[Federal Register: May 6, 2008 (Volume 73, Number 88)]
[Rules and Regulations]
[Page 24871-24881]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my08-10]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1493-IFC]
RIN 0938-AP33
Medicare Program; Changes for Long-Term Care Hospitals Required
by Certain Provisions of the Medicare, Medicaid, SCHIP Extension Act of
2007: 3-Year Delay in the Application of Payment Adjustments for Short
Stay Outliers and Changes to the Standard Federal Rate
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This interim final rule with comment period implements certain
provisions of section 114 of the Medicare, Medicaid, and SCHIP
Extension Act of 2007 relating to long term care hospitals (LTCHs).
These provisions include a 3-year delay in the application of certain
provisions of the payment adjustment for short-stay outliers and
revisions to the RY 2008 standard Federal rate.
DATES: Effective date: The provisions of Sec. 412.1 and Sec. 412.500
are effective June 5, 2008. The provisions of Sec. 412.529(c)(1)
through (c)(3) are effective on December 29, 2007. In accordance with
section 1871(e)(1)(A)(i) and (ii) of the Social Security Act (the Act),
the Secretary has determined that retroactive application of the
provisions of Sec. 412.529(c)(1) through (c)(3) is necessary to comply
with the statute and that failure to apply the changes retroactively
would be contrary to public interest. Also, in accordance with section
1871(e)(1)(A)(ii) of the Act, the technical corrections to Sec.
412.529(f)
[[Page 24872]]
(redesignated from Sec. 412.529(c)(4)) are effective on December 29,
2007. In accordance with section 1871(e)(1)(A)(ii) of the Act, the
Secretary has determined that failure to apply the technical
corrections in Sec. 412.529(f) retroactively would be contrary to
public interest. Additionally, in accordance with section
1871(e)(1)(A)(i) and (ii) of the Act, the provisions of Sec. 412.523
are effective April 1, 2008. Also, in accordance with section
1871(e)(1)(A)(ii) of the Act, the fixed loss-amount provision in
section II.D.2. of this preamble which revises the fixed-loss amount
for discharge occurring on or after April 1, 2008, and through June 30,
2008, is effective April 1, 2008.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on June 30, 2008.
ADDRESSES: In commenting, please refer to file code CMS-1493-IFC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the filecode to find the document
accepting comments.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1493-IFC, P.O. Box 8013, Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1493-IFC, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to either of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487, General
information. Michele Hudson, (410) 786-5490, General information.
Elizabeth Truong, (410) 786-6005, Federal rate update and short stay
outlier.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://
www.regulations.gov. Follow the search instructions on the Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Legislative and Regulatory Authority
Section 123 of the Medicare, Medicaid, and SCHIP [State Children's
Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113), as amended by section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554), provides 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 (LOS) (as determined by the Secretary of
Health and Human Services (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 fiscal year (FY) 1997.
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 diagnosis related
group (DRG) weights, area wage adjustments, geographic
reclassification, outliers, updates, and a disproportionate share
adjustment.
In the August 30, 2002 Federal Register, we issued a final rule
that implemented the LTCH PPS authorized under BBRA and BIPA (67 FR
55954). 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.
[[Page 24873]]
In the August 30, 2002 final rule, we also presented an in-depth
discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments (short-
stay outliers), 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 rule for a comprehensive
discussion of the research and data that supported the establishment of
the LTCH PPS (67 FR 55954).
In the June 6, 2003 Federal Register, we published a final rule
that set forth the FY 2004 annual update of the payment rates for the
Medicare PPS for inpatient hospital services furnished by LTCHs (68 FR
34122). 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 (RY)). 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 are based on a
LTCH PPS rate year. While the LTCH payment rate update is effective
July 1, the annual update of the DRG classifications and relative
weights for LTCHs are linked to the annual adjustments of the acute
care hospital inpatient DRGs and are effective each October 1.
The most recent annual update to the LTCH PPS was presented in the
RY 2008 LTCH PPS final rule (72 FR 26870 through 27029). In that final
rule, among other things, we established a 0.71 percent update to the
Federal rate for RY 2008, as well as revising the existing payment
formula for certain short-stay outlier (SSO) cases and the
establishment of a payment adjustment policy applicable to LTCH and
LTCH satellite facility discharges that were admitted from hospitals
that are not co-located with the LTCH or LTCH satellite facility and
that exceed a certain percentage threshold. In addition, in the January
29, 2008 Federal Register, we presented the annual proposed rule for RY
2009. Among other things, this proposed rule presented a proposed
update for RY 2009 and other proposed payment rate and policy changes.
On December 29, 2007 the Medicare, Medicaid, and SCHIP Extension
Act (MMSEA) (Pub. L. 110-173) was enacted. Specifically, section 114 of
MMSEA, entitled ``Long-term care hospitals,'' made a number of changes
affecting payments to LTCHs for inpatient services. Several of the
provisions of section 114 of MMSEA are discussed in this interim final
rule with comment period.
B. Criteria for 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 LOS of
greater than 25 days. Alternatively, Sec. 412.23(e)(2)(ii) states that
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 LOS for all patients, including both
Medicare and non-Medicare inpatients, of greater than 20 days.
Section 412.23(e)(3) currently provides that, subject to the
provisions of paragraphs (e)(3)(ii) through (e)(3)(iv) of this section,
the average Medicare inpatient LOS, specified under Sec.
412.23(e)(2)(i) is calculated by dividing the total number of covered
and noncovered days of stay for Medicare inpatients (less leave or pass
days; that is, days where the inpatient is not occupying a bed but has
not been discharged) by the number of total Medicare discharges for the
hospital's most recent complete cost reporting period. Currently, Sec.
412.23 also provides that subject to the provisions of paragraphs
(e)(3)(ii) through (e)(3)(iv) of this section, the average inpatient
LOS 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. The fiscal intermediaries (FIs) or Medicare Administrative
Contractors (MACs) verify that LTCHs meet the average LOS 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. As described in Sec.
409.61, 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 1 remaining-benefit day. (For a more detailed
explanation, see the June 6, 2003 final rule (68 FR 34123).)
The FI's or MAC's determination of whether or not a hospital
qualifies as an LTCH is based on the hospital's discharge data from the
hospital's most recent complete cost reporting period as specified in
Sec. 412.23(e)(3) and is effective at the start of the hospital's next
cost reporting period as specified in Sec. 412.22(d). However, if the
hospital does not meet the average LOS requirement as specified in
Sec. 412.23(e)(2)(i) and (ii), the hospital may provide the FI or MAC
with data indicating a change in the ALOS 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 existing Sec. 412.23(e)(3) is 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.
