index value of the urban area
to which they previously belonged, for 3 years (FYs 2005-2007).
Also, in the February 3, 2005 proposed rule, we explained that we
did not believe it was necessary to propose a transition policy for the
revision to the LTCH PPS labor market area definitions because the
impact of the revision to the labor market area definitions would only
have a minimal impact on LTCH PPS payments (as explained below).
Instead, under the LTCH PPS, we proposed to adopt the new CBSA-based
labor market area definitions beginning with the 2006 LTCH PPS rate
year without a transition period. As also discussed in greater detail
below, we believe that this policy is appropriate because despite
significant similarities between the LTCH PPS and the IPPS, there are
clear distinctions between the payment systems, particularly regarding
wage index issues.
The most significant distinction upon which we have based this
policy determination, as we discussed in the February 3, 2005 proposed
rule, is that where acute care hospitals under the IPPS have been paid
using full wage index adjusted payments since 1983 and had used the
previous IPPS MSA-based labor market area designations for over 10
years, under the LTCH PPS, a wage index adjustment is being phased-in
over a 5-year period, and as noted above, most LTCHs are still in their
FY 2004 cost reporting period (the vast majority of LTCHs start their
cost reporting periods on July 1 or September 1), and are, therefore,
in the 2nd year of the 5-year phase-in of the LTCH PPS wage index
adjustment, and the applicable wage index value is \2/5\ths (40
percent) of the applicable full LTCH PPS wage index adjustment. Since
most LTCHs are only in the 2nd year of the 5-year phase-in of the wage
index adjustment, for most LTCHs, the labor-related portion of the
standard Federal rate is only adjusted by 40 percent of the applicable
full wage index (that is, \2/5\th wage index value). The LTCH PPS wage
index adjustment is made by multiplying the LTCH PPS standard Federal
rate by the applicable wage index value, and the current LTCH PPS labor
related-share is 72.885 percent. Consequently, for most LTCHs, only 29
percent of the standard Federal rate is affected by the wage index
adjustment (72.885 percent x 0.4 = 29.154 percent), and the revision to
the labor market area definitions based on OMB's new CBSA-based
designations will only have a minimal impact on LTCH PPS payments.
Thus, the impact that the wage index can have on LTCH PPS payments is
limited at this point, since only a small percentage of the LTCH PPS
standard Federal rate is affected by the wage index (approximately 29
percent in most cases, as explained above) because of the 5-year phase-
in of the wage index adjustment.
Our initial analysis of the appropriateness of including a wage
index adjustment in the March 22, 2002 proposed rule for the LTCH PPS
(67 FR 13465) indicated that a wage adjustment did not lead to an
increase in the accuracy of LTCH PPS payments because a statistical
analysis did not show a significant relationship between LTCHs costs
and their geographic location. However, based upon
[[Page 24189]]
comments, we revisited this proposed determination after additional
data analysis and a more general policy evaluation, and we stated that
we ``believe that the conceptual reasons for having an area wage
adjustment support transitioning into a wage adjustment,
notwithstanding the data problems and issues with the regression
analysis'' (see August 30, 2002 LTCH PPS final rule (67 FR 56018)).
However, given the lack of strong empirical evidence to support a wage
index adjustment under the LTCH PPS, we provided for a 5-year
transition to the full implementation of the wage index adjustment. We
also noted that we would ``* * * continue to reevaluate LTCH data as
they become available and would propose to adjust the phase-in if
subsequent data support a change.'' In each subsequent LTCH PPS
proposed and final rule since FY 2003, we have evaluated the most
recent LTCH data available and still have found no empirical evidence
to support a change in the 5-year phase-in of the wage index adjustment
under the LTCH PPS.
A wage index adjustment has been a stable feature of the acute care
hospital IPPS since its 1983 implementation and, furthermore, the IPPS
had utilized the prior MSA-based labor market area designation for over
10 years. As explained in detail above, the proposed revisions to the
labor market area definitions based on OMB's new CBSA designations
would not have the same impact on the LTCH PPS, which has only been
implemented since October 1, 2002, as it did on the IPPS. Given the
clear distinction between the impact of the revisions to the labor
market area definitions on the IPPS as compared to those same proposed
revisions to the LTCH PPS, therefore, we believe that, although it is
appropriate to adopt transition policies for acute care hospitals under
the IPPS, it is also equally appropriate not to treat the impact of the
proposed revisions to the LTCH PPS labor market area definitions in the
same way under the LTCH PPS. We believe that the revision to the labor
market area definitions based on OMB's new CBSA-based designations
would only have a minimal impact on LTCH PPS payments.
As we discussed in the February 3, 2005 proposed rule, because the
impact of the revision to the labor market area definitions would only
have a minimal impact on LTCH PPS payments (as explained above), we do
not believe it is necessary to have a transition policy for the
revision to the LTCH PPS labor market area definitions. In contrast, a
transition policy to the revised IPPS labor market area definitions
under the IPPS was appropriate because individual hospitals could
experience a significant impact as a result of the new labor market
definitions, especially because the full labor-related share of either
71.066 percent or 62 percent (as discussed above in section V.C.1.b. of
this preamble) of the IPPS standardized amount (that is, Federal rate)
is affected by the IPPS wage index adjustment, which resulted in a more
significant projected impact for acute care hospitals under the IPPS.
Furthermore, as we explained in that same proposed rule, we do not
believe that it is necessary to further transition any changes to the
LTCH PPS wage index adjustment, including the revision of the labor
market area definitions, because, in fact, the LTCH PPS wage index
adjustment is still being phased-in over 5 years as established in the
August 30, 2002 LTCH PPS final rule (67 FR 56018). Accordingly, in the
February 3, 2005 proposed rule, we explained that, to the extent the
new CBSA-based labor market area definitions are implemented, we would
not expect them to have as significant of an impact on LTCHs, as they
do for IPPS hospitals since the full wage index adjustment had been a
stable factor of IPPS payment for over 20 years.
Comment: One commenter believes that we should implement our
proposed revisions to the LTCH PPS labor market area based on OMB's
CBSA designations with the same transition as was implemented under the
IPPS.
Response: As discussed in the February 3, 2005 proposed rule, we
did not provide for a transition policy under the LTCH PPS for changes
to the labor market area definitions even though a transition policy
was implemented under the IPPS. We believe it was necessary to provide
additional protection to acute care hospitals that due to the new CBSA
designations experienced reductions in their wage indices, given the
scope and potentially significant implications of these new labor
market areas. Moreover, as noted above, a wage index adjustment has
been a stable feature of the acute care hospital IPPS almost since its
implementation in 1983. The prior MSA-based labor market area
designations were utilized in IPPS for over 10 years, thus, reinforcing
our belief that a transition policy was appropriate.
We recognize that, just like IPPS hospitals, many LTCHs would
experience decreases in their wage index as a result of the labor
market area changes. At the same time, a significant number of LTCHs
may benefit from these changes. However, we believe that because we are
in the midst of a 5-year transition to a full wage-index adjustment
under the LTCH PPS, the effects of these newest CBSA-based changes to
the LTCH PPS labor market areas definitions will be mitigated.
Specifically, as noted above, many LTCHs are still in the early stages
of the 5-year phase-in of the LTCH PPS wage index adjustment. In fact,
many LTCHs are only in the 2nd year of the 5-year phase-in of the LTCH
PPS wage index adjustment. Therefore, for most LTCHs, the labor-related
portion of the standard Federal rate is only adjusted by 40 percent of
the applicable full wage index (that is, \2/5\th wage index value).
Also, as noted above, the LTCH PPS wage index adjustment is made by
multiplying the LTCH PPS standard Federal rate by the applicable wage
index value, and the current LTCH PPS labor related-share is 72.885
percent. Consequently, for most LTCHs, only 29 percent of the standard
Federal rate is affected by the wage index adjustment (72.885 percent x
0.4 = 29.154 percent), and the proposed revision to the labor market
area definitions based on OMB's new CBSA-based designations will only
have a minimal impact on LTCH PPS payments.
An additional distinction between the IPPS and the LTCH PPS
regarding the wage index adjustment is that the IPPS policies that
provide for a transition policy from MSA-based labor market areas to
CBSA-based labor market areas were implemented in a budget neutral
manner under the IPPS (69 FR 49034-49035 and 49275). However, as noted
above, wage index changes are not budget neutral under the LTCH PPS;
therefore, a transition policy similar to what was implemented for the
IPPS would result in additional LTCH spending by the Medicare program.
Therefore, as explained in more detail above, despite the fact that we
have established a transition policy for the implementation of CBSA-
based labor market areas under the IPPS, we do not believe that it is
either appropriate or necessary to establish a similar transition
policy under the LTCH PPS. This is the case, in large part, because
there are clear differences in the impact of the wage index adjustment
between the IPPS and the LTCH PPS. Primarily, we would note that the
full 100 percent wage index adjustment has been a feature of the IPPS
since its beginning in 1983 where under the LTCH PPS, which has been in
effect for cost reporting periods beginning on or after October 1,
2002, many LTCHs are only in the 2nd year of a 5-year phase-in of a
full wage index adjustment. Therefore,
[[Page 24190]]
even though there are many LTCHs that will experience decreases in
their wage index as a result of the labor market changes, and there are
a significant number of LTCHs that may benefit from the changes, we
believe that the effects of the changes to the LTCH PPS labor market
area definition resulting from the new CBSA-based designations will be
mitigated because, presently, payments to LTCHs do not include a full
wage index adjustment. Therefore, under the broad authority of section
123 of Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, we are
not providing for a transition period for purposes of implementing the
new CBSA-based labor market area definitions.
In addition, in the February 3, 2005 proposed rule (70 FR 5744), we
proposed to revise Sec. 412.525(c) to clarify the application of the
current adjustment for area wage levels under the LTCH PPS, which was
originally established in the August 30, 2002 final rule (67 FR 56015-
56019). Specifically, we proposed to revise Sec. 412.525(c) to state
that the labor portion of a LTCH's Federal prospective payment is
adjusted to account for geographical differences in the area wage
levels using an appropriate wage index (established by CMS). The wage
index reflects the relative level of hospital wages and wage-related
costs in the geographic area of the hospital compared to the national
average level of hospital wages and wage-related costs. Currently,
urban or rural area is determined in accordance with the definitions at
Sec. 412.62(f)(1)(ii) and (iii). We received no comments on our
proposed revisions to Sec. 412.525(c), and, therefore, are adopting
those changes in this final rule. As we discussed above, because we are
revising those definitions in this final rule, urban or rural area will
be determined in accordance with the revisions to Sec. 412.525(c)(1)
or the revisions to Sec. 412.525(c)(2), respectively. In addition,
Sec. 412.525(c) will be revised to specify that the appropriate wage
index (established by CMS) is updated annually. We note that this
revision to the language in Sec. 412.525(c), which codifies our
existing policy into regulations, is similar to the wage index
adjustment codified in regulations under the IPPS at Sec. 412.64(h).
As stated above, this clarification to Sec. 412.525(c) clearly
outlines in regulations our established methodology for the application
of the area wage adjustment under the LTCH PPS. As noted above, this
methodology was established when we implemented the LTCH PPS (that is,
cost reporting periods beginning on or after October 1, 2002) in the
August 30, 2002 final rule (67 FR 56015).
d. Wage Index Data
In the May 7, 2004 final rule (69 FR 25684), we established LTCH
PPS wage index values for the 2005 LTCH PPS rate year calculated from
the same data (generated in cost reporting periods beginning during FY
2000) used to compute the FY 2004 acute care hospital inpatient wage
index data without taking into account geographic reclassification
under sections 1886(d)(8) and (d)(10) of the Act. The LTCH wage index
values applicable for discharges occurring on or after July 1, 2004
through June 30, 2005 are shown in Table 1 (for urban areas) and Table
2 (for rural areas) in the Addendum to that final rule. Acute care
hospital inpatient wage index data is also used to establish the wage
index adjustment used in the IRF PPS, IPF PPS, HHA PPS, SNF PPS, and
inpatient psychiatric facility PPS (IPF). As we discussed in the August
30, 2002 LTCH PPS final rule (67 FR 56019), since hospitals that are
excluded from the IPPS are not required to provide wage-related
information on the Medicare cost report and because we would need to
establish instructions for the collection of this LTCH data in order to
establish a geographic reclassification adjustment under the LTCH PPS,
the wage adjustment established under the LTCH PPS is based on a LTCH's
actual location without regard to the urban or rural designation of any
related or affiliated provider. Therefore, because complete LTCH wage-
related data are not currently available on the cost report, we do not
have complete LTCH wage related data to use for the purposes of
creating a LTCH wage index based on LTCH wage data, and since the labor
market areas of acute care hospitals under the IPPS are similar to
those of LTCHs, we believe wage data of acute care IPPS hospitals
accurately capture the relationship between the wage related costs for
LTCHs in an area as compared to the national average. Therefore, we
believe IPPS acute care hospitals' wage data are the best available
data to use for the wage index under the LTCH PPS.
In the February 3, 2005 proposed rule, for the 2006 LTCH PPS rate
year, we proposed to use acute care hospital inpatient wage index data
generated from cost reporting periods beginning during FY 2001 without
taking into account geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act to determine the applicable wage
index values under the LTCH PPS because these data (FY 2001) are the
most recent complete data. These data are the same FY 2001 acute care
hospital inpatient wage data that were used to compute the FY 2005 wage
indices currently used under the IPPS, SNF PPS, and HHA PPS. The
proposed full wage index values applicable for LTCH PPS discharges
occurring on or after July 1, 2005 through June 30, 2006 are shown in
Tables 1 and 2 in the Addendum to that same proposed rule (70 FR 5772-
5806). As we noted in earlier in this section, we inadvertently
included two Micropolitian Areas, Enid, OK (CBSA 21240) and Jamestown,
NY (CBSA 27640) (which we proposed to treat as rural), in Table 1
(proposed urban area wage indexes) of the Addendum to the February 3,
2005 proposed rule. Despite this error, the proposed statewide average
rural wage indexes in Table 2 of the Addendum to that same proposed
rule for rural OK and NY, respectively, correctly included the wage
data for these Micropolitan areas. We have removed these two geographic
areas from Table 1 (urban area wage indexes) of the Addendum to this
final rule. We received no comments on the proposed wage index values
for 2006 LTCH PPS rate year. Accordingly, in this final rule, we are
establishing wage index values for the 2006 LTCH PPS rate year
calculated from the same data used to calculate the FY 2005 acute care
hospital wage index used under the IPPS (generated in FY 2001) without
taking into account geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act. The LTCH wage index values that will
be applicable for discharges occurring on or after July 1, 2005 through
June 30, 2006, are shown in Table 1 (for urban areas) and Table 2 (for
rural areas) in the Addendum to this final rule. We note a labeling
error published in prior years wage index tables used in the LTCH PPS.
That labeling error was 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 LTCH wage
index values, and it has only been the listing of Stanly County under
MSA 1520 in prior years LTCH PPS index tables that was in error.
Consequently, Table 1a in the Addendum to 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, any LTCHs
located in Stanly County,
[[Page 24191]]
NC, will continue to fall under, and use, the wage index for rural
North Carolina. As we also noted above, we have removed the inadvertent
inclusion of two Micropolitian Areas (which we are treating as rural),
Enid, OK (CBSA 21240) and Jamestown, NY (CBSA 27640), from Table 1
(urban area wage indexes) of the addendum this final rule).
As noted above, a listing of each LTCH's State and county location;
existing MSA-based labor market area designation; and its new CBSA-
based labor market area designation based on the best available cost
report data (FYs 1999-2003) from HCRIS and county information from our
OSCAR database, are shown in Table 4 of the Addendum to this final
rule. As we also noted earlier in this section, we encourage LTCHs to
review the county location and both the current and labor market area
assignments for accuracy. Any questions or corrections (including
additions or deletions) to the information provided in Table 4 should
be emailed to the following CMS Web address: cmsltchpps@cms.hhs.gov. A
link to this address can be found on the following CMS Web page http://www.cms.hhs.gov/providers/longterm/frnotices.asp.
Also, as noted
earlier, a crosswalk file is available on the CMS Web page http://www.cms.hhs.gov/providers/longterm/frnotices.asp
which shows, by
county, a crosswalk of the MSA-based labor market areas to the new
CBSA-based labor-market areas adopted in this final rule.
As discussed earlier in this section (V.C.1.a.), the applicable
wage index phase-in percentages are based on the start of a LTCH's cost
reporting period beginning on or after October 1st of each year during
the 5-year transition period. Thus, for cost reporting periods
beginning on or after October 1, 2004 and before October 1, 2005 (FY
2005), the labor portion of the standard Federal rate would be adjusted
by three-fifths of the applicable LTCH wage index value. For example,
for a LTCH's discharges occurring during the 2006 LTCH PPS rate year
(that is, July 1, 2005 through June 30, 2006) and occurring in the
LTCH's cost reporting period beginning during FY 2005, the applicable
wage index value would be three-fifths of the full FY 2005 acute care
hospital inpatient wage index data, without taking into account
geographic reclassification under sections 1886(d)(8) and (d)(10) of
the Act (shown in Tables 1 and 2 of the Addendum to this final rule).
Similarly, for a LTCH's discharges occurring during the 2006 LTCH PPS
rate year (that is, July 1, 2005 through June 30, 2006) and occurring
in the LTCH's cost reporting period beginning during FY 2006, the
applicable wage index value will be four-fifths of the full FY 2005
acute care hospital inpatient wage index data, without taking into
account geographic reclassification under sections 1886(d)(8) and
(d)(10) of the Act (shown in Tables 1 and 2 in the Addendum to this
final rule).
Because the phase-in of the wage index does not coincide with the
LTCH PPS rate year (July 1st through June 30th), most LTCHs will
experience a change in the wage index phase-in percentages during the
LTCH PPS rate year. For example, during the 2006 LTCH PPS rate year,
for a LTCH with a January 1st fiscal year, the three-fifths wage index
would be applicable for the first 6 months of the 2006 LTCH PPS rate
year (July 1, 2005 through December 31, 2005) and the four-fifths wage
index would be applicable for the second 6 months of the 2006 LTCH PPS
rate year (January 1, 2006 through June 30, 2006). We also note that
some providers will still be in the second year of the 5-year phase-in
of the LTCH wage index (that is, those LTCHs who began the second year
of the 5-year phase-in during their cost reporting periods that began
between July 1, 2004 and September 30, 2004). For the remainder of
those LTCHs' FY 2004 cost reporting periods which will conclude during
the first 3 months of the 2006 LTCH PPS rate year, the applicable wage
index value will be two-fifths of the full FY 2005 acute care hospital
inpatient wage index data, without taking into account geographic
reclassification under sections 1886(d)(8) and (d)(10) of the Act as
shown in Tables 1 and 2 in the Addendum to this final rule. Since there
are no longer any LTCHs in their cost reporting period that began
during FY 2003 (the first year of the 5-year wage index phase-in), we
are no longer showing the \1/5\th wage index value in Tables 1 and 2 in
the Addendum to this final rule.
2. Adjustment for Cost-of-Living in Alaska and Hawaii
In the August 30, 2002 LTCH PPS final rule (67 FR 56022), we
established, under Sec. 412.525(b), a cost-of-living adjustment (COLA)
for LTCHs located in Alaska and Hawaii to account for the higher costs
incurred in those States. (The inadvertent omission of Sec. 412.525(b)
by the OFR noted in the May 7, 2004 LTCH PPS final rule (69 FR 25686)
has been corrected in 42 CFR parts 400 to 429 revised as of October 1,
2004). In the May 7, 2004 final rule (69 FR 25686), for the 2005 LTCH
PPS rate year, we established that we make a COLA to payments for LTCHs
located in Alaska and Hawaii by multiplying the standard Federal
payment rate by the appropriate factor listed in Table I of that same
final rule.
In the February 3, 2005 proposed rule, for the 2006 LTCH PPS rate
year, we proposed to make a COLA to payments to LTCHs located in Alaska
and Hawaii by multiplying the standard Federal payment rate by the
factors listed in Table I below. These factors are obtained from the
U.S. Office of Personnel Management (OPM) and are currently used under
the IPPS. In addition, in that same proposed rule, we proposed that if
the OPM releases revised COLA factors before March 1, 2005, we would
use them for the development of the payments for the 2006 LTCH rate
year and publish them in the LTCH PPS final rule. The OPM has not
revised the COLA factors for Alaska and Hawaii since the publication of
the proposed rule. Therefore, we are using the proposed COLA factors
published in the February 3, 2005 proposed rule for this final rule.
We received no comments on the proposed COLA factors for LTCHs
located in Alaska and Hawaii for the 2006 LTCH PPS rate year.
Therefore, under Sec. 412.525(b) and the broad authority of section
123 of Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, we are
establishing the COLA factors for LTCHs located in Alaska and Hawaii,
as shown below in Table I, for the 2006 LTCH PPS rate year.
Table I.--Cost-of-Living Adjustment Factors for Alaska and Hawaii
Hospitals for the 2006 LTCH PPS Rate Year
------------------------------------------------------------------------
------------------------------------------------------------------------
Alaska:
All areas................................................... 1.25
Hawaii:
Honolulu County............................................. 1.25
Hawaii County............................................... 1.165
Kauai County................................................ 1.2325
Maui County................................................. 1.2375
Kalawao County.............................................. 1.2375
------------------------------------------------------------------------
3. Adjustment for High-Cost Outliers
a. Background
Under Sec. 412.525(a), we make an adjustment for additional
payments for outlier cases that have extraordinarily high costs
relative to the costs of most discharges. Providing additional payments
for outliers strongly improves the accuracy of the LTCH PPS in
determining resource costs at the patient and hospital level. These
additional payments reduce the financial losses that would otherwise be
caused by treating patients who require more
[[Page 24192]]
costly care and, therefore, reduce the incentives to underserve these
patients. We set the outlier threshold before the beginning of the
applicable rate year so that total outlier payments are projected to
equal 8 percent of estimated total payments under the LTCH PPS.
Under Sec. 412.525(a), we make outlier payments for any discharges
if the estimated cost of a case exceeds the adjusted LTCH PPS payment
for the LTC-DRG plus a fixed-loss amount. The fixed-loss amount is the
amount used to limit the loss that a hospital will incur under the
outlier policy for a case with unusually high costs. This results in
Medicare and the LTCH sharing financial risk in the treatment of
extraordinarily costly cases. The LTCH's loss is limited to the fixed-
loss amount and a fixed percentage of costs above the marginal cost
factor. We calculate the estimated cost of a case by multiplying the
overall hospital cost-to-charge ratio by the Medicare allowable covered
charge. In accordance with Sec. 412.525(a)(3), we pay outlier cases 80
percent of the difference between the estimated cost of the patient
case and the outlier threshold (the sum of the adjusted Federal
prospective payment for the LTC-DRG and the fixed-loss amount).
Under the LTCH PPS, we determine a fixed-loss amount, that is, the
maximum loss that a LTCH can incur under the LTCH PPS for a case with
unusually high costs before the LTCH will receive any additional
payments. We calculate the fixed-loss amount by simulating estimated
aggregate payments with and without an outlier policy. We set the
fixed-loss amount at a level that would result in estimated total
outlier payments being projected to be equal to 8 percent of projected
total LTCH PPS payments. Currently, MedPAR claims data and cost-to-
charge ratios based on data from the latest available cost report data
from the Hospital Cost Report Information System (HCRIS) and
corresponding MedPAR claims data are used to establish a fixed-loss
threshold amount under the LTCH PPS.
b. Cost-to-Charge Ratios (CCRs)
As we noted above, we calculate the estimate of the cost of the
case used in determining LTCH PPS outlier payments by multiplying the
Medicare allowable charges for the case by the LTCH's overall CCR. As
we established in the June 9, 2003 IPPS high-cost outlier final rule
(68 FR 34494-34515), for discharges occurring on or after October 1,
2003, FIs use either the most recent settled cost report or the most
recent tentative settled cost report, whichever is from the later
period, to determine a LTCH's CCR. As we specified in Program
Memorandum Transmittal A-02-093 when we implemented the LTCH PPS and as
codified in regulation at Sec. 412.525(a)(4)(ii) which incorporates
Sec. 412.84(i)(3), for discharges occurring on or after August 8,
2003, for LTCHs for which we are unable to compute an accurate CCR (for
example, due to faulty or unavailable data), we assign the applicable
statewide average CCR to the LTCH. (Currently, the applicable statewide
average CCRs can be found in Tables 8A and 8B of the FY 2005 IPPS final
rule (69 FR 49687-49688).)
As set forth in Sec. 412.525(a)(4)(ii), by cross-referencing Sec.
412.84(i)(3), currently, we apply the applicable statewide average CCR
when a LTCH's CCR exceeds the maximum CCR threshold (ceiling) set forth
at Sec. 412.84(i)(3)(ii). As we explained in the June 9, 2003 high-
cost outlier final rule (68 FR 34506-34507), CCRs above this range are
probably due to faulty data reporting or entry. Therefore, these CCRs
should not be used to identify and make payments for outlier cases
because the data are clearly errors and should not be relied upon. We
also have a similar policy regarding use of the statewide average CCR
under the short-stay outlier policy at Sec. 412.529. Since CCRs are
also used in determining short-stay outlier payments, the rationale for
that policy mirrors that for high-cost outliers. (As specified in
Transmittal 309 (October 1, 2004), the current LTCH PPS CCR ceiling is
1.409, which is equal to the combined operating and capital CCR
ceilings (69 FR 49278).)
Currently, for discharges occurring on or after August 8, 2003,
only a maximum CCR threshold (ceiling) is applied to a LTCH's CCR
ratio. For discharges occurring on or after August 8, 2003, a minimum
CCR threshold (floor) is no longer applicable (See June 8, 2003, 68 FR
34506-34507). As discussed above, if a LTCH's CCR is above the ceiling,
the applicable statewide average CCR is assigned to the LTCH. However,
a LTCH's CCR is no longer raised to the applicable statewide average
CCR if it falls below a minimum CCR threshold (floor) for discharges
occurring on or after August 8, 2003, in order to prevent hospitals
from receiving inappropriately high outlier payments. As we explained
in the June 6, 2003 final rule, (68 FR 34143-34144), we believe that
using the current combined IPPS operating and capital CCR ceiling for
LTCHs is appropriate since LTCHs are certified as acute care hospitals
that meet the criteria set forth in section 1861(e) of the Act to
participate as a hospital in the Medicare program, and, in general,
hospitals are paid as LTCHs only because their Medicare average length
of stay is greater than 25 days in accordance with Sec. 412.23(e).
Furthermore, as explained in that same final rule, prior to qualifying
as a LTCH under Sec. 412.23(e)(2)(i), a hospital generally is paid as
an acute care hospital under the IPPS during the period in which it
demonstrates that it has an average length of stay of greater than 25
days. (Refer to the June 9, 2003 high-cost outlier final rule (68 FR
34506-34507) for further explanation of the establishment of the
current CCR policy.)
c. Establishment of the Fixed-Loss Amount
When we implemented the LTCH PPS, as discussed in the August 30,
2002 final rule (67 FR 56022-56026), we established a fixed-loss amount
so that total estimated outlier payments are projected to equal 8
percent of total estimated payments under the LTCH PPS. To determine
the fixed-loss amount, we estimate outlier payments and total LTCH PPS
payments for each case using claims data from the MedPAR. Specifically,
to determine the outlier payment for each case, we estimate the cost of
the case by multiplying the Medicare covered charges from the claim by
the LTCH's hospital specific CCR. In accordance with Sec.
412.525(a)(3), if the estimated cost of the case exceeds the outlier
threshold (the sum of the adjusted Federal prospective payment for the
LTC-DRG and the fixed-loss amount), we pay an outlier payment equal to
80 percent of the difference between the estimated cost of the case and
the outlier threshold (the sum of the adjusted Federal prospective
payment for the LTC-DRG and the fixed-loss amount).
In the May 7, 2004 final rule, in calculating the fixed-loss amount
that would result in outlier payments projected to be equal to 8
percent of total estimated payments for the 2005 LTCH PPS rate year, we
used claims data from the December 2003 update of the FY 2003 MedPAR
files, as that was the best available data at that time. We calculated
LTCHs' CCRs for determining the fixed-loss amount based on the latest
available cost report data in HCRIS from FYs 1999 through 2002. Also,
as we explained in that same final rule (68 FR 25687), we calculated a
single fixed-loss amount for the 2005 LTCH PPS rate year based on
Version 21.0 of the GROUPER, which was the version in effect as of the
beginning of
[[Page 24193]]
the LTCH PPS rate year (that is, July 1, 2004, for the 2005 LTCH PPS
rate year).
We also applied the current outlier policy under Sec. 412.525(a)
in determining the fixed-loss amount for the 2005 LTCH PPS rate year.
Accordingly, we used the FY 2004 IPPS combined operating and capital
CCR ceiling of 1.366 (as explained in the IPPS final rule, published
August 1, 2003 (68 FR 45478)) to evaluate whether each LTCH's CCR
exceeded the ceiling. (Our rationale for using the FY 2004 combined
IPPS operating and capital CCR ceiling for LTCHs is stated above in
section V.C.3.b. of this preamble.) As we discuss in greater detail
below, in determining the fixed-loss amount for the 2005 LTCH PPS rate
year, there were no LTCHs with missing CCRs or with CCRs in excess of
the current ceiling and, therefore, there was no need to assign the
applicable statewide average CCR to any LTCHs in determining the fixed-
loss amount (unless this was already done by the FI).
For the 2005 LTCH PPS rate year, in the May 7, 2004 final rule (69
FR 25689), we established a fixed-loss amount of $17,864. Thus, in the
2005 LTCH PPS rate year, we pay an outlier case 80 percent of the
difference between the estimated cost of the case and the outlier
threshold (the sum of the adjusted Federal LTCH PPS payment for the
LTC-DRG and the fixed-loss amount of $17,864).
In the February 3, 2005 proposed rule (70 FR 5746-5749), we did not
propose to change our established methodology for determining the
fixed-loss amount. However, we proposed to use more recently available
data to determine the fixed-loss amount for the 2006 LTCH PPS rate
year, including the most recent available claims data and data from the
Provider Specific File (PSF). Specifically, in that same proposed rule,
for the 2006 LTCH PPS rate year, we used the September 2004 update of
the FY 2003 MedPAR claims data to determine a proposed fixed-loss
amount that would result in projected outlier payments being equal to 8
percent of total projected LTCH PPS payments, based on the policies
described in that proposed rule, because those data were the best LTCH
data available at that time. As noted above, we determined the proposed
fixed-loss amount based on the version of the GROUPER that will be in
effect as of the beginning of the 2006 LTCH PPS rate year (July 1,
2005), that is, Version 22.0 of the LTCH PPS GROUPER (69 FR 48982).
As we explained in the February 3, 2005 proposed rule, in
determining the LTCH PPS fixed-loss amount, CCRs are used to estimate
the cost of each case by multiplying the Medicare covered charges from
the claim by the appropriate CCR. Rather than using CCRs calculated
from the latest available cost report data in HCRIS and corresponding
claims data from the MedPAR data as we did when we determined the 2005
LTCH PPS rate year fixed-loss amount (as noted above), in that proposed
rule, for purposes of determining the proposed fixed-loss amount for
the 2006 LTCH PPS rate year, we proposed to use CCRs from the PSF as
they are based on the best available data for the LTCH PPS because, as
we discuss in greater detail below, they are based on more recent data
and were actually used to make LTCH PPS payment.
The PSF contains CCRs computed by FIs in accordance with Program
Memorandum Transmittal A-02-093 and Program Memorandum Transmittal A-
03-058, which reflects the changes made in the June 9, 2003 high-cost
outlier final rule (68 FR 34494), including the use of either the most
recently settled or tentatively settled cost report, whichever is
later, to determine a LTCH's CCR. This also includes the assignment of
the applicable statewide average CCR by the FI in cases where the FI
was unable to compute a CCR (for example, due to faulty or unavailable
data), or the CCR computed by the FI exceeded the applicable CCR
ceiling. While FIs have been determining a CCR for each LTCH and
entering it on the PSF (as instructed in Program Transmittal A-02-093
and Program Memorandum Transmittal A-03-058) in order to determine the
LTCH PPS payment for each discharge using the LTCH PPS PRICER software,
we have only recently had access to the complete PSF data for all LTCHs
due to the lag time in data availability (the LTCH PPS has only been in
effect for slightly over 2 years, that is for cost reporting periods
beginning on or after October 1, 2002). Thus, this is the first
opportunity that we have had to use CCRs from the PSF in determining
the fixed-loss amount.
We proposed to use the CCRs from the PSF rather than computing CCRs
from the latest MedPAR claims data and corresponding cost report data
for purposes of determining the fixed-loss amount under the LTCH PPS
because, as we discussed in the February 3, 2005 proposed rule, we
believe that using these CCRs to estimate the cost of the case used in
determining outlier payments would be more accurate than using our
current source for obtaining CCRs to estimate the fixed-loss amount
(that is, calculating CCRs from the latest cost report data in HCRIS
and corresponding claims data in the MedPAR files, as explained above).
Specifically, as we discuss in greater detail below, CCRs in the PSF
are based on the most recently settled or tentatively settled cost
report, whichever is later, whereas the CCRs computed from HCRIS and
corresponding MedPAR data are several years old due to the lag time in
data availability. Increasing the accuracy of the estimate of outlier
payments that is used in determining the fixed-loss amount by using
CCRs from the PSF rather than CCRs computed from HCRIS and
corresponding MedPAR data would help ensure that outlier payments are
projected to equal 8 percent of total estimated LTCH PPS payments as we
established in the August 30, 2002 final rule (67 FR 56026). Using CCRs
from the PSF should result in a more precise fixed-loss amount because
these CCRs are based on more recent available data and, as explained
above, these are the CCRs actually used by FIs to make LTCH PPS
payments using the LTCH PPS PRICER software. As discussed in the
February 3, 2005 proposed rule, the CCRs in the PSF also reflect the
changes to the CCR and outlier policy made in the June 9, 2003 high-
cost outlier final rule (68 FR 34494), which includes the use of either
the most recently settled or tentatively settled cost reports,
whichever is later, by FIs to determine a LTCH's CCR. In addition,
because all of the LTCHs with claims in the September 2004 update of
the FY 2003 MedPAR files (which we used to determine the proposed
fixed-loss amount) have an entry in the PSF, there were no LTCHs with
missing CCRs, and, therefore, there was no need to assign the
applicable statewide average CCR to any LTCHs in determining the fixed-
loss amount for the 2006 LTCH PPS rate year (unless this was already
done by the FI when entering the CCR in the PSF). This results in a
more accurate CCR for each LTCH, and therefore a more accurate estimate
of the cost of each case for LTCHs that, in the past, were assigned the
applicable statewide average CCR in determining the fixed-loss amount
because the data needed to compute a CCR were unavailable. (We note
that consistent with our established methodology for determining CCRs
for the purposes of determining the fixed-loss amount, if, in the
future, a LTCH were missing a CCR in the PSF, we would assign the
applicable statewide average CCR.)
We believe that CCRs from the PSF are a better approximation of the
CCRs that would be used to determine LTCHs' LTCH PPS payments during
the 2006
[[Page 24194]]
LTCH PPS rate year because these are the most recent available CCRs
actually used to make LTCH PPS payments. The CCRs that we have
previously used to estimate the fixed-loss amount, computed from cost
report data in HCRIS and corresponding claims data in the MedPAR files,
were not used by FIs to make LTCH payments. Data from the PSF have only
recently become available for all LTCHs because the LTCH PPS has only
been in effect for slightly over 2 years (that is, cost reporting
periods beginning on or after October 1, 2002). Prior to the
availability of PSF data, for purposes of determining the fixed-loss
amount, CCRs were computed based on the best available data (that is,
from cost report data in HCRIS and corresponding MedPAR claims data).
However, because there is lag time between the submission of cost
report data and the availability of that data in HCRIS, CCRs may have
been computed from cost reports that were several years old. In
addition, often the applicable statewide average CCR was assigned to
LTCHs when cost report and corresponding claims data necessary to
compute a CCR were unavailable. This change in the source of obtaining
CCRs for computing the fixed-loss amount results in more up-to-date and
generally lower CCRs. This is the same data source used for obtaining
CCRs under the IPPS for determining the IPPS fixed-loss amount annually
(FY 2005 IPPS final rule, 69 FR 49276).
As stated above, in the February 3, 2005 proposed rule, we only
proposed to change the data source for obtaining the CCRs used in
determining the fixed-loss amount and not our established methodology
for determining the fixed-loss amount or our established rules for
determining CCRs for LTCH PPS payment purposes. In that same proposed
rule, for purposes of determining the proposed 2006 LTCH PPS rate year
fixed-loss amount that would result in projected outlier payments being
equal to 8 percent of total projected LTCH PPS payments, we used CCRs
from the June 2004 update of the PSF, and LTCH claims from the
September 2004 update of the FY 2003 MedPAR files. Accordingly, based
on the data and policies described in that proposed rule, we proposed a
fixed-loss amount of $11,544 for the 2006 LTCH PPS rate year. Thus, we
proposed to pay an outlier case 80 percent of the difference between
the estimated cost of the case and the outlier threshold (the sum of
the adjusted Federal LTCH payment for the LTC-DRG and the fixed-loss
amount of $11,544).
As we discussed in the February 3, 2005 proposed rule, the proposed
fixed-loss amount of $11,544 for the 2006 LTCH PPS rate year is
significantly lower than the current fixed-loss amount of $17,864 for
the 2005 LTCH PPS rate year. This notable change in the fixed-loss
amount is primarily due to the change in the source of LTCHs' CCRs that
are used to estimate costs when estimating LTCH PPS payments
(specifically, using CCRs from the PSF rather than computing them from
HCRIS and corresponding MedPAR data). As we discussed in that same
proposed rule and as we discuss in greater detail below, we believe
that a decrease in the fixed-loss amount is appropriate and necessary
to maintain that estimated outlier payments would equal 8 percent of
estimated total LTCH PPS payments, as required under Sec. 412.525(a).
Comment: Seven commenters supported our decision to use hospital-
specific CCRs, which resulted in a significant reduction in the
proposed fixed-loss amount. One provider particularly endorsed the
resulting reduction in the fixed-loss amount which, in the future,
should help ensure that estimated outlier payments would equal 8
percent of estimated total Medicare payments to LTCHs. Several of the
hospitals that commented noted that since this change would effectively
reduce the financial loss suffered by LTCHs in treating high-cost
cases, it would be highly effective in encouraging LTCHs to provide
treatment for the some of the sickest Medicare beneficiaries.
Response: We appreciate the commenters' endorsement of our use of
hospital-specific CCRs for purposes of determining the 2006 LTCH PPS
rate year fixed-loss amount. As stated above, in proposing the revised
outlier threshold, we have not proposed a change to our established
methodology for determining the fixed-loss amount, we only proposed
changing the data source.
At the outset of the LTCH PPS, we used the best available data in
calculating the CCRs, which were the latest available cost data in
HCRIS and corresponding claims data from MedPAR. The most recently
available claims data from the PSF that we proposed to use to update
the CCRs have only recently become available for all LTCHs. The LTCH
PPS has only been in effect for slightly over 2 years (that is, for
cost reporting periods beginning on or after October 1, 2002) and
because many LTCHs did not transition to the LTCH PPS until FY 2003,
the PSF was not created until relatively recently. For the 2006 LTCH
PPS rate year, in calculating the proposed fixed-loss amount under
Sec. 412.525(a), we used the September 2004 update of the FY 2003
MedPAR claims data because those data were the best available LTCH
data.
Therefore, in this final rule we are establishing that in
determining a fixed-loss amount that would result in estimated outlier
payments equal to 8 percent of estimated total LTCH PPS payments, we
will use the CCRs from the latest available PSF. Consistent with our
established policy, we will continue to assign the applicable statewide
average CCRs if a LTCH's CCR is unavailable or exceeds the maximum CCR
threshold (as discussed above). In this final rule, for purposes of
determining the final 2006 LTCH PPS rate year fixed-loss amount, we are
using CCRs from the December 2004 update of the PSF, which are the CCRs
that were used by FIs to make LTCH PPS payments to LTCHs as of December
31, 2004, and LTCH claims data from the December 2004 update of the FY
2004 MedPAR files, as these are the best available data. As discussed
above, the CCRs in the PSF also reflect the changes to the CCR and
outlier policy made in the June 9, 2003 high-cost outlier final rule
(68 FR 34494), which include the use of either the most recently
settled or tentatively settled cost reports, whichever is later, by FIs
to determine a LTCH's CCR. In addition, because all of the LTCHs with
claims in the December 2004 update of the FY 2004 MedPAR files (which
we used to determine the fixed-loss amount for the final 2006 LTCH PPS
rate year) have an entry in the PSF, there were no LTCHs with missing
CCRs, and, therefore, there was no need to assign the applicable
statewide average CCR to any LTCHs in determining the fixed-loss amount
(unless this was already done by the FI when entering the CCR in the
PSF). (We note that consistent with our established methodology for
determining CCRs for the purposes of determining the fixed-loss amount,
if, in the future, a LTCH were missing a CCR in the PSF, we would
assign the applicable statewide average CCR.)
Based on the data and policies described in this final rule, we are
establishing a fixed-loss amount of $10,501 for the 2006 LTCH PPS rate
year. Thus, we will pay an outlier case 80 percent of the difference
between the estimated cost of the case and the outlier threshold (the
sum of the adjusted Federal LTCH payment for the LTC-DRG and the fixed-
loss amount of $10,501). We note that the fixed-loss amount of $10,501
for the 2006 LTCH PPS rate year is lower than the proposed fixed-loss
amount for the 2006 LTCH
[[Page 24195]]
PPS rate year of $11,544 and significantly lower than the current
fixed-loss amount of $17,864 for the 2005 LTCH PPS rate year. As we
discussed in the February 3, 2005 proposed rule, this notable change in
the fixed-loss amount for the 2006 LTCH PPS rate year as compared to
the 2005 LTCH PPS rate year is primarily due to the change in the
source of LTCHs' CCRs used to estimate costs when estimating LTCH PPS
payments (specifically, using CCRs from the PSF rather than computing
them from HCRIS and corresponding MedPAR data). As described above, in
the past we have used CCRs that were calculated using costs from the
most recent available cost report data in HCRIS and corresponding
charges from MedPAR claims data. As also noted above, often the
statewide average CCR was assigned to LTCHs when data to compute a CCR
was unavailable. However, for the 2006 LTCH PPS rate year, in
determining the fixed-loss amount, we are using CCRs from the PSF
because, as we discussed above, we believe that these CCRs will more
closely approximate the CCRs that will be used to make payments to
LTCHs during the 2006 LTCH PPS rate and will result in a more accurate
estimate of the cost of each case used in determining outlier payments.
As we noted above, CCRs from the PSF are based on more recent data
and are generally lower than the CCRs computed from cost report data in
HCRIS and corresponding claims data in the MedPAR files. Specifically,
in comparing the best available data for 335 LTCHs, we found that
almost 40 percent of LTCHs would experience a decrease in the CCR we
used for computing the fixed-loss amount. Furthermore, for those LTCHs
with a CCR in the PSF that is lower than CCRs used to determine the
2005 LTCH PPS rate year fixed-loss amount, we found that the difference
in the CCRs was more than a 75 percent decrease for some LTCHs for
which the applicable statewide average CCR previously been assigned
because we were unable to compute a CCR (for example, due to faulty or
unavailable data).
In determining estimated outlier payments (80 percent of costs
beyond the fixed-loss amount), as discussed above, costs are estimated
by multiplying the Medicare-covered charges for the case by the LTCH's
CCR. When relatively lower CCRs are used to estimate costs from
charges, the resulting estimated cost of each case is lower, thereby
reducing estimated outlier payments since outlier payments are
projected to equal 80 percent of the difference between the estimated
cost of the case and the outlier threshold (the sum of the adjusted
Federal prospective payment for the LTC-DRG and the fixed-loss amount).
As we discussed in the February 3, 2005 proposed rule, lowering the
fixed-loss amount results in more cases qualifying as outlier cases as
well as an increase in the amount of the outlier payment for an outlier
case because the maximum loss that a LTCH must incur before receiving
an outlier payment (that is, the fixed-loss amount) will be smaller.
Thus, in order to ensure that estimated outlier payments will be equal
to 8 percent of estimated total LTCH PPS payments, the outlier fixed-
loss amount should be lowered.
As stated above, we have established that under the LTCH PPS,
outlier payments are estimated to be equal to 8 percent of estimated
total LTCH PPS payments. As we discussed in the February 3, 2005
proposed rule, an analysis of recent LTCH PPS claims indicates that the
2004 and 2005 LTCH PPS rate year outlier fixed-loss amounts may have
resulted in LTCH PPS outlier payments that fell below the estimated 8
percent. Specifically, based on claims discharged during the 2004 LTCH
PPS rate year (July 1, 2003 through June 30, 2004), we estimate that
outlier payments equal about 6 percent of estimated total LTCH PPS
payments.
As an alternative to lowering the fixed-loss amount, as we
discussed in the February 3, 2005 proposed rule, we examined adjusting
the marginal cost factor (that is, the percentage that Medicare will
pay of the estimated cost of a case that exceeds the sum of the
adjusted Federal prospective payment for the LTC-DRG and the fixed-loss
amount for LTCH PPS outlier cases (Sec. 412.525(a)(3)), as a means of
ensuring that estimated outlier payments would be projected to equal 8
percent of estimated total LTCH PPS payments. Under the LTCH PPS high-
cost outlier policy at Sec. 412.525(a)(3), the marginal cost factor is
currently equal to 80 percent, as we established in the August 30, 2002
final rule (67 FR 56022-56026). As we discuss in that same final rule,
a marginal cost factor equal to 80 percent means that we pay the LTCH
for an outlier case, 80 percent of the difference between the estimated
cost of the case and the outlier threshold (the sum of the adjusted
Federal rate for the LTC-DRG PPS payment and the fixed-loss amount).
As we discussed in the August 30, 2002 final rule (67 FR 56023),
the marginal cost factor is designed to share the financial risk of
treating extremely costly LTCH cases between LTCHs and the Medicare
program by providing ``a balance between the need to protect LTCHs
financially, while encouraging them to treat expensive patients and
maintain the incentives of a prospective payment system to improve the
efficient delivery of care.'' Increasing the marginal cost factor from
the established 80 percent, while maintaining the existing fixed-loss
amount would increase total outlier payments because we would pay a
larger percentage of the estimated costs that exceed the outlier
threshold (the sum of the adjusted Federal rate for the LTC-DRG and the
fixed-loss amount). For example, if we were to increase the marginal
cost factor to 90 percent without lowering the fixed-loss amount, we
would pay outlier cases an additional 10 percent (90 percent minus 80
percent) of the estimated costs that exceed the outlier threshold (the
sum of the adjusted Federal rate for the LTC-DRG and the fixed-loss
amount).
While this alternative would also help to ensure that outlier
payments are projected to equal 8 percent of estimated total LTCH PPS
payments, it would not maintain the existing balance between providing
an incentive for LTCHs to treat expensive patients and improving the
efficient delivery of care. It would significantly reduce the LTCHs'
share of the financial risk in treating those costly patients. As we
discussed in the August 30, 2002 final rule (67 FR 56023-56024), our
analysis of payment-to-cost ratios for outlier cases showed that a
marginal cost factor of 80 percent appropriately addresses outlier
cases that are significantly more expensive than non-outlier cases,
while simultaneously maintaining the integrity of the LTCH PPS.
Lowering the fixed-loss amount from $17,864 to $10,501 will reduce
the amount of the loss that a LTCH must incur under the LTCH PPS for a
case with unusually high costs before the LTCH will receive any
additional Medicare payments. However, as we explain above, we believe
the 80 percent marginal cost factor continues to adequately maintain
the LTCHs' share of the financial risk in treating those costly
patients and ensure the efficient delivery of services. LTCHs will
still have to first lose $10,501 before receiving any additional
payment for treating an unusually costly case. We believe the fixed-
loss amount of $10,501 in conjunction with the requirement that the
LTCH is responsible for 20 percent of all estimated costs incurred
beyond the outlier threshold (the sum of the adjusted Federal rate for
the LTC-DRG PPS payment and the fixed-loss amount) will be significant
enough to avoid the ``incentive'' for LTCHs to allow cases to reach the
outlier
[[Page 24196]]
threshold in order to receive an additional payment. Therefore, we
believe the fixed-loss mount of $10,501 will sufficiently identify
unusually costly LTCH cases while maintaining the integrity of the LTCH
PPS. Consequently, under the broad authority of section 123 of Pub. L.
106-113 and section 307(b)(1) of Pub. L. 106-554, we are adopting a
fixed-loss amount of $10,501 that is calculated from CCRs derived from
the best available claims data and CCRs from the PSF.
Accordingly, we are not adjusting the marginal cost factor under
the LTCH PPS high-cost outlier policy. Rather, as discussed in detail
above, we believe that employing actual CCR data from the PSF for
purposes of determining the fixed-loss amount will result in a more
accurate estimate of LTCH PPS outlier payments. Therefore, a decrease
in the fixed-loss amount is appropriate and necessary to maintain
estimated outlier payments equal to 8 percent of estimated total
estimated LTCH PPS payments, as required under Sec. 412.525(a).
We note that the fixed-loss amount for the 2006 LTCH PPS rate year
established in this final rule ($10,501) is less than the fixed-loss
amount ($11,544) proposed in the February 3, 2005 proposed rule. This
is primarily due to the fact that the average case-mix of the LTCH
claims in the FY 2004 MedPAR files, which are being used to compute the
final fixed-loss amount is higher than the average case-mix of the LTCH
claims in the FY 2003 MedPAR files, which were used to compute the
proposed fixed-loss amount. Specifically, based on the claims in the
December 2004 update of the MedPAR files and version 22.0 of the
GROUPER, we found that the average case-mix increased over 6 percent
from FY 2003 to FY 2004. In addition, the final standard Federal rate
of $38,086.04, which is based on the most recent estimate of the market
basket update of 3.4 percent, is 0.3 percent higher than the proposed
Federal rate of $37,975.53, which was based on the proposed market
basket update of 3.1 percent, as discussed above in section V.B.1.b of
this preamble. Both the increase in case-mix and the increase in the
Federal rate result in slightly higher overall payments to LTCHs.
Therefore, it is necessary for the fixed-loss amount to decrease
slightly in order to ensure that estimated outlier payments remain
equal to 8 percent of estimated total LTCH PPS payments.
As we stated above, based on an analysis of recent LTCH claims
data, we now estimate that actual outlier payments in the 2004 LTCH PPS
rate year equal about 6 percent of actual total LTCH PPS payments. In
this final rule, as discussed above, using the best data available at
this time we are establishing a revised fixed-loss amount (outlier
threshold) so that estimated outlier payments are projected to be 8
percent of estimated total LTCH PPS payments in the 2006 LTCH PPS rate
year; the revised outlier threshold is significantly lower than the
current outlier threshold. We will continue to monitor outlier
payments, including actual outlier payments in the 2006 LTCH PPS rate
year. Although we do not adjust the outlier threshold for a given year
to account for differences between projected payments and actual
payments, we do examine actual payments for purposes of determining
whether it might be necessary to refine our estimation methodology. In
setting the outlier threshold for the 2007 LTCH PPS rate year, we will
use the best data available at the time and also propose refinements to
the estimation methodology if necessary and appropriate so that our
projections for the 2007 LTCH PPS rate year are as accurate as
possible.
Comment: One commenter noted that the fixed-loss amount and,
therefore, the outlier threshold has been decreasing since the start of
the LTCH PPS. The commenter also noted that we indicated in the
proposed rule that based on claims discharged during the 2004 LTCH PPS
rate year, we estimated that outlier payments that were made during the
2004 LTCH PPS rate year were approximately equal to 6 percent of
estimated total LTCH PPS payments. The commenter suggests that this 6
percent figure means that the ``process utilized by CMS to project
[o]utlier payments has resulted in roughly 2 percent of the [o]utlier
budget funding to not be paid to providers.'' The commenter suggests
that CMS implement a one-time adjustment to account for the portion of
outlier funds that have not been paid to LTCHs since the inception of
the LTCH PPS and further that CMS implement a threshold that ensures
that the entire 8 percent of estimated total LTCH PPS payments set
aside for outlier payments for future years is paid to providers.
Response: As discussed above, the progressive decrease in the
fixed-loss amount has resulted from the fact that the CCRs that we have
previously used to estimate the fixed-loss amount were determined based
on cost report data in HCRIS and corresponding claims data in the
MedPAR files, but that data were not used by FIs to make actual LTCH
PPS payments. Data from the PSF, which are used to make outlier
payments under the LTCH PPS, have only recently become available for
all LTCHs. Also, as noted above, because there is lag time between the
submission of cost report data in HCRIS and the availability of that
data, CCRs may have been computed from cost reports that were several
years old. Furthermore, for many LTCHs the applicable statewide average
CCR was assigned to the LTCH when cost report and corresponding claims
data to compute a CCR were unavailable. Accordingly, as our data
sources have more accurately reflected actual LTCH PPS payments, the
fixed-loss amount has been determined based on more recent CCR data and
it has progressively decreased each year since the start of the LTCH
PPS. As discussed above, the change in the fixed-loss amount for the
2006 LTCH PPS rate year is primarily a result of using CCRs from the
PSF to estimate costs under the LTCH PPS rather than computing CCRs
from HCRIS and corresponding MedPAR data. (This is the same data source
used for obtaining CCRs under the IPPS for determining the IPPS outlier
fixed-loss amount (69 FR 49276, August 11, 2004).)
As we noted in the February 3, 2005 proposed rule and reiterate in
the discussion above, an analysis of recent LTCH PPS claims indicates
that the outlier fixed-loss amounts established for the 2004 and 2005
LTCH PPS rate years may have resulted in LTCH PPS outlier payments that
fell below the estimated 8 percent in those rate years. We would remind
the commenter that the decision to make estimated outlier payments
equal to 8 percent of the estimated total payments under the LTCH PPS
was based on data analyses by our contractors when we first designed
the LTCH PPS effective for LTCH cost reporting periods beginning during
FY 2003. The August 30, 2002 final rule (67 FR 56022-56027) details our
determinations based on the results of the evaluations presented by 3M
Health Information Systems and also an industry study commissioned by
NALTH, as well as the original study by the RAND Corporation for the
IPPS (57 FR 23640, June 4, 1992). As noted in that final rule, ``In
order to determine the most appropriate outlier policy, we analyzed the
extent to which the various options would reduce financial risk, reduce
incentives to underserve costly beneficiaries, and improve the overall
fairness of the system. We believed an outlier target of 8 percent
would allow us to achieve a balance of the above stated goals.'' (57 FR
56023).
The regulations at Sec. 412.523(d)(1) specify that ``CMS adjusts
the standard Federal rate by a reduction factor of 8
[[Page 24197]]
percent, the estimated proportion of outlier payments'' under the LTCH
PPS as described in Sec. 412.525(a). This policy is similar to the
policy for outliers under the IPPS. Under the IPPS there have been some
years when outlier payments exceed the projected target percentage (5.1
percent) and other years when they fall below. In the August 11, 2004
final rule for the IPPS, we stated that ``[n]evertheless, consistent
with the policy and statutory interpretations that we have maintained
since the inception of the IPPS, we do not plan to make payments to
ensure that the percentage of total outlier payments actually reflect
the percentage target of total IPPS payments.'' (69 FR 49278)
Each year we estimate, based on the best data available at the
time, the amount Medicare will pay LTCHs under the LTCH PPS. Based on
that estimate, and an estimate of the proposed outlier payments that
would be paid, we establish a fixed-loss amount that will generate
estimated outlier payments that would equal 8 percent of the estimated
total payments under the LTCH PPS. Thus, we estimate the fixed-loss
amount based on the best available data to us at the time. If
ultimately it is determined that some of the estimated factors used to
determine the fixed-loss amount were not accurate and, therefore, we
ultimately pay either more or less than 8 percent as outlier payments,
no adjustment to future LTCH PPS payments is appropriate. Therefore, a
payment adjustment to providers that would represent the difference
between estimated outlier payments and those that Medicare actually
made since the start of the LTCH PPS would not be appropriate. We
believe, however, that the use of the PSF for determining CCRs for
purposes of calculating the fixed-loss amount, will most likely result
in actual outlier payments that more closely equal the requirement for
estimated outlier payments to equal 8 percent of estimated total LTCH
PPS payments.
Based on the data and policies described in this final rule, we are
establishing a fixed-loss amount of $10,501 for the 2006 LTCH PPS rate
year. Thus, we will pay an outlier case 80 percent of the difference
between the estimated cost of the case and the outlier threshold (the
sum of the adjusted Federal LTCH payment for the LTC-DRG and the fixed-
loss amount of $10,501). As also discussed above, consistent with our
longstanding policy under both the IPPS and the LTCH PPS, we are not
making any additional adjustments to the outlier policy at Sec.
412.525(a) or to the standard Federal rate to account for any amount
that actual outlier payments may have been more or less than 8 percent
of estimated total LTCH PPS payments.
d. Reconciliation of Outlier Payments Upon Cost Report Settlement
In the June 9, 2003 high-cost outlier final rule (68 FR 34508-
34512), consistent with the change made for acute care hospitals under
the IPPS at Sec. 412.84(m), we established under Sec.
412.525(a)(4)(ii), by cross-referencing Sec. 412.84(i)(4) and (m),
that effective for LTCH PPS discharges occurring on or after August 8,
2003, reconciliation of outlier payments may be made upon cost report
settlement to account for differences between the actual CCR and the
estimated CCR ratio for the period during which the discharge occurs.
As is the case with the changes made to the outlier policy for acute
care hospitals under the IPPS, the instructions for implementing these
regulations are discussed in further detail in Program Memorandum
Transmittal A-03-058. In addition, in that same final rule (68 FR
34513), we established a similar change to the short-stay outlier
policy at Sec. 412.529(c)(5)(ii).
We also discussed in the June 9, 2003 high-cost outlier final rule
(68 FR 34494-34515), consistent with the policy change for acute care
hospitals under the IPPS at Sec. 412.84(i)(2), that, for LTCH PPS
discharges occurring on or after October 1, 2003, FIs will use either
the most recent settled cost report or the most recent tentative
settled cost report, whichever is from the later period, to determine a
LTCH's CCR. In addition, in that same final rule, we established a
similar change to the short-stay outlier policy at Sec.
412.529(c)(5)(iii).
e. Application of Outlier Policy to Short-Stay Outlier Cases
As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR
56026), under some rare circumstances, a LTCH discharge could qualify
as a short-stay outlier case (as defined under Sec. 412.529 and
discussed in section VI.B.4. of this preamble) and also as a high-cost
outlier case. In such a scenario, a patient could be hospitalized for
less than five-sixths of the geometric average length of stay for the
specific LTC-DRG, and yet incur extraordinarily high treatment costs.
If the costs exceeded the outlier threshold (that is, the short-stay
outlier payment plus the fixed-loss amount), the discharge would be
eligible for payment as a high-cost outlier. Thus, for a short-stay
outlier case in the 2006 LTCH PPS rate year, the high-cost outlier
payment will be 80 percent of the difference between the estimated cost
of the case and the outlier threshold (the sum of the fixed-loss amount
of $10,501 and the amount paid under the short-stay outlier policy).
4. Adjustments for Special Cases
a. General
As discussed in the August 30, 2002 LTCH PPS final rule (67 FR
55995), under section 123 of Pub. L. 106-113, the Secretary generally
has broad authority in developing the PPS for LTCHs, including whether
(and how) to provide for adjustments to reflect variations in the
necessary costs of treatment among LTCHs.
Generally, LTCHs, as described in section 1886(d)(1)(B)(iv) of the
Act, are distinguished from other inpatient hospital settings by
maintaining an average inpatient length of stay of greater than 25
days. However, LTCHs may have cases that have stays of considerably
less than the average length of stay and that receive significantly
less than the full course of treatment for a specific LTC-DRG. As we
explained in the August 30, 2002 LTCH PPS final rule (67 FR 55954),
these cases would be paid inappropriately if the hospital were to
receive the full LTC-DRG payment. Below we discuss the payment
methodology for these special cases.
b. Adjustment for Short-Stay Outlier Cases
A short-stay outlier case may occur when a beneficiary receives
less than the full course of treatment at the LTCH before being
discharged. These patients may be discharged to another site of care or
they may be discharged and not readmitted because they no longer
require treatment. Furthermore, patients may expire early in their LTCH
stay.
Generally, LTCHs are defined by statute as having an average
inpatient length of stay of greater than 25 days. We believe that a
payment adjustment for short-stay outlier cases results in more
appropriate payments because these cases most likely would not receive
a full course of treatment in this short period of time and a full LTC-
DRG payment may not always be appropriate. Payment-to-cost ratios
simulated for LTCHs, for the cases described above, show that if LTCHs
receive a full LTC-DRG payment for those cases, they would be
significantly ``overpaid'' for the resources they have actually
expended.
Under Sec. 412.529, in general, we adjust the per discharge
payment to the least of 120 percent of the cost of the case, 120
percent of the LTC-DRG specific per diem amount multiplied by the
length of stay of that discharge, or the full LTC-DRG payment, for all
cases
[[Page 24198]]
with a length of stay up to and including five-sixths of the geometric
average length of stay of the LTC-DRG.
As we noted in section VI.C.3. of this preamble, in the June 9,
2003 high-cost outlier final rule (68 FR 34494-34515), we revised the
methodology for determining CCRs for acute care hospitals under the
IPPS because we became aware that payment vulnerabilities existed in
the previous IPPS outlier policy. Consistent with the policy
established for acute care hospitals under the IPPS at Sec. 412.84(i)
and (m) in the June 9, 2003 high-cost outlier final rule (68 FR 34515),
and similar to the policy change described above for LTCH PPS high-cost
outlier payments at Sec. 412.525(a)(4)(ii), we established under Sec.
412.529(c)(5)(ii) that for discharges on or after August 8, 2003,
short-stay outlier payments are subject to the provisions in the
regulations at Sec. 412.84(i)(1), (i)(3) and (i)(4), and (m).
In addition, we also discussed in the June 9, 2003 high-cost
outlier final rule (68 FR 34508-34513) that short-stay outlier payments
are subject to the provisions in the regulations at Sec. 412.84(i)(2)
for discharges on or after October 1, 2003 in accordance with Sec.
412.529(c)(5)(iii). In addition, in that same final rule, we
established that the applicable statewide average CCR is applied when a
LTCH's CCR exceeds the ceiling or in certain other instances as
specified in Sec. 412.84(i)(3). Thus, the applicable statewide average
CCR is no longer applied when a LTCH's CCR falls below the floor.
Furthermore, we also established that any reconciliation of payments
for short-stay outliers may be made upon cost report settlement to
account for differences between the estimated CCR and the actual CCR
for the period during which the discharge occurs. In the June 6, 2003
final rule for the 2004 LTCH PPS rate year (68 FR 34146-34148), for
certain hospitals that qualify as LTCHs under section
1886(d)(1)(B)(iv)(II) of the Act (``subclause (II)'' LTCHs) as added by
section 4417(b) of Pub. L. 105-33, and implemented in Sec.
412.23(e)(2)(ii), we established a temporary adjustment to the short-
stay outlier policy during the 5-year transition period. Under Sec.
412.529(c)(4), effective for discharges from a ``subclause (II)'' LTCH
occurring on or after July 1, 2003, the short-stay outlier percentage
is 195 percent during the first year of the hospital's 5-year
transition. For the second cost reporting period, the short-stay
outlier percentage is 193 percent; for the third cost reporting period,
the percentage is 165 percent; for the fourth cost reporting period,
the percentage is 136 percent; and for the final cost reporting period
of the 5-year transition (and future cost reporting periods), the
short-stay outlier percentage is 120 percent, that is, the same as it
is for all other LTCHs under the LTCH PPS.
As we discussed in the June 6, 2003 final rule for the 2004 LTCH
PPS rate year (68 FR 34147), we established this formula with the
expectation that an adjustment to short-stay outlier payments during
the transition will result in reducing the difference between payments
and costs for a ``subclause (II)'' LTCH for the period of July 1, 2003
through the end of the transition period, when the LTCH PPS will be
fully phased-in.
As we stated in that same final rule, we also expect that during
this 5-year period, ``subclause (II)'' LTCHs will make every attempt to
adopt the type of efficiency enhancing policies that generally result
from the implementation of prospective payment systems in other health
care settings. We did not propose any changes to the short-stay outlier
policy in the February 3, 2005 proposed rule and did not receive any
comments regarding the short-stay outlier policy at Sec. 412.529.
5. Hospital-Within-Hospitals and Satellites of LTCHs Notification
Requirements
In the August 30, 2002 LTCH PPS final rule, we established a
notification requirement for LTCHS that were HwHs, as defined in Sec.
412.22(e) and satellites of LTCHs, as defined in Sec. 412.22(h)(5),
and for LTCHs and satellites of LTCHs that were subject to onsite
provider payment adjustment under Sec. 412.532. At existing Sec.
412.22(e)(3) and (h)(5), we require a LTCH HwH or a satellite of a
LTCH, respectively, to notify its FI and CMS of its co-located status
within 60 days of the start of its first cost reporting period under
the LTCH PPS. At existing Sec. 412.532(i), we require the LTCH or
satellite of a LTCH that is co-located with another hospital or a SNF
to provide notification of its co-location within 60 days following the
effective date of the regulations. We also established an additional
notification requirement at Sec. 412.532(i) for a LTCH or a satellite
of a LTCH subject to the onsite provider payment adjustment at Sec.
412.532, to notify its FI and CMS within 60-days of a change in co-
located status. We intended that these regulations also require LTCHs
and satellites of LTCHs to identify particular co-located Medicare
providers.
As we discussed in the February 3, 2005 proposed rule (70 FR 5750),
it appears that this expectation is unclear in our present regulations.