II. Provisions of This Interim Final Rule With Comment Period
Section 114 of MMSEA made a number of changes affecting payments to
long-term care hospitals (LTCHs) for inpatient services. This interim
final rule with comment period will implement the following provisions
affecting LTCH PPS payments:
Modification of payment adjustments to certain SSO cases.
Section 114(c)(3) of MMSEA specifies that the refinement of the SSO
policy implemented in RY 2008 shall not apply for a 3-year period
beginning with discharges occurring on or after December 29, 2007.
Specifically, the fourth SSO payment option in Sec. 412.529(c)(3)(i)
shall not apply for a 3-year period, as discussed in section II.B. of
this interim final rule with comment period.
Revision to the RY 2008 rate provision. Section 114(e)(1)
of MMSEA provides that the base rate for RY 2008 ``shall be the same as
the base rate for discharges for the hospital occurring during the rate
year ending in 2007.'' Furthermore, in accordance with section
[[Page 24874]]
114(e)(2) of MMSEA, the revised rate will not be applicable to
discharges occurring on or after July 1, 2007 and before April 1, 2008.
(See section II.C. of this interim final rule with comment period.)
We also note that section 114(c)(4) of MMSEA specifies that for a
3-year period beginning on December 29, 2007, the Secretary shall not
make the one-time prospective adjustment to the LTCH PPS payment rates
provided for in existing Sec. 412.523(d)(3). Since under existing
regulations the one-time prospective adjustment would have impacted the
update to the standard Federal rate for RY 2009, we have addressed this
provision in the LTCH PPS RY 2009 January 29, 2008 proposed rule (73 FR
5353 through 5360). While we did not propose the one-time prospective
adjustment in the RY 2009 proposed rule, we provided a possible
methodology for determining whether the one-time prospective adjustment
would be warranted. We solicited comments on the methodology and
indicated that we would take these comments into consideration in
proposing to implement a one-time prospective adjustment on or after
December 29, 2010, consistent with the requirements of section
114(c)(4) of MMSEA. Additionally, section 114(d) of MMSEA established a
3-year moratorium on the establishment and classification of new LTCHs,
LTCH satellite facilities, and on any increase in beds in existing
LTCHs and LTCH satellite facilities, with certain exceptions. Section
114(c)(1) and (2) of MMSEA established a 3-year delay in the
application of certain payment policies which apply a payment
adjustment for LTCH patients admitted from certain referring hospitals
that exceed various percentage thresholds. These provisions will be
addressed in a separate rulemaking.
We would also note that section 114 of MMSEA included additional
provisions focusing on LTCHs not directly related to payment policy
that are not in this interim final rule with comment period are as
follows:
Section 1861 of the Act is amended by adding a new
paragraph (ccc) defining LTCHs.
The Secretary is directed to conduct a study and submit a
report to the Congress within 18 months after the date of enactment of
MMSEA. The Secretary will conduct a study on the establishment of
national LTCH facility and patient criteria.
The Secretary is directed to provide an expanded review of
medical necessity for LTCH admission and continued stay.
A. Scope of the LTCH Regulations and Section 114 of MMSEA
Section 114(e)(1) of MMSEA amended section 1886 of the Act by
adding a new subsection m. New section 1886(m)(1) of the Act provides
that for provisions related to the establishment and implementation of
a prospective payment system for payments under this title for
inpatient hospital services furnished by a long-term care hospital
described in subsection (d)(1)(B)(iv) (see section 123 of BBRA and
section 307(b) of BIPA.) In addition, it added new section 1886(m)(2)
of the Act, which pertains to the standard Federal rate for RY 2008. We
are revising our regulations at Sec. 412.1(a)(4) and Sec. 412.500,
which contain the scope of the long-term care hospital regulations to
reference the statutory authority provided by section 114 of MMSEA and
to reference the amendment to section 1886 of the Act.
B. Short Stay Outlier (SSO) Cases
1. Background
In the RY 2003 LTCH PPS final rule (67 FR 55995), we established at
Sec. 412.529 a special payment policy for short-stay outlier (SSO)
cases, SSO cases are cases with a covered LOS that is less than or
equal to five-sixths of the geometric average LOS for each LTC-DRG.
When we established the SSO policy, we explained that ``[a] short stay
outlier case may occur when a beneficiary receives less than the full
course of treatment at the LTCH before being discharged'' (67 FR
55995). Therefore, under the LTCH PPS, we implemented a special payment
adjustment for SSO cases. Under the SSO policy established in the RY
2003 LTCH PPS final rule (67 FR 55995 through 56000), for LTCH PPS
discharges with a covered LOS of up to and including five-sixths the
geometric average LOS for the LTC-DRG, we adjusted the per discharge
payment under the LTCH PPS by the least of the following three options:
(1) 120 percent of the estimated cost of the case; (2) 120 percent of
the LTC-DRG specific per diem amount multiplied by the covered LOS of
that discharge; or (3) the full LTC-DRG payment.
Generally LTCHs are defined by statute as having an average LOS of
greater than 25 days. We believe that since a SSO case may occur when a
beneficiary receives less than the full course of treatment at the LTCH
before being discharged, the full LTC-DRG payment would generally not
be appropriate. Accordingly, based on an evaluation of data from more
than 3 years of the LTCH PPS which revealed that a large percentage of
SSOs had a covered LOS of 14 days or less, we further revised our
payment policy for SSO cases in the RY 2007 and RY 2008 LTCH PPS final
rules (71 FR 27845 through 27870 and 72 FR 26904 through 26918) for
LTCHs defined by section 1886(d)(1)(B)(iv)(I) of the Act. However, as
we discussed in detail in the RY 2007 and RY 2008 LTCH PPS final rules
(71 FR 27863 and 72 FR 26907), we did not believe that it was
appropriate to apply our RY 2007 and RY 2008 SSO policy revisions,
discussed below, to the unique situation of a LTCHs defined by section
1886(d)(1)(B)(iv)(II) of the Act.