We have been informed by some of our regional offices and FIs that
LTCHs and satellites of LTCHs, for which they are responsible, have in
many cases neglected to specify the name(s), address(es), and Medicare
provider number(s) of the co-located providers covered by Sec.
412.22(e)(3), (h)(5), and Sec. 412.532, as applicable. Therefore, in
that same proposed rule, with respect to Sec. 412.22(e)(3), we
proposed to clarify our policy that a LTCH that occupies space in a
building used by another hospital or in one or more entire buildings
located on the same campus as buildings used by another hospital and
that meets the criteria of paragraph (e)(1) or (e)(2) of Sec. 412.22
must inform its FI and CMS in writing of its co-located status, as well
as, provide the name(s), address(es), and the Medicare provider
number(s) of the other co-located hospitals (that is, acute care
hospitals, IRFs, and psychiatric facilities and units).
We also proposed to clarify that with respect to Sec.
412.22(h)(5), a satellite of a LTCH that occupies space in a building
used by another hospital, or in one or entire buildings located on the
same campus as buildings used by another hospital, and that meets the
criteria of paragraphs (h)(1) through (h)(4) of Sec. 412.22 must
notify its FI and CMS in writing of its co-location and identify by
name(s), address(es), and Medicare provider number(s) those hospital(s)
with which it is co-located. In addition, we proposed to clarify the
notification requirements in Sec. 412.532 that apply to a LTCH or
satellite of a LTCH. For example, we clarified that the notification
requirements apply to a LTCH or a satellite of a LTCH that is co-
located with a SNF. Furthermore, since the existing regulation text at
Sec. 412.22(e)(3)and (h)(5) required that the notification take place
within 60 days of the LTCH's first cost reporting period beginning on
or after October 1, 2002 and Sec. 412.532(i) required that the
notification occur within 60 days of the effective date of the original
regulation (cost reporting periods beginning on or after October 1,
2002), and this timeframe for many providers has long since passed, we
proposed to eliminate the specific timing requirement in favor of the
on-going, prospective notification requirement described above, which
is also clearer and more comprehensive. Therefore, we proposed to
delete the phrase ``within 60 days of its first cost reporting period
that begins on or after October 1, 2002'' at Sec. 412.22(e)(3) and
(h)(5). We also proposed to delete the phrase ``within 60 days
following the
[[Page 24199]]
effective date of these regulations'' from Sec. 412.532(i). We also
proposed to delete the phrase ``and within 60 days of a change in co-
located status'' from Sec. 412.532(i) because, as we explained in that
same proposed rule, we believe that the proposed continuing
notification requirement in the revised regulation text at Sec.
412.22(e)(3)and (h)(5), as well as at Sec. 412.532(i), would include
the obligation to notify CMS and the FI in writing of any changes in
co-located status and the obligation to provide the requisite
information detailed above. Accordingly, we proposed to revise each of
the three notification provisions, to establish consistency and to
clearly state the on-going requirement that a LTCH or satellite of a
LTCH that is co-located with another hospital or a SNF inform their FIs
and CMS in writing of the name(s), address(es), and Medicare provider
number(s) of particular co-located Medicare providers.
Comment: While three commenters agreed with the proposed
clarification of the notification requirement, one of the commenters
requested that there be no penalty for a provider who fails to meet the
notification requirement.
Response: While we thank these commenters for their support, we
would point out that our notification requirements have existed since
the implementation of the LTCH PPS. What we proposed in the February 3,
2005 LTCH PPS proposed rule were clarifications of these requirements.
In the August 30, 2002 LTCH PPS final rule, we stated that we would
be monitoring HwHs and satellite facilities of LTCHs for compliance
with existing regulations, growth in numbers and transfer patterns. To
that end, we included a requirement in the regulations at Sec.
412.22(e)(3) and (h)(5), respectively, that HwHs and satellites of
LTCHs notify their FIs and CMS regional offices about their co-location
with any other hospital, within 60 days following the initial effective
date of the LTCH PPS. In addition, we provided for an additional
requirement at Sec. 412.532(i), to have a LTCH (including a satellite
of a LTCH) that is subject to the onsite provider payment adjustment
notify its FI and CMS within 60 days of a change in its co-located
status and within 60 days following the effective date of those
regulations. We believed that Sec. 412.532(i) of the regulations also
requires that a LTCH that is co-located with another hospital or a SNF
identify particular Medicare co-located providers that are covered
within the scope of Sec. 412.532(a), as applicable. Also, in the
February 3, 2005 proposed rule (70 FR 5755), we proposed a revision to
Sec. 412.532(i) to clarify that the notification requirement applies
to situations where a LTCH, or a satellite of a LTCH, occupies space in
a building used by a SNF or in one or more entire buildings located on
the same campus as buildings used by a SNF. However, in the course of
revising language in Sec. 412.532(i), while we clearly intended to
apply the notification requirement to a LTCH or a satellite of a LTCH
that is co-located with a SNF, we are concerned that the public may
misinterpret the proposed regulation text to mean that a LTCH or a
satellite of a LTCH which is co-located with a SNF need only provide
notification if it meets the requirements in Sec. 412.22(e)(1) or
(e)(2) or Sec. 412.22(h)(1) through (h)(4). However, since those
regulations do not currently apply to a LTCH or a satellite of a LTCH
which is co-located with a SNF, we believe the intent of this change,
that is, to apply the notification requirement to a LTCH or a satellite
of a LTCH that occupies space in a building used by a SNF or in one or
more entire buildings located on the same campus as buildings used by a
SNF, would not be met. This is clearly contrary to our intent as
expressed in the February 3, 2005 proposed rule (70 FR 5755).
Accordingly, we have restructured the paragraph to clarify that only a
LTCH or a satellite of a LTCH that is co-located with another hospital
(that is, onsite acute care hospital, an onsite IRF, or an onsite
psychiatric facility or unit) is required to meet the specific criteria
at Sec. 412.22(e)(1) or (e)(2) or Sec. 412.22(h)(1) through (h)(4).
The regulation text as revised does not require these criteria to be
met in the case of a SNF that is co-located with a LTCH or satellite of
a LTCH for the notification requirement to apply.
In addition, we had indicated in the February 3, 2005 proposed rule
that a LTCH or a satellite of a LTCH would have to provide specific
information about those providers specified at Sec. 412.532(a). In
this final rule, we are making an editorial change to Sec. 412.532(i)
by deleting the general reference to providers ``specified at paragraph
(a)'' and in its place inserting the specific providers listed in
paragraph (a) to which the particular provision applies.
For the reasons explained previously, we are finalizing our
proposed regulation text concerning the notification requirements (with
some minor editorial clarifications) and our proposal to eliminate the
specific timing requirements.
We believe that these clarifications to the notification
requirements establish consistency and clearly state the ongoing
requirement that a LTCH HwHs and a satellite of a LTCH that is co-
located with another hospital or SNF notify their CMS regional office
and FI in writing, supplying the requisite information. Since we did
not receive any comments in opposition to our proposed clarifications,
we are finalizing those clarifications with the editorial modifications
discussed above. Therefore, in this final rule, we are revising each of
the three notification provisions to establish consistency and to
clearly state the on-going requirement that a LTCH or a satellite of a
LTCH that is co-located with another hospital or a SNF inform their FI
and CMS in writing of the name(s), address(es), and Medicare provider
number(s) of particular co-located Medicare providers. While we did not
propose a penalty for nonconformance with the notification
requirements, we trust that, being aware of our monitoring activities
with regard to this regulation, LTCHs would make every effort to comply
with the notification requirements. As stated in the August 30, 2002
LTCH PPS final rule, if we believe that LTCHs are not complying with
this requirement, it may become necessary for us to revisit the
existing regulations dealing with ownership and control of HwHs through
notice and comment rulemaking.
6. Other Payment Adjustments
As indicated earlier, we have broad authority under section 123 of
Pub. L. 106-113, including whether (and how) to provide for adjustments
to reflect variations in the necessary costs of treatment among LTCHs.
Thus, in the August 30, 2002 LTCH PPS final rule (67 FR 56014-56027),
we discussed our extensive data analysis and rationale for not
implementing an adjustment for geographic reclassification, rural
location, treating a disproportionate share of low-income patients
(DSH), or indirect medical education (IME) costs. In that same final
rule, we stated that we would collect data and reevaluate the
appropriateness of these adjustments in the future once more LTCH data
become available after the LTCH PPS is implemented.
Because the LTCH PPS has only been implemented for a few years and
there is a lag-time in data availability, sufficient new data have
still not yet been generated that would enable us to conduct a
comprehensive reevaluation of these payment adjustments. Nonetheless,
we have reviewed the limited data that are available and have found no
evidence to support additional proposed policy changes. Therefore, in
the February 3, 2005 proposed rule, we did not propose to make any
adjustments for geographic
[[Page 24200]]
reclassification, rural location, DSH, or IME. However, we will
continue to collect and interpret new data as they become available in
the future to determine if these data support proposing any additional
payment adjustments.
Comment: Three of the commenters who supported our proposed
adoption of the revised labor market areas based on OMB's new CBSA
designations urged us to allow LTCHs the same opportunity that exists
for acute care hospitals of applying for geographic reclassification to
neighboring counties for wage index purposes. To limit this option to
acute care hospitals in the same labor market, they argue, puts LTCHs
at a competitive disadvantage. In stating the value of consistency in
the Medicare program, one commenter notes the automatic ``out-migration
adjustment'' in section 505 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 for acute care hospitals in
qualifying counties where hospital employees commute to higher wage
index areas. The commenter urges us to, therefore, consider geographic
reclassification for LTCHs, particularly one that could meet
qualifications for reclassification to a neighboring urban CBSA under
the criteria and conditions for geographic reclassification set forth
in 42 CFR 412.230 through 234 through the Medicare Geographic
Classification Review Board (MGCRB).
Response: We appreciate the commenters' support for the adoption of
OMB's new CBSA-based designations for the LTCH PPS and, as noted above,
we will be finalizing that provision. However, we are not adopting the
suggestion to establish a geographic reclassification procedure for
LTCHs that parallels either the MGCRB set forth in section 1886(d)(10)
of the Act and implemented at 42 CFR 412.230, or the recent ``out-
migration adjustment'' in section 505 of the MMA of 2003, which adds
section 1886(d)(13) to the Act and is implemented at 42 CFR
412.64(h)(5)(i). The Congress clearly targeted both of these
provisions, as well as the reclassification provision set forth in
section 1886(d)(8) of the Act, specifically for ``subsection (d)''
hospitals, that is, inpatient acute care hospitals. As we discuss
below, we believe that the considerable administrative burdens inherent
in establishing a reclassification process for a hospital system as
authorized by the Congress for the approximately 4,500 ``subsection
(d)'' hospitals nationwide, is neither reasonable nor appropriate for
the LTCH system with only approximately 350 hospitals that are unevenly
dispersed throughout the country.
In the August 1, 2002 final rule for the LTCH PPS, in which we
presented features of the new payment system and detailed explanation
of the analytical foundations of our determinations, we stated that we
were not implementing an adjustment for geographic reclassification in
the LTCH PPS because our data supported ``neither an adjustment to
account for differences in area wage levels nor an adjustment for LTCHs
located in rural areas or large urban areas * * *'' In that final rule,
we noted that ``* * * regression analysis indicated that wage
adjustment for LTCHs would not increase the accuracy of payments'' (67
FR 56019). Although we did provide for a 5-year phase-in of the wage
adjustment for LTCHs in the August 1, 2002 final rule, we determined
that we would not establish a geographic reclassification process for
the initial years of the LTCH PPS. We cited the fact that excluded
hospitals (that is, hospitals paid under the TEFRA payment system) were
not required to provide wage-related information on the Medicare cost
report (Worksheet S-3). At that point, we were not prepared to create
instructions for data collection on LTCH wage-related costs or to
develop the full range of application and determination procedures
required in order to establish a new geographic reclassification
system. Furthermore, in the August 1, 2002 final rule, where we
established a 5-year phase-in to a full wage index for the new LTCH
PPS, we sought consistency with area wage adjustments made to all other
postacute providers (that is, the existing HHA, SNF, and IRF PPSs) in
using ``pre-reclassification'' inpatient acute care hospital wage data
without regard to any approved geographic reclassifications under
section 1886(d)(8) or 1886(d)(10) of the Act. The resulting phased-in
area wage adjustment for LTCHs is based on the provider's actual
location, without regard to the urban or rural designation of any
affiliated or related providers. In further discussing geographic
reclassification, we noted that the administrative burden resulting
from an attempt to develop an adjustment for geographic
reclassification far outweighed any potential resulting benefits. The
administrative burden of developing a geographic reclassification
process would likely entail creating a provider application with an
appropriate deadline (and engaging in Paperwork Reduction Act
analysis), creating an entity to process, evaluate and determine
provider applications, and establishing an appeals process for those
who disagreed with the reclassification decision. Also, we would need
to develop criteria for geographic reclassification as well as evaluate
the effect of a reclassification provision in terms of budget
neutrality. We would need to publish reclassification data in each
payment notice and reclassification determinations would need to be
completed by the effective date of each year's payment notice. We
believe this administrative burden outweighs the benefit that would be
received by the few LTCH hospitals that would receive reclassification
under such a system. Thus, we reiterate our belief that it is neither
reasonable nor cost-effective to establish a reclassification system
under the LTCH PPS.
In section XII. (Regulatory Impact Analysis) of the February 3,
2005 proposed rule, we provided data in Table II of that section that
indicated that the impact of the change from the 2005 LTCH PPS rate
year to the 2006 LTCH PPS rate year for wage index changes for the LTCH
PPS, which include the progression of the phase-in of the wage index
and the proposed update in the wage index data, as well as the proposed
change in the labor market area definitions, is, on average, a positive
increase in payments of 0.1 percent. (The same table also indicates
that the average percent change in payments per discharge from the 2005
LTCH PPS rate year to the 2006 LTCH PPS rate year, as a result of all
changes being proposed, is estimated to be an increase of 5.5 percent.)
(70 FR 5764)
Therefore, while we do understand that there are a few individual
LTCHs and also one particular county near Boston that will experience
more than a negligible negative impact because of the adoption of
CBSAs, and, therefore, believe themselves to be at a competitive
disadvantage with regard to hiring hospital personnel as compared to
acute care hospitals in the same market, we continue to believe that,
as described above, it is not administratively feasible to establish a
geographic reclassification procedure for so few LTCHs. (Table II
indicates that for LTCHs in New England, the average percent change in
Medicare payments per discharge from the 2005 LTCH PPS rate year to the
2006 LTCH PPS rate year is estimated to be an increase of 7.5 percent.)
We believe that it is revealing of Congressional intent that existing
reclassification provisions in the statute continue to be limited to
short-term acute care or ``section (d)'' hospitals. Furthermore, the
Congress has not deemed it appropriate to
[[Page 24201]]
mandate a geographical reclassification policy for any of the IPPS-
excluded hospital prospective payment systems. We do not believe that
the small universe of LTCHs that are slightly negatively affected by
the CBSA-based labor market area definitions as they apply to their
wage index adjustment would justify the serious and considerable
administrative burden entailed in establishing a geographic
reclassification adjustment under the LTCH PPS.
7. Budget Neutrality Offset To Account for the Transition Methodology
Under Sec. 412.533, we implemented a 5-year transition period for
moving to 100 percent of the Federal prospective payment rate, during
which a LTCH is paid an increasing percentage of the LTCH PPS Federal
payment rate and a decreasing percentage of reasonable cost-based
payment for each discharge. Furthermore, we allow a LTCH to elect to be
paid based on 100 percent of the standard Federal rate in lieu of the
blended methodology.
The standard Federal rate was determined as if all LTCHs will be
paid based on 100 percent of the standard Federal rate. As stated
earlier, we provide for a 5-year transition period that allows LTCHs to
receive payments based partially on the reasonable cost-based
methodology. Section 123(a)(1) of the Pub. L. 106-113 requires that the
Secretary shall develop a per discharge prospective payment system for
LTCHs and such system shall ``maintain budget neutrality.''
Accordingly, as we established in the August 30, 2002 final rule (67 FR
56033-56036), during the 5-year transition period, we reduce all LTCH
Medicare payments (whether a LTCH elects payment based on 100 percent
of the Federal rate or whether a LTCH is being paid under the
transition blend methodology) to account for the cost of the transition
methodology in the given LTCH PPS rate year. Specifically, we reduce
all LTCH Medicare payments during the 5-year transition by a factor
that is equal to 1 minus the ratio of the estimated reasonable cost-
based payments that would have been made if the LTCH PPS had not been
implemented to the projected total Medicare program PPS payments (that
is, payments made under the transition methodology and the option to
elect payment based on 100 percent of the Federal rate).
In the May 7, 2004 final rule (69 FR 25702), based on the best
available data at that time, we projected that approximately 93 percent
of LTCHs will be paid based on 100 percent of the standard Federal rate
rather than receive payment under the transition blend methodology for
the 2005 LTCH PPS rate year. Using the same methodology described in
the August 30, 2002 LTCH PPS final rule (67 FR 56034), this projection,
which used updated data and inflation factors, was based on our
estimate that either--(1) A LTCH has already elected payment based on
100 percent of the Federal rate prior to the start of the 2005 LTCH PPS
rate year (July 1, 2004); or (2) a LTCH would receive higher payments
based on 100 percent of the 2005 LTCH PPS rate year standard Federal
rate compared to the payments it would receive under the transition
blend methodology. Similarly, we projected that the remaining 7 percent
of LTCHs will choose to be paid based on the applicable transition
blend methodology (as set forth under Sec. 412.533(a)) because they
would receive higher payments than if they were paid based on 100
percent of the 2005 LTCH PPS rate year standard Federal rate.
In that same final rule, based on the best available data at that
time and policy revisions described in that same rule, we projected
that the full effect of the remaining 4 years of the transition period
(including the election option) would result in a cost to the Medicare
program of $29 million. Specifically, for the 2005 LTCH PPS rate year,
we estimated that the cost of the transition would be $15 million. In
order to maintain budget neutrality, using the methodology established
in the August 30, 2002 LTCH PPS final rule (67 FR 56034) based on
updated data and the policies and rates discussed in the May 7, 2004
LTCH PPS final rule, we established a 0.5 percent reduction (0.995) to
all LTCH payments in the 2005 LTCH PPS rate year to account for the $15
million estimated cost of the transition period methodology (including
the option to elect payment based on 100 percent of the Federal rate)
for the 2005 LTCH PPS rate year. Furthermore, we indicated that we
would propose a budget neutrality offset for each of the remaining
years of the transition period to account for the estimated costs for
the respective LTCH PPS rate years.
In the February 3, 2005 proposed rule (70 FR 5754), based on the
best available data at that time, using the same methodology
established in the August 30, 2002 LTCH PPS final rule (67 FR 56034),
we projected that approximately 94 percent of LTCHs would be paid based
on 100 percent of the standard Federal rate rather than receive payment
under the transition blend methodology during the 2006 LTCH PPS rate
year. This projection was based on our estimate that either: (1) A LTCH
has already elected payment based on 100 percent of the Federal rate
prior to the beginning of the 2006 LTCH PPS rate year (July 1, 2005);
or (2) a LTCH would receive higher payments based on 100 percent of the
standard Federal rate compared to the payments they would receive under
the transition blend methodology. Similarly, we projected that the
remaining 6 percent of LTCHs would choose to be paid based on the
transition blend methodology at Sec. 412.533 because those payments
are estimated to be higher than if they were paid based on 100 percent
of the standard Federal rate.
Based on the best available data and the policies described in the
February 3, 2005 proposed rule, we projected that in the absence of a
transition period budget neutrality offset, the full effect of the
remaining 3 years of the transition period (including the election
option) as compared to payments as if all LTCHs would be paid based on
100 percent of the Federal rate would result in a cost to the Medicare
program of $10 million as follows: $7 million in the 2006 LTCH PPS rate
year; $3 million in the 2007 LTCH PPS rate year; and no cost in the
2008 LTCH PPS rate year. As we explained in that same proposed rule, we
are no longer projecting a small cost for the 2008 LTCH PPS rate year
(July 1, 2007 through June 30, 2008) even though some LTCH's will have
a cost reporting period for the 5th year of the transition period which
will be concluding in the first 3 months of the 2008 LTCH PPS rate year
because as we discussed above, based on the most available data, we are
projecting that the vast majority of LTCHs would have made the election
to be paid based on 100 percent of the Federal rate rather than the
transition blend.
Accordingly, using the methodology established in the August 30,
2002 LTCH PPS final rule (67 FR 56034) based on updated data and the
policies and rates discussed in the February 3, 2005 proposed rule, we
proposed a 0.2 percent reduction (0.998) to all LTCHs' payments for
discharges occurring on or after July 1, 2005 and through June 30,
2006, to account for the estimated cost of the transition period
methodology (including the option to elect payment based on 100 percent
of the Federal rate) of the $7 million for the 2006 LTCH PPS rate year.
We note that we did not receive any comments regarding our proposed
budget neutrality factor to account for the cost of the transition
period.
Therefore, in this final rule, based on the most recent available
data, using the same methodology established in the
[[Page 24202]]
August 30, 2002 LTCH PPS final rule (67 FR 56034), we are projecting
that approximately 98 percent of LTCHs will be paid based on 100
percent of the standard Federal rate rather than receive payment under
the transition blend methodology during the 2006 LTCH PPS rate year.
This projection, which uses updated data, is based on our estimate that
either: (1) A LTCH has already elected payment based on 100 percent of
the Federal rate prior to the beginning of the 2006 LTCH PPS rate year
(July 1, 2005); or (2) a LTCH will receive higher payments based on 100
percent of the standard Federal rate compared to the payments they
would receive under the transition blend methodology. Similarly, we
project that the remaining 2 percent of LTCHs will choose to be paid
based on the transition blend methodology at Sec. 412.533 because
those payments are estimated to be higher than if they were paid based
on 100 percent of the standard Federal rate. The applicable transition
blend percentage applies to the LTCH's entire cost reporting period
beginning on or after October 1 (unless the LTCH elects payment based
on 100 percent of the Federal rate).
Based on the best available data and the policies described in this
final rule, we are projecting that the full effect of the remaining
years of the transition period (including the election option) as
compared to payments as if all LTCHs would be paid based on 100 percent
of the Federal rate will result in a negligible cost to the Medicare
program. Specifically, based on the most recent available data, we
estimate that the cost of the transition period methodology (including
the option to elect payment based on 100 percent of the Federal rate)
would be approximately $1 million in the 2006 LTCH PPS rate year and
approximately $675 thousand in the 2007 LTCH PPS rate year. As stated
above, to account for the cost of the transition methodology in a given
LTCH PPS rate year during the 5-year transition, we reduce all LTCH
Medicare payments by a factor that is equal to 1 minus the ratio of the
estimated reasonable cost-based payments that would have been made if
the LTCH PPS had not been implemented to the projected total Medicare
program PPS payments (that is, payments made under the transition
methodology and the option to elect payment based on 100 percent of the
Federal rate). Because we estimate that the additional cost of the
transition period methodology (including the option to elect payment
based on 100 percent of the Federal rate) will be approximately $1
million for the 2006 LTCH PPS rate year (and will be less than $1
million for the 2007 LTCH PPS rate year) and because this amount is a
small percentage of total LTCH PPS payments (estimated at over $3
billion, as shown in the table below), the formula that we have used to
establish the budget neutrality offset in prior years results in a
factor (as described above) that we reduce all LTCH Medicare payments
by to account for those additional costs of zero (as a function of
rounding). In addition, as explained above, we are no longer projecting
an additional cost to the Medicare program resulting from the
transition period methodology (including the option to elect payment
based on 100 percent of the Federal rate) for the 2008 LTCH PPS rate
year.
Accordingly, using the methodology established in the August 30,
2002 LTCH PPS final rule (67 FR 56034), based on updated data and the
policies and rates discussed in this final rule, we are establishing a
0.0 percent reduction (a budget neutrality offset of 1.000) to all
LTCHs' payments for discharges occurring on or after July 1, 2005 and
through June 30, 2006, to account for the estimated cost of the
transition period methodology (including the option to elect payment
based on 100 percent of the Federal rate). As stated above, in order to
maintain budget neutrality, we indicated that we will use a budget
neutrality offset for each of the remaining years of the transition
period to account for the estimated costs for the respective LTCH PPS
rate years. In this final rule, based on the best available data, we
estimate there would be a 0.0 percent budget neutrality offset to LTCH
PPS payments during the remaining years of the transition period since,
as explained above, we currently estimate that the additional cost to
the Medicare program resulting from the transition period methodology
is so small that the budget neutrality factor determined under our
established methodology would round to zero.
As we discussed in the August 30, 2002 LTCH PPS final rule (67 FR
56036), consistent with the statutory requirement for budget neutrality
in section 123(a)(1) of Pub. L. 106-113, we intended that estimated
aggregate payments under the LTCH PPS for FY 2003 equal the estimated
aggregate payments that would be made if the LTCH PPS were not
implemented. Our methodology for estimating payments for purposes of
the budget neutrality calculations uses the best available data at the
time and necessarily reflect assumptions. As the LTCH PPS progresses,
we are monitoring payment data and will evaluate the ultimate accuracy
of the assumptions used in the budget neutrality calculations (for
example, inflation factors, intensity of services provided, or
behavioral response to the implementation of the LTCH PPS) described in
the August 30, 2002 LTCH PPS final rule (67 FR 56027-56037). To the
extent these assumptions significantly differ from actual experience,
the aggregate amount of actual payments may turn out to be
significantly higher or lower than the estimates on which the budget
neutrality calculations were based.
Section 123 of Pub. L. 106-113 and section 307 of Pub. L. 106-554
provide broad authority to the Secretary in developing the LTCH PPS,
including the authority for appropriate adjustments. Under this broad
authority, as implemented in the regulations at Sec. 412.523(d)(3), we
have provided for the possibility of making a one-time prospective
adjustment to the LTCH PPS rates by October 1, 2006, so that the effect
of any significant difference between actual payments and estimated
payments for the first year of the LTCH PPS would not be perpetuated in
the LTCH PPS rates for future years.
In the May 7, 2004 LTCH PPS final (69 FR 25703-25704), based on the
best available data at that time, we estimated that total Medicare
program payments for LTCH services over the next 5 LTCH PPS rate years
would be $2.96 billion for the 2005 LTCH PPS rate year; $2.98 billion
for the 2006 LTCH PPS rate year; $2.95 billion for the 2007 LTCH PPS
rate year; $3.01 billion for the 2008 LTCH PPS rate year; and $3.12
billion for the 2009 LTCH PPS rate year.
In the February 3, 2005 proposed rule, consistent with the
methodology established in the August 30, 2002 LTCH PPS final rule (67
FR 56036), based on the best available data at that time, we estimated
that total Medicare program payments for LTCH services for the next 5
LTCH PPS rate years would be $2.94 billion in the 2006 LTCH PPS rate
year; $2.90 billion in the 2007 LTCH PPS rate year; $2.96 billion in
the 2008 LTCH PPS rate year; $3.08 billion in the 2009 LTCH PPS rate
year; and $3.24 billion in the 2010 LTCH PPS rate year. These estimates
were based on the projection that 94 percent of LTCHs would elect to be
paid based on 100 percent of the 2006 LTCH PPS rate year proposed
standard Federal rate rather than the applicable transition blend, and
our estimate of 2006 LTCH PPS rate year payments to LTCHs. These
estimates were also based on our Office of the Actuary's most recent
estimate of the excluded hospital with capital market basket for the
2006 through 2010
[[Page 24203]]
LTCH PPS rate years and our Office of the Actuary's projection of the
change in Medicare beneficiary fee-for-service enrollment for the 2006
through 2010 LTCH PPS rate years (70 FR 5752).
Comment: Two commenters requested that we include estimates of the
impact of our recent payment adjustment for LTCH HwHs and satellites of
LTCHs in our projections of future LTCH PPS payments.
Response: The tables in section V.C.7. of this preamble and the
impact analysis in section XII.B.5. have not factored in the estimated
impact of the recent payment adjustment for LTCH HwHs and satellites of
LTCHs that were established in the August 11, 2004 IPPS final rule and
codified at Sec. 412.534. In that same final rule, we noted that
quantifying the effect of the payment adjustment for LTCH HwHs and
satellites under Sec. 412.534 on Medicare expenditures for the LTCH
PPS was problematic because ``[w]e cannot estimate the numbers of
existing entities that will be affected by these revisions, nor can we
estimate the specific DRGs that will be affected at those hospitals''
(69 FR 49771). We expected some degree of behavioral changes in
discharge and admission policies between host hospitals and their LTCH
HwHs or LTCH satellites, but ``* * * we [also] do not know the number
of new applications for either LTCH hospital-within-a-hospital or LTCH
satellite status that would [be] subject to review under these new
circumstances.'' (69 FR 49771) Additionally, we note that we adopted a
``hold harmless'' policy the first year following the implementation of
this policy (cost reporting periods beginning on or after October 1,
2004). That is, LTCH HwHs and LTCH satellites are not subject to the
payment adjustment if the percentage of discharges admitted by the LTCH
HwH or satellite of the LTCH from the host hospital do not exceed the
percentage of discharges admitted from the host in its FY 2004 cost
reporting period (Sec. 412.534(f)(1)). Furthermore, under Sec.
412.534(f), we have also provided for a transition to the full payment
adjustment for a hospital that is paid under the provisions of subpart
O on October 1, 2005 and whose qualifying period under Sec. 412.23(e)
began on or before October 1, 2004. We know from comments that we
received on the May 18, 2004 IPPS proposed rule (69 FR 28196) that
there could be a considerable number of these LTCHs in formation and
yet since they are presently acute care hospitals, they are receiving
Medicare payments under the IPPS. No claims or cost reporting data have
been submitted by these hospitals under the LTCH PPS because they are
not LTCHs at this time and, therefore, our projections would be unable
to capture data on this not-inconsiderable group of providers that
would be affected by the payment adjustment.
Since the publication of the August 11, 2004 final rule, however,
we have compiled a more comprehensive list of HwHs and asked our Office
of the Actuary to utilize the best available Medicare data in order to
evaluate whether it could be used to create a preliminary estimate of
the impact of the LTCH HwH and satellite payment adjustment on Medicare
payments during the three years of the transition to the full payment
adjustment (FYs 2006-2008). Presently, based on our best data available
to us, we believe that there are approximately 170 HwHs, but, because
of the lag time in the availability of discharge data, we do not have
complete data on the percentage of each LTCH's discharges that were
admitted from its host during FY 2004. However, we do have specific
discharge pattern data from 48 HwHs and their hosts (for CY 2003)
provided by a LTCH HwH chain.
Our Office of the Actuary evaluated the available data on those
LTCH HwHs to develop projections based on the specified yearly ceilings
of admissions from the host during the transition (that is, 75 percent
in FY 2006, 50 percent in 2007 and 25 percent in FY 2008) and
extrapolated the results from these calculations to the remaining LTCH
HwHs for which we lacked specific patient discharge pattern data.
Because of the limited availability of hospital-specific admission and
discharge data, those estimates were based on several assumptions,
including behavioral changes by hosts that would result in fewer
patients being discharged to the LTCH HwH and no additional increase in
the number of LTCH patients.
Although the actual result of these analyses, projections, and
extrapolations initially indicated an estimated reduction in Medicare
payments under the LTCH PPS, these estimates do not account for the
possibility that there could be an increase in the number of non-
outlier patients discharged from host hospitals who were admitted to
and receive Medicare covered services at another LTCH that was not co-
located with the host. Since these LTCHs that are not co-located with
the host would also submit claims under the LTCH PPS for treating the
Medicare beneficiaries admitted, at this point, we believe it would be
inappropriate to project a significant reduction in payments to LTCHs
under the LTCH PPS. Therefore, based on the data available at this
time, we continue to believe that it is difficult to accurately
quantify the impact on Medicare payments under the LTCH PPS resulting
from the recent payment adjustment at Sec. 412.534. We believe that
any attempt to include the impact of this particular policy in our
projections of future LTCH PPS spending could undermine the credibility
of these projections. For these reasons, while the effect of the change
to the LTCH HwH and LTCH satellite policy has been considered, we do
not believe that it is appropriate at this point to reduce our
projection of LTCH PPS payments in this final rule.
As we explained in detail in our August 11, 2004 final rule for the
IPPS (69 FR 49196) we implemented the payment adjustment for LTCH HwHs
and satellites at Sec. 412.534 because we believe that the co-location
of LTCHs or LTCH satellites with other Medicare providers, particularly
acute care hospitals, bore a ``strong resemblance * * * to LTCH units
of acute care hospitals, a configuration precluded by statute.'' (69 FR
49201, August 11, 2004) Although we are not presently capable of
publishing reliable data projections that reflect the impact of this
policy on the LTCH PPS, we continue to believe, as stated in the August
11, 2004 final rule, ``* * * [t]o the extent that these policy
revisions will eliminate hospital-within-hospital arrangements that
circumvented our existing requirements, the Medicare program will avoid
making unnecessary payments under the more costly'' LTCH prospective
payment system (69 FR 49771).
In this final rule, consistent with the methodology established in
the August 30, 2002 LTCH PPS final rule (67 FR 56036), based on the
most recent available data, we estimate that total Medicare program
payments for LTCH services for the next 5 LTCH PPS rate years will be
as follows:
------------------------------------------------------------------------
Estimated
LTCH PPS rate year payments ($
in billions)
------------------------------------------------------------------------
2006.................................................... 3.32
2007.................................................... 3.38
2008.................................................... 3.48
2009.................................................... 3.63
2010.................................................... 3.79
------------------------------------------------------------------------
In accordance with the methodology established in the August 30,
2002 LTCH PPS final rule (67 FR 56037), these estimates are based on
the projection that 98 percent of LTCHs will elect to be paid based on
100 percent of the 2006 LTCH PPS rate year proposed standard Federal
rate rather than the applicable transition blend, and our estimate of
2006 LTCH PPS rate year
[[Page 24204]]
payments to LTCHs using our Office of the Actuary's most recent
estimate of the excluded hospital with capital market basket of 3.4
percent for the 2006 LTCH PPS rate year, 3.0 percent for the 2007 LTCH
PPS rate year, 2.8 for the 2008 LTCH PPS rate year, and 2.9 percent for
the 2009 and 2010 LTCH PPS rate years. We also took into account our
Office of the Actuary's projection that there will be a change in
Medicare fee-for-service beneficiary enrollment of -1.0 percent in the
2006 LTCH PPS rate year, -2.1 percent in the 2007 LTCH PPS rate year, -
1.0 percent in the 2008 LTCH PPS rate year, 0.3 percent in the 2009 and
2010 LTCH PPS rate years. (We note that, based on the most recent
available data, our Office of the Actuary is projecting a slight
decrease in Medicare fee-for-service Part A enrollment, in part,
because they are projecting an increase in Medicare managed care
enrollment as a result of the implementation of several provisions of
the MMA of 2003.)
As we discussed in the May 7, 2004 LTCH PPS final rule (69 FR
25704), because the LTCH PPS has only been recently implemented,
sufficient new data have not been generated that would enable us to
conduct a comprehensive reevaluation of our budget neutrality
calculations. Accordingly, we did not make a one-time adjustment under
Sec. 412.523(d)(3). In the February 3, 2005 proposed rule (70 FR
5752), we explained that at this time, we still do not have sufficient
new data to enable us to conduct a comprehensive reevaluation of our
budget neutrality calculations. Therefore, we did not propose to make a
one-time adjustment under Sec. 412.523(d)(3) so that the effect of any
significant difference between actual payments and estimated payments
for the first year of the LTCH PPS is not perpetuated in the PPS rates
for future years.
We note that we did not receive any comments on our proposal not to
make a one-time adjustment under Sec. 412.523(d)(3) in the LTCH PPS
rate year 2006. Accordingly, at this time, we are not making a one-time
adjustment under Sec. 412.523(d)(3) so that the effect of any
significant difference between actual payments and estimated payments
for the first year of the LTCH PPS is not perpetuated into the LTCH PPS
rates for future years. However, we will continue to collect and
interpret new data as the data become available in the future to
determine if such an adjustment should be proposed.
8. Extension of the Interrupted Stay Policy
In the May 7, 2004 LTCH PPS final rule, we revised the definition
of an ``interruption of a stay'' at Sec. 412.531 by establishing two
distinct categories, ``[a] 3-day or less interruption of stay'' at
(a)(1) and ``[a] greater than 3-day interruption of stay'' at (a)(2).
The ``greater than 3-day interruption of stay'' which was directly
based on the original ``interruption of stay'' policy that had been
implemented at the start of the LTCH prospective payment system (August
30, 2002 LTCH PPS final rule, 67 FR 56002) is defined as a stay at a
LTCH during which a Medicare inpatient is discharged from the LTCH to
an acute care hospital, an IRF, or a SNF (or swing bed) for a period of
greater than 3 days, but is readmitted to the LTCH within the
applicable fixed day period, that is, between 4 and 9 consecutive days
for an acute care hospital, between 4 and 27 consecutive days for an
IRF, and between 4 and 45 consecutive days for a SNF. In both the ``3-
day or less interruption of stay'' and the ``greater than 3-day
interruption of stay'', the day count begins on the day of discharge
from the LTCH, (which is also the day of admission to the other site of
care). The payment features of the ``greater than 3-day'' policy itself
govern the stay after day 4 once the ``3-day or less'' policy no longer
applies.
As defined in the previous paragraph, for purposes of Medicare
payment to the LTCH, a greater than 3-day interruption of stay is
treated as only one discharge from the LTCH and generates only one LTC-
DRG payment. However, under this policy, Medicare makes a separate
payment to the intervening provider (that is, acute care hospital, IRF,
or SNF) for the treatment or care given to the beneficiary during the
interruption.
In implementing this policy, we provided that, in the event a
Medicare inpatient is discharged from a LTCH and is readmitted and the
stay qualifies as an interrupted stay, the provider must cancel the
claim generated by the original stay in the LTCH and submit one claim
for the entire stay. (For further details, see Medicare Program
Memorandum Transmittal A-02-093, September 2002.) On the other hand, if
the patient stay exceeds the total fixed-day threshold at the other
facility before being readmitted to the LTCH, two separate LTCH PPS
payments would be made. One would be based on the principal diagnosis
and length of stay for the first discharge from the LTCH and the other
based on the principal diagnosis and length of stay for the second
discharge from the LTCH. Depending upon their lengths of stay, both
stays could result in payments as a short-stay outlier (Sec. 412.529),
a full LTC-DRG, or even a high-cost outlier. Further, if the principal
diagnosis is the same for both admissions, the hospital could receive
two similar payments. It is also important to note that under the
existing greater than 3-day interruption of stay policy, a separate
Medicare payment is made to the intervening provider under that
provider's payment system.
The 3-day or less interruption of stay policy is defined at Sec.
412.531(a)(1) as ``a stay at a long-term care hospital during which a
Medicare inpatient is discharged from the long-term care hospital to an
acute care hospital, IRF, SNF, or the patient's home and readmitted to
the same long-term care hospital within 3-days of the discharge from
the long-term care hospital. The 3-day or less period begins with the
date of discharge from the long-term care hospital and ends not later
than midnight of the third day.'' As discussed in detail in the May 7,
2004 LTCH PPS final rule (69 FR 25691-25700), there are several
components to this policy. First, only one LTC-DRG payment will be made
to the LTCH for the patient who is discharged from the LTCH to an acute
care hospital, IRF, SNF, or patient's home and readmitted to the same
LTCH within 3 days. Secondly, any off-site tests or medical treatment,
either inpatient or outpatient, delivered at an acute care hospital or
an IRF, or care at a SNF, will be covered by the LTCH ``under
arrangements'' if the patient is readmitted to the LTCH within 3 days.
(We established a specific exception to the ``under arrangements''
requirement during the 2005 LTCH PPS rate year, which we will review
below, at Sec. 412.531(b)(1)(ii)(A)(1), in the event that the
treatment was grouped to a surgical DRG under the IPPS at an acute care
hospital.)
Existing regulations at Sec. 412.509(c) require a LTCH to furnish
all necessary covered services for a Medicare beneficiary who is an
inpatient of the hospital either directly or ``under arrangements'' (as
defined in Sec. 409.3). The ``under arrangements'' policy set forth in
Sec. 412.509 derives from the regulations at Sec. 411.15(m), which
implement section 1862(a)(14) of the Act. Section 1862(a) of the Act
specifies the services for which no payment may be made under Medicare
Part A and Part B and also specifies the exception for certain services
to be furnished ``under arrangements'' by providers. Under section
1862(a)(14) of the Act, notwithstanding any other provision of
[[Page 24205]]
this title, ``no payment may be made under part A or part B for any
expenses incurred for items or services which are other than
physicians' services (as defined in regulations promulgated
specifically for purposes of this paragraph), services described by
section 1861(s)(2)(K) of the Act (certified nurse-midwife services,
qualified psychologist services, and services of a certified registered
nurse anesthetist, and which are furnished to an individual who is a
patient of a hospital or critical access hospital by an entity other
than the hospital or critical access hospital, unless the services are
furnished under arrangements (as defined in section 1861(w)(1) of the
Act)) with the entity made by the hospital or critical access
hospital.'' Section 1861(w)(1) of the Act states that ``[t]he term
``arrangements'' is limited to arrangements under which receipt of
payment by the hospital, critical access hospital, skilled nursing
facility, home health agency, or hospice program (whether in its own
right or as agent), with respect to services for which an individual is
entitled to have payment made under this title, discharges the
liability of such individual or any other person to pay for the
services.'' We believed the objective of these statutory provisions,
which were implemented for inpatient acute care hospitals in
regulations at Sec. 411.15(m) and subsequently at Sec. 412.509 for
LTCHs, was to discharge financial liability for inpatients who may have
received additional care off-premises and to assign payment
responsibility for the care to the hospital that is being paid for that
beneficiary's total care for that spell of illness.
Over the years, we have often referred to this as the ``prohibition
against unbundling'' for purposes of emphasizing that if a Medicare
provider ``unbundles'' specific components of a beneficiary's total
inpatient care (provided either ``directly'' or ``under arrangements'')
and sends separate claims to Medicare for those tests or treatments,
the provider would be acting in violation of the statute and applicable
regulations. Since LTCHs treat patients with multicomorbidities who are
often in need of a wide range of diagnostic and treatment modalities
and lengthy hospitalizations, we believe that in this particular
setting, this statutory requirement was particularly vulnerable to
gaming. For that reason, in formulating the ``3-days or less
interruption of stay policy'' at Sec. 412.531(a), we clarified the
existing general unbundling prohibition and the unbundling prohibition
as it applied to the interrupted stay policy under the LTCH PPS.
As noted above, we were concerned that LTCH patients, under active
treatment, were being inappropriately discharged to other treatment
sites, receiving tests or procedures related to one of the diagnoses
for which the patient was being hospitalized and which otherwise should
have been provided at the LTCH either directly or ``under
arrangements'' (Sec. 412.509) prior to being readmitted to the LTCH.
This behavior resulted in another claim being submitted to Medicare by
the other treatment site for those tests or procedures. Since it is a
fundamental principle of all prospective payment systems that payments
associated with specific diagnostic groups include all costs associated
with rendering care to the type of patients treated, the behavior
described above on the part of the LTCH would result in an additional
and inappropriate Medicare payments for services delivered by an
intervening provider.
If a LTCH obtains, from another facility ``under arrangements,'' a
specific test or procedure that is not available on the LTCH's premises
for one of its inpatients, as contemplated by Sec. 412.509, a
discharge and a subsequent readmission would therefore be unnecessary
and inappropriate. This is true even if it is necessary to transport
the patient to another facility to receive the arranged-for service. In
this situation, generally, the LTCH would include the medically
necessary test or procedure on its patient claim to Medicare which
could have an effect on the assignment of the LTC-DRG and, thus, the
Medicare payment to the LTCH, and the LTCH would be responsible for
paying the provider directly for the test or procedure. Under the 3-day
or less interruption of stay policy, if a LTCH patient is discharged to
an acute care hospital, IRF, SNF, or patient's home and returns to the
LTCH for further hospital-level care within 3 days, any Medicare-
covered services delivered during that interruption will be deemed to
have been delivered ``under arrangements'' and included in the one
episode of care for which Medicare will pay the LTCH. Furthermore,
under Sec. 409.3, when services are furnished ``under arrangements,''
Medicare payments made to the provider that arranged for the services
discharges the liability of the beneficiary or any other person to pay
for those services.
Our policy was premised on the belief that 3 days, in most
instances, represented an appropriate interval for establishing whether
or not the reason for the patient's readmission was directly connected
to the original episode of care at the LTCH. Therefore, no additional
claim can be submitted to Medicare by the other provider that actually
furnished the test or procedure if the patient is readmitted to the
LTCH within 3 days since the initial LTCH admission triggered a
Medicare payment under the LTCH prospective payment system that has
been calibrated to cover payment for all necessary Medicare covered
services delivered to a beneficiary during that episode of care.
Moreover, under this established policy, where the LTCH is required
to pay for outpatient or inpatient medical treatment or care provided
at an acute care hospital, an IRF or SNF during any days of the 3-day
or less interruption, all days of the 3-day or less interruption that
the patient is away from the LTCH will be included in that patient's
day count at the LTCH. If the LTCH patient goes home during the
interruption and receives no additional medical care prior to being
readmitted to the LTCH, the intervening days will not be included in
the day count because the LTCH did not deliver any services to the
patient during those days either directly or ``under arrangement.''
In the policy, as established in the May 7, 2004 LTCH PPS final
rule, for LTCH rate year 2005, we did provide a limited exception to
the prohibition against additional Medicare payments to an intervening
provider under the less than 3-day interruption of stay policy at Sec.
412.531(b)(1)(ii)(A)(1). Under this exception, during the 2005 LTCH PPS
rate year, if a patient was discharged from a LTCH, admitted as an
inpatient to an acute care hospital and readmitted to the same LTCH
within 3 days, and if the treatment that was delivered at the acute
care hospital was grouped to a surgical DRG, Medicare will pay the
acute care hospital separately for that surgical treatment. We also
provided in Sec. 412.531(b)(1)(i)(c) that the number of days that a
beneficiary spends away from a LTCH during a 3-day or less interruption
of stay during which a beneficiary receives a procedure that is grouped
to a surgical DRG under the IPPS in an acute care hospital during the
2005 LTCH PPS rate year is not included in determining the length of
stay of the patient at the LTCH. We established this exception in
response to comments on the original policy that we proposed in the
January 30, 2004 proposed rule (69 FR 4768-4772) requesting that we
take into consideration the following scenario: the occurrence of an
emergency ``totally unrelated'' to a LTCH patient's admitting diagnoses
that occurred and
[[Page 24206]]
requiring surgery at an acute inpatient hospital, followed by the
readmission of the patient within 3-days to the LTCH for a continuation
of treatment of the patient's initial medical problems.
In our response to these concerns, we noted that the 3-day or less
interruption of stay policy at 412.531 resulted from our concern that
if a LTCH patient was discharged to an acute care hospital for only 1,
2, or 3 days, followed by a readmission to the LTCH, there could be
reason to believe that the treatment delivered, even if it was grouped
to a surgical DRG, was not a major procedure because of the relatively
short length of stay, and, therefore, should have been provided ``under
arrangements.''
In the May 7, 2004 LTCH PPS final rule, we stated that over the
course of the first year of implementation of the revised 3-day or less
interrupted stay policy, we would study relevant claims data in order
to evaluate whether further proposed refinements to this policy would
be warranted in this year's rule. Specifically, we stated that we would
analyze new data to determine whether problems associated with LTCH
interrupted stays equally affected all settings to which LTCH patients
may have been discharged and subsequently readmitted and we would
closely monitor patterns of discharges and readmissions under the first
year of this policy. In order to pursue these analyses, we stated that
we would be using relevant claims data as soon as they were available
to determine whether our policy was producing its desired effect of
reducing unnecessary and inappropriate Medicare payments while not
compromising beneficiary access to medically necessary services. The 3-
day interruption of stay policy was first implemented on July 1, 2004,
and, therefore, we do not yet have sufficient data to accomplish the
above evaluations. Therefore, in the February 3, 2005 proposed rule (70
FR 5754), we proposed to extend the surgical DRG exception in Sec.
412.531(b)(1)(i)(C) and (b)(ii)(A)(1) through the 2006 LTCH rate year,
from July 1, 2005 through June 30, 2006. As we explained in that same
proposed rule, at that point, the policy will have been in effect for
12 months, and we believe that we will be better able to evaluate
whether this exception should be extended further as well as whether
the overall policy requires modification in order to serve the overall
goals of the Medicare program.
Comment: Three commenters expressed strong support for our proposed
one-year extension of the surgical DRG exception to our 3-days or less
interrupted stay policy, noting that it prevents LTCHs from having to
pay for costly surgical procedures ``under arrangements'' for patients
who are otherwise being treated at LTCHs. One of the commenters urged
us to make it a permanent feature of the policy.
Response: We appreciate the commenters' support for our proposed
policy. As noted above, we will be analyzing claims data over the next
year to determine whether the surgical DRG exception to the ``under
arrangements'' feature of the 3-day or less interrupted stay policy is
actively accomplishing our goal of reducing unnecessary Medicare
payments and to deter inappropriate Medicare payments while not
compromising beneficiary access to medically necessary services. We
believe that we will have sufficient data to evaluate continuation of
the exception and also whether additional refinements to the overall 3-
day or less interruption of stay policy are warranted. We are
particularly interested in analyzing data from LTCHs to determine
whether there has been a significant increase in interruptions of 4-
days since the establishment of the policy. To the extent interruption
of stay has increased to at least 4 days, this behavior may indicate
inappropriate efforts to side-step the provisions of our 3-day or less
interruption of stay policy. Therefore, as proposed, we are extending
the surgical DRG exception through the 2006 LTCH PPS rate year, from
July 1, 2005-June 30, 2006 in Sec. 412.531(b)(1)(i)(C) and
(b)(ii)(A)(1).
9. Onsite Discharges and Readmittances
Under Sec. 412.532, generally, if more than 5 percent of all
Medicare discharges during a cost reporting period are patients who are
discharged to an onsite SNF, IRF, or psychiatric facility, or to an
onsite acute care hospital and who are then directly readmitted to the
LTCH (including a satellite facility), only one LTC-DRG payment will be
made to the LTCH for these type of discharges and readmittances during
the LTCH's cost reporting period. Therefore, payment for the entire
stay will be paid either as one full LTC-DRG payment or a short-stay
outlier, depending on the duration of the entire LTCH stay.
In applying the 5-percent threshold, we apply one threshold for
discharges and readmittances with the co-located acute care hospital.
There is also a separate 5-percent threshold for the aggregate of all
discharges and readmittances to the LTCH from its co-located SNFs,
IRFs, and psychiatric facilities. In the case of a LTCH that is co-
located with an acute care hospital, an IRF, or a SNF, the interrupted
stay policy at Sec. 412.531 applies until the 5-percent threshold is
reached. Once the applicable 5-percent threshold is reached, all LTCH
discharges and readmittances from the co-located acute care hospital
for that cost reporting period are paid as one discharge pursuant to
Sec. 412.532. This means that once the 5-percent threshold has been
reached, even if a discharged LTCH Medicare patient was readmitted to
the LTCH following a stay in an acute care hospital of greater than 9
days, if the facilities share a common location, the subsequent
discharge from the LTCH will not represent a separate hospitalization
for payment purposes. Under this policy, the total stay for a patient
will include LTCH days prior to the interruption and, also, the days
after the readmission to the LTCH that followed the interruption and
Medicare will make one LTC-DRG payment when the patient is discharged
during a cost reporting period. One LTC-DRG will be assigned based upon
all patient diagnoses and care delivered to the patient during the
entire LTCH stay and included on the discharge claim regardless of the
length of stay at the acute care hospital during the interruption.
Similarly, if the LTCH has exceeded its 5-percent threshold for all
discharges to an onsite IRF, SNF, or psychiatric hospital or unit,
which were readmitted to the LTCH from those providers, the subsequent
LTCH discharge for those patients will not be treated as a separate
discharge for Medicare payment purposes. (Unless the up to 3-day
interrupted stay policy is applicable, payment to an acute care
hospital under the IPPS, to the IRF under the IRF PPS, or to a SNF
under the SNF PPS, will not be affected. Payments to the psychiatric
facility also will not be affected.)
In the August 30, 2002 LTCH PPS final rule, we established a
notification requirement for LTCHs that were HwHs, as defined in Sec.
412.22(e), and satellites of LTCHs, as defined at Sec. 412.22(h)(5),
and for LTCHs and satellites of LTCHs that were subject to the onsite
provider payment adjustment under Sec. 412.532 because they were co-
located with other Medicare providers, as specified in Sec.
412.532(a). At existing Sec. 412.22(e)(3) and (h)(5), we require a
LTCH HwH and a satellite of a LTCH, respectively, to notify its FI and
CMS of its co-located status within 60 days of the start of its first
cost reporting period under the LTCH PPS. At existing Sec. 412.532(i),
we require the LTCH or satellite of a LTCH that is co-located with
another hospital or a SNF to provide notification of its co-location
within 60-days following the effective date of the regulations. We also
[[Page 24207]]
established an additional notification requirement at Sec. 412.532(i),
for a LTCH or satellite of a LTCH, subject to the onsite provider
payment adjustment at Sec. 412.532 to notify its FI and CMS within 60
days of a change in co-located status. We intended that these
regulations also require LTCHs and satellites of LTCH that are co-
located with other hospitals or SNFs to identify particular co-located
Medicare providers.
As we discussed in the February 3, 2005 proposed rule (70 FR 5750),
it appears that this expectation is unclear in our present regulations.
We have been informed by some of our regional offices and FIs that
LTCHs and satellites of LTCHs, for which they are responsible, have in
many cases neglected to specify the name(s), address(es), and Medicare
provider number(s) of the co-located providers covered by Sec.
412.22(e)(3), (h)(5), and Sec. 412.532, as applicable. Therefore, in
that same proposed rule, with respect to Sec. 412.22(e)(3), we
proposed to clarify our policy that a LTCH that occupies space in a
building used by another hospital, or in one or more entire buildings
located on the same campus as buildings used by a hospital and that
meets the criteria of paragraph (e)(1) or (e)(2) of Sec. 412.22, must
inform its FI and CMS in writing of its co-located status, as well as,
provide the name(s), address(es), and the Medicare provider number(s)
of the other co-located providers (that is, acute care hospitals, IRFs,
and psychiatric facilities and units). We also proposed to clarify
that, with respect to Sec. 412.22(h)(5), a satellite of a LTCH that
occupies space in a building used by another hospital, or in one or
more entire buildings located on the same campus as buildings used by
another hospital, and that meets the criteria of paragraphs (h)(1)
through (h)(4) of Sec. 412.22, must notify its FI and CMS in writing
of its co-location and identify by name(s), address(es), and Medicare
provider number(s), those hospital(s) with which it is co-located.
In addition, we proposed to clarify the notification requirements
in Sec. 412.532 that apply to a LTCH or satellite of a LTCH to which
Sec. 412.532 applies. For example, we clarified that the notification
requirements apply to a LTCH or a satellite of a LTCH that is co-
located with a SNF. Furthermore, since the existing regulation text at
Sec. 412.22(e)(3) and (h)(5) required that the notification take place
within 60 days of the LTCH's first cost reporting period beginning on
or after October 1, 2002 and Sec. 412.532(i) required that the
notification occur within 60 days of the effective date of the original
regulation (cost reporting periods beginning on or after October 1,
2002), and this timeframe for many providers has long since passed, we
proposed to eliminate the specific timing requirement in favor of the
on-going, prospective notification requirement described above, which
is also clearer and more comprehensive. Therefore, we proposed to
delete the phrase ``within 60 days of its first cost reporting period
that begins on or after October 1, 2002'' at Sec. 412.22(e)(3) and
(h)(5). We also proposed to delete the phrase ``within 60 days
following the effective date of these regulations'' from Sec.
412.532(i). We also proposed to delete the phrase ``and within 60 days
of a change in co-located status'' from Sec. 412.532(i) because, as we
explained in that same proposed rule, we believe that the proposed
continuing notification requirement in the revised regulation text at
Sec. 412.22(e)(3) and (h)(5), as well as at Sec. 412.532(i), would
include the obligation to notify CMS and the FI in writing of any
changes in co-located status and the obligation to provide the
requisite information detailed above. We also proposed to clarify that
the notification requirement in Sec. 412.532(i) applied to a LTCH or a
satellite of a LTCH that is co-located with a SNF. Accordingly, we
proposed to revise each of the three notification provisions, to
establish consistency and to clearly state the on-going requirement
that a LTCH and a satellite of a LTCH that is co-located with another
hospital or a SNF inform their FIs and CMS in writing of the name(s),
address(es), and Medicare provider number(s) of particular co-located
Medicare providers.
As discussed earlier in the comment and response in section V.C.8.
of this preamble, several commenters agreed with our proposed
clarification of the notification requirement. There were no comments
on the proposed elimination of the specific timing requirement, that
is, notification occurs within 60 days of the LTCH's first cost
reporting period beginning on or after October 1, 2002 and the
notification occurs within 60 days of the effective date of the
original regulation (October 1, 2002) and that notification occurs
within 60 days of a change in co-located status, nor were there
comments regarding our clarification that the notification requirements
apply to a LTCH or a satellite of a LTCH that is co-located with a SNF.
As explained in detail earlier in this section of the preamble, we are
finalizing our proposed notification requirements with some minor
editorial modifications.
VI. Computing the Adjusted Federal Prospective Payments for the 2006
LTCH PPS Rate Year
In accordance with Sec. 412.525 and as discussed in section V.C.
of this final rule, the standard Federal rate is adjusted to account
for differences in area wages by multiplying the labor-related share of
the standard Federal rate by the appropriate LTCH PPS wage index (as
shown in Tables 1 and 2 of the Addendum to this final rule). The
standard Federal rate is also adjusted to account for the higher costs
of hospitals in Alaska and Hawaii by multiplying the nonlabor-related
share of the standard Federal rate by the appropriate cost-of-living
factor (shown in Table I in section V.C.2. of this preamble). In the
May 7, 2004 final rule (69 FR 25674), we established a standard Federal
rate of $36,833.69 for the 2005 LTCH PPS rate year. In February 3, 2005
proposed rule, based on the best available data, previously established
policies, and the proposed policies described in that rule, we proposed
a standard Federal rate of $37,975.53 for the 2006 LTCH PPS rate year
as discussed in section V.B. of this preamble. In this final rule,
based on the best available data and the finalized policies described
in this final rule, we are establishing a standard Federal rate of
$38,086.04 for the 2006 LTCH PPS rate year as discussed in section
IV.B. of this preamble. We illustrate the methodology used to adjust
the Federal prospective payments for the 2006 LTCH PPS rate year in the
following example: During the 2006 LTCH PPS rate year, a Medicare
patient is in a LTCH located in Chicago-Naperville-Joliet, Illinois
(CBSA 16974). This LTCH is in the third year of the wage index phase-
in, thus, the three-fifths wage index values are applicable. The three-
fifths wage index value for CBSA 16974 is 1.0521 (see Table 1 in the
Addendum to this final rule). The Medicare patient is classified into
LTC-DRG 9 (Spinal Disorders and Injuries), which has a relative weight
of 1.0950 (see Table 3 in the Addendum to this final rule). To
calculate the LTCH's total adjusted Federal prospective payment for
this Medicare patient, we compute the wage-adjusted Federal prospective
payment amount by multiplying the unadjusted standard Federal rate
($38,086.04) by the labor-related share (72.885 percent) and the wage
index value (1.0521). This wage-adjusted amount is then added to the
nonlabor-related portion of the unadjusted standard Federal rate
(27.115 percent; adjusted for cost of living, if applicable) to
determine the adjusted Federal rate, which is then multiplied by the
LTC-DRG relative
[[Page 24208]]
weight (1.0950) to calculate the total adjusted Federal prospective
payment for the 2006 LTCH PPS rate year ($43,287.85). Finally, as
discussed in section V.C.6. of this preamble, for the 2006 LTCH PPS
rate year, there will be a 0.0 percent reduction (a budget neutrality
offset of 1.000) to the total adjusted Federal prospective payment to
account for the costs of the transition methodology.
The following illustrates the components of the calculations in
this example:
Unadjusted Standard Federal Prospective Payment Rate.... $38,086.04
Labor-Related Share..................................... 0.72885
---------------
Labor-Related Portion of the Federal Rate............... = $27,759.01
\3/5\ths Wage Index (CBSA 16974)........................ 1.0521
---------------
Wage-Adjusted Labor Share of Federal Rate............... = $29,205.25
Nonlabor-Related Portion of the Federal Rate ($38,086.04 + $10,327.03
x 0.27115).............................................
---------------
Adjusted Federal Rate Amount............................ = $39,532.28
LTC-DRG 9 Relative Weight............................... x 1.0950
---------------
Total Adjusted Federal Prospective Payment (Before the = $43,287.85
Budget Neutrality Offset)..............................
Budget Neutrality Offset................................ x 1.000
===============
Total Federal Prospective Payment (Including the = $43,287.85
Budget Neutrality Offset)..........................
VII. Transition Period
To provide a stable fiscal base for LTCHs, under Sec. 412.533, we
implemented a 5-year transition period whereby a LTCH receives payment
consisting of a portion based on reasonable cost principles and a
portion based on the Federal prospective payment rate (unless the LTCH
elects payments based on 100 percent of the Federal rate). As discussed
in the August 30, 2002 final rule (67 FR 56038), we believe that a 5-
year phase-in provides LTCHs time to adjust their operations and
capital financing to the LTCH PPS, which is based on prospectively
determined Federal payment rates. Furthermore, we believe that the 5-
year phase-in of the LTCH PPS also allows LTCH personnel to develop
proficiency with the LTC-DRG coding system, which will result in
improvement in the quality of the data used for generating our annual
determination of relative weights and payment rates.
In accordance with Sec. 412.533, the transition period for all
hospitals subject to the LTCH PPS begins with the hospital's first cost
reporting period beginning on or after October 1, 2002 and extends
through the hospital's last cost reporting period beginning before
October 1, 2006. During the 5-year transition period, a LTCH's total
payment under the LTCH PPS is based on two payment percentages--one
based on reasonable cost-based (TEFRA) payments and the other based on
the standard Federal prospective payment rate. The percentage of
payment based on the LTCH PPS Federal rate increases by 20 percentage
points each year, while the reasonable cost-based payment rate
percentage decreases by 20 percentage points each year, for the next 2
fiscal years. For cost reporting periods beginning on or after October
1, 2006, Medicare payment to LTCHs will be determined entirely under
the Federal rate. The blend percentages as set forth in Sec.
412.533(a) are as follows:
------------------------------------------------------------------------
Reasonable
Federal cost
Cost reporting periods beginning on or after rate principles
percentage rate
percentage
------------------------------------------------------------------------
October 1, 2002............................... 20 80
October 1, 2003............................... 40 60
October 1, 2004............................... 60 40
October 1, 2005............................... 80 20
October 1, 2006............................... 100 0
------------------------------------------------------------------------
For cost reporting periods that begin on or after October 1, 2004,
and before October 1, 2005 (FY 2005), the total payment for a LTCH is
40 percent of the amount calculated under reasonable cost principles
for that specific LTCH and 60 percent of the Federal prospective
payment amount. For cost reporting periods that begin on or after
October 1, 2005 and before October 1, 2006 (FY 2006), the total payment
for a LTCH will be 20 percent of the amount calculated under reasonable
cost principles for that specific LTCH and 80 percent of the Federal
prospective payment amount. As we noted in the May 7, 2004 final rule
(69 FR 25674), the change in the effective date of the annual LTCH PPS
rate update from October 1 to July 1 has no effect on the LTCH PPS
transition period as set forth in Sec. 412.533(a). That is, LTCHs paid
under the transition blend under Sec. 412.533(a) will receive those
blend percentages for the entire 5-year transition period (unless they
elect payments based on 100 percent of the Federal rate). Furthermore,
LTCHs paid under the transition blend will receive the appropriate
blend percentages of the Federal and reasonable cost-based rate for
their entire cost reporting period as prescribed in Sec. 412.533(a)(1)
through (a)(5).
The reasonable cost-based rate percentage is a LTCH specific amount
that is based on the amount that the LTCH would have been paid (under
TEFRA) if the PPS were not implemented. Medicare fiscal intermediaries
will continue to compute the LTCH reasonable cost-based payment amount
according to Sec. 412.22(b) of the regulations and sections 1886(d)
and (g) of the Act.
In implementing the PPS for LTCHs, one of our goals is to
transition hospitals to full prospective payments as soon as
appropriate. Therefore, under Sec. 412.533(c), we allow a LTCH, which
is subject to a blended rate, to elect payment based on 100 percent of
the Federal rate at the start of any of its cost reporting periods
during the 5-year transition period rather than incrementally shifting
from reasonable cost-based payments to prospective payments. Once a
LTCH elects to be paid based on 100 percent of the Federal rate, it
will not be able to revert to the transition blend. For cost reporting
periods that began on or after December 1, 2002, and for the remainder
of the 5-year transition period, a LTCH must notify its fiscal
intermediary in writing of its election on or before the 30th day prior
to the start of the LTCH's next cost reporting period. For example, a
LTCH with a cost reporting period that begins on May 1, 2005, must
notify its fiscal intermediary in writing of an election on or before
April 1, 2005.
Under Sec. 412.533(c)(2)(i), the notification by the LTCH to make
the election must be made in writing to the Medicare fiscal
intermediary. Under Sec. Sec. 412.533(c)(2)(ii) and (c)(2)(iii), the
[[Page 24209]]
intermediary must receive the request on or before the specified date
(that is, on or before the 30th day before the applicable cost
reporting period begins for cost reporting periods beginning on or
after December 1, 2002 through September 30, 2006), regardless of any
postmarks or anticipated delivery dates.