For RY 2007, consistent with the Secretary's broad authority ``to
provide for appropriate adjustments to the long-term hospital payment
system * * *'' established under section 123 of the BBRA as amended by
section 307(b)(1) of BIPA, we reduced the cost-based option of the SSO
policy adjustment to 100 percent of the estimated costs of the case for
discharges occurring on or after July 1, 2006. Furthermore, in the RY
2007 LTCH PPS final rule, we added a fourth payment option to the SSO
policy, following an analysis of the FY 2004 MedPAR data that indicated
that even under the existing SSO policy, LTCHs were admitting short
stay patients that we believe could have continued treatment at the
acute care hospitals (paid for under the IPPS). Furthermore, we believe
that these types of admissions (that is, of patients from acute care
hospitals that result in short stay cases at the LTCH) could result in
unnecessary and inappropriate admissions to LTCHs. This fourth payment
alternative is a blend of an LTCH PPS amount that is comparable to the
IPPS per diem payment amount, and the 120 percent of the LTC-DRG per
diem payment amount. Specifically, the blended payment is based on a
percentage of an IPPS comparable amount computed as a per diem and
capped at the full IPPS-comparable amount, and a percentage of a
payment based on 120 percent of the LTC-DRG per diem amount so that as
the length of the stay increases, the percentage of the IPPS comparable
per diem amount will decrease and the percentage based on 120 percent
of the LTC-DRG per diem specific amount will increase. This reflects
our belief that as the length of a SSO stay increases, the case begins
to resemble a more ``typical'' LTCH stay and, therefore, it is
appropriate that incrementally, payment should be based more on what
would otherwise be payable under the LTCH PPS and less on the ``IPPS-
comparable'' amount. (Specifics of calculating the ``IPPS-
[[Page 24875]]
comparable'' amount are set forth in considerable detail in the RY 2007
LTCH PPS final rule (71 FR 27852 through 27853).)
In the RY 2008 LTCH PPS final rule (72 FR 26904 through 26918), we
further revised the SSO policy based upon additional analysis of the FY
2005 MedPAR data. Specifically, our analysis revealed that 42 percent
of LTCH SSO discharges, or approximately 19,750 cases, had covered
lengths of stay that were less than or equal to the ALOS plus one
standard deviation of an IPPS discharge for the same DRG as the LTC-DRG
to which the case was assigned. (For additional discussion of this
specific determination, see the RY 2008 LTCH PPS final rule (72 FR
26905).) At that time, we stated that we believed that the 42 percent
of LTCH SSO cases in the RY 2005 MedPAR files with LOS that are equal
to or less than the IPPS average LOS plus one standard deviation for
the same DRGs under the IPPS appeared to be comparable to typical stays
at acute care hospitals.
For this subgroup of SSO cases, we stated that even with the blend
option, we believe that payment in excess of what Medicare would have
paid under the IPPS is inappropriate. (We note that in the FY 2008 IPPS
final rule (72 FR 47130) the Medicare severity-diagnosis related groups
(MS-DRGs) and the Medicare severity-long-term care-diagnosis related
groups (MS-LTC-DRGs) were adopted for the IPPS and the LTCH PPS,
respectively. Therefore, for SSO policies that are applicable to LTCH
discharges occurring on or after October 1, 2007, all references to
DRGs and LTC-DRGs should be understood to represent MS-DRGs and MS-LTC-
DRGs (see Sec. 412.503). Accordingly, in the RY 2008 LTCH PPS final
rule we established an alternative fourth payment option for SSO cases
under the LTCH PPS for discharges occurring on or after July 1, 2007.
Specifically, the covered LOS of a SSO case which has been assigned to
a particular MS-LTC-DRG is compared to the average LOS plus one
standard deviation for the same DRG under the IPPS, which we call
``IPPS comparable threshold.'' For example, if the covered LOS of the
LTCH SSO case is equal to or less than the average LOS plus one
standard deviation for the same DRG under the IPPS, the LTCH SSO case
would be within the ``IPPS comparable threshold'' (72 FR 26870 and
26906). We note that the ``IPPS-comparable threshold'' is only
applicable if a particular stay is a SSO, that is, with a covered LOS
equal to or less than five-sixth of the average LOS of the applicable
MS-LTC-DRG. Thus, for a LTCH SSO case that is within the ``IPPS
comparable threshold,'' the fourth payment option would be based on an
amount comparable to the hospital IPPS per diem amount determined under
Sec. 412.529(d)(4). For a SSO case with a covered LOS that exceeds the
``IPPS-comparable'' threshold, the fourth payment option continues to
be the ``blend'' established in RY 2007, described above. For all SSO
cases, the first three SSO payment options are the same. To summarize,
as established in Sec. 412.529, for each SSO case treated at a LTCH
defined under section 1886(d)(1)(B)(iv)(I), Medicare will pay the least
of the following:
100 percent of the estimated cost of the case.
120 percent of the LTC-DRG specific per diem amount
multiplied by the covered LOS of the particular case.
The full LTC-DRG.
Comparing the covered LOS for a SSO case and the ``IPPS
comparable threshold'' one of the following:
++ The blend of the 120 percent of the LTC-DRG specific per diem
amount and an amount comparable to the IPPS per diem amount specified
in Sec. 412.529(c)(2)(iv), for cases where the covered LOS for a SSO
case is greater than the ``IPPS comparable threshold''.
++ An amount comparable to the hospital IPPS per diem amount
determined under Sec. 412.529(d)(4) for cases where the covered LOS
for a SSO is less than or equal to the ``IPPS comparable threshold.''
We note that the revisions of the SSO policy payment options that were
finalized beginning in RY 2007, (that is, the ``blend'' and reduction
of the 120 percent of the estimated cost to 100 percent), and RY 2008
(the ``IPPS-comparable'' threshold option) were not applied to the
unique situation of a hospital designated as a LTCH by the Congress
under section 1886(d)(1)(B)(iv)(II) of the Act, that is, (a ``subclause
(II)'' LTCH) (71 FR 27863 and 72 FR 26907).
2. Change to the SSO Policy Due to the Medicare, Medicaid, and SCHIP
Extension Act of 2007
Section 114(c)(3) of MMSEA provides that ``[t]he Secretary shall
not apply, for the 3-year period beginning on the date of the enactment
of this Act, the amendments finalized on May 11, 2007 (72 Federal
Register 26904, 26992) made to the short-stay outlier payment provision
for long-term care hospitals contained in section 412.529(c)(3)(i) of
title 42, Code of Federal Regulations, or any similar provision.''
Accordingly, for discharges beginning on or after December 29, 2007 and
before December 29, 2010, the fourth SSO payment option based on the
``IPPS comparable threshold'' as discussed above shall not apply.