Notifications received, postmarked, or delivered by other means
after the specified date will not be accepted. If the specified date
falls on a day that the postal service or other delivery sources are
not open for business, the LTCH will be responsible for allowing
sufficient time for the delivery of the request before the deadline. If
a LTCH's notification is not received timely, payment will be based on
the transition period blend percentages.
VIII. Payments to New LTCHs
Under Sec. 412.23(e)(4), for purposes of Medicare payment under
the LTCH PPS, we define a new LTCH as a provider of inpatient hospital
services that otherwise meets the qualifying criteria for LTCHs, set
forth in Sec. 412.23(e)(1) and (e)(2), under present or previous
ownership (or both), and its first cost reporting period as a LTCH
begins on or after October 1, 2002. We also specify in Sec. 412.500
that the LTCH PPS is applicable to hospitals with a cost reporting
period that began on or after October 1, 2002.
As we discussed in the August 30, 2002 final rule (67 FR 56040),
this definition of new LTCHs should not be confused with those LTCHs
first paid under the TEFRA payment system for discharges occurring on
or after October 1, 1997, described in section 1886(b)(7)(A) of the
Act, as added by section 4416 of the Balanced Budget Act of 1997
(BBA'97) (Pub. L. 105-33). As stated in Sec. 413.40(f)(2)(ii), for
cost reporting periods beginning on or after October 1, 1997, the
payment amount for a ``new'' (post-FY 1998) LTCH is the lower of the
hospital's net inpatient operating cost per case or 110 percent of the
national median target amount payment limit for hospitals in the same
class for cost reporting periods ending during FY 1996, updated to the
applicable cost reporting period (see 62 FR 46019, August 29, 1997).
Under the LTCH PPS, those ``new'' LTCHs that meet the definition of
``new'' under Sec. 413.40(f)(2)(ii) and that have their first cost
reporting period as a LTCH beginning prior to October 1, 2002, will be
paid under the transition methodology described in Sec. 412.533.
As noted above and in accordance with Sec. 412.533(d), new LTCHs
will not participate in the 5-year transition from reasonable cost-
based reimbursement to prospective payment. As we discussed in the
August 30, 2002 final rule (67 FR 56040), the transition period is
intended to provide existing LTCHs time to adjust to payment under the
new system. Since these new LTCHs with their first cost reporting
periods as LTCHs beginning on or after October 1, 2002, would not have
received payment under reasonable cost-based reimbursement for the
delivery of LTCH services prior to the effective date of the LTCH PPS,
we do not believe that those new LTCHs require a transition period in
order to make adjustments to their operations and capital financing, as
will LTCHs that have been paid under the reasonable cost-based
methodology.
IX. Method of Payment
Under Sec. 412.513, a Medicare LTCH patient is classified into a
LTC-DRG based on the principal diagnosis, up to eight additional
(secondary) diagnoses, and up to six procedures performed during the
stay, as well as age, sex, and discharge status of the patient. The
LTC-DRG is used to determine the Federal prospective payment that the
LTCH will receive for the Medicare-covered Part A services the LTCH
furnished during the Medicare patient's stay. Under Sec. 412.541(a),
the payment is based on the submission of the discharge bill. The
discharge bill also provides data to allow for reclassifying the stay
from payment at the full LTC-DRG rate to payment for a case as a short-
stay outlier (under Sec. 412.529) or as an interrupted stay (under
Sec. 412.531), or to determine if the case will qualify for a high-
cost outlier payment (under Sec. 412.525(a)).
Accordingly, the ICD-9-CM codes and other information used to
determine if an adjustment to the full LTC-DRG payment is necessary
(for example, length of stay or interrupted stay status) are recorded
by the LTCH on the Medicare patient's discharge bill and submitted to
the Medicare fiscal intermediary for processing. The payment represents
payment in full, under Sec. 412.521(b), for inpatient operating and
capital-related costs, but not for the costs of an approved medical
education program, bad debts, blood clotting factors, anesthesia
services by hospital-employed nonphysician anesthetists or obtained
under arrangement, or the costs of photocopying and mailing medical
records requested by a Quality Improvement Organization (QIO), which
are costs paid outside the LTCH PPS.
As under the previous reasonable cost-based payment system, under
Sec. 412.541(b), a LTCH may elect to be paid using the periodic
interim payment (PIP) method described in Sec. 413.64(h) and may be
eligible to receive accelerated payments as described in Sec.
413.64(g).
For those LTCHs that are paid during the 5-year transition based on
the blended transition methodology in Sec. 412.533(a) for cost
reporting periods that began on or after October 1, 2002, and before
October 1, 2006, the PIP amount is based on the transition blend. For
those LTCHs that are paid based on 100 percent of the standard Federal
rate, the PIP amount is based on the estimated prospective payment for
the year rather than on the estimated reasonable cost-based
reimbursement. We exclude high-cost outlier payments that are paid upon
submission of a discharge bill from the PIP amounts. In addition, Part
A costs that are not paid for under the LTCH PPS, including Medicare
costs of an approved medical education program, bad debts, blood
clotting factors, anesthesia services by hospital-employed nonphysician
anesthetists or obtained under arrangement, and the costs of
photocopying and mailing medical records requested by a QIO, are
subject to the interim payment provisions (Sec. 412.541(c)).
Under Sec. 412.541(d), LTCHs with unusually long lengths of stay
that are not receiving payment under the PIP method may bill on an
interim basis (60 days after an admission and at intervals of at least
60 days after the date of the first interim bill) and should include
any high-cost outlier payment determined as of the last day for which
the services have been billed.
X. MedPAC Recommendations/Monitoring
The MedPAC's June 2004 Report to the Congress: Variation and
Innovation in Medicare, contained a chapter on ``Defining Long-Term
Care Hospitals.'' In this chapter, the Commission focused on a broad
range of issues central to understanding LTCHs which, although rapidly
increasing in number, is still the smallest of all provider categories,
but the most costly to the Medicare program per beneficiary episode of
care.
The Commission identified particular problems such as growth of the
LTCH industry, and high payment rates that appear to result from
current payment incentives. Specifically the report states, ``[F]irst,
the financial incentive of the acute and long-term care hospital PPSs
are likely to encourage facilities to selectively retain and admit
certain types of patients to minimize their costs. Acute hospitals have
a financial incentive to transfer patients as quickly as possible if
they are likely to become
[[Page 24210]]
high-cost outliers (to avoid losses on those patients). LTCHs have an
incentive to admit patients with a given diagnosis who are likely to
require fewer resources. Second, as the number of LTCHs grows,
facilities may find it increasingly difficult to find patients who
truly require LTCH-level care; this would lead to an increase in lower
severity patients being cared for in LTCHs and higher Medicare
spending. Finally, LTCH care is costly. The per case base rate in
$37,000 and payments can be as high as $115,000 per case for the most
complex patients.'' (pp. 127-8)
The Commission also examined LTCHs in the June 2003 Report to the
Congress, entitled, ``Monitoring post-acute care.'' Citing that Report,
the Commission compared beneficiaries treated in LTCHs and other
settings and determined that based on ``the 11 most common diagnoses in
LTCHs, using descriptive analysis and controlling for diagnosis related
group (DRG) and severity of illness * * * that patients in market areas
with LTCHs had similar acute hospital lengths of stay [preceding the
LTCH stay] whether they used these facilities or not.'' Further,
``[p]atients who used LTCHs were three to five times less likely to use
skilled nursing facility (SNF) care, suggesting that SNFs and long-term
care hospitals may be substitutes.'' The June 2004 Report had also
noted that `` * * * Medicare pays more for patients treated in LTCHs,
compared with patients not treated in them'', but also concluded that
this study, as well as the rapid and continuing growth in the number of
LTCHs, the corresponding increases in Medicare spending, combined with
the markedly uneven distribution of LTCHs throughout the country,
raised additional issues for further research. (p. 122)
In its June 2004 Report to the Congress, the Commission reported
the results of this subsequent research, both qualitative and
quantitative, which focused on the following questions: What role do
long-term care hospitals play in providing care?; Where are clinically
similar patients treated in areas without long-term care hospitals?;
and How do Medicare payments and outcomes compare for LTCH patients
versus those in other settings? (p. 122). The Commission's research
utilized structured interviews with health care providers and hospital
administrators; site visits and clinical presentations; and
quantitative analyses of markets with and without LTCHs and patient-
level analyses to examine outcomes and per-episode impact on Medicare
costs. Responses to these questions included the following assertions:
LTCHs provide post-acute care to a small number of
medically complex patients who are more stable than patients in an
intensive care unit (ICU) but may still have unresolved underlying
complex medical conditions.
The use of LTCHs is associated with certain diagnoses,
severity levels and the proximity of the facility.
In areas without LTCHs, acute hospitals and SNFs are the
principal substitutes of LTCHs.
When LTCH care is not targeted to patients most likely to
need this level of care, care for patients at a LTCH is more costly to
Medicare than for similar patients in alternative settings. Conversely,
when LTCH care is targeted to patients most likely to need this level
of care, costs for those patients appear to be comparable to costs for
those who use other settings (and costs for LTCH patients with
tracheostomies save Medicare money) in large part because of fewer
acute hospital readmissions for those patients. (pp. 121-134)
The Commission's interpretations of its qualitative and
quantitative research findings led to two specific recommendations:
``5A--The Congress and the Secretary should define long-term care
hospitals by facility and patient criteria that ensure that patients
admitted to these facilities are medically complex and have a good
chance at improvement.
Facility-level criteria should characterize this level of
care by features such as staffing, patient evaluation and review
processes, and mix of patients.
Patient-level criteria should identify specific clinical
characteristics and treatment modalities.
5B--The Secretary should require the Quality Improvement
Organizations to review long-term care hospital admissions for medical
necessity and monitor that these facilities are in compliance with
defining criteria.'' (p. 120).
Since the publication of MedPAC's recommendations, we have
discussed the implications of the Report with several trade
associations that represent different facets of the LTCH industry (for
example, older non-profit LTCHs; a for-profit chain that specializes in
a particular case-mix; another for-profit chain which functions mainly
in the HwH model).
In response to the recommendation in MedPAC's June 2004 Report that
the Secretary examine defining LTCHs by facility and patient criteria,
we have awarded a contract to Research Triangle Institute (RTI),
International for a thorough examination of the Commission's
recommendations based on the performance of a wide variety of analytic
tasks using CMS data files, and also utilizing information collected
from physicians, providers, and LTCH trade associations. This contract,
``Long Term Care Hospital (LTCH) Payment System Refinement/
Evaluation,'' will assist (CMS) in researching MedPAC's recommendations
regarding the appropriate and cost-effective use of LTCHs in the
Medicare program. With the recommendations of MedPAC's June 2004 Report
to Congress as a point of departure, RTI, International will evaluate
patient or facility level characteristics for LTCHs in order to
identify and distinguish the role of these hospitals as a Medicare
provider. This effort will be multi-faceted. Claims analysis of
patients treated by LTCHs, as well as outlier patients treated at acute
care hospitals will provide information to help direct this work, and
several additional types of data sources will be used to evaluate these
two issues, including administrative data such as Medicare claims as
well as primary data collected through interviews, and a secondary
analysis of existing regulatory requirements. As they gather
information for the purposes of determining the feasibility of
establishing LTCH patient and facility-level criteria, our contractor
has been directed to include information from representatives, along
with other stake-holders in the LTCH industry. Additionally, the
contractor will examine the present role of QIOs in the Medicare
program, focusing on their responsibilities regarding the LTCH PPS, as
well as the potential for an expanded QIO role as suggested by MedPAC's
recommendations. The goals of this research will be to document current
practices related to the MedPAC recommendations, both in terms of
provider certification, quality reviews, and hospital practice
patterns.
Specifically, the project itself will be completed in two phases.
Phase I, which is presently being undertaken by the contractor, focuses
on an analysis of LTCHs within the current Medicare system, their
history as participating providers, their case-mix, the criteria used
by QIOs to determine the appropriateness of treatment in LTCHs, and
where similar patients are treated in areas that lack LTCHs. Prior
analyses of these issues by other contractors will be utilized as well
as preliminary discussions with MedPAC, other researchers, and the
QIOs. Building on the work of Phase I, Phase II will continue to
address the feasibility of MedPAC's proposed criteria by first
investigating the appropriateness of patient level criteria to
determine
[[Page 24211]]
whether there are distinctions between patients treated in LTCHs and
other types of potential substitute providers (with particular
attention to varying outcomes). Medicare claims data will be utilized
for comparisons of LTCH patients and long-stay patients who are treated
in acute care hospitals that have attained high cost outlier status. A
separate analysis will be made for a subset of LTCH patients with
diagnoses that are typically treated in IRFs. The contractor is then
planning interviews with QIOs for the purpose of gathering information
on assessment measures for each setting. Comparisons of these
instruments will be made across regions for their usefulness as
standardized patient screening or assessment tools. The contractors
then plan to evaluate the outcomes of their research in the context of
MedPAC's recommendation for the development of facility-level criteria,
using claims, interviews, and document reviews. To the extent the
analyses suggest that changes should be made that may affect LTCH
payments, LTCH discharges, or the definition of LTCH, such proposed
changes could necessitate some statutory or regulatory changes.
In the August 30, 2002 final rule (67 FR 56014), we described an
on-going monitoring component of the new LTCH PPS that would enable us
to evaluate the impact of the new payment policies. Specifically, we
discussed on-going analysis of the various policies that we believe
would provide equitable payment for stays that reflect less than the
full course of treatment and reduce the incentives for inappropriate
admissions, transfers, or premature discharges of patients that are
present in a discharge-based PPS. To this end, we have designed system
features utilizing MedPAR data that will enable us and the fiscal
intermediary to track beneficiary movement to and from a LTCH and track
LTCH patients to and from another Medicare provider. We also stated our
intent to collect and interpret data on changes in average lengths of
stay under the LTCH PPS for specific LTC-DRGs and the impact of these
changes on the Medicare program. As part of our data analysis, we have
revisited a number of our original and even pre-LTCH PPS policies in
order to address what we believed were behaviors by certain LTCHs that
have led to inappropriate Medicare payments. In recent Federal Register
publications, for example, we have proposed and subsequently finalized
revisions to the interruption of stay policy (69 FR 25692, May, 2004),
and we established a payment adjustment for LTCH HwHs and satellites
(69 FR 49191, August 11, 2004).
Also, in the June 6, 2003 final rule (68 FR 34157), we explained
that, given that the only requirement that distinguishes a LTCH from
other acute care hospitals is an average inpatient length of stay of
greater than 25 days, we continue to be concerned about the extent to
which LTCH services and patients differ from those services and
patients treated in other Medicare covered settings (for example, SNFs
and IRFs) and how the LTCH PPS will affect the access, quality, and
costs across the health care continuum. Thus, we will be monitoring
trends in the supply and utilization of LTCHs and Medicare's costs in
LTCHs relative to other Medicare providers. For example, we intend to
conduct medical record reviews of Medicare patients to monitor changes
in service use (ventilator use, for example) over a LTCH episode of
care and to assess patterns in the average length of stay at the
facility level.
We also are collecting data on patients staying for periods of 6
months or longer in LTCHs and believe that QIOs will be evaluating
whether or not such extensive stays may be indicative of LTCH patients
who could be more appropriately served at a SNF.
As we discussed in the June 6, 2003 final rule (68 FR 34157), the
MedPAC endorsed this monitoring activity as a primary aspect of the
design and on-going functioning of the LTCH PPS. Furthermore, as
discussed earlier, the Commission, in its June, 2004 Report to the
Congress, recommended that we develop facility and patient criteria for
LTCH admission and treatment and require a review by QIOs to evaluate
whether LTCH admissions meet criteria for medical necessity once the
recommended facility and patient criteria are established.
The involvement of QIOs in the LTCH PPS was established at the
outset of the system at Sec. 412.508, and was described in the August
30, 2002 final rule (67 FR 55975). Specific activities for QIOs
regarding LTCHs are included in contracts awarded by our Office of
Clinical Standards and Quality (OCSQ) detailing their scope(s) of work
among which are reviewing random samples of LTCH records for medical
necessity and coding for generating national payment error estimates;
proposing projects to reduce improper payments utilizing the national
payment error cause analysis or their own data collection. One
direction that is being explored by OCSQ for this type of project is
the identification of LTCHs that have specific diagnoses codes related
to medically unnecessary admissions, or perhaps high levels of short-
stay outliers.
In January 2004, QIOs began reviewing medical records for LTCH
claims for the specific purpose of estimating a national payment error
rate. Presently, QIOs review 116 LTCH cases each month for admission
necessity, for acute care admission, and coding. A cause analysis will
be done after the first year's sampling to discern patterns of improper
payments for admission necessity and coding. The payment error
estimates and some of these analyses will be included in the annual
fee-for-service error report.
We continue to be concerned that our policies must assure that
LTCHs only treat patients for whom the LTCH level of care is
appropriate in order to ensure that Medicare is a prudent purchaser of
these very costly services. In addressing one aspect of the issue of
whether patients in LTCHs truly need hospital-level of care, beginning
in October 2004 and slated to end in July 2005 OCSQ has undertaken a
study of LTCH short-stay outliers. Under the short-stay outlier policy
at Sec. 412.529, when a LTCH patient stay is considered a short-stay
outlier for Medicare payment purposes, the LTCH receives an adjusted
(generally lower) payment when the covered days of care do not exceed
\5/6\ of the (geometric) average length of stay for the particular LTC-
DRG assigned to the case. The study evaluates the extent of short-stay
outliers and the possibility of retention of patients by the LTCH when
the LTCH patient no longer requires hospital-level of care and could be
effectively served in a SNF. Due to possible reductions in payment
combined with a need to maintain an average length of stay of greater
than 25 days to remain an LTCH, we believe that LTCHs may be retaining
these patients beyond the short-stay outlier threshold in order to
increase Medicare payments. The three QIOs located in States which
house the majority of LTCHs are conducting reviews on six months of
records from the monthly random sample for this study in order to
assess this situation and to determine whether and to what extent
patients are being retained at the LTCH beyond their need for hospital-
level care and whether retention can be linked to the increased payment
for patients exceeding the short-stay outlier threshold. If it is
determined that retaining LTCH patients unnecessarily beyond the short-
stay outlier threshold is a significant payment issue, OCSQ plans to
add this review type to the standard QIO LTCH review.
In addition to existing tasks and the above research study on
short-stay
[[Page 24212]]
outliers, in accordance with the goals of our on-going monitoring
program as well as MedPAC's June 2003 recommendations, we believe the
QIO's findings will be invaluable in both identifying the most
appropriate type of patients for treatment at a LTCH as well as to
begin to explore measures of cost-effectiveness for LTCH services.
Currently, we do not require LTCHs to submit any clinical or other
quality data, thus, any measurement activity must be based solely on
claims. General concerns that we have raised since the establishment of
the LTCH PPS, however, and the analysis and very specific
recommendations in the MedPAC's June 2004 Report have led us to
question what level of additional data beyond current claims would be
required for the creation of clinical quality measures for LTCHs.
Furthermore, we are presently evaluating whether CMS's Quality
Measurement and Health Assessment Group (QMHAG) will need to build a
quality measurement program for the LTCH setting. (A quality
measurement program would generally establish processes or a group of
tasks or processes which, if completed satisfactorily, would indicate a
level of compliance with program goals. Clinical quality measures for
acute care hospitals based on voluntary data submission and for nursing
homes and home health agencies based on a mandatory standardized data
submission are currently being generated.)
As in the acute care hospital, in order to establish a robust set
of clinical quality measures for LTCHs, the domains would have to reach
a broad population, be based on medical evidence, be scientifically
valid, and be actionable. We are also considering measures that cut
across other care delivery sites and are broadly focused around areas
such as medication management or patient safety. We anticipate a mix of
process and outcomes measures that would reflect expected care for each
setting, but we also believe that the measures should not ultimately be
limited to clinical measures, but should include measures of
institutional procedures related to delivery of care systems and
patients' actual experience of care. Moreover, as we consider ways to
link payment to outcome or performance, it is essential that these
measures be adequately risk adjusted.
Therefore, in addition to pursuing our on-going monitoring program
under the direction of our Office of Research, Development, and
Information (ORDI), existing QIO monitoring and studies, and our
considerations of expanding the QIO role in the LTCH PPS, as noted
above, we have awarded a contract to RTI International for a thorough
examination of the feasibility of implementing MedPAC's recommendations
that are contained in the June 2004 Report to the Congress. The
research contract was funded for FY 2005 and we anticipate that we will
be able to make available RTI's findings in the FY 2007 LTCH PPS
proposed rule.
Comment: Several commenters agreed with the MedPAC recommendations
that were published in the February 3, 2005 proposed rule, and support
CMS' decision to engage RTI in a research study to examine the
feasibility of implementing the MedPAC recommendations. In addition,
the majority commented that CMS and RTI should work in a collaborative
effort with the LTCH community which is also compiling critical data.
One commenter stated his belief that there is a geographic diversity
among LTCHs due to the continuum of care resources available in a given
area of the country. In this respect, the commenter opposes any attempt
to narrowly define LTCHs based upon a so-called ``LTCH Prototype.''
Furthermore, the commenter believes that in order to comprehend the
variations in lengths of stay among LTCHs, we must look to external
contributory factors as well as LTCH specific internal data. Two other
commenters, while supporting CMS' proposal to develop a quality
measurement program for LTCHs, suggest that CMS establish some type of
expert panel comprised of, among others, LTCH professionals, physicians
and respiratory therapists. Several commenters are concerned that
MedPAC did not recommend examining the role of nursing facilities, many
of which attempt to provide a level of service far above their intended
role and capabilities in the continuum of care. They question whether
these facilities provide the same level of care and quality provided by
LTCHs.
Response: We appreciate the commenters' support of our decision to
have RTI assist us in examining potential criteria for assuring
appropriate and cost effective use of LTCHs in the Medicare program. As
you are aware, MedPAC identified particular problems, such as growth of
the LTCH industry and high payment rates that appear to result from
current payment incentives. Moreover, the Commission's interpretation
of its qualitative and quantitative research findings led to two
specific recommendations: ``5A--The Congress and the Secretary should
define long-term care hospitals by facility and patient criteria that
ensure that patients admitted to these facilities are medically complex
and have a good chance at improvement * * *. 5B--The Secretary should
require the Quality Improvement Organizations to review long-term care
hospital admissions for medical necessity and monitor that these
facilities are in compliance with defining criteria.'' As a result of
MedPAC's recommendations, we awarded a contract to RTI International
for a thorough examination of MedPAC's recommendations based on the
performance of a wide variety of analytic tasks using our data files,
and also utilizing information collected from physicians, providers,
and LTCH trade associations. The information collected, both internally
and externally, in this project is intended to provide information that
will allow the Congress or the Secretary to develop criteria for
distinguishing LTCHs from other acute care hospitals. We believe our
role here is not to narrowly define the role of an LTCH, but rather to
evaluate all information available to us in order to identify and
distinguish the role of these hospitals as Medicare providers. Central
to determining criteria for defining LTCHs is understanding differences
between LTCHs and other types of post-acute providers and their
patients. The contractor will use Medicare claims and payment data to
examine the feasibility of patient level criteria and facility level
criteria by studying differences between patients treated in LTCHs and
other hospitals. As stated in the February 3, 2005 proposed rule, the
contractor will examine the present role of QIOs in the Medicare
program, focusing on their responsibilities regarding the LTCH PPS. The
goals of this research is to document current practices related to the
MedPAC recommendations, both in terms of provider certification,
quality reviews, and hospital practice patterns.
The project itself will be completed in two phases. Phase I, which
is near completion, focuses on an analysis of LTCHs within the current
Medicare system, their history as participating providers, their case-
mix, the criteria used by QIOs to determine the appropriateness of
treatment in LTCHs, and determining where similar patients are being
treated in areas that lack LTCHs. Prior analyses of these issues by
other contractors will be utilized as well as preliminary discussions
with MedPAC, other researchers, and the QIOs.
Building on the work of Phase I, Phase II will continue to carry
out the analysis of the feasibility of MedPAC's criteria and making
recommendations for revising the policies affecting LTCHs. Medicare
claims data will be
[[Page 24213]]
utilized for comparisons of LTCH patients and long-stay patients who
are treated in acute care hospitals that have attained high-cost
outlier status. A separate analysis will be made for a subset of LTCH
patients with diagnoses that are typically treated in IRFs. The
contractor is then planning site visits, discussions with LTCH
professionals, physicians, and therapists, and interviews with QIOs.
These visits and interviews will be useful for understanding the
differences between the types of admissions treated at LTCHs as
compared to other providers and whether they vary clinically or are a
function of varying availability of substitute providers in a
geographic area. The contractor then plans to evaluate the outcomes of
its research in the context of MedPAC's recommendation for the
development of facility-level criteria, using claims, interviews, and
document reviews. To the extent the analyses suggest that changes
should be made that may affect LTCH payments, LTCH discharges, or the
definition of LTCH, such proposed changes may necessitate either
statutory or regulatory changes, or both.
In response to the commenters who expressed concern that MedPAC did
not address the role of nursing facilities in the continuum of post-
acute care, the level of service that these facilities deliver, and
whether they deliver the same level of care and quality delivered by
LTCHs, we are not in a position to comment on the subjects which MedPAC
chooses to evaluate. We would note, however, that the June 2003 MedPAC
report did include a discussion of the use of SNFs following a
beneficiary's acute care hospital stay as an alternative to
hospitalization at a LTCH. (p. 81-84) MedPAC's June 2004 report also
compared Medicare payments to SNFs, IRFs, and LTCHs for specific
principal diagnoses and noted, among other findings, that ``The sharp
decrease in probability of use of skilled nursing facilities by long-
term care hospital users suggests that SFNs and LTCHs are
substitutes.'' The report also stated that ``Long term care hospital
clinicians, however, are adamant that treatment provided in SNFs is not
as intensive as care provided in LTCHs.'' (p. 126.) We would
additionally assert that despite the fact that we have tasked RTI to
focus on evaluating the development of facility and patient-level
criteria for LTCHs and QIO review, we expect that the final report will
also include some discussion of the distinctions between hospital-level
care provided at LTCHs and the SNF-level care.
XI. Collection of Information Requirements
The collection requirements associated with this final rule are
exempt from the PRA as stipulated under Pub. L. 100-203, Section 4201.
XII. Regulatory Impact Analysis
A. Introduction
We have examined the impact of this final 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 Act, the Unfunded Mandates Reform Act of
1995 (UMRA) (Pub. L. 104-4), and Executive Order 13132.
1. Executive Order 12866
Executive Order 12866 (as amended by Executive Order 13258, which
merely assigns 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 one
year). In this final rule, we are using the most recent estimate of the
LTCH PPS market basket, updated claims data, and updated wage index
values to estimate payments for the 2006 LTCH PPS rate year. Based on
the best available data for 259 LTCHs, we estimate that the 3.4 percent
increase to the standard Federal rate for the 2006 LTCH PPS rate year,
in conjunction with the decrease in fixed-loss amount (discussed in
section V.C.3. of this final rule) and the decrease in the transition
period budget neutrality offset (discussed in section V.C.7. of this
final rule), will result in an increase in payments from the 2005 LTCH
PPS rate year of $169 million. (Section V.C.7. of this final rule
includes an estimate of Medicare program payments for LTCH services.)
Because the combined distributional effects and costs to the Medicare
program are estimated to be greater than $100 million, this final rule
is considered a major economic rule, as defined above.
2. Regulatory Flexibility Act (RFA)
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 $26
million or less in any 1 year. For purposes of the RFA, all hospitals
are considered small entities according to the Small Business
Administration's latest size standards with total revenues of $26
million or less in any 1 year (for further information, see the Small
Business Administration's regulation at 65 FR 69432, November 17,
2000). Because we lack data on individual hospital receipts, we cannot
determine the number of small proprietary LTCHs. Therefore, we assume
that all LTCHs are considered small entities for the purpose of the
analysis that follows. Medicare fiscal intermediaries are not
considered to be small entities. Individuals and States are not
included in the definition of a small entity.
Currently, our database of 259 LTCHs includes the data for 62 non-
profit (voluntary ownership control) LTCHs and 189 proprietary LTCHs.
The remaining 8 LTCHs are Government owned and operated. (See Table
II.) The impact of the changes for the 2006 LTCH PPS rate year are
discussed below in section XII.B.4.c of this final rule. The provisions
of this final rule represent a 5.7 percent increase in estimated
payments in the 2006 LTCH PPS rate year for all LTCHs (as shown in
Table II below). We do not expect the incremental increase of 5.7
percent to the LTCH PPS Medicare payment rates, including the 0.1
percent incremental decrease due to the wage index changes (discussed
in section V.C.1. of this final rule), to have a significant adverse
effect on the overall revenues of most LTCHs. In addition, LTCHs also
provide services to (and generate revenue from) patients other than
Medicare beneficiaries. Accordingly, we certify that this final rule
will not have a significant impact on a substantial number of small
entities, in accordance with RFA.
3. Impact on Rural Hospitals
Section 1102(b) of the Social Security Act requires us to prepare a
regulatory impact analysis if a proposed or final rule may have a
significant impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside of
a Metropolitan Statistical Area and has fewer than 100 beds. As
discussed in detail below, the rates and policies set forth in this
final rule will not have an adverse impact on
[[Page 24214]]
rural hospitals based on the data of the 16 rural hospitals in our
database of the 259 LTCHs for which data were available.
4. Unfunded Mandates
Section 202 of the UMRA requires that agencies assess anticipated
costs and benefits before issuing any rule that may result in
expenditure in any one year by State, local, or tribal governments, in
the aggregate, or by the private sector, of $110 million or more. This
final rule will not mandate any requirements for State, local, or
tribal governments, nor will it result in expenditures by the private
sector of $110 million or more in any one year.
5. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has federalism
implications.
We have examined this final rule under the criteria set forth in
Executive Order 13132 and have determined that this final rule will not
have any significant impact on the rights, roles, and responsibilities
of State, local, or tribal governments or preempt State law, based on
the 8 State and local LTCHs in our database of 259 LTCHs for which data
were available.
B. Anticipated Effects of Payment Rate Changes
We discuss the impact of the payment rate changes in this final
rule below in terms of their fiscal impact on the Medicare budget and
on LTCHs.
1. Budgetary Impact
Section 123(a)(1) of Medicare, Medicaid and State Child Health
Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) requires that the PPS developed for LTCHs ``maintain
budget neutrality.'' Therefore, in calculating the standard Federal
rate under Sec. 412.523(d)(2), we set total payments for FY 2003 under
the LTCH PPS so that aggregate payments under the LTCH PPS are
estimated to equal to the amount that would have been paid if this PPS
had not been implemented. However, as discussed in greater detail in
the August 30, 2002 final rule (67 FR 56033-56036), the FY 2003 LTCH
PPS standard Federal rate ($34,956.15) was calculated as though all
LTCHs would be paid based on 100 percent of the standard Federal rate
in FY 2003. As discussed in section V.C.7. of this final rule, we apply
a budget neutrality offset to payments to account for the monetary
effect of the 5-year transition to full prospective payment under the
LTCH PPS and the policy to permit LTCHs to elect, during the
transition, to be paid based on 100 percent of the standard Federal
rate rather than a blend of Federal prospective payments and reasonable
cost-based payments. The amount of the offset is equal to 1 minus the
ratio of the estimated payments based on 100 percent of the LTCH PPS
Federal rate to the projected total Medicare program payments that will
be made under the transition methodology and the option to elect
payment based on 100 percent of the Federal prospective payment rate.
2. Impact on Providers
The basic methodology for determining a LTCH PPS payment is set
forth in the regulations at Sec. 412.515 through Sec. 412.525. In
addition to the basic LTC-DRG payment (standard Federal rate x LTC-DRG
relative weight), we make adjustments for differences in area wage
levels, cost-of-living adjustment for Alaska and Hawaii, and short-stay
outliers. Furthermore, LTCHs may also receive high-cost outlier
payments for those cases that qualify based on the threshold
established each rate year. Section 412.533 provides for a 5-year
transition to payments based on 100 percent of the Federal prospective
payment rate. During the 5-year transition period, payments to LTCHs
are based on an increasing percentage of the LTCH PPS Federal rate and
a decreasing percentage of payment based on reasonable cost-based
methodology. Section 412.533(c) provides for a one-time opportunity for
LTCHs to elect payments based on 100 percent of the LTCH PPS Federal
rate.
In order to understand the impact of the changes to the LTCH PPS
discussed in this final rule on different categories of LTCHs for the
2006 LTCH PPS rate year, it is necessary to estimate payments per
discharge under the LTCH PPS rates and factors for the 2005 LTCH PPS
rate year (see the May 7, 2005 final rule; 68 FR 25674) and to estimate
payments per discharge that will be made under the LTCH PPS rates and
factors for the 2006 LTCH PPS rate year, as discussed in the preamble
of this final rule. To this end, we determined the percent change in
payments per discharge of estimated 2005 LTCH PPS rate year payments to
estimated 2006 LTCH PPS rate year payments for each category of LTCHs.
In addition, for each category of LTCHs, we have included the estimated
percent change in payments per discharge resulting from the LTCH PPS
wage index changes (described in section V.C.1. of this final rule).
The wage index changes for the 2006 LTCH PPS rate year include the
change in the labor market area definitions, the update in the wage
index data, and the established phase-in of the LTCH PPS wage index
adjustment from the 2005 LTCH PPS rate year (LTCHs' FYs 2004 and 2005
cost reporting periods) to the 2006 LTCH PPS rate year (LTCHs' FYs 2005
and 2006 LTCH cost reporting periods).
Hospital groups were based on characteristics provided in the
Online Survey Certification and Reporting (System) (OSCAR) data, FYs
2000 through 2003 cost report data, and Provider Specific File data.
Hospitals with incomplete characteristics were grouped into the
``unknown'' category. Hospital groups include:
--Location: Large Urban/Other Urban/Rural.
--Participation Date.
--Ownership Control.
--Census Region.
--Bed Size.
To estimate the impacts among the various categories of providers
during the LTCH PPS transition period, it is imperative that reasonable
cost-based methodology payments and prospective payments contain
similar inputs. More specifically, in the impact analysis showing the
impact reflecting the applicable transition blend percentages of
prospective payments and reasonable cost-based methodology payments and
the option to elect payment based on 100 percent of the Federal rate
(Table III below), we estimated payments only for those providers for
whom we are able to calculate payments based on reasonable cost-based
methodology. For example, if we did not have at least 2 years of
historical cost data for a LTCH, we were unable to determine an update
to the LTCH's target amount to estimate payment under reasonable cost-
based methodology.
Using LTCH cases from the FY 2004 MedPAR file and cost data from
FYs 1999 through 2002 to estimate payments under the current reasonable
cost-based principles, we have obtained both case-mix and cost data for
259 LTCHs. Thus, for the impact analyses reflecting the applicable
transition blend percentages and the option to elect payment based on
100 percent of the Federal rate (see Table II below), we used data from
259 LTCHs. While currently there are more than 300 LTCHs, the most
recent growth is predominantly in for-profit LTCHs that provide
respiratory and ventilator-dependent patient care. We believe that the
discharges from the FY 2004
[[Page 24215]]
MedPAR data for the 259 LTCHs in our database provide sufficient
representation in the LTC-DRGs containing discharges for patients who
received respiratory and ventilator-dependent care based on the
relatively large number of LTCH cases in LTC-DRGs for these diagnoses.
However, using cases from the FY 2004 MedPAR file we had case-mix data
for 335 LTCHs. Cost data to determine current payments under reasonable
cost-based methodology payments are not needed to simulate payments
based on 100 percent of the Federal rate. Therefore, for the impact
analyses reflecting fully phased-in prospective payments (see Table III
below), we used data from 335 LTCHs.
These impacts reflect the estimated ``losses'' or ``gains'' among
the various classifications of LTCHs for the 2005 LTCH PPS rate year
(July 1, 2004 through June 30, 2005) compared to the 2006 LTCH PPS rate
year (July 1, 2005 through June 30, 2006). Prospective payments for the
2005 LTCH rate year were based on the standard Federal rate of
$36,833.69 and the hospitals' estimated case-mix based on FY 2004 LTCH
claims data. Estimated prospective payments for the 2006 LTCH PPS rate
year are based on the standard Federal rate of $38,086.04 and the same
FY 2004 LTCH claims data.
3. Calculation of Prospective Payments
To estimate payments under the LTCH PPS, we simulated payments on a
case-by-case basis by applying the payment policy for short-stay
outliers (as described in section V.C.4.b. of this final rule) and the
adjustments for area wage differences (as described in section V.C.1.
of this final rule) and for the cost-of-living for Alaska and Hawaii
(as described in section V.C.2. of this final rule). Additional
payments would also be made for high-cost outlier cases (as described
in section V.C.3. of this final rule). As noted in section V.C.6. of
this final rule, we are not making adjustments for rural location,
geographic reclassification, indirect medical education costs, or a
disproportionate share of low-income patients because sufficient new
data have not been generated that would enable us to conduct a
comprehensive reevaluation of these payment adjustments.
For estimated 2005 LTCH PPS rate year payments, we used the
applicable LTCH wage index values effective for discharges occurring on
or after July 1, 2004 through June 30, 2005 based on the existing MSA-
based labor market area designations (see May 7, 2004 (69 FR 25685)).
We adjusted for area wage differences for estimated 2005 LTCH PPS rate
year payments by computing a weighted average of a LTCH's applicable
wage index during the period from July 1, 2004, through June 30, 2005,
because some providers may experience a change in the wage index phase-
in percentage during that period. For cost reporting periods beginning
on or after October 1, 2003 and before September 30, 2004 (FY 2004),
the labor portion of the Federal rate was adjusted by two-fifths of the
applicable ``LTCH PPS wage index'' (that is, the FY 2004 IPPS wage
index data without taking into account geographic reclassification,
under sections 1886(d)(8) and (d)(10)) of the Act). For cost reporting
periods beginning on or after October 1, 2004 and before September 30,
2005 (FY 2005), the labor portion of the Federal rate was adjusted by
three-fifths of the applicable LTCH PPS wage index. Therefore, during
the 2005 LTCH PPS rate year (July 1, 2004 through June 30, 2005), a
provider with a cost reporting period that began October 1, 2003, had 3
months of payments under the two-fifths wage index value and 9 months
of payment under the three-fifths wage index value. For this provider,
for the purposes of estimating payments for the impact analyses, we
computed a blended wage index of 25 percent (3 months/12 months) of the
two-fifths wage index value and 75 percent (9 months/12 months) of the
three-fifths wage index value. The applicable LTCH PPS wage index
values for the 2005 LTCH PPS rate year are shown in Tables 1 and 2 of
the Addendum to the May 7, 2004 final rule (69 FR 25722-25741).
For estimated 2006 LTCH PPS rate year payments, we used the
applicable LTCH wage index values effective for discharges occurring on
or after July 1, 2005 through June 30, 2006 (as shown in Tables 1 and 2
of the Addendum to this final rule) based on the CBSA-based labor
market area designations (described in section V.C.1.c.1. of this final
rule). Because some providers may experience a change in the wage index
phase-in percentage during that period, we adjusted for area wage
differences for estimated 2006 LTCH PPS rate year payments by computing
a weighted average of a LTCH's applicable wage index during the period
from July 1, 2005, through June 30, 2006. For cost reporting periods
that began on or after October 1, 2004 and before September 30, 2005,
the labor portion of the Federal rate is adjusted by three-fifths of
the applicable LTCH PPS wage index (that is, as discussed in section
V.C.1. of this final rule, the FY 2005 IPPS acute care hospital wage
index data without taking into account geographic reclassification
under sections 1886(d)(8) and (d)(10) of the Act). For cost reporting
periods beginning on or after October 1, 2005 and before September 30,
2006, the labor portion of the Federal rate will be adjusted by four-
fifths of the applicable LTCH PPS wage index. The applicable LTCH PPS
wage index values for the 2006 LTCH PPS rate year are shown in Tables 1
and 2 of the Addendum to this final rule.
For estimated 2005 LTCH PPS rate year payments, for those LTCHs
projected to receive payment under the transition blend methodology, we
also calculated payments using the applicable transition blend
percentages. During the 2005 LTCH PPS rate year, based on the
transition blend percentages set forth in Sec. 412.533(a), some
providers may experience a change in the transition blend percentage
during the period from July 1, 2004 through June 30, 2005. For example,
during the period from July 1, 2004 through June 30, 2005, a provider
with a cost reporting period beginning on October 1, 2003 (which is
paid under the 60/40 transition blend (60 percent of payments based on
reasonable cost-based methodology and 40 percent of payments under the
LTCH PPS) beginning October 1, 2003) has 3 months (July 1, 2004 through
September 30, 2004) under the 60/40 blend and 9 months (October 1, 2004
through June 30, 2005) of payment under the 40/60-transition blend (40
percent of payments based on reasonable cost-based methodology and 60
percent of payments under the LTCH PPS for cost reporting periods
beginning during FY 2005). (The 40 percent/60 percent blend will
continue until the provider's cost reporting period beginning on
October 1, 2005 (FY 2006).)
Similarly, during the 2006 LTCH PPS rate year, based on the
transition blend percentages set forth in Sec. 412.533(a), some of the
providers paid under the transition blend methodology may experience a
change in the transition blend percentage during the period from July
1, 2005 through June 30, 2006. For example, during the period from July
1, 2005 through June 30, 2006, a provider with a cost reporting period
beginning on October 1, 2004 (which is paid under the 40/60 transition
blend would have 3 months (July 1, 2005 through September 30, 2005)
under the 40/60 blend and 9 months (October 1, 2005 through June 30,
2006) of payment under the 20/80-transition blend (20 percent of
payments based on reasonable cost-based methodology and 80 percent of
payments under the LTCH PPS for cost reporting periods beginning
[[Page 24216]]
during FY 2006). (The 20 percent/80 percent blend will continue until
the provider's cost reporting period beginning on October 1, 2006 (FY
2007).)
In estimating blended transition payments, we estimated payments
based on the reasonable cost-based methodology, in accordance with the
requirements at section 1886(b) of the Act. For those providers who
have not already made the election (as determined from PSF data) to be
paid based on 100 percent of the Federal rate, we compared the
estimated blended transition payment to the LTCH's estimated payment if
it would elect payment based on 100 percent of the Federal rate. If we
estimated that the LTCH would be paid more based on 100 percent of the
Federal rate, we assumed that it would elect to bypass the transition
methodology and to receive payments based on 100 percent of prospective
payment.
Then we applied the budget neutrality offset to payments to account
for the effect of the 5-year transition methodology and election of
payment based on 100 percent of the Federal rate on Medicare program
payments (established in the August 30, 2002 final rule (67 FR 56034)).
In estimating 2005 LTCH PPS rate year payments, we applied the 0.5
percent (0.995) budget neutrality offset to payments to account for the
effect of the 5-year transition methodology and election of payment
based on 100 percent of the Federal rate on Medicare program payments
(See the May 7, 2004 final rule (68 FR 25674)) to each LTCH's estimated
payments under the LTCH PPS for the 2005 LTCH PPS rate year. Similarly,
in estimating 2006 LTCH PPS rate year payments, we applied the 0.0
percent (1.000) budget neutrality offset to payments to account for the
effect of the 5-year transition methodology and election of payment
based on 100 percent of the Federal rate on Medicare program payments
(see section V.C.7 of this final rule) to each LTCH's estimated
payments under the LTCH PPS for the 2006 LTCH PPS rate year. The impact
shown below in Table II is based on our projection of using the best
available data for 259 LTCHs that approximately 2 percent of LTCHs will
be paid based on the transition blend methodology and 98 percent of
LTCHs will elect payment based on 100 percent of the Federal rate.
In Table III below, we also show the impact if the LTCH PPS were
fully implemented; that is, as if there were an immediate transition to
fully Federal prospective payments under the LTCH PPS for the 2005 LTCH
PPS rate year and the 2006 LTCH PPS rate year. Accordingly, in the
impact analysis shown in Table III., the respective budget neutrality
adjustments to account for the 5-year transition methodology on LTCHs'
Medicare program payments for the 2005 and 2006 LTCH PPS rate years
(0.5 percent and the 0.0 percent, respectively) were not applied to
LTCHs' estimated payments under the LTCH PPS.
Tables II and III below illustrate the aggregate impact of the
payment system among various classifications of LTCHs.
The first column, LTCH Classification, identifies the type
of LTCH.
The second column lists the number of LTCHs of each
classification type.
The third column identifies the number of long-term care
cases.
The fourth column shows the estimated payment per
discharge for the 2005 LTCH PPS rate year.
The fifth column shows the estimated payment per discharge
for the 2006 LTCH PPS rate year.
The sixth column shows the percent change in estimated
LTCH PPS payments based on the wage index changes from the 2005 LTCH
PPS rate year to the 2006 LTCH PPS rate year (as discussed in section
V.C.1. of this final rule).
The seventh column shows the percent change of 2005 LTCH
PPS rate year estimated payments compared to the 2006 LTCH PPS rate
year estimated payments for all changes (as discussed in the preamble
of this final rule).
[[Page 24217]]
[GRAPHIC] [TIFF OMITTED] TR06MY05.000
[[Page 24218]]
[GRAPHIC] [TIFF OMITTED] TR06MY05.001
[[Page 24219]]
4. Results
Based on the most recent available data (as described above for 259
LTCHs), we have prepared the following summary of the impact (as shown
in Table II) of the LTCH PPS set forth in this final rule.
a. Location
We evaluated each LTCH's location (urban or rural) based on the
CBSA-based labor market area definitions described in section
V.C.1.c.1. of this final rule. Based on the most recent available data,
the vast majority of LTCHs are in urban areas. Approximately 6 percent
of the LTCHs are identified as being located in a rural area, and
approximately 4.4 percent of all LTCH cases are treated in these rural
hospitals. Impact analysis in Table II shows that for rural LTCHs the
percent change in estimated payments per discharge for the 2006 LTCH
PPS rate year will increase 3.6 percent in comparison to the 2005 LTCH
PPS rate year from all of the established changes, which reflects the
estimated 2.3 percent decrease in payments per discharge from the wage
index changes. The primary reason for the projected increase in
payments per discharge for all changes for rural LTCHs is a combination
of the 3.4 percent increase in the standard Federal rate, the decrease
in the transition budget neutrality offset (discussed in section V.C.7.
of this final rule), and a projected increase in outlier payments as a
result of the decrease in outlier fixed-loss amount (discussed in
section V.C.3. of this final rule), which results in more cases
qualifying as outlier cases and receiving additional outlier payments.
This projected increase in estimated payments per discharge for rural
LTCHs is partially offset by a projected decrease in payments per
discharge as a result of the changes in the wage index.
Rural LTCHs are projected to experience a relatively large decrease
in payments due to the wage index changes primarily because of the
progression of the 5-year phase-in of the wage index adjustment. That
is, because the wage index of most rural areas is less than 1.0, as
rural LTCHs progress through the 5-year phase-in of the wage index
adjustment (for example, the two-fifths wage index for cost reporting
periods beginning during FY 2004 to the three-fifths wage index for
cost reporting periods beginning during FY 2005), their wage index
decreases, which results in a decrease in their payments. This would
occur even if we had not revised the labor market area definitions
based on OMB's CBSA designations. For example (as shown in Table 2 of
the Addendum to this final rule), the three-fifths wage index for rural
Arizona of 0.9362 is less than the two-fifths wage index for rural
Arizona of 0.9574. In addition, we identified three LTCHs that are
currently urban under the existing MSA-based labor market area
designations that will become rural under the new CBSA-based labor
market designations, and as a result, are projected to experience a
relatively larger decrease in payments per discharge due to the changes
in the wage index. (See Table II.)
For urban LTCHs, the percent change in estimated payments per
discharge for the 2006 LTCH PPS rate year are projected to increase 5.0
percent in comparison to the 2005 LTCH PPS rate year from all changes,
which reflects an estimated 0.0 percent change resulting from the wage
index changes. Payments per discharge for the 2006 LTCH PPS rate year
are projected to increase 4.8 percent for large urban LTCHs in
comparison to the 2005 LTCH PPS rate year from all of the changes,
including a projected 0.7 percent decrease from the wage index changes.
We project that 2006 LTCH PPS rate year payments per discharge will
increase 6.3 percent in comparison to the 2005 LTCH PPS rate year for
other urban LTCHs, including a projected 0.3 percent increase for the
wage index changes.
As noted above and discussed in greater detail below, the projected
increase in payments per discharge for all changes for both large and
other urban LTCHs is largely due to the 3.4 percent increase to the
standard Federal rate, the decrease in the transition budget neutrality
offset, and a projected increase in outlier payments as a result of the
decrease in the outlier fixed amount. These projected increases in
payments per discharge reflecting all changes for LTCHs that are
located in large urban areas are partially offset by a projected
decrease in payments per discharge for the wage index changes. The
projected decrease in payments per discharge based solely on the wage
index changes are largely due to the progression of the 5-year phase-in
of the wage index adjustment, as explained above, since the majority of
LTCHs are in large urban areas with wage index values that are slightly
less than 1.0. Large urban LTCHs are projected to experience a decrease
in payments per discharge for the wage index changes because, in
addition to the effect of the progression of the 5-year phase-in of the
wage index adjustment, as explained above, the wage index for a few
large urban areas, such as Houston, Texas, will be slightly lower under
the new CBSA-based labor market area designations than they would be
under the MSA-based labor market area designations. (See Table II.)
As noted above, in addition to the update to the standard Federal
rate, the estimated percent increase in payments per discharge for all
changes from the 2005 LTCH PPS rate year to the 2006 LTCH PPS rate year
is largely attributable to the decrease in the outlier fixed-loss
amount (discussed in section V.C.3. of this final rule). For the 2005
LTCH PPS rate year, the outlier fixed-loss amount is $17,864 (as
established in the May 7, 2004 final rule). Therefore, currently a case
qualifies for an additional LTCH PPS outlier payment if the estimated
cost of the case exceeds the outlier threshold (the sum of the adjusted
Federal LTCH payment for the LTC-DRG and the fixed-loss amount of
$17,864). For the 2006 LTCH PPS rate year, the outlier fixed loss-
amount is $10,501. Therefore, a case would qualify for an additional
LTCH PPS outlier payment if the estimated cost of the case exceeds the
outlier threshold (the sum of the adjusted Federal LTCH payment for the
LTC-DRG and the fixed-loss amount of $10,501). Therefore, we estimate
that more cases will qualify as outlier cases (the estimated cost of
the case exceeds the proposed outlier threshold) and will receive
outlier payments, thereby increasing total estimated payments per
discharge. In the aggregate, LTCHs are not expected to experience a
significant impact as a result of the changes to the wage index. As
discussed throughout this impact section, certain groups of hospitals
are projected to benefit from the changes to the wage index while other
groups of LTCHs are projected to be negatively impacted by the changes
to the wage index. However, as a result of the aggregate effect of the
update to the standard Federal rate combined with the decrease in the
outlier fixed-loss amount, we estimate that all LTCH categories would
experience an increase in payments.
b. Participation Date
LTCHs are grouped by participation date into three categories: (1)
Before October 1983; (2) between October 1983 and September 1993; and
(3) between October 1993 and September 2002. At this time, we do not
have sufficient cost report data for any of the LTCHs that began
participating in the Medicare program after October 2002 (the
implementation of the LTCH PPS), and, therefore, they are not included
in the impact analysis shown below in Table II.
[[Page 24220]]
Based on the most recent available data, the majority,
approximately 70 percent, of the LTCH discharges are in LTCHs hospitals
that began participating between October 1993 and September 2002, and
we estimate that 2006 LTCH PPS rate year payments per discharge will
increase 5.4 percent in comparison to the 2005 LTCH PPS rate year due
to all changes, which includes the estimated 0.3 percent decrease in
payments per discharge due to the wage index changes.
Approximately 22 percent of the discharges are in LTCHs that began
participating in Medicare between October 1983 and September 1993, and
2006 LTCH PPS rate year payments per discharge are projected to
increase 6.3 percent in comparison to the 2005 LTCH PPS rate year from
all changes, which includes the estimated 0.2 percent increase in
payments per discharge from the wage index changes. Payments per
discharge for the 2006 LTCH PPS rate year are estimated to increase 7.0
percent in comparison to the 2005 LTCH PPS rate year for LTCHs that
began participating before October 1983 from all changes, including the
estimated 1.1 percent increase in payments per discharge from the wage
index changes. This increase in projected payments per discharge from
the changes in the wage index for LTCHs that began participating before
October 1983 is largely due to a combination of the change to the CBSA-
based labor market area definitions and the increase in the percentage
of the wage index adjustment as required by the 5-year phase-in of the
wage index adjustment (for example, two-fifths of the wage index
adjustment for cost reporting periods beginning during FY 2004
increasing to three-fifths of the wage index adjustment for cost
reporting periods beginning during FY 2005.). (See Table II.)
In addition, as discussed above, these increases in payments for
the 2006 LTCH PPS rate year are also due to the decrease in the outlier
fixed-loss amount (as discussed in section V.C.3. of this final rule).
As a result, more cases would qualify as outlier cases (the estimated
cost of the case exceeds the outlier threshold) and, therefore, will
receive outlier payments, thereby increasing total estimated payments
per discharge. As also noted above, in the aggregate LTCHs are not
expected to experience a significant impact as a result of the changes
to the wage index. While certain groups of LTCHs are projected to
benefit from the changes to the wage index, other groups of LTCHs are
projected to be negatively impacted by the changes to the wage index.
c. Ownership Control
LTCHs are grouped into three categories based on ownership control
type--(1) voluntary; (2) proprietary; and (3) government.
Based on the most recent available data, approximately 3 percent of
LTCHs are government owned and operated. We project that for these
government owned and operated LTCHs, 2006 LTCH PPS rate year payments
per discharge will increase 6.5 percent in comparison to the 2005 LTCH
PPS rate year from all changes, including the estimated 0.5 percent
decrease in payments per discharge from the wage index changes. This
estimated decrease in estimated payments per discharge for the wage
index changes is largely due to the current applicable percentage of
the 5-year phase-in of the wage index adjustment, as explained above,
since the majority of government run LTCHs are located in areas with
wage index values that are less than 1.0. The majority (approximately
73 percent) of LTCHs are proprietary. We project that 2006 LTCH PPS
rate year payments per discharge for these proprietary LTCHs will
increase 5.6 percent in comparison to the 2005 LTCH PPS rate year for
all changes, including the estimated 0.2 percent decrease in payments
per discharge from the wage index changes. Similarly, we project that
2006 LTCH PPS rate year payments per discharge for voluntary LTCHs will
increase 6.1 percent in comparison to the 2005 LTCH PPS rate year for
all changes, including the estimated 0.1 percent increase in payments
per discharge from the wage index changes. As noted above, in addition
to the update to the standard Federal rate and the decrease in the
budget neutrality offset, the estimated percent increase in payments
per discharge for all changes from the 2005 LTCH PPS rate year to the
2006 LTCH PPS rate year is largely attributable to the decrease in
outlier fixed-loss amount (discussed in section IV.C.3. of this final
rule), which will result in more cases qualifying as outlier cases (the
estimated cost of the case exceeds the outlier threshold) and,
therefore, will receive additional outlier payments, thereby increasing
total estimated payments per discharge. (See Table II.)
d. Census Region
Payments per discharge for the 2006 LTCH PPS rate year are
estimated to increase for LTCHs located in all regions in comparison to
the 2005 LTCH PPS rate year from all changes. Of the nine census
regions, we project that the increase in 2006 LTCH PPS rate year
payments per discharge in comparison to the 2005 LTCH PPS rate year
will be the largest for LTCHs in the Pacific and New England regions.
Specifically, 2006 LTCH rate year payments per discharge for LTCHs in
the Pacific and New England regions are projected to increase 7.9
percent and 7.5 percent, respectively, in comparison to the 2005 LTCH
PPS rate year, which includes the estimated 1.5 percent and 1.4 percent
increase, respectively, from the wage index changes for both areas. As
explained above, these relatively large increases in payments from all
changes for the 2006 LTCH PPS rate year for LTCHs in the New England
and Pacific regions are mostly attributable to the decrease in the
outlier fixed-loss amount (discussed in section V.C.3. of this final
rule), which results in more cases qualifying as outlier cases (the
estimated cost of the case exceeds the outlier threshold) and,
therefore, will receive additional outlier payments, thereby increasing
total estimated payments per discharge. Furthermore, in addition to the
update to the standard Federal rate, we believe that many LTCHs in the
New England and Pacific regions will experience an increase in payments
because of an the annual percentage increase of the phase-in of the
wage index adjustment, (two-fifths of the applicable LTCH PPS wage
index for cost reporting periods beginning on or after October 1, 2003;
three-fifths of the applicable wage index for cost reporting periods
beginning on or after October 1, 2004; and four-fifths of the
applicable wage index for cost reporting periods beginning on or after
October 1, 2005) since most of the LTCHs in these regions are located
in areas that have a wage index value of greater than 1.0. (See Table
II.).
We project that 2006 LTCH PPS rate year payments per discharge will
increase the least for LTCHs in the Middle Atlantic region in
comparison to the 2005 LTCH PPS rate year for all changes (4.5
percent). We project that, for LTCHs located in the Middle Atlantic
region, 2006 LTCH PPS payments per discharge will decrease slightly in
comparison to the 2005 LTCH PPS rate year from the wage index changes
(1.0 percent). We are projecting a slight decrease in payments per
discharge from the wage index changes, which results in a slightly
lower percent increase in payments per discharge from all changes, for
LTCHs located in this region because of the progression of the 5-year
phase-in of the wage index adjustment. Specifically, many LTCHs located
in this area will
[[Page 24221]]
have a wage index value of less than 1.0. (See Table II.)
e. Bed Size
LTCHs were grouped into six categories based on bed size--0-24
beds, 25-49 beds, 50-74 beds, 75-124 beds, 125-199 beds, and 200+ beds.
For all bed size categories, we are projecting an increase in 2006
LTCH PPS rate year payments per discharge in comparison to the 2005
LTCH PPS rate year from all changes. Most LTCHs are in bed size
categories where 2006 LTCH PPS rate year payments per discharge are
projected to increase at least 5 percent in comparison to the 2005 LTCH
PPS rate year from all changes.
We project that LTCHs with greater than 200 beds will have the
largest increase in estimated 2006 LTCH PPS rate year payments per
discharge in comparison to the 2005 LTCH PPS rate year from all changes
(7.0 percent), including the estimated increase from the wage index
changes of 1.0 percent. This increase in projected payments per
discharge for all changes for LTCHs with greater than 200 beds is
largely due to a combination of the 3.4 percent increase in the
standard Federal rate, a decrease in the budget neutrality offset, a
projected increase in outlier payments resulting from the decrease in
outlier fixed-loss amount, as explained above, and the increase in
projected payment per discharge from the wage index changes. This
increase in projected payments per discharge from the changes in the
wage index for LTCHs with greater than 200 beds is largely due to a
combination of the change to the CBSA-based labor market area
definitions and the increase in the percentage of the wage index
adjustment as required by the 5-year phase-in of the wage index
adjustment because most LTCHs with greater than 200 beds are located in
an area with a wage index value of greater than 1.0. (See Table II.)
Payments per discharge for the 2006 LTCH PPS rate year for LTCHs
with 24-49 beds are projected to increase the least in comparison to
the 2005 LTCH PPS rate year from all changes (5.0 percent), which
includes the estimated decrease in payments per discharge from the wage
indexes changes (-0.6 percent). This slight decrease in estimated
payments per discharge from the wage index changes is largely due to
the progression of the 5-year phase-in of the wage index adjustment (as
explained above) since the majority of LTCHs with 25-49 beds are
located in areas with a wage index value of less than 1.0. (See Table
II.)
5. Effect on the Medicare Program
Based on actuarial projections, we estimate that Medicare spending
(total Medicare program payments) for LTCH services over the next 5
years will be as follows:
------------------------------------------------------------------------
Estimated
LTCH PPS rate year payments ($ in
billions)
------------------------------------------------------------------------
2006................................................. $3.32
2007................................................. 3.38
2008................................................. 3.48
2009................................................. 3.63
2010................................................. 3.79
------------------------------------------------------------------------
These estimates are based on the current estimate of the increase
in the excluded hospital with capital market basket of 3.4 percent for
the 2006 LTCH PPS rate year, 3.0 percent for the 2007, 2.8 for the 2008
LTCH PPS rate year, 2.9 percent for the 2009 and 2010 LTCH PPS rate
years. We estimate that there will be a change in Medicare fee-for
service beneficiary enrollment of -1.0 percent in the 2006 LTCH PPS
rate year, -2.1 percent in the 2007 LTCH PPS rate year, -1.0 percent in
2008 LTCH PPS rate year, 0.3 percent in the 2009 and 2010 LTCH PPS rate
years, and an estimated increase in the total number of LTCHs. (We note
that, based on the most recent available data, our Office of the
Actuary is projecting a decrease in Medicare fee-for-service Part A
enrollment, in part, because of a projected increase in Medicare
managed care enrollment as a result of the implementation of several
provisions of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003.)
Consistent with the statutory requirement for budget neutrality, as
we discussed in the August 30, 2002 final rule that implemented the
LTCH PPS, in developing the LTCH PPS, we intended for estimated
aggregate payments under the LTCH PPS in FY 2003 would equal the
estimated aggregate payments that would have been made if the LTCH PPS
were not implemented. Our methodology for estimating payments for
purposes of the budget neutrality calculations used the best available
data and necessarily reflected assumptions. As we collect data from
LTCHs, we continue to monitor payments and evaluate the ultimate
accuracy of the assumptions used to calculate the budget neutrality
calculations (that is, inflation factors, intensity of services
provided, or behavioral response to the implementation of the LTCH
PPS). As discussed above in section V.C.7. of the preamble of this
final rule, because the LTCH PPS has only been implemented for about
2.5 years, due to the lag time in the availability of data, at this
time, we still do not have sufficient new cost report and claims data
generated under the LTCH PPS to enable us to conduct a comprehensive
reevaluation of our FY 2003 budget neutrality calculations.
Section 123 of BBRA and section 307 of BIPA provide the Secretary
with extremely broad authority in developing the LTCH PPS, including
the authority for appropriate adjustments. In accordance with this
broad authority, we may discuss in a future proposed rule a possible
one-time prospective adjustment to the LTCH PPS rates to maintain
budget neutrality so that the effect of the difference between actual
payments and estimated payments for the first year of LTCH PPS is not
perpetuated in the PPS rates for future years. As discussed above in
section V.C.7. of this final rule, because the LTCH PPS was only
recently implemented, we do not yet have sufficient complete data to
determine whether such an adjustment is warranted.
6. Effect on Medicare Beneficiaries
Under the LTCH PPS, hospitals receive payment based on the average
resources consumed by patients for each diagnosis. We do not expect any
changes in the quality of care or access to services for Medicare
beneficiaries under the LTCH PPS, but we expect that paying
prospectively for LTCH services will enhance the efficiency of the
Medicare program.
C. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf
), in Table IV below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this final rule. This
table provides our best estimate of the increase in Medicare payments
under the LTCH PPS as a result of the changes presented in this final
rule based on the data for 259 LTCHs in our database. All expenditures
are classified as transfers to Medicare providers (that is, LTCHs).
Table IV.--Accounting Statement: Classification of Estimated
Expenditures, From the 2005 LTCH PPS Rate Year to the 2006 LTCH PPS Rate
Year
[In millions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $169.
[[Page 24222]]
From Whom To Whom? Federal Government To LTCH
Medicare Providers.
------------------------------------------------------------------------
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
0
In accordance with the discussion in this preamble, the Centers for
Medicare & Medicaid Services amends 42 CFR chapter IV, part 412 as set
forth below:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority citation for part 412 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
0
2. Section 412.22 is amended by revising paragraphs (e)(3) and (h)(5)
to read as follows:
Sec. 412.22 Excluded hospitals and hospital units: General rules.
* * * * *
(e) * * *
* * * * *
(3) Notification of co-located status. A long-term care hospital
that occupies space in a building used by another hospital, or in one
or more entire buildings located on the same campus as buildings used
by another hospital and that meets the criteria of paragraphs (e)(1) or
(e)(2) of this section must notify its fiscal intermediary and CMS in
writing of its co-location and identify by name, address, and Medicare
provider number those hospital(s) with which it is co-located.
* * * * *
(h) * * *
* * * * *
(5) Notification of co-located status. A satellite of a long-term
care hospital that occupies space in a building used by another
hospital, or in one or more entire buildings located on the same campus
as buildings used by another hospital and that meets the criteria of
paragraphs (h)(1) through (h)(4) of this section must notify its fiscal
intermediary and CMS in writing of its co-location and identify by
name, address, and Medicare provider number, those hospital(s) with
which it is co-located.
* * * * *
0
3. Section 412.525 is amended by revising paragraph (c) to read as
follows:
Sec. 412.525 Adjustments to the Federal prospective payments.
* * * * *
(c) Adjustments for area levels. The labor portion of a long-term
care hospital's Federal prospective payment is adjusted to account for
geographical differences in the area wage levels using an appropriate
wage index (established by CMS), which reflects the relative level of
hospital wages and wage-related costs in the geographic area (that is,
urban or rural area as determined in accordance with paragraph (c)(1)
or (c)(2) of this section) of the hospital compared to the national
average level of hospital wages and wage-related costs. The appropriate
wage index (established by CMS) is updated annually.
(1) For cost reporting periods beginning on or after October 1,
2002, with respect to discharges occurring during the period covered by
such cost reports but before July 1, 2005, the application of the wage
index under the long-term care hospital prospective payment system is
made on the basis of the location of the facility in an urban or rural
area as defined in Sec. 412.62(f)(1)(ii) and (f)(1)(iii),
respectively.
(2) For discharges occurring on or after July 1, 2005, the
application of the wage index under the long-term care hospital
prospective payment system is made on the basis of the location of the
facility in an urban or rural area as defined in Sec.
412.64(b)(1)(ii)(A) through (C).