Specifically, during the 3-year period specified above, for each SSO
case treated at a LTCH defined under section 1886(d)(1)(B)(iv)(I) of
the Act, Medicare will pay the least of: (1) 100 percent of the
estimated cost of the case; (2) 120 percent of the LTC-DRG specific per
diem amount multiplied by the covered LOS of the particular case; (3)
the full LTC-DRG; or (4) the blend of the 120 percent of the LTC-DRG
specific per diem amount and an amount comparable to the IPPS per diem
amount specified in Sec. 412.529(c)(2)(iv).
Accordingly, we are amending the appropriate regulations pertaining
to the payment of SSO to implement section 114(c)(3) of MMSEA.
Specifically, we made several heading changes and redesignated
paragraph (c)(4), which refers to the policy for reconciliation of SSO
payments, as the new paragraph (f). We note that we have not made any
substantive changes to the policy for reconciliation of SSO payment
(other than those associated with implementing section 114(c)(3) of
MMSEA) and that the redesignation of the paragraph (c)(4) as (f), in
addition the heading changes are simply reorganizational changes
intended to make the regulations in this section more accessible. We
also note that in amending the regulations, we discovered that several
citations under existing paragraph (c)(4) were incorrect, originating
from the RY 2008 final rule when we redesignated this paragraph from
(c)(3) to (c)(4) (which was also an organizational change and not a
substantive policy change to the policy on reconciliation of SSO
payment) but inadvertently did not change the citations to correspond
to the redesignation. In this interim final rule with comment period,
we have corrected the citations in the redesignated paragraph (f).
C. Standard Federal Rate for the 2008 LTCH PPS Rate Year
1. Background
As specified at Sec. 412.523(c)(3)(ii), for LTCH PPS rate years
beginning RY 2004 through RY 2006, we updated the standard Federal rate
by a factor to adjust for the most recent estimate of the increases in
prices of an appropriate market basket of goods and services for LTCHs.
When we moved the date of the annual update of the LTCH PPS from
October 1 to July l in the RY 2004 LTCH PPS final rule (68 FR 34126
through 34128), we revised Sec. 412.523(c)(3) accordingly.
[[Page 24876]]
In the RY 2007 LTCH PPS final rule (71 FR 27818), we explained that
rather than solely using the most recent estimate of the LTCH PPS
market basket as the basis of the update factor for the Federal rate at
RY 2007, we believed it is appropriate to adjust the Federal rate to
account for the changes in case mix that are due to changes in coding
practices (rather than an increase in patient severity) as indicated by
our ongoing monitoring activities. We established at Sec.
412.523(c)(3)(iii) that the update to the standard Federal rate for the
2007 LTCH PPS rate year was zero percent, based on the most recent
estimate of the LTCH PPS market basket at the time and an adjustment to
account for changes in case-mix in prior periods that are due to
changes in coding practices, rather than increased patient severity, in
FY 2004. Therefore, effective from July 1, 2006 through June 30, 2007,
the standard rate was $38,086 (71 FR 27818). For the following year, we
also considered changes in case mix in 2005 as opposed to 2004 that
were due to changes in coding practices (rather than increased patient
severity) in establishing the update to the Federal rate for the 2008
LTCH PPS rate year. In the RY 2008 LTCH final rule (72 FR 26887 through
26890), we adjusted the Federal rate based on the most recent estimate
of market basket (3.2 percent) and an adjustment to account for changes
in coding practices (2.49 percent) in FY 2005. Accordingly, we
established at Sec. 412.523(c)(3)(iv) that the update to the standard
Federal rate for RY 2008 was 0.71 percent and we established the LTCH
PPS standard Federal rate, effective from July 1, 2007 through June 30,
2008, at $38,356.45 (see 72 FR 26890).
2. Section 114(e)(1) and (2) of the Medicare, Medicaid, and SCHIP
Extension Act of 2007
Section 114(e)(1) of MMSEA revises the base rate for RY 2008.
Specifically, section 114(e)(1) of Public Law 110-173 adds a new
subsection 1886(m)(2) of the Act, which provides that the base rate for
RY 2008 ``shall be the same as the base rate for discharges for the
hospital occurring during the rate year ending in 2007.'' In addition,
section 114(e)(2) of Public Law 110-173 indicates that section
1886(m)(2) of the Act ``shall not apply to discharges occurring on or
after July 1, 2007, and before April 1, 2008'' (that is, the first 9
months of RY 2008). We note that the statute uses the term ``base
rate,'' which is an undefined term in both section 1886(m) of the Act
and in 42 CFR Part 412, subpart O. As we explained in the LTCH PPS RY
2009 proposed rule (73 FR 5361), we are interpreting that term to be
the standard Federal rate because we believe Congress meant to
eliminate the 0.71 percent update from the RY 2008 standard Federal
rate. Under this interpretation, the standard Federal rate for RY 2008
would be the same as the standard Federal rate for RY 2007, that is,
the 0.71 percent update finalized in the RY 2008 LTCH PPS final rule
would be reversed.
We do not believe that the term ``base rate'' could refer to the
``unadjusted rate'' because the unadjusted rate for RY 2008 would be
updated by the current year's update factor in order to determine the
standard Federal rate for RY 2008 (that is, to determine the standard
Federal rate for any given rate year, the previous year's standard
Federal rate, referred herein as the ``unadjusted rate,'' is updated by
the current year's update factor) and doing so would result in the same
Federal rate for RY 2008 as was adopted in the RY 2008 final rule. To
illustrate mathematically, if ``base rate'' is interpreted to mean
``unadjusted rate,'' the ``unadjusted rate'' for RY 2008 ($38,086.04)
would be the same as the RY 2007 ``unadjusted rate'' ($38,086.04). The
RY 2008 ``unadjusted rate'' of $38,086.04 would subsequently be updated
by the 0.71 percent update factor finalized in the RY 2008 final rule,
resulting in a standard Federal rate for RY 2008 of $38,356.45, which
is the same standard Federal rate that was originally finalized in the
RY 2008 final rule. If we adopted this interpretation, we believe that
LTCH PPS payments would be unaffected by section 114(e)(1) of MMSEA.
Therefore, we believe that the term ``base rate'' used in section
114(e)(1) of MMSEA refers to the standard Federal rate. In subsequent
sections of this preamble, we are using the term standard Federal rate
instead of ``base rate'' when referencing the provision in section
114(e)(1) of MMSEA in order to avoid further confusion.