* * * * *
0
4. Section 412.531 is amended by revising paragraphs (b)(1)(i)(C) and
(b)(1)(ii)(A)(1) to read as follows:
Sec. 412.531 Special payment provisions when an interruption of a
stay occurs in a long-term care hospital.
* * * * *
(b) * * *
(1) * * *
(i) * * *
(C) The number of days that a beneficiary spends away from a long-
term care hospital during a 3-day or less interruption of stay under
paragraph (a)(1) of this section during which the beneficiary receives
a procedure that is grouped to a surgical DRG under the inpatient
prospective payment system in an acute care hospital during the 2005
and 2006 long-term care hospital prospective payment system rate year
is not included in determining the length of stay of the patient at the
long-term care hospital.
* * * * *
(ii) * * *
(A) * * *
(1) For a 3-day or less interruption of stay under paragraph (a)(1)
of this section in which a long-term care hospital discharges a patient
to an acute care hospital and the patient's treatment during the
interruption is grouped into a surgical DRG under the acute care
inpatient hospital prospective payment system, for the LTCH 2005 and
2006 rate years, CMS also makes a separate payment to the acute care
hospital for the surgical DRG discharge in accordance with paragraph
(b)(1)(i)(C) of this section.
* * * * *
0
5. Section 412.532 is amended by revising paragraph (i) to read as
follows:
Sec. 412.532 Special payment provisions for patients who are
transferred to onsite providers and readmitted to a long-term care
hospital.
* * * * *
(i)(1) A long-term care hospital or a satellite of a long-term care
hospital that meets the criteria of Sec. 412.22(e)(1) or (e)(2) or
Sec. 412.22(h)(1) through (h)(4) that occupies space in a building
used by another hospital or in one or more entire buildings located on
the same campus as buildings used by another hospital and must notify
its fiscal intermediary and CMS in writing of its co-location and
identify by name(s), address(es), and Medicare provider number(s) the
onsite acute care hospital, onsite IRF, or onsite psychiatric facility
or unit with which it is co-located.
(2) A long term care hospital or satellite of a long term care
hospital that occupies space in a building used by a SNF or in one or
more entire buildings located on the same campus as buildings used by a
SNF must notify its fiscal intermediary and CMS in writing of its co-
located status and identify by name, address and Medicare provider
number the SNF with which it is co-located.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
[[Page 24223]]
Dated: April 21, 2005.
Mark McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 29, 2005.
Michael O. Leavitt,
Secretary.?>
[[Page 24224]]
The following addendum will not appear in the Code of Federal
Regulations.
Addendum
This addendum contains the tables referred to throughout the
preamble to this final rule. The tables presented below are as follows:
Table 1.--Long-Term Care Hospital Wage Index for Urban Areas (based on
CBSA-based Labor Market Area Designations) for Discharges Occurring
from July 1, 2005 through June 30, 2006
Table 2.--Long-Term Care Hospital Wage Index for Rural Areas (based on
CBSA-based Labor Market Area Designations) for Discharges Occurring
from July 1, 2005 through June 30, 2006
Table 3.--FY 2005 LTC-DRG Relative Weights, Geometric Mean Length of
Stay, and Short-Stay Five-Sixths Average Length of Stay for Discharges
Occurring from July 1, 2005 through September 30, 2006. (Note: This is
the same information provided in Table 11 of the August 11, 2004 IPPS
final rule (69 FR 49738-49754, as revised in the October 7, 2004 IPPS
correction notice, 69 FR 60266-60271), which has been reprinted here
for convenience.)
Table 4.--A Listing of Long-Term Care Hospitals' State and County
Location; Current Labor Market Area Designation; and New CBSA-based
Labor Market Area Designation
Table 1.--Long-Term Care Hospital Wage Index for Urban Areas Based on CBSA Labor Market Areas for Discharges
Occurring From July 1, 2005 Through June 30, 2006 \1\
----------------------------------------------------------------------------------------------------------------
2/5ths 3/5ths 4/5ths
CBSA code Urban area (constituent counties) Full wage wage wage wage
index \2\ index \3\ index \4\ index \5\
----------------------------------------------------------------------------------------------------------------
10180........................... Abilene, TX....................... 0.7850 0.9140 0.8710 0.8280
Callahan County, TX...............
Jones County, TX..................
Taylor County, TX.................
10380........................... Aguadilla-Isabela-San 0.4280 0.7712 0.6568 0.5424
Sebasti[aacute]n, PR.
Aguada Municipio, PR..............
Aguadilla Municipio, PR...........
A[ntilde]asco Municipio, PR.......
Isabela Municipio, PR.............
Lares Municipio, PR...............
Moca Municipio, PR................
Rinc[oacute]n Municipio, PR.......
San Sebasti[aacute]n Municipio, PR
10420........................... Akron, OH......................... 0.9055 0.9622 0.9433 0.9244
Portage County, OH................
Summit County, OH.................
10500........................... Albany, GA........................ 1.1266 1.0506 1.0760 1.1013
Baker County, GA..................
Dougherty County, GA..............
Lee County, GA....................
Terrell County, GA................
Worth County, GA..................
10580........................... Albany-Schenectady-Troy, NY....... 0.8650 0.9460 0.9190 0.8920
Albany County, NY.................
Rensselaer County, NY.............
Saratoga County, NY...............
Schenectady County, NY............
Schoharie County, NY..............
10740........................... Albuquerque, NM................... 1.0485 1.0194 1.0291 1.0388
Bernalillo County, NM.............
Sandoval County, NM...............
Torrance County, NM...............
Valencia County, NM...............
10780........................... Alexandria, LA.................... 0.8171 0.9268 0.8903 0.8537
Grant Parish, LA..................
Rapides Parish, LA................
10900........................... Allentown-Bethlehem-Easton, PA-NJ. 0.9501 0.9800 0.9701 0.9601
Warren County, NJ.................
Carbon County, PA.................
Lehigh County, PA.................
Northampton County, PA............
11020........................... Altoona, PA....................... 0.8462 0.9385 0.9077 0.8770
Blair County, PA..................
11100........................... Amarillo, TX...................... 0.9178 0.9671 0.9507 0.9342
Armstrong County, TX..............
Carson County, TX.................
Potter County, TX.................
Randall County, TX................
11180........................... Ames, IA.......................... 0.9479 0.9792 0.9687 0.9583
Story County, IA..................
11260........................... Anchorage, AK..................... 1.2165 1.0866 1.1299 1.1732
Anchorage Municipality, AK........
Matanuska-Susitna Borough, AK.....
11300........................... Anderson, IN...................... 0.8713 0.9485 0.9228 0.8970
[[Page 24225]]
Madison County, IN................
11340........................... Anderson, SC...................... 0.8670 0.9468 0.9202 0.8936
Anderson County, SC...............
11460........................... Ann Arbor, MI..................... 1.1022 1.0409 1.0613 1.0818
Washtenaw County, MI..............
11500........................... Anniston-Oxford, AL............... 0.7881 0.9152 0.8729 0.8305
Calhoun County, AL................
11540........................... Appleton, WI...................... 0.9131 0.9652 0.9479 0.9305
Calumet County, WI................
Outagamie County, WI..............
11700........................... Asheville, NC..................... 0.9191 0.9676 0.9515 0.9353
Buncombe County, NC...............
Haywood County, NC................
Henderson County, NC..............
Madison County, NC................
12020........................... Athens-Clarke County, GA.......... 1.0202 1.0081 1.0121 1.0162
Clarke County, GA.................
Madison County, GA................
Oconee County, GA.................
Oglethorpe County, GA.............
12060........................... Atlanta-Sandy Springs-Marietta, GA 0.9971 0.9988 0.9983 0.9977
Barrow County, GA.................
Bartow County, GA.................
Butts County, GA..................
Carroll County, GA................
Cherokee County, GA...............
Clayton County, GA................
Cobb County, GA...................
Coweta County, GA.................
Dawson County, GA.................
DeKalb County, GA.................
Douglas County, GA................
Fayette County, GA................
Forsyth County, GA................
Fulton County, GA.................
Gwinnett County, GA...............
Haralson County, GA...............
Heard County, GA..................
Henry County, GA..................
Jasper County, GA.................
Lamar County, GA..................
Meriwether County, GA.............
Newton County, GA.................
Paulding County, GA...............
Pickens County, GA................
Pike County, GA...................
Rockdale County, GA...............
Spalding County, GA...............
Walton County, GA.................
12100........................... Atlantic City, NJ................. 1.0931 1.0372 1.0559 1.0745
Atlantic County, NJ...............
12220........................... Auburn-Opelika, AL................ 0.8215 0.9286 0.8929 0.8572
Lee County, AL....................
12260........................... Augusta-Richmond County, GA-SC.... 0.9154 0.9662 0.9492 0.9323
Burke County, GA..................
Columbia County, GA...............
McDuffie County, GA...............
Richmond County, GA...............
Aiken County, SC..................
Edgefield County, SC..............
12420........................... Austin-Round Rock, TX............. 0.9595 0.9838 0.9757 0.9676
Bastrop County, TX................
Caldwell County, TX...............
Hays County, TX...................
Travis County, TX.................
Williamson County, TX.............
12540........................... Bakersfield, CA................... 1.0036 1.0014 1.0022 1.0029
Kern County, CA...................
12580........................... Baltimore-Towson, MD.............. 0.9907 0.9963 0.9944 0.9926
[[Page 24226]]
Anne Arundel County, MD...........
Baltimore County, MD..............
Carroll County, MD................
Harford County, MD................
Howard County, MD.................
Queen Anne's County, MD...........
Baltimore City, MD................
12620........................... Bangor, ME........................ 0.9955 0.9982 0.9973 0.9964
Penobscot County, ME..............
12700........................... Barnstable Town, MA............... 1.2335 1.0934 1.1401 1.1868
Barnstable County, MA.............
12940........................... Baton Rouge, LA................... 0.8319 0.9328 0.8991 0.8655
Ascension Parish, LA..............
East Baton Rouge Parish, LA.......
East Feliciana Parish, LA.........
Iberville Parish, LA..............
Livingston Parish, LA.............
Pointe Coupee Parish, LA..........
St. Helena Parish, LA.............
West Baton Rouge Parish, LA.......
West Feliciana Parish, LA.........
12980........................... Battle Creek, MI.................. 0.9366 0.9746 0.9620 0.9493
Calhoun County, MI................
13020........................... Bay City, MI...................... 0.9574 0.9830 0.9744 0.9659
Bay County, MI....................
13140........................... Beaumont-Port Arthur, TX.......... 0.8616 0.9446 0.9170 0.8893
Hardin County, TX.................
Jefferson County, TX..............
Orange County, TX.................
13380........................... Bellingham, WA.................... 1.1642 1.0657 1.0985 1.1314
Whatcom County, WA................
13460........................... Bend, OR.......................... 1.0603 1.0241 1.0362 1.0482
Deschutes County, OR..............
13644........................... Bethesda-Frederick-Gaithersburg, 1.0956 1.0382 1.0574 1.0765
MD.
Frederick County, MD..............
Montgomery County, MD.............
13740........................... Billings, MT...................... 0.8961 0.9584 0.9377 0.9169
Carbon County, MT.................
Yellowstone County, MT............
13780........................... Binghamton, NY.................... 0.8447 0.9379 0.9068 0.8758
Broome County, NY.................
Tioga County, NY..................
13820........................... Birmingham-Hoover, AL............. 0.9157 0.9663 0.9494 0.9326
Bibb County, AL...................
Blount County, AL.................
Chilton County, AL................
Jefferson County, AL..............
St. Clair County, AL..............
Shelby County, AL.................
Walker County, AL.................
13900........................... Bismarck, ND...................... 0.7505 0.9002 0.8503 0.8004
Burleigh County, ND...............
Morton County, ND.................
13980........................... Blacksburg-Christiansburg-Radford, 0.7951 0.9180 0.8771 0.8361
VA.
Giles County, VA..................
Montgomery County, VA.............
Pulaski County, VA................
Radford City, VA..................
14020........................... Bloomington, IN................... 0.8587 0.9435 0.9152 0.8870
Greene County, IN.................
Monroe County, IN.................
Owen County, IN...................
14060........................... Bloomington-Normal, IL............ 0.9111 0.9644 0.9467 0.9289
McLean County, IL.................
14260........................... Boise City-Nampa, ID.............. 0.9352 0.9741 0.9611 0.9482
Ada County, ID....................
Boise County, ID..................
Canyon County, ID.................
Gem County, ID....................
[[Page 24227]]
Owyhee County, ID.................
14484........................... Boston-Quincy, MA................. 1.1771 1.0708 1.1063 1.1417
Norfolk County, MA................
Plymouth County, MA...............
Suffolk County, MA................
14500........................... Boulder, CO....................... 1.0046 1.0018 1.0028 1.0037
Boulder County, CO................
14540........................... Bowling Green, KY................. 0.8140 0.9256 0.8884 0.8512
Edmonson County, KY...............
Warren County, KY.................
14740........................... Bremerton-Silverdale, WA.......... 1.0614 1.0246 1.0368 1.0491
Kitsap County, WA.................
14860........................... Bridgeport-Stamford-Norwalk, CT... 1.2835 1.1134 1.1701 1.2268
Fairfield County, CT..............
15180........................... Brownsville-Harlingen, TX......... 1.0125 1.0050 1.0075 1.0100
Cameron County, TX................
15260........................... Brunswick, GA..................... 1.1933 1.0773 1.1160 1.1546
Brantley County, GA...............
Glynn County, GA..................
McIntosh County, GA...............
15380........................... Buffalo-Niagara Falls, NY......... 0.9339 0.9736 0.9603 0.9471
Erie County, NY...................
Niagara County, NY................
15500........................... Burlington, NC.................... 0.8967 0.9587 0.9380 0.9174
Alamance County, NC...............
15540........................... Burlington-South Burlington, VT... 0.9322 0.9729 0.9593 0.9458
Chittenden County, VT.............
Franklin County, VT...............
Grand Isle County, VT.............
15764........................... Cambridge-Newton-Framingham, MA... 1.1189 1.0476 1.0713 1.0951
Middlesex County, MA..............
15804........................... Camden, NJ........................ 1.0675 1.0270 1.0405 1.0540
Burlington County, NJ.............
Camden County, NJ.................
Gloucester County, NJ.............
15940........................... Canton-Massillon, OH.............. 0.8895 0.9558 0.9337 0.9116
Carroll County, OH................
Stark County, OH..................
15980........................... Cape Coral-Fort Myers, FL......... 0.9371 0.9748 0.9623 0.9497
Lee County, FL....................
16180........................... Carson City, NV................... 1.0352 1.0141 1.0211 1.0282
Carson City, NV...................
16220........................... Casper, WY........................ 0.9243 0.9697 0.9546 0.9394
Natrona County, WY................
16300........................... Cedar Rapids, IA.................. 0.8975 0.9590 0.9385 0.9180
Benton County, IA.................
Jones County, IA..................
Linn County, IA...................
16580........................... Champaign-Urbana, IL.............. 0.9527 0.9811 0.9716 0.9622
Champaign County, IL..............
Ford County, IL...................
Piatt County, IL..................
16620........................... Charleston, WV.................... 0.8876 0.9550 0.9326 0.9101
Boone County, WV..................
Clay County, WV...................
Kanawha County, WV................
Lincoln County, WV................
Putnam County, WV.................
16700........................... Charleston-North Charleston, SC... 0.9420 0.9768 0.9652 0.9536
Berkeley County, SC...............
Charleston County, SC.............
Dorchester County, SC.............
16740........................... Charlotte-Gastonia-Concord, NC-SC. 0.9743 0.9897 0.9846 0.9794
Anson County, NC..................
Cabarrus County, NC...............
Gaston County, NC.................
Mecklenburg County, NC............
Union County, NC..................
York County, SC...................
[[Page 24228]]
16820........................... Charlottesville, VA............... 1.0294 1.0118 1.0176 1.0235
Albemarle County, VA..............
Fluvanna County, VA...............
Greene County, VA.................
Nelson County, VA.................
Charlottesville City, VA..........
16860........................... Chattanooga, TN-GA................ 0.9207 0.9683 0.9524 0.9366
Catoosa County, GA................
Dade County, GA...................
Walker County, GA.................
Hamilton County, TN...............
Marion County, TN.................
Sequatchie County, TN.............
16940........................... Cheyenne, WY...................... 0.8980 0.9592 0.9388 0.9184
Laramie County, WY................
16974........................... Chicago-Naperville-Joliet, IL..... 1.0868 1.0347 1.0521 1.0694
Cook County, IL...................
DeKalb County, IL.................
DuPage County, IL.................
Grundy County, IL.................
Kane County, IL...................
Kendall County, IL................
McHenry County, IL................
Will County, IL...................
17020........................... Chico, CA......................... 1.0542 1.0217 1.0325 1.0434
Butte County, CA..................
17140........................... Cincinnati-Middletown, OH-KY-IN... 0.9516 0.9806 0.9710 0.9613
Dearborn County, IN...............
Franklin County, IN...............
Ohio County, IN...................
Boone County, KY..................
Bracken County, KY................
Campbell County, KY...............
Gallatin County, KY...............
Grant County, KY..................
Kenton County, KY.................
Pendleton County, KY..............
Brown County, OH..................
Butler County, OH.................
Clermont County, OH...............
Hamilton County, OH...............
Warren County, OH.................
17300........................... Clarksville, TN-KY................ 0.8022 0.9209 0.8813 0.8418
Christian County, KY..............
Trigg County, KY..................
Montgomery County, TN.............
Stewart County, TN................
17420........................... Cleveland, TN..................... 0.7844 0.9138 0.8706 0.8275
Bradley County, TN................
Polk County, TN...................
17460........................... Cleveland-Elyria-Mentor, OH....... 0.9650 0.9860 0.9790 0.9720
Cuyahoga County, OH...............
Geauga County, OH.................
Lake County, OH...................
Lorain County, OH.................
Medina County, OH.................
17660........................... Coeur d'Alene, ID................. 0.9339 0.9736 0.9603 0.9471
Kootenai County, ID...............
17780........................... College Station-Bryan, TX......... 0.9243 0.9697 0.9546 0.9394
Brazos County, TX.................
Burleson County, TX...............
Robertson County, TX..............
17820........................... Colorado Springs, CO.............. 0.9792 0.9917 0.9875 0.9834
El Paso County, CO................
Teller County, CO.................
17860........................... Columbia, MO...................... 0.8396 0.9358 0.9038 0.8717
Boone County, MO..................
Howard County, MO.................
17900........................... Columbia, SC...................... 0.9392 0.9757 0.9635 0.9514
[[Page 24229]]
Calhoun County, SC................
Fairfield County, SC..............
Kershaw County, SC................
Lexington County, SC..............
Richland County, SC...............
Saluda County, SC.................
17980........................... Columbus, GA-AL................... 0.8690 0.9476 0.9214 0.8952
Russell County, AL................
Chattahoochee County, GA..........
Harris County, GA.................
Marion County, GA.................
Muscogee County, GA...............
18020........................... Columbus, IN...................... 0.9388 0.9755 0.9633 0.9510
Bartholomew County, IN............
18140........................... Columbus, OH...................... 0.9737 0.9895 0.9842 0.9790
Delaware County, OH...............
Fairfield County, OH..............
Franklin County, OH...............
Licking County, OH................
Madison County, OH................
Morrow County, OH.................
Pickaway County, OH...............
Union County, OH..................
18580........................... Corpus Christi, TX................ 0.8647 0.9459 0.9188 0.8918
Aransas County, TX................
Nueces County, TX.................
San Patricio County, TX...........
18700........................... Corvallis, OR..................... 1.0545 1.0218 1.0327 1.0436
Benton County, OR.................
19060........................... Cumberland, MD-WV................. 0.8662 0.9465 0.9197 0.8930
Allegany County, MD...............
Mineral County, WV................
19124........................... Dallas-Plano-Irving, TX........... 1.0074 1.0030 1.0044 1.0059
Collin County, TX.................
Dallas County, TX.................
Delta County, TX..................
Denton County, TX.................
Ellis County, TX..................
Hunt County, TX...................
Kaufman County, TX................
Rockwall County, TX...............
19140........................... Dalton, GA........................ 0.9558 0.9823 0.9735 0.9646
Murray County, GA.................
Whitfield County, GA..............
19180........................... Danville, IL...................... 0.8392 0.9357 0.9035 0.8714
Vermilion County, IL..............
19260........................... Danville, VA...................... 0.8643 0.9457 0.9186 0.8914
Pittsylvania County, VA...........
Danville City, VA.................
19340........................... Davenport-Moline-Rock Island, IA- 0.8773 0.9509 0.9264 0.9018
IL.
Henry County, IL..................
Mercer County, IL.................
Rock Island County, IL............
Scott County, IA..................
19380........................... Dayton, OH........................ 0.9303 0.9721 0.9582 0.9442
Greene County, OH.................
Miami County, OH..................
Montgomery County, OH.............
Preble County, OH.................
19460........................... Decatur, AL....................... 0.8894 0.9558 0.9336 0.9115
Lawrence County, AL...............
Morgan County, AL.................
19500........................... Decatur, IL....................... 0.8122 0.9249 0.8873 0.8498
Macon County, IL..................
19660........................... Deltona-Daytona Beach-Ormond 0.8898 0.9559 0.9339 0.9118
Beach, FL.
Volusia County, FL................
19740........................... Denver-Aurora, CO................. 1.0904 1.0362 1.0542 1.0723
Adams County, CO..................
Arapahoe County, CO...............
[[Page 24230]]
Broomfield County, CO.............
Clear Creek County, CO............
Denver County, CO.................
Douglas County, CO................
Elbert County, CO.................
Gilpin County, CO.................
Jefferson County, CO..............
Park County, CO...................
19780........................... Des Moines, IA.................... 0.9266 0.9706 0.9560 0.9413
Dallas County, IA.................
Guthrie County, IA................
Madison County, IA................
Polk County, IA...................
Warren County, IA.................
19804........................... Detroit-Livonia-Dearborn, MI...... 1.0349 1.0140 1.0209 1.0279
Wayne County, MI..................
20020........................... Dothan, AL........................ 0.7537 0.9015 0.8522 0.8030
Geneva County, AL.................
Henry County, AL..................
Houston County, AL................
20100........................... Dover, DE......................... 0.9825 0.9930 0.9895 0.9860
Kent County, DE...................
20220........................... Dubuque, IA....................... 0.8748 0.9499 0.9249 0.8998
Dubuque County, IA................
20260........................... Duluth, MN-WI..................... 1.0340 1.0136 1.0204 1.0272
Carlton County, MN................
St. Louis County, MN..............
Douglas County, WI................
20500........................... Durham, NC........................ 1.0363 1.0145 1.0218 1.0290
Chatham County, NC................
Durham County, NC.................
Orange County, NC.................
Person County, NC.................
20740........................... Eau Claire, WI.................... 0.9139 0.9656 0.9483 0.9311
Chippewa County, WI...............
Eau Claire County, WI.............
20764........................... Edison, NJ........................ 1.1136 1.0454 1.0682 1.0909
Middlesex County, NJ..............
Monmouth County, NJ...............
Ocean County, NJ..................
Somerset County, NJ...............
20940........................... El Centro, CA..................... 0.8856 0.9542 0.9314 0.9085
Imperial County, CA...............
21060........................... Elizabethtown, KY................. 0.8684 0.9474 0.9210 0.8947
Hardin County, KY.................
Larue County, KY..................
21140........................... Elkhart-Goshen, IN................ 0.9278 0.9711 0.9567 0.9422
Elkhart County, IN................
21300........................... Elmira, NY........................ 0.8445 0.9378 0.9067 0.8756
Chemung County, NY................
21340........................... El Paso, TX....................... 0.9181 0.9672 0.9509 0.9345
El Paso County, TX................
21500........................... Erie, PA.......................... 0.8699 0.9480 0.9219 0.8959
Erie County, PA...................
21604........................... Essex County, MA.................. 1.0662 1.0265 1.0397 1.0530
Essex County, MA..................
21660........................... Eugene-Springfield, OR............ 1.0940 1.0376 1.0564 1.0752
Lane County, OR...................
21780........................... Evansville, IN-KY................. 0.8372 0.9349 0.9023 0.8698
Gibson County, IN.................
Posey County, IN..................
Vanderburgh County, IN............
Warrick County, IN................
Henderson County, KY..............
Webster County, KY................
21820........................... Fairbanks, AK..................... 1.1146 1.0458 1.0688 1.0917
Fairbanks North Star Borough, AK..
21940........................... Fajardo, PR....................... 0.3939 0.7576 0.6363 0.5151
Ceiba Municipio, PR...............
[[Page 24231]]
Fajardo Municipio, PR.............
Luquillo Municipio, PR............
22020........................... Fargo, ND-MN...................... 0.9114 0.9646 0.9468 0.9291
Cass County, ND...................
Clay County, MN...................
22140........................... Farmington, NM.................... 0.8049 0.9220 0.8829 0.8439
San Juan County, NM...............
22180........................... Fayetteville, NC.................. 0.9363 0.9745 0.9618 0.9490
Cumberland County, NC.............
Hoke County, NC...................
22220........................... Fayetteville-Springdale-Rogers, AR- 0.8636 0.9454 0.9182 0.8909
MO.
Benton County, AR.................
Madison County, AR................
Washington County, AR.............
McDonald County, MO...............
22380........................... Flagstaff, AZ..................... 1.0787 1.0315 1.0472 1.0630
Coconino County, AZ...............
22420........................... Flint, MI......................... 1.1178 1.0471 1.0707 1.0942
Genesee County, MI................
22500........................... Florence, SC...................... 0.8833 0.9533 0.9300 0.9066
Darlington County, SC.............
Florence County, SC...............
22520........................... Florence-Muscle Shoals, AL........ 0.7883 0.9153 0.8730 0.8306
Colbert County, AL................
Lauderdale County, AL.............
22540........................... Fond du Lac, WI................... 0.9897 0.9959 0.9938 0.9918
Fond du Lac County, WI............
22660........................... Fort Collins-Loveland, CO......... 1.0218 1.0087 1.0131 1.0174
Larimer County, CO................
22744........................... Fort Lauderdale-Pompano Beach- 1.0165 1.0066 1.0099 1.0132
Deerfield Beach, FL.
Broward County, FL................
22900........................... Fort Smith, AR-OK................. 0.8283 0.9313 0.8970 0.8626
Crawford County, AR...............
Franklin County, AR...............
Sebastian County, AR..............
Le Flore County, OK...............
Sequoyah County, OK...............
23020........................... Fort Walton Beach-Crestview- 0.8786 0.9514 0.9272 0.9029
Destin, FL.
Okaloosa County, FL...............
23060........................... Fort Wayne, IN.................... 0.9807 0.9923 0.9884 0.9846
Allen County, IN..................
Wells County, IN..................
Whitley County, IN................
23104........................... Fort Worth-Arlington, TX.......... 0.9472 0.9789 0.9683 0.9578
Johnson County, TX................
Parker County, TX.................
Tarrant County, TX................
Wise County, TX...................
23420........................... Fresno, CA........................ 1.0536 1.0214 1.0322 1.0429
Fresno County, CA.................
23460........................... Gadsden, AL....................... 0.8049 0.9220 0.8829 0.8439
Etowah County, AL.................
23540........................... Gainesville, FL................... 0.9459 0.9784 0.9675 0.9567
Alachua County, FL................
Gilchrist County, FL..............
23580........................... Gainesville, GA................... 0.9557 0.9823 0.9734 0.9646
Hall County, GA...................
23844........................... Gary, IN.......................... 0.9310 0.9724 0.9586 0.9448
Jasper County, IN.................
Lake County, IN...................
Newton County, IN.................
Porter County, IN.................
24020........................... Glens Falls, NY................... 0.8467 0.9387 0.9080 0.8774
Warren County, NY.................
Washington County, NY.............
24140........................... Goldsboro, NC..................... 0.8778 0.9511 0.9267 0.9022
Wayne County, NC..................
24220........................... Grand Forks, ND-MN................ 0.9091 0.9636 0.9455 0.9273
Polk County, MN...................
[[Page 24232]]
Grand Forks County, ND............
24300........................... Grand Junction, CO................ 0.9900 0.9960 0.9940 0.9920
Mesa County, CO...................
24340........................... Grand Rapids-Wyoming, MI.......... 0.9420 0.9768 0.9652 0.9536
Barry County, MI..................
Ionia County, MI..................
Kent County, MI...................
Newaygo County, MI................
24500........................... Great Falls, MT................... 0.8810 0.9524 0.9286 0.9048
Cascade County, MT................
24540........................... Greeley, CO....................... 0.9444 0.9778 0.9666 0.9555
Weld County, CO...................
24580........................... Green Bay, WI..................... 0.9590 0.9836 0.9754 0.9672
Brown County, WI..................
Kewaunee County, WI...............
Oconto County, WI.................
24660........................... Greensboro-High Point, NC......... 0.9190 0.9676 0.9514 0.9352
Guilford County, NC...............
Randolph County, NC...............
Rockingham County, NC.............
24780........................... Greenville, NC.................... 0.9183 0.9673 0.9510 0.9346
Greene County, NC.................
Pitt County, NC...................
24860........................... Greenville, SC.................... 0.9557 0.9823 0.9734 0.9646
Greenville County, SC.............
Laurens County, SC................
Pickens County, SC................
25020........................... Guayama, PR....................... 0.4005 0.7602 0.6403 0.5204
Arroyo Municipio, PR..............
Guayama Municipio, PR.............
Patillas Municipio, PR............
25060........................... Gulfport-Biloxi, MS............... 0.8950 0.9580 0.9370 0.9160
Hancock County, MS................
Harrison County, MS...............
Stone County, MS..................
25180........................... Hagerstown-Martinsburg, MD-WV..... 0.9715 0.9886 0.9829 0.9772
Washington County, MD.............
Berkeley County, WV...............
Morgan County, WV.................
25260........................... Hanford-Corcoran, CA.............. 0.9296 0.9718 0.9578 0.9437
Kings County, CA..................
25420........................... Harrisburg-Carlisle, PA........... 0.9359 0.9744 0.9615 0.9487
Cumberland County, PA.............
Dauphin County, PA................
Perry County, PA..................
25500........................... Harrisonburg, VA.................. 0.9275 0.9710 0.9565 0.9420
Rockingham County, VA.............
Harrisonburg City, VA.............
25540........................... Hartford-West Hartford-East 1.1054 1.0422 1.0632 1.0843
Hartford, CT.
Hartford County, CT...............
Litchfield County, CT.............
Middlesex County, CT..............
Tolland County, CT................
25620........................... Hattiesburg, MS................... 0.7362 0.8945 0.8417 0.7890
Forrest County, MS................
Lamar County, MS..................
Perry County, MS..................
25860........................... Hickory-Lenoir-Morganton, NC...... 0.9502 0.9801 0.9701 0.9602
Alexander County, NC..............
Burke County, NC..................
Caldwell County, NC...............
Catawba County, NC................
25980........................... Hinesville-Fort Stewart, GA....... 0.7715 0.9086 0.8629 0.8172
Liberty County, GA................
Long County, GA...................
26100........................... Holland-Grand Haven, MI........... 0.9388 0.9755 0.9633 0.9510
Ottawa County, MI.................
26180........................... Honolulu, HI...................... 1.1013 1.0405 1.0608 1.0810
Honolulu County, HI...............
[[Page 24233]]
26300........................... Hot Springs, AR................... 0.9249 0.9700 0.9549 0.9399
Garland County, AR................
26380........................... Houma-Bayou Cane-Thibodaux, LA.... 0.7721 0.9088 0.8633 0.8177
Lafourche Parish, LA..............
Terrebonne Parish, LA.............
26420........................... Houston-Baytown-Sugar Land, TX.... 0.9973 0.9989 0.9984 0.9978
Austin County, TX.................
Brazoria County, TX...............
Chambers County, TX...............
Fort Bend County, TX..............
Galveston County, TX..............
Harris County, TX.................
Liberty County, TX................
Montgomery County, TX.............
San Jacinto County, TX............
Waller County, TX.................
26580........................... Huntington-Ashland, WV-KY-OH...... 0.9564 0.9826 0.9738 0.9651
Boyd County, KY...................
Greenup County, KY................
Lawrence County, OH...............
Cabell County, WV.................
Wayne County, WV..................
26620........................... Huntsville, AL.................... 0.8851 0.9540 0.9311 0.9081
Limestone County, AL..............
Madison County, AL................
26820........................... Idaho Falls, ID................... 0.9059 0.9624 0.9435 0.9247
Bonneville County, ID.............
Jefferson County, ID..............
26900........................... Indianapolis, IN.................. 1.0113 1.0045 1.0068 1.0090
Boone County, IN..................
Brown County, IN..................
Hamilton County, IN...............
Hancock County, IN................
Hendricks County, IN..............
Johnson County, IN................
Marion County, IN.................
Morgan County, IN.................
Putnam County, IN.................
Shelby County, IN.................
26980........................... Iowa City, IA..................... 0.9654 0.9862 0.9792 0.9723
Johnson County, IA................
Washington County, IA.............
27060........................... Ithaca, NY........................ 0.9589 0.9836 0.9753 0.9671
Tompkins County, NY...............
27100........................... Jackson, MI....................... 0.9146 0.9658 0.9488 0.9317
Jackson County, MI................
27140........................... Jackson, MS....................... 0.8291 0.9316 0.8975 0.8633
Copiah County, MS.................
Hinds County, MS..................
Madison County, MS................
Rankin County, MS.................
Simpson County, MS................
27180........................... Jackson, TN....................... 0.8900 0.9560 0.9340 0.9120
Chester County, TN................
Madison County, TN................
27260........................... Jacksonville, FL.................. 0.9537 0.9815 0.9722 0.9630
Baker County, FL..................
Clay County, FL...................
Duval County, FL..................
Nassau County, FL.................
St. Johns County, FL..............
27340........................... Jacksonville, NC.................. 0.8401 0.9360 0.9041 0.8721
Onslow County, NC.................
27500........................... Janesville, WI.................... 0.9583 0.9833 0.9750 0.9666
Rock County, WI...................
27620........................... Jefferson City, MO................ 0.8338 0.9335 0.9003 0.8670
Callaway County, MO...............
Cole County, MO...................
Moniteau County, MO...............
[[Page 24234]]
Osage County, MO..................
27740........................... Johnson City, TN.................. 0.8146 0.9258 0.8888 0.8517
Carter County, TN.................
Unicoi County, TN.................
Washington County, TN.............
27780........................... Johnstown, PA..................... 0.8380 0.9352 0.9028 0.8704
Cambria County, PA................
27860........................... Jonesboro, AR..................... 0.8144 0.9258 0.8886 0.8515
Craighead County, AR..............
Poinsett County, AR...............
27900........................... Joplin, MO........................ 0.8721 0.9488 0.9233 0.8977
Jasper County, MO.................
Newton County, MO.................
28020........................... Kalamazoo-Portage, MI............. 1.0676 1.0270 1.0406 1.0541
Kalamazoo County, MI..............
Van Buren County, MI..............
28100........................... Kankakee-Bradley, IL.............. 1.0603 1.0241 1.0362 1.0482
Kankakee County, IL...............
28140........................... Kansas City, MO-KS................ 0.9629 0.9852 0.9777 0.9703
Franklin County, KS...............
Johnson County, KS................
Leavenworth County, KS............
Linn County, KS...................
Miami County, KS..................
Wyandotte County, KS..............
Bates County, MO..................
Caldwell County, MO...............
Cass County, MO...................
Clay County, MO...................
Clinton County, MO................
Jackson County, MO................
Lafayette County, MO..............
Platte County, MO.................
Ray County, MO....................
28420........................... Kennewick-Richland-Pasco, WA...... 1.0520 1.0208 1.0312 1.0416
Benton County, WA.................
Franklin County, WA...............
28660........................... Killeen-Temple-Fort Hood, TX...... 0.9242 0.9697 0.9545 0.9394
Bell County, TX...................
Coryell County, TX................
Lampasas County, TX...............
28700........................... Kingsport-Bristol-Bristol, TN-VA.. 0.8240 0.9296 0.8944 0.8592
Hawkins County, TN................
Sullivan County, TN...............
Bristol City, VA..................
Scott County, VA..................
Washington County, VA.............
28740........................... Kingston, NY...................... 0.9000 0.9600 0.9400 0.9200
Ulster County, NY.................
28940........................... Knoxville, TN..................... 0.8548 0.9419 0.9129 0.8838
Anderson County, TN...............
Blount County, TN.................
Knox County, TN...................
Loudon County, TN.................
Union County, TN..................
29020........................... Kokomo, IN........................ 0.8986 0.9594 0.9392 0.9189
Howard County, IN.................
Tipton County, IN.................
29100........................... La Crosse, WI-MN.................. 0.9289 0.9716 0.9573 0.9431
Houston County, MN................
La Crosse County, WI..............
29140........................... Lafayette, IN..................... 0.9067 0.9627 0.9440 0.9254
Benton County, IN.................
Carroll County, IN................
Tippecanoe County, IN.............
29180........................... Lafayette, LA..................... 0.8306 0.9322 0.8984 0.8645
Lafayette Parish, LA..............
St. Martin Parish, LA.............
29340........................... Lake Charles, LA.................. 0.7935 0.9174 0.8761 0.8348
[[Page 24235]]
Calcasieu Parish, LA..............
Cameron Parish, LA................
29404........................... Lake County-Kenosha County, IL-WI. 1.0342 1.0137 1.0205 1.0274
Lake County, IL...................
Kenosha County, WI................
29460........................... Lakeland, FL...................... 0.8930 0.9572 0.9358 0.9144
Polk County, FL...................
29540........................... Lancaster, PA..................... 0.9883 0.9953 0.9930 0.9906
Lancaster County, PA..............
29620........................... Lansing-East Lansing, MI.......... 0.9658 0.9863 0.9795 0.9726
Clinton County, MI................
Eaton County, MI..................
Ingham County, MI.................
29700........................... Laredo, TX........................ 0.8747 0.9499 0.9248 0.8998
Webb County, TX...................
29740........................... Las Cruces, NM.................... 0.8784 0.9514 0.9270 0.9027
Dona Ana County, NM...............
29820........................... Las Vegas-Paradise, NV............ 1.1378 1.0551 1.0827 1.1102
Clark County, NV..................
29940........................... Lawrence, KS...................... 0.8644 0.9458 0.9186 0.8915
Douglas County, KS................
30020........................... Lawton, OK........................ 0.8212 0.9285 0.8927 0.8570
Comanche County, OK...............
30140........................... Lebanon, PA....................... 0.8570 0.9428 0.9142 0.8856
Lebanon County, PA................
30300........................... Lewiston, ID-WA................... 0.9314 0.9726 0.9588 0.9451
Nez Perce County, ID..............
Asotin County, WA.................
30340........................... Lewiston-Auburn, ME............... 0.9562 0.9825 0.9737 0.9650
Androscoggin County, ME...........
30460........................... Lexington-Fayette, KY............. 0.9359 0.9744 0.9615 0.9487
Bourbon County, KY................
Clark County, KY..................
Fayette County, KY................
Jessamine County, KY..............
Scott County, KY..................
Woodford County, KY...............
30620........................... Lima, OH.......................... 0.9330 0.9732 0.9598 0.9464
Allen County, OH..................
30700........................... Lincoln, NE....................... 1.0208 1.0083 1.0125 1.0166
Lancaster County, NE..............
Seward County, NE.................
30780........................... Little Rock-North Little Rock, AR. 0.8826 0.9530 0.9296 0.9061
Faulkner County, AR...............
Grant County, AR..................
Lonoke County, AR.................
Perry County, AR..................
Pulaski County, AR................
Saline County, AR.................
30860........................... Logan, UT-ID...................... 0.9094 0.9638 0.9456 0.9275
Franklin County, ID...............
Cache County, UT..................
30980........................... Longview, TX...................... 0.8801 0.9520 0.9281 0.9041
Gregg County, TX..................
Rusk County, TX...................
Upshur County, TX.................
31020........................... Longview, WA...................... 1.0224 1.0090 1.0134 1.0179
Cowlitz County, WA................
31084........................... Los Angeles-Long Beach-Glendale, 1.1732 1.0693 1.1039 1.1386
CA.
Los Angeles County, CA............
31140........................... Louisville, KY-IN................. 0.9122 0.9649 0.9473 0.9298
Clark County, IN..................
Floyd County, IN..................
Harrison County, IN...............
Washington County, IN.............
Bullitt County, KY................
Henry County, KY..................
Jefferson County, KY..............
Meade County, KY..................
[[Page 24236]]
Nelson County, KY.................
Oldham County, KY.................
Shelby County, KY.................
Spencer County, KY................
Trimble County, KY................
31180........................... Lubbock, TX....................... 0.8777 0.9511 0.9266 0.9022
Crosby County, TX.................
Lubbock County, TX................
31340........................... Lynchburg, VA..................... 0.9017 0.9607 0.9410 0.9214
Amherst County, VA................
Appomattox County, VA.............
Bedford County, VA................
Campbell County, VA...............
Bedford City, VA..................
Lynchburg City, VA................
31420........................... Macon, GA......................... 0.9887 0.9955 0.9932 0.9910
Bibb County, GA...................
Crawford County, GA...............
Jones County, GA..................
Monroe County, GA.................
Twiggs County, GA.................
31460........................... Madera, CA........................ 0.8521 0.9408 0.9113 0.8817
Madera County, CA.................
31540........................... Madison, WI....................... 1.0306 1.0122 1.0184 1.0245
Columbia County, WI...............
Dane County, WI...................
Iowa County, WI...................
31700........................... Manchester-Nashua, NH............. 1.0642 1.0257 1.0385 1.0514
Hillsborough County, NH...........
Merrimack County, NH..............
31900........................... Mansfield, OH..................... 0.9189 0.9676 0.9513 0.9351
Richland County, OH...............
32420........................... Mayag[uuml]ez, PR................. 0.4493 0.7797 0.6696 0.5594
Hormigueros Municipio, PR.........
Mayag[uuml]ez Municipio, PR.......
32580........................... McAllen-Edinburg-Pharr, TX........ 0.8602 0.9441 0.9161 0.8882
Hidalgo County, TX................
32780........................... Medford, OR....................... 1.0534 1.0214 1.0320 1.0427
Jackson County, OR................
32820........................... Memphis, TN-MS-AR................. 0.9217 0.9687 0.9530 0.9374
Crittenden County, AR.............
DeSoto County, MS.................
Marshall County, MS...............
Tate County, MS...................
Tunica County, MS.................
Fayette County, TN................
Shelby County, TN.................
Tipton County, TN.................
32900........................... Merced, CA........................ 1.0575 1.0230 1.0345 1.0460
Merced County, CA.................
33124........................... Miami-Miami Beach-Kendall, FL..... 0.9870 0.9948 0.9922 0.9896
Miami-Dade County, FL.............
33140........................... Michigan City-La Porte, IN........ 0.9332 0.9733 0.9599 0.9466
LaPorte County, IN................
33260........................... Midland, TX....................... 0.9384 0.9754 0.9630 0.9507
Midland County, TX................
33340........................... Milwaukee-Waukesha-West Allis, WI. 1.0076 1.0030 1.0046 1.0061
Milwaukee County, WI..............
Ozaukee County, WI................
Washington County, WI.............
Waukesha County, WI...............
33460........................... Minneapolis-St. Paul-Bloomington, 1.1066 1.0426 1.0640 1.0853
MN-WI.
Anoka County, MN..................
Carver County, MN.................
Chisago County, MN................
Dakota County, MN.................
Hennepin County, MN...............
Isanti County, MN.................
Ramsey County, MN.................
[[Page 24237]]
Scott County, MN..................
Sherburne County, MN..............
Washington County, MN.............
Wright County, MN.................
Pierce County, WI.................
St. Croix County, WI..............
33540........................... Missoula, MT...................... 0.9618 0.9847 0.9771 0.9694
Missoula County, MT...............
33660........................... Mobile, AL........................ 0.7995 0.9198 0.8797 0.8396
Mobile County, AL.................
33700........................... Modesto, CA....................... 1.1966 1.0786 1.1180 1.1573
Stanislaus County, CA.............
33740........................... Monroe, LA........................ 0.7903 0.9161 0.8742 0.8322
Ouachita Parish, LA...............
Union Parish, LA..................
33780........................... Monroe, MI........................ 0.9506 0.9802 0.9704 0.9605
Monroe County, MI.................
33860........................... Montgomery, AL.................... 0.8300 0.9320 0.8980 0.8640
Autauga County, AL................
Elmore County, AL.................
Lowndes County, AL................
Montgomery County, AL.............
34060........................... Morgantown, WV.................... 0.8730 0.9492 0.9238 0.8984
Monongalia County, WV.............
Preston County, WV................
34100........................... Morristown, TN.................... 0.7790 0.9116 0.8674 0.8232
Grainger County, TN...............
Hamblen County, TN................
Jefferson County, TN..............
34580........................... Mount Vernon-Anacortes, WA........ 1.0576 1.0230 1.0346 1.0461
Skagit County, WA.................
34620........................... Muncie, IN........................ 0.8580 0.9432 0.9148 0.8864
Delaware County, IN...............
34740........................... Muskegon-Norton Shores, MI........ 0.9741 0.9896 0.9845 0.9793
Muskegon County, MI...............
34820........................... Myrtle Beach-Conway-North Myrtle 0.9022 0.9609 0.9413 0.9218
Beach, SC.
Horry County, SC..................
34900........................... Napa, CA.......................... 1.2531 1.1012 1.1519 1.2025
Napa County, CA...................
34940........................... Naples-Marco Island, FL........... 1.0558 1.0223 1.0335 1.0446
Collier County, FL................
34980........................... Nashville-Davidson-Murfreesboro, 1.0086 1.0034 1.0052 1.0069
TN.
Cannon County, TN.................
Cheatham County, TN...............
Davidson County, TN...............
Dickson County, TN................
Hickman County, TN................
Macon County, TN..................
Robertson County, TN..............
Rutherford County, TN.............
Smith County, TN..................
Sumner County, TN.................
Trousdale County, TN..............
Williamson County, TN.............
Wilson County, TN.................
35004........................... Nassau-Suffolk, NY................ 1.2907 1.1163 1.1744 1.2326
Nassau County, NY.................
Suffolk County, NY................
35084........................... Newark-Union, NJ-PA............... 1.1687 1.0675 1.1012 1.1350
Essex County, NJ..................
Hunterdon County, NJ..............
Morris County, NJ.................
Sussex County, NJ.................
Union County, NJ..................
Pike County, PA...................
35300........................... New Haven-Milford, CT............. 1.1807 1.0723 1.1084 1.1446
New Haven County, CT..............
35380........................... New Orleans-Metairie-Kenner, LA... 0.9103 0.9641 0.9462 0.9282
Jefferson Parish, LA..............
[[Page 24238]]
Orleans Parish, LA................
Plaquemines Parish, LA............
St. Bernard Parish, LA............
St. Charles Parish, LA............
St. John the Baptist Parish, LA...
St. Tammany Parish, LA............
35644........................... New York-Wayne-White Plains, NY-NJ 1.3311 1.1324 1.1987 1.2649
Bergen County, NJ.................
Hudson County, NJ.................
Passaic County, NJ................
Bronx County, NY..................
Kings County, NY..................
New York County, NY...............
Putnam County, NY.................
Queens County, NY.................
Richmond County, NY...............
Rockland County, NY...............
Westchester County, NY............
35660........................... Niles-Benton Harbor, MI........... 0.8847 0.9539 0.9308 0.9078
Berrien County, MI................
35980........................... Norwich-New London, CT............ 1.1596 1.0638 1.0958 1.1277
New London County, CT.............
36084........................... Oakland-Fremont-Hayward, CA....... 1.5220 1.2088 1.3132 1.4176
Alameda County, CA................
Contra Costa County, CA...........
36100........................... Ocala, FL......................... 0.9153 0.9661 0.9492 0.9322
Marion County, FL.................
36140........................... Ocean City, NJ.................... 1.0810 1.0324 1.0486 1.0648
Cape May County, NJ...............
36220........................... Odessa, TX........................ 0.9798 0.9919 0.9879 0.9838
Ector County, TX..................
36260........................... Ogden-Clearfield, UT.............. 0.9216 0.9686 0.9530 0.9373
Davis County, UT..................
Morgan County, UT.................
Weber County, UT..................
36420........................... Oklahoma City, OK................. 0.8982 0.9593 0.9389 0.9186
Canadian County, OK...............
Cleveland County, OK..............
Grady County, OK..................
Lincoln County, OK................
Logan County, OK..................
McClain County, OK................
Oklahoma County, OK...............
36500........................... Olympia, WA....................... 1.1006 1.0402 1.0604 1.0805
Thurston County, WA...............
36540........................... Omaha-Council Bluffs, NE-IA....... 0.9754 0.9902 0.9852 0.9803
Harrison County, IA...............
Mills County, IA..................
Pottawattamie County, IA..........
Cass County, NE...................
Douglas County, NE................
Sarpy County, NE..................
Saunders County, NE...............
Washington County, NE.............
36740........................... Orlando, FL....................... 0.9742 0.9897 0.9845 0.9794
Lake County, FL...................
Orange County, FL.................
Osceola County, FL................
Seminole County, FL...............
36780........................... Oshkosh-Neenah, WI................ 0.9099 0.9640 0.9459 0.9279
Winnebago County, WI..............
36980........................... Owensboro, KY..................... 0.8434 0.9374 0.9060 0.8747
Daviess County, KY................
Hancock County, KY................
McLean County, KY.................
37100........................... Oxnard-Thousand Oaks-Ventura, CA.. 1.1105 1.0442 1.0663 1.0884
Ventura County, CA................
37340........................... Palm Bay-Melbourne-Titusville, FL. 0.9633 0.9853 0.9780 0.9706
Brevard County, FL................
[[Page 24239]]
37460........................... Panama City-Lynn Haven, FL........ 0.8124 0.9250 0.8874 0.8499
Bay County, FL....................
37620........................... Parkersburg-Marietta, WV-OH....... 0.8288 0.9315 0.8973 0.8630
Washington County, OH.............
Pleasants County, WV..............
Wirt County, WV...................
Wood County, WV...................
37700........................... Pascagoula, MS.................... 0.7974 0.9190 0.8784 0.8379
George County, MS.................
Jackson County, MS................
37860........................... Pensacola-Ferry Pass-Brent, FL.... 0.8306 0.9322 0.8984 0.8645
Escambia County, FL...............
Santa Rosa County, FL.............
37900........................... Peoria, IL........................ 0.8886 0.9554 0.9332 0.9109
Marshall County, IL...............
Peoria County, IL.................
Stark County, IL..................
Tazewell County, IL...............
Woodford County, IL...............
37964........................... Philadelphia, PA.................. 1.0865 1.0346 1.0519 1.0692
Bucks County, PA..................
Chester County, PA................
Delaware County, PA...............
Montgomery County, PA.............
Philadelphia County, PA...........
38060........................... Phoenix-Mesa-Scottsdale, AZ....... 0.9982 0.9993 0.9989 0.9986
Maricopa County, AZ...............
Pinal County, AZ..................
38220........................... Pine Bluff, AR.................... 0.8673 0.9469 0.9204 0.8938
Cleveland County, AR..............
Jefferson County, AR..............
Lincoln County, AR................
38300........................... Pittsburgh, PA.................... 0.8736 0.9494 0.9242 0.8989
Allegheny County, PA..............
Armstrong County, PA..............
Beaver County, PA.................
Butler County, PA.................
Fayette County, PA................
Washington County, PA.............
Westmoreland County, PA...........
38340........................... Pittsfield, MA.................... 1.0439 1.0176 1.0263 1.0351
Berkshire County, MA..............
38540........................... Pocatello, ID..................... 0.9601 0.9840 0.9761 0.9681
Bannock County, ID................
Power County, ID..................
38660........................... Ponce, PR......................... 0.5006 0.8002 0.7004 0.6005
Juana D[iacute]az Municipio, PR...
Ponce Municipio, PR...............
Villalba Municipio, PR............
38860........................... Portland-South Portland-Biddeford, 1.0112 1.0045 1.0067 1.0090
ME.
Cumberland County, ME.............
Sagadahoc County, ME..............
York County, ME...................
38900........................... Portland-Vancouver-Beaverton, OR- 1.1403 1.0561 1.0842 1.1122
WA.
Clackamas County, OR..............
Columbia County, OR...............
Multnomah County, OR..............
Washington County, OR.............
Yamhill County, OR................
Clark County, WA..................
Skamania County, WA...............
38940........................... Port St. Lucie-Fort Pierce, FL.... 1.0046 1.0018 1.0028 1.0037
Martin County, FL.................
St. Lucie County, FL..............
39100........................... Poughkeepsie-Newburgh-Middletown, 1.1363 1.0545 1.0818 1.1090
NY.
Dutchess County, NY...............
Orange County, NY.................
39140........................... Prescott, AZ...................... 0.9892 0.9957 0.9935 0.9914
Yavapai County, AZ................
[[Page 24240]]
39300........................... Providence-New Bedford-Fall River, 1.0929 1.0372 1.0557 1.0743
RI-MA.
Bristol County, MA................
Bristol County, RI................
Kent County, RI...................
Newport County, RI................
Providence County, RI.............
Washington County, RI.............
39340........................... Provo-Orem, UT.................... 0.9588 0.9835 0.9753 0.9670
Juab County, UT...................
Utah County, UT...................
39380........................... Pueblo, CO........................ 0.8752 0.9501 0.9251 0.9002
Pueblo County, CO.................
39460........................... Punta Gorda, FL................... 0.9441 0.9776 0.9665 0.9553
Charlotte County, FL..............
39540........................... Racine, WI........................ 0.9045 0.9618 0.9427 0.9236
Racine County, WI.................
39580........................... Raleigh-Cary, NC.................. 1.0057 1.0023 1.0034 1.0046
Franklin County, NC...............
Johnston County, NC...............
Wake County, NC...................
39660........................... Rapid City, SD.................... 0.8912 0.9565 0.9347 0.9130
Meade County, SD..................
Pennington County, SD.............
39740........................... Reading, PA....................... 0.9215 0.9686 0.9529 0.9372
Berks County, PA..................
39820........................... Redding, CA....................... 1.1835 1.0734 1.1101 1.1468
Shasta County, CA.................
39900........................... Reno-Sparks, NV................... 1.0456 1.0182 1.0274 1.0365
Storey County, NV.................
Washoe County, NV.................
40060........................... Richmond, VA...................... 0.9397 0.9759 0.9638 0.9518
Amelia County, VA.................
Caroline County, VA...............
Charles City County, VA...........
Chesterfield County, VA...........
Cumberland County, VA.............
Dinwiddie County, VA..............
Goochland County, VA..............
Hanover County, VA................
Henrico County, VA................
King and Queen County, VA.........
King William County, VA...........
Louisa County, VA.................
New Kent County, VA...............
Powhatan County, VA...............
Prince George County, VA..........
Sussex County, VA.................
Colonial Heights City, VA.........
Hopewell City, VA.................
Petersburg City, VA...............
Richmond City, VA.................
40140........................... Riverside-San Bernardino-Ontario, 1.0970 1.0388 1.0582 1.0776
CA.
Riverside County, CA..............
San Bernardino County, CA.........
40220........................... Roanoke, VA....................... 0.8415 0.9366 0.9049 0.8732
Botetourt County, VA..............
Craig County, VA..................
Franklin County, VA...............
Roanoke County, VA................
Roanoke City, VA..................
Salem City, VA....................
40340........................... Rochester, MN..................... 1.1504 1.0602 1.0902 1.1203
Dodge County, MN..................
Olmsted County, MN................
Wabasha County, MN................
40380........................... Rochester, NY..................... 0.9281 0.9712 0.9569 0.9425
Livingston County, NY.............
Monroe County, NY.................
Ontario County, NY................
[[Page 24241]]
Orleans County, NY................
Wayne County, NY..................
40420........................... Rockford, IL...................... 0.9626 0.9850 0.9776 0.9701
Boone County, IL..................
Winnebago County, IL..............
40484........................... Rockingham County-Strafford 1.0221 1.0088 1.0133 1.0177
County, NH.
Rockingham County, NH.............
Strafford County, NH..............
40580........................... Rocky Mount, NC................... 0.8998 0.9599 0.9399 0.9198
Edgecombe County, NC..............
Nash County, NC...................
40660........................... Rome, GA.......................... 0.8878 0.9551 0.9327 0.9102
Floyd County, GA..................
40900........................... Sacramento--Arden-Arcade-- 1.1700 1.0680 1.1020 1.1360
Roseville, CA.
El Dorado County, CA..............
Placer County, CA.................
Sacramento County, CA.............
Yolo County, CA...................
40980........................... Saginaw-Saginaw Township North, MI 0.9814 0.9926 0.9888 0.9851
Saginaw County, MI................
41060........................... St. Cloud, MN..................... 1.0215 1.0086 1.0129 1.0172
Benton County, MN.................
Stearns County, MN................
41100........................... St. George, UT.................... 0.9458 0.9783 0.9675 0.9566
Washington County, UT.............
41140........................... St. Joseph, MO-KS................. 1.0013 1.0005 1.0008 1.0010
Doniphan County, KS...............
Andrew County, MO.................
Buchanan County, MO...............
DeKalb County, MO.................
41180........................... St. Louis, MO-IL.................. 0.9076 0.9630 0.9446 0.9261
Bond County, IL...................
Calhoun County, IL................
Clinton County, IL................
Jersey County, IL.................
Macoupin County, IL...............
Madison County, IL................
Monroe County, IL.................
St. Clair County, IL..............
Crawford County, MO...............
Franklin County, MO...............
Jefferson County, MO..............
Lincoln County, MO................
St. Charles County, MO............
St. Louis County, MO..............
Warren County, MO.................
Washington County, MO.............
St. Louis City, MO................
41420........................... Salem, OR......................... 1.0556 1.0222 1.0334 1.0445
Marion County, OR.................
Polk County, OR...................
41500........................... Salinas, CA....................... 1.3823 1.1529 1.2294 1.3058
Monterey County, CA...............
41540........................... Salisbury, MD..................... 0.9123 0.9649 0.9474 0.9298
Somerset County, MD...............
Wicomico County, MD...............
41620........................... Salt Lake City, UT................ 0.9561 0.9824 0.9737 0.9649
Salt Lake County, UT..............
Summit County, UT.................
Tooele County, UT.................
41660........................... San Angelo, TX.................... 0.8167 0.9267 0.8900 0.8534
Irion County, TX..................
Tom Green County, TX..............
41700........................... San Antonio, TX................... 0.9003 0.9601 0.9402 0.9202
Atascosa County, TX...............
Bandera County, TX................
Bexar County, TX..................
Comal County, TX..................
Guadalupe County, TX..............
[[Page 24242]]
Kendall County, TX................
Medina County, TX.................
Wilson County, TX.................
41740........................... San Diego-Carlsbad-San Marcos, CA. 1.1267 1.0507 1.0760 1.1014
San Diego County, CA..............
41780........................... Sandusky, OH...................... 0.9017 0.9607 0.9410 0.9214
Erie County, OH...................
41884........................... San Francisco-San Mateo-Redwood 1.4712 1.1885 1.2827 1.3770
City, CA.
Marin County, CA..................
San Francisco County, CA..........
San Mateo County, CA..............
41900........................... San Germ[aacute]n-Cabo Rojo, PR... 0.5240 0.8096 0.7144 0.6192
Cabo Rojo Municipio, PR...........
Lajas Municipio, PR...............
Sabana Grande Municipio, PR.......
San Germ[aacute]n Municipio, PR...
41940........................... San Jose-Sunnyvale-Santa Clara, CA 1.4722 1.1889 1.2833 1.3778
San Benito County, CA.............
Santa Clara County, CA............
41980........................... San Juan-Caguas-Guaynabo, PR...... 0.4645 0.7858 0.6787 0.5716
Aguas Buenas Municipio, PR........
Aibonito Municipio, PR............
Arecibo Municipio, PR.............
Barceloneta Municipio, PR.........
Barranquitas Municipio, PR........
Bayam[oacute]n Municipio, PR......
Caguas Municipio, PR..............
Camuy Municipio, PR...............
Can[oacute]vanas Municipio, PR....
Carolina Municipio, PR............
Cata[ntilde]o Municipio, PR.......
Cayey Municipio, PR...............
Ciales Municipio, PR..............
Cidra Municipio, PR...............
Comer[iacute]o Municipio, PR......
Corozal Municipio, PR.............
Dorado Municipio, PR..............
Florida Municipio, PR.............
Guaynabo Municipio, PR............
Gurabo Municipio, PR..............
Hatillo Municipio, PR.............
Humacao Municipio, PR.............
Juncos Municipio, PR..............
Las Piedras Municipio, PR.........
Lo[iacute]za Municipio, PR........
Manat[iacute] Municipio, PR.......
Maunabo Municipio, PR.............
Morovis Municipio, PR.............
Naguabo Municipio, PR.............
Naranjito Municipio, PR...........
Orocovis Municipio, PR............
Quebradillas Municipio, PR........
R[iacute]o Grande Municipio, PR...
San Juan Municipio, PR............
San Lorenzo Municipio, PR.........
Toa Alta Municipio, PR............
Toa Baja Municipio, PR............
Trujillo Alto Municipio, PR.......
Vega Alta Municipio, PR...........
Vega Baja Municipio, PR...........
Yabucoa Municipio, PR.............
42020........................... San Luis Obispo-Paso Robles, CA... 1.1118 1.0447 1.0671 1.0894
San Luis Obispo County, CA........
42044........................... Santa Ana-Anaheim-Irvine, CA...... 1.1611 1.0644 1.0967 1.1289
Orange County, CA.................
42060........................... Santa Barbara-Santa Maria-Goleta, 1.0771 1.0308 1.0463 1.0617
CA.
Santa Barbara County, CA..........
42100........................... Santa Cruz-Watsonville, CA........ 1.4779 1.1912 1.2867 1.3823
Santa Cruz County, CA.............
[[Page 24243]]
42140........................... Santa Fe, NM...................... 1.0909 1.0364 1.0545 1.0727
Santa Fe County, NM...............
42220........................... Santa Rosa-Petaluma, CA........... 1.2961 1.1184 1.1777 1.2369
Sonoma County, CA.................
42260........................... Sarasota-Bradenton-Venice, FL..... 0.9629 0.9852 0.9777 0.9703
Manatee County, FL................
Sarasota County, FL...............
42340........................... Savannah, GA...................... 0.9460 0.9784 0.9676 0.9568
Bryan County, GA..................
Chatham County, GA................
Effingham County, GA..............
42540........................... Scranton--Wilkes-Barre, PA........ 0.8543 0.9417 0.9126 0.8834
Lackawanna County, PA.............
Luzerne County, PA................
Wyoming County, PA................
42644........................... Seattle-Bellevue-Everett, WA...... 1.1492 1.0597 1.0895 1.1194
King County, WA...................
Snohomish County, WA..............
43100........................... Sheboygan, WI..................... 0.8948 0.9579 0.9369 0.9158
Sheboygan County, WI..............
43300........................... Sherman-Denison, TX............... 0.9617 0.9847 0.9770 0.9694
Grayson County, TX................
43340........................... Shreveport-Bossier City, LA....... 0.9132 0.9653 0.9479 0.9306
Bossier Parish, LA................
Caddo Parish, LA..................
De Soto Parish, LA................
43580........................... Sioux City, IA-NE-SD.............. 0.9070 0.9628 0.9442 0.9256
Woodbury County, IA...............
Dakota County, NE.................
Dixon County, NE..................
Union County, SD..................
43620........................... Sioux Falls, SD................... 0.9441 0.9776 0.9665 0.9553
Lincoln County, SD................
McCook County, SD.................
Minnehaha County, SD..............
Turner County, SD.................
43780........................... South Bend-Mishawaka, IN-MI....... 0.9447 0.9779 0.9668 0.9558
St. Joseph County, IN.............
Cass County, MI...................
43900........................... Spartanburg, SC................... 0.9519 0.9808 0.9711 0.9615
Spartanburg County, SC............
44060........................... Spokane, WA....................... 1.0660 1.0264 1.0396 1.0528
Spokane County, WA................
44100........................... Springfield, IL................... 0.8738 0.9495 0.9243 0.8990
Menard County, IL.................
Sangamon County, IL...............
44140........................... Springfield, MA................... 1.0176 1.0070 1.0106 1.0141
Franklin County, MA...............
Hampden County, MA................
Hampshire County, MA..............
44180........................... Springfield, MO................... 0.8557 0.9423 0.9134 0.8846
Christian County, MO..............
Dallas County, MO.................
Greene County, MO.................
Polk County, MO...................
Webster County, MO................
44220........................... Springfield, OH................... 0.8748 0.9499 0.9249 0.8998
Clark County, OH..................
44300........................... State College, PA................. 0.8461 0.9384 0.9077 0.8769
Centre County, PA.................
44700........................... Stockton, CA...................... 1.0564 1.0226 1.0338 1.0451
San Joaquin County, CA............
44940........................... Sumter, SC........................ 0.8520 0.9408 0.9112 0.8816
Sumter County, SC.................
45060........................... Syracuse, NY...................... 0.9468 0.9787 0.9681 0.9574
Madison County, NY................
Onondaga County, NY...............
Oswego County, NY.................
45104........................... Tacoma, WA........................ 1.1078 1.0431 1.0647 1.0862
[[Page 24244]]
Pierce County, WA.................
45220........................... Tallahassee, FL................... 0.8655 0.9462 0.9193 0.8924
Gadsden County, FL................
Jefferson County, FL..............
Leon County, FL...................
Wakulla County, FL................
45300........................... Tampa-St. Petersburg-Clearwater, 0.9024 0.9610 0.9414 0.9219
FL.
Hernando County, FL...............
Hillsborough County, FL...........
Pasco County, FL..................
Pinellas County, FL...............
45460........................... Terre Haute, IN................... 0.8517 0.9407 0.9110