In the RY 2008 LTCH PPS final rule (72 FR 26890), we established a
standard Federal rate of $38,356.45 for the 2008 LTCH PPS rate year
that was based on the best available data and policies established in
that final rule. As discussed above, section 114(e) of MMSEA revises
the standard Federal rate for RY 2008 while specifying that this rate
``shall not apply to discharges occurring on or after July 1, 2007, and
before April 1, 2008'' (that is, the first 9 months of RY 2008).
Specifically, section 114(e)(1) of MMSEA provides that under the new
section 1886(m)(2) of the Act, the standard Federal rate for RY 2008
shall be the same as the standard Federal rate for RY 2007. The
standard Federal rate for RY 2007 was $38,086.04 (71 FR 27818). Thus,
to implement 114(e)(1) of the MMSEA, we are establishing through this
interim final rule with comment period that the RY 2008 standard
Federal rate is $38,086.04 (the same as the standard Federal rate for
2007). However, section 114(e)(2) of MMSEA specifically delays the
application of the revised RY 2008 standard Federal rate. Specifically,
section 114(e)(2) of MMSEA states that the revised RY 2008 standard
Federal rate ``shall not apply to discharges occurring on or after July
1, 2007, and before April 1, 2008.'' Therefore, LTCH payments for
discharges occurring on or after July 1, 2007 through March 31, 2008,
will continue to include an adjustment of 0.71 percent, that is,
payments are based on the standard Federal rate in Sec.
412.523(c)(3)(iii) as updated by 0.71 percent. Accordingly, for
discharges occurring on or after April 1, 2008 through June 30, 2008,
the revised RY 2008 standard Federal rate of $38,086.04 is applied,
while payments for discharges occurring from July 1, 2007 through March
31, 2008 are determined based on the standard Federal rate in Sec.
412.523(c)(3)(iii) increased by 0.71 percent that is, $38,356.45. We
are revising Sec. 412.523(c)(iv) to conform to the revision of the
standard Federal rate for RY 2008 under section 114(e) of MMSEA and to
specify how payments are determined during RY 2008.
Furthermore, section 114(e) of MMSEA affects the high cost outlier
fixed-loss amount currently in effect since it revises the standard
Federal rate for RY 2008 and the standard Federal rate is used to
determine the fixed-loss amount. Specifically, the current fixed-loss
amount was determined based on a standard Federal rate of $38,356.45.
(See the RY 2008 LTCH PPS final rule (72 FR 26896 through 26899), as
amended by the RY 2008 correction notice (72 FR 36613), for a
discussion of the methodology and data used to determine the current
fixed-loss amount for RY 2008.) Since for discharges occurring on or
after April 1, 2008 through June 30, 2008, payments will be based on
the revised RY 2008 standard Federal rate of $38,086.04, consistent
with the existing regulations at Sec. 412.525(a), in order to maintain
estimated total payments for high cost outlier cases at 8 percent of
the estimated total payments, we are revising the high cost outlier
fixed-loss amount. Accordingly, under the broad authority conferred on
the Secretary by section 123 of the BBRA, as amended by
[[Page 24877]]
section 307(b) of BIPA, to make appropriate adjustments to the LTCH
PPS, the revised high cost outlier fixed-loss amount effective for
discharges occurring on or after April 1, 2008 through June 30, 2008 is
$20,707. This revised fixed-loss amount was determined using the same
data and methodology presented in the RY 2008 LTCH PPS final rule and
takes into account the revised RY 2008 standard Federal rate as
provided for in the MMSEA (discussed above).
We note that in the RY 2009 LTCH PPS proposed rule (73 FR 5362),
consistent with our historical practice, we proposed to update the
standard Federal rate from the previous year (which is $38,086.04 due
to section 114(e) of MMSEA, as explained above) to determine the
proposed standard Federal rate for RY 2009.
III. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the ``DATES'' section of this
preamble, and, when we proceed with a subsequent document, we will
respond to the comments in the preamble to that document.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking and invite
public comment on a proposed rule in accordance with 5 U.S.C. section
553(b) of the Administrative Procedure Act (APA). In addition, section
1871(b)(1) provides that the Secretary shall provide for notice of the
proposed regulation in the Federal Register and a period of not less
than 60 days for public comment thereon. Section 1871(b)(2) provides
for an exception to the requirement that the Secretary provide for
notice of a proposed rulemaking and a period of not less than 60 days
for public comment. Specifically, section 1871(b)(2)(B) of the Act
provides an exception to these requirements when a law establishes a
specific deadline for the implementation of a provision and the
deadline is less than 150 days after the date of the enactment of the
statute in which the deadline is contained. Here, various provisions of
the MMSEA addressed in this interim final rule with comment period,
changed existing LTCH PPS policies (it affected the short-stay outlier
policy in Sec. 412.529 and revised the RY 2008 standard Federal rate.
Such changes were required to be implemented: (1) Beginning December
29, 2007 (section 114(c)(3) of MMSEA), and (2) were effective for RY
2008 on April 1, 2008 (section 114(e)(2) of MMSEA). Thus, the statute's
deadline for implementation of the MMSEA-related policies contained in
this interim final regulation was less than 150 days after the date of
the enactment of the statute in which the deadline was contained.
Therefore, under the authority of section 1871(b)(2)(B) of the Act, we
are waiving notice and comment procedures for the MMSEA policy changes
pertaining to the short-stay outlier policy, and the revised RY 2008
standard Federal rate.
Moreover, we also find good cause to waive the requirement for
publication of a notice of proposed rulemaking and comment on the
grounds that it is unnecessary, impracticable and contrary to the
public interest under the authority of 5 U.S.C. 553(b)(B). In general,
this interim final rule with comment period sets forth three
nondiscretionary provisions of the MMSEA with respect to short-stay
outliers and the rate for RY 2008. Therefore, we believe pursuing
notice and comment is unnecessary. Moreover, because that process would
prevent timely implementation of congressionally mandated policy
changes that are to be effective, as described previously in this
section, we believe notice and comment procedures are impracticable and
contrary to the public interest. In addition, notice and comment would
delay significantly the issuance of essential guidance to the public
which is necessary to assist them in making complex, time-sensitive
business decisions of significant financial consequence with respect to
their efforts to comply with section 114 of the MMSEA. Failure to
provide this guidance would impede such business decisions. This
regulation also makes three changes that are outside of the MMSEA
mandated changes discussed above. Specifically, this regulation makes
minor technical corrections to two incorrect cites that are embedded in
Sec. 412.529 and it revises the fixed-loss amount for the period April
1, 2008, through June 30, 2008. With respect to the technical
corrections of the two embedded cites in Sec. 412.529, notice and
comment is also unnecessary. The revisions do not represent changes to
our policy, and the public interest would, as a result, be best served
by the timely correction of these technical errors. A delay in the
applicability of the nonsubstantive changes would be contrary to the
public interest because the incorrect cites, if left in place, result
in confusion with respect to the calculation of cost-to-charge ratios.
We also find good cause to waive notice and comment procedures on the
revised fixed-loss amount for the period April 1, 2008, through June
30, 2008. The fixed-loss amount under the LTCH PPS is directly affected
by the statutorily mandated change to the standard Federal rate for RY
2008 cited above. The existing regulations limit estimated high cost
outlier payments under the LTCH PPS to 8 percent of total estimated
LTCH PPS payments. Accordingly, in order to assure that estimated high
cost outlier payments are maintained at this 8 percent target, in
conjunction with the Congressionally mandated change in the LTCH PPS
payments (that is, the standard Federal rate) that applies April 1,
2008, it would be contrary to the public interest if we did not make
this conforming change to the high cost outlier fixed-loss amount,
which lowers the fixed-loss amount for the period April 1, 2008,
through June 30, 2008.
Section 1871(e)(1)(A) of the Act provides that a substantive change
in regulations, manual instructions, interpretative rules, statements
of policy, or guidelines of general applicability under this title
shall not be applied (by extrapolation or otherwise) retroactively to
items and services furnished before the effective date of the change
unless the Secretary determines that (i) such retroactive application
is necessary to comply with statutory requirements; or (ii) failure to
apply the change retroactively would be contrary to the public
interest. As explained in the paragraph above, the MMSEA requires the
Secretary to implement various policy changes contemporaneously with
the enactment of the MMSEA on December 29, 2007. Therefore, under the
authority of section 1871(e)(1)(A)(i) of the Act, we are making the
provisions of this interim final rule with comment period that
implement section 114(c)(3) of MMSEA retroactive to December 29, 2007.
Additionally, as explained previously, the Secretary also finds that it
would be contrary to the public interest if these provisions were not
made effective on December 29, 2007, as explained above.
Also, as explained in the previous paragraph, section 114(e)(1) of
MMSEA requires the Secretary to revise standard Federal rate for RY
2008. However, the Secretary shall not apply such revised rate to
discharges occurring on or after July 1, 2007, and before April 1, 2008
(section 114(e)(2) of the Act). Consequently, the regulations
implementing section 114(e)(2) of MMSEA must be effective for a period
predating this interim final rule with comment period under the
authority of
[[Page 24878]]
section 1871(e)(1)(A)(i) of the Act (specifically, beginning April 1,
2008). As explained previously, it would also be contrary to the public
interest if these policies were not effective April 1, 2008.
In general, many of the provisions of the MMSEA implemented in this
interim final regulation are beneficial to LTCHs. If those MMSEA
provisions of this regulation were not effective under the timeframes
noted above, most LTCHs would be deprived the full benefit of these
provisions. With respect to the minor technical corrections to Sec.
412.529, failure to make these nonsubstantive changes applicable
beginning on December 29, 2007, would be contrary to the public
interest because of the confusion that could result from the incorrect
citations in Sec. 412.529. It is in the public interest to make the
correction to prevent confusion among long-term care hospitals
attempting to calculate cost-to-charge ratios. It is also contrary to
the public interest as described above to not make the change to the
fixed-loss amount applicable beginning April 1, 2008. Therefore, under
the authority of section 1871(e)(1)(A)(ii) of the Act, we are making
these changes effective under the timeframes noted above. For the same
reasons noted above, we find good cause under section 553(d)(3) of the
APA to waive the 30-day delay in the effective date.
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, and including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
Section 412.529(f)(4) states that for discharges occurring on or
after October 1, 2006, short-stay outlier payments are subject to
certain provisions. Specifically, Sec. 412.529(f)(4)(i) states that a
hospital may also request that its fiscal intermediary use a different
(higher or lower) cost-to-charge ratio and this request must be
approved by the appropriate CMS Regional Office.
The burden associated with this requirement is the time and effort
necessary for a hospital to collect supporting evidence for submission,
to draft the request for alternative cost-to-charge ratio, and to
submit the request along with the supporting evidence to the
appropriate CMS Regional Office. While this requirement is subject to
the PRA, the burden is currently approved under OMB control number
0938-1020 with an expiration date of June 30, 2010.
Table 3.--Estimated Annual Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Burden per
Regulation section(s) OMB Control Respondents Responses response Total annual
No. (hours) burden (hours)
----------------------------------------------------------------------------------------------------------------
Sec. 412.529(f)............... 0938-1020 18 18 8 144
-------------------------------------------------------------------------------
Total....................... .............. .............. .............. .............. 144
----------------------------------------------------------------------------------------------------------------
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Mail copies to the address specified in the ADDRESSES section of
this proposed rule and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503, Attn: Carolyn L. Raffaelli, CMS
Desk Officer, CMS-1493-IFC, Carolyn_L._Raffaelli@omb.eop.gov. Fax
(202) 395-6974.
VI. Regulatory Impact Analysis
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804 (2)).
Executive Order 12866 (as amended by Executive Order 13258) directs
agencies to assess all costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). A regulatory impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any 1 year).
As stated in section II.C. of this preamble, section 114(e)(1) of
the Medicare, Medicaid, and SCHIP Extension Act of 2007 at the new
1886(m)(2) of the Act revises the standard Federal rate for RY 2008 by
providing that ``for discharges occurring during the rate year ending
in 2008 for a hospital, the base rate for such discharges for the
hospital shall be the same as the base rate for discharges for the
hospital occurring during the rate year ending in 2007'' (in other
words, the standard Federal rate for RY 2008 is the same as the
standard Federal rate for 2007). Thus, the standard Federal rate for RY
2008 is established in section II.C. of this interim final rule with
comment period at $38,086.04 (the same as the standard Federal rate for
2007). However, as we discussed in section II.D. of this interim final
rule with comment period, section 114(e)(2) of the MMSEA specifically
indicates that this rate ``shall not apply to discharges occurring on
or after July 1, 2007, and before April 1, 2008.'' Therefore, payments
for discharges occurring on or after July 1, 2007 through March 31,
2008, are based on $38,356.45 (as established in the RY 2008 LTCH PPS
final rule), while for discharges occurring on or after April 1, 2008
through June 30, 2008, payments are based on the RY 2008 standard
Federal rate which is $38,086.04. CMS' Office of the Actuary (OACT)
estimates a
[[Page 24879]]
projected decrease of approximately $5 million in estimated aggregate
LTCH PPS payments for RY 2008 resulting from the change in payments for
discharges occurring on or after April 1, 2008 through June 30, 2008.
Additionally, as discussed in section II.B. of this interim final rule
with comment period, section 114(c)(3) of MMSEA requires a 3-year
suspension of our implementation of the revision to the SSO policy at
Sec. 412.529(c)(3)(i) that was finalized in the RY 2008 final rule.
OACT estimates that the SSO provision included in the MMSEA will result
in a projected increase in estimated aggregate LTCH PPS payments for RY
2008 of $20 million. Consequently, we estimate the combined impact on
estimated aggregate LTCH PPS payments for RY 2008 from the MMSEA
provisions that are presented in this interim final rule with comment
period to be approximately $15 million. Because the combined
distributional effects and estimated changes to the Medicare program
payments would not be greater than $100 million, this interim final
rule with comment period would not be considered a major economic rule,
as defined in this section.
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 small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6.5 million to $31.5 million in any 1 year. (For further information,
see the Small Business Administration's regulation at 70 FR 72577,
December 6, 2005.) Individuals and States are not included in the
definition of a small entity. 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 this impact discussion. Medicare FIs and
MACs are not considered to be small entities. As we discuss in detail
throughout the preamble of this interim final rule with comment period,
we believe that the provisions specified by the MMSEA presented in this
rule would result in an increase in estimated aggregate LTCH PPS
payments. Accordingly, the Secretary certifies that this interim final
rule with comment period would not have a significant economic impact
on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 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 for Medicare payment regulations and has fewer than
100 beds. As stated above, implementing the provisions specified by the
MMSEA that are discussed in this rule would result in an increase in
estimated aggregate LTCH PPS payments; therefore, we believe this rule
will not have a significant impact on small rural hospitals.
Accordingly, the Secretary certifies that this interim final rule with
comment period would not have a significant economic impact on the
operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2008, that
threshold level is currently approximately $130 million. This interim
final rule with comment period would not mandate any requirements for
State, local, or tribal governments, nor would it result in
expenditures by the private sector of $130 million or more in any 1
year.
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. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
0
For the reasons stated in the preamble of this interim final rule with
comment period, the Centers for Medicare & Medicaid Services is
amending 42 CFR Chapter IV as follows:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority citation for part 412 is revised to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
0
2. In Sec. 412.1 paragraph (a)(4) is revised to read as follows:
Sec. 412.1 Scope of part.
(a) * * *
(4) This part implements the following regarding long-term care
hospitals--
(i) Section 123 of Public Law 106-113, which provides for the
establishment of a prospective payment system for the costs of
inpatient hospital services furnished to Medicare beneficiaries by
long-term care hospitals described in section 1886(d)(1)(B)(iv) of the
Act, for cost reporting periods beginning on or after October 1, 2002.
(ii) The provisions of section 307(b) of Public Law 106-554, which
state that the Secretary shall examine and may provide for appropriate
adjustments to the long-term care hospital prospective payment system,
including adjustments to diagnosis-related group (DRG) weights, area
wage adjustments, geographic reclassification, outlier adjustments,
updates, and disproportionate share adjustments consistent with section
1886(d)(5)(F) of the Act.
(iii) Section 114 of Public Law 110-173, which contains several
provisions regarding long-term care hospitals, including the--
(A) Amendment of section 1886 of the Act to add a new subsection
(m) that references section 123 of Public Law 106-113 and section
307(b) of Public Law 106-554 for the establishment and implementation
of a prospective payment system for payments under title XVIII for
inpatient hospital services furnished by a long-term care hospital
described in section 1886(d)(1)(B)(iv) of the Act.
(B) Revision of the standard Federal rate for RY 2008.
* * * * *
0
3. Section 412.500 is amended by revising paragraph (a) to read as
follows:
Sec. 412.500 Basis and scope of subpart.
(a) Basis. This subpart implements the following:
(1) Section 123 of Public Law 106-113, which provides for the
implementation of a prospective payment system for long-term care
hospitals described in section 1886(d)(1)(B)(iv) of the Act.
[[Page 24880]]
(2) Section 307 of Public Law 106-554, which states that the
Secretary shall examine and may provide for appropriate adjustments to
that system, including adjustments to DRG weights, area wage
adjustments, geographic reclassification, outliers, updates, and
disproportionate share adjustments consistent with section
1886(d)(5)(F) of the Act.
(3) Section 114 of Public Law 110-173, which contains several
provisions regarding long-term care hospitals, including the--
(i) Amendment of section 1886 of the Act to add a new subsection
(m) that references section 123 of Public Law 106-113 and section
307(b) of Public Law 106-554 for the establishment and implementation
of a prospective payment system for payments under title XVIII for
inpatient hospital services furnished by a long-term care hospital
described in section 1886(d)(1)(B)(iv) of the Act; and
(ii) Revision of the standard Federal rate for RY 2008.
* * * * *
0
4. Section 412.523 is amended by revising paragraph (c)(3)(iv) to read
as follows:
Sec. 412.523 Methodology for calculating the Federal prospective
payment rates.
* * * * *
(c) * * *
(3) * * *
(iv) For long-term care hospital prospective payment system rate
year beginning July 1, 2007 and ending June 30, 2008.
(A) The standard Federal rate for long-term care hospital
prospective payment system rate year beginning July 1, 2007 and ending
June 30, 2008 is the same as the standard Federal rate for the previous
long-term care hospital prospective payment system rate year. The
standard Federal rate is adjusted, as appropriate, as described in
paragraph (d) of this section.
(B) With respect to discharges occurring on or after July 1, 2007
and before April 1, 2008, payments are based on the standard Federal
rate in paragraph (c)(3)(iii) of this section updated by 0.71 percent.
* * * * *
0
5. Section 412.529 is amended by--
0
A. Revising paragraphs (c)(1) through (c)(3).
0
B. Redesignating paragraph (c)(4) as paragraph (f).
0
C. Revising newly redesignated paragraph (f).
Sec. 412.529 Special payment provision for short-stay outliers.
* * * * *
(c) * * *
(1) Discharges occurring before July 1, 2006. For discharges from
long-term care hospitals described under Sec. 412.23(e)(2)(i),
occurring before July 1, 2006, the LTCH prospective payment system
adjusted payment amount for a short-stay outlier case is the least of
the following amounts:
(i) One hundred and twenty (120) percent of the LTC-DRG specific
per diem amount determined under paragraph (d)(1) of this section.
(ii) One hundred and twenty (120) percent of the estimated cost of
the case determined under paragraph (d)(2) of this section.
(iii) The Federal prospective payment for the LTC-DRG determined
under paragraph (d)(3) of this section.
(2) Discharges occurring on or after July 1, 2006 and before July
1, 2007 and discharges occurring on or after December 29, 2007 and
before December 29, 2010. For discharges from long-term care hospitals
described under Sec. 412.23(e)(2)(i) occurring on or after July 1,
2006 and before July 1, 2007 and discharges occurring on or after
December 29, 2007 and before December 29, 2010, the LTCH prospective
payment system adjusted payment amount for a short-stay outlier case is
the least of the following amounts:
(i) One hundred and twenty (120) percent of the LTC-DRG specific
per diem amount determined under paragraph (d)(1) of this section.
(ii) One hundred (100) percent of the estimated cost of the case
determined under paragraph (d)(2) of this section.
(iii) The Federal prospective payment for the LTC-DRG as determined
under paragraph (d)(3) of this section.
(iv) An amount payable under subpart O computed as a blend of an
amount comparable to the hospital inpatient prospective payment system
per diem amount determined under paragraph (d)(4)(i) of this section
and the 120 percent of the LTC-DRG specific per diem payment amount
determined under paragraph (d)(1) of this section.
(A) The blend percentage applicable to the 120 percent of the LTC-
DRG specific per diem payment amount determined under paragraph (d)(1)
of this section is determined by dividing the covered length-of-stay of
the case by the lesser of five-sixths of the geometric average length
of stay of the LTC-DRG or 25 days, not to exceed 100 percent.
(B) The blend percentage of the amount determined under paragraph
(d)(4)(i) of this section is determined by subtracting the percentage
determined in paragraph (A) from 100 percent.
(3) Discharges occurring on or after July 1, 2007 and before
December 29, 2007 and discharges occurring on or after December 29,
2010. For discharges from long-term care hospitals described under
Sec. 412.23(e)(2)(i) occurring on or after July 1, 2007 and before
December 29, 2007 and discharges occurring on or after December 29,
2010, the LTCH prospective payment system adjusted payment amount for a
short-stay outlier case is adjusted by either of the following:
(i) If the covered length of stay of the case assigned to a
particular LTC-DRG is less than or equal to one standard deviation from
the geometric ALOS of the same DRG under the inpatient prospective
payment system (the IPPS-comparable threshold), the LTCH prospective
payment system adjusted payment amount for such a case is the least of
the following amounts:
(A) One hundred and twenty (120) percent of the LTC-DRG specific
per diem amount determined under paragraph (d)(1) of this section.
(B) One hundred (100) percent of the estimated cost of the case
determined under paragraph (d)(2) of this section.
(C) The Federal prospective payment for the LTC-DRG as determined
under paragraph (d)(3) of this section.
(D) An amount payable under subpart O of this part comparable to
the hospital inpatient prospective payment system per diem amount
determined under paragraph (d)(4) of this section.
(ii) If the covered length of stay of the case assigned to a
particular LTC-DRG is greater than one standard deviation from the
geometric ALOS of the same DRG under the inpatient prospective payment
system (the IPPS-comparable threshold), the LTCH prospective payment
system adjusted payment amount for such a case is determined under
paragraph (c)(2) of this section.
* * * * *
(f) Reconciliation of short-stay outlier payments. Payments are
reconciled in accordance with one of the following:
(1) Discharges occurring on or after October 1, 2002, and before
August 8, 2003. For discharges occurring on or after October 1, 2002,
and before August 8, 2003, no reconciliations are made to short-stay
outlier payments upon cost report settlement to account for differences
between cost-to-charge ratio and the actual cost-to-charge ratio of the
case.
(2) Discharges occurring on or after August 8, 2003, and before
October 1, 2006. For discharges occurring on or after August 8, 2003,
and before October 1, 2006, short-stay outlier payments are subject to
the provisions of Sec. 412.84(i)(1), (i)(3), and (i)(4) and (m) for
adjustments of cost-to-charge ratios.
[[Page 24881]]
(3) Discharges occurring on or after October 1, 2003, and before
October 1, 2006. For discharges occurring on or after October 1, 2003,
and before October 1, 2006, short-stay outlier payments are subject to
the provisions of Sec. 412.84(i)(2) for adjustments to cost-to-charge
ratios.
(4) Discharges occurring on or after October 1, 2006. For
discharges occurring on or after October 1, 2006, short-stay outlier
payments are subject to the following provisions:
(i) CMS may specify an alternative to the cost-to-charge ratio
otherwise applicable under paragraph (f)(4)(ii) of this section. A
hospital may also request that its fiscal intermediary use a different
(higher or lower) cost-to-charge ratio based on substantial evidence
presented by the hospital. This request must be approved by the
appropriate CMS Regional Office.
(ii) The cost-to-charge ratio applied at the time a claim is
processed is based on either the most recent settled cost report or the
most recent tentatively settled cost report, whichever is from the
latest cost reporting period.
(iii) The fiscal intermediary may use a statewide average cost-to-
charge ratio, which CMS establishes annually, if it is unable to
determine an accurate cost-to-charge ratio for a hospital in one of the
following circumstances:
(A) A new hospital that has not yet submitted its first Medicare
cost report. (For this purpose, a new hospital is defined as an entity
that has not accepted assignment of an existing hospital's provider
agreement in accordance with Sec. 489.18 of this chapter.)
(B) A hospital whose cost-to-charge ratio is in excess of 3
standard deviations above the corresponding national geometric mean.
CMS establishes and publishes this mean annually.
(C) Any other hospital for which data to calculate a cost-to-charge
ratio are not available.
(iv) Any reconciliation of outlier payments is based on the cost-
to-charge ratio calculated based on a ratio of costs to charges
computed from the relevant cost report and charge data determined at
the time the cost report coinciding with the discharge is settled.
(v) At the time of any reconciliation under paragraph (f)(4)(iv) of
this section, outlier payments may be adjusted to account for the time
value of any underpayments or overpayments. Any adjustment is based
upon a widely available index to be established in advance by the
Secretary, and is applied from the midpoint of the cost reporting
period to the date of reconciliation.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: April 4, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: April 30, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. 08-1217 Filed 5-1-08; 4:00 pm]
BILLING CODE 4120-01-P