[Federal Register: May 1, 2009 (Volume 74, Number 83)]
[Notices]
[Page 20361-20399]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01my09-95]
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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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Medicare Program; Inpatient Psychiatric Facilities Prospective Payment
System Payment Update for Rate Year Beginning July 1, 2009 (RY 2010);
Notice
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1495-NC]
RIN 0938-AP50
Medicare Program; Inpatient Psychiatric Facilities Prospective
Payment System Payment Update for Rate Year Beginning July 1, 2009 (RY
2010)
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice; request for comments.
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SUMMARY: This notice updates the payment rates for the Medicare
prospective payment system (PPS) for inpatient psychiatric hospital
services provided by inpatient psychiatric facilities (IPFs). These
changes are applicable to IPF discharges occurring during the rate year
beginning July 1, 2009 through June 30, 2010. We are also requesting
comments on the IPF PPS teaching adjustment and the market basket.
DATES:
Effective Date: The updated IPF prospective payment rates are
effective for discharges occurring on or after July 1, 2009 through
June 30, 2010.
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, 2009.
ADDRESSES: In commenting, please refer to file code CMS-1495-NC.
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 specific
issues in this regulation to http://www.regulations.gov. Follow the
instructions for ``Comment or Submission'' and enter the file code 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-1495-NC, P.O. Box 8010, Baltimore, MD 21244-1850.
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-1495-NC, 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) 786-9994 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.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Dorothy Myrick or Jana Lindquist,
(410) 786-4533 (for general information).
Bridget Dickensheets, (410) 786-8670 (for information regarding the
market basket and labor-related share).
Theresa Bean, (410) 786-2287 (for information regarding the
regulatory impact analysis).
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
that 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.
Table of Contents
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.
I. Background
A. Annual Requirements for Updating the IPF PPS
B. Overview of the Legislative Requirements of the IPF PPS
C. IPF PPS--General Overview
II. Transition Period for Implementation of the IPF PPS
III. Updates to the IPF PPS for RY Beginning July 1, 2009
A. Determining the Standardized Budget-Neutral Federal Per Diem
Base Rate
1. Standardization of the Federal Per Diem Base Rate and
Electroconvulsive Therapy Rate
2. Calculation of the Budget Neutrality Adjustment
a. Outlier Adjustment
b. Stop-Loss Provision Adjustment
c. Behavioral Offset
B. Update of the Federal Per Diem Base Rate and
Electroconvulsive Therapy Rate
1. Market Basket for IPFs Reimbursed Under the IPF PPS
a. Market Basket Index for the IPF PPS
b. Overview of the RPL Market Basket
2. Labor-Related Share
3. One-Time Prospective Adjustment to the Standard Federal Rate
IV. Update of the IPF PPS Adjustment Factors
A. Overview of the IPF PPS Adjustment Factors
B. Patient-Level Adjustments
1. Adjustment for MS-DRG Assignment
2. Payment for Comorbid Conditions
3. Patient Age Adjustments
4. Variable Per Diem Adjustments
C. Facility-Level Adjustments
1. Wage Index Adjustment
a. Background
b. Wage Index for RY 2010
c. OMB Bulletins
2. Adjustment for Rural Location
3. Teaching Adjustment
4. Cost of Living Adjustment for IPFs Located in Alaska and
Hawaii
5. Adjustment for IPFs With a Qualifying Emergency Department
(ED)
D. Other Payment Adjustments and Policies
1. Outlier Payments
a. Update to the Outlier Fixed Dollar Loss Threshold Amount
b. Statistical Accuracy of Cost-to-Charge Ratios
2. Expiration of the Stop-Loss Provision
V. Request for Comments
VI. Waiver of Proposed Rulemaking
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VII. Collection of Information Requirements
VIII. Response to Comments
IX. Regulatory Impact Analysis
Addenda
Acronyms
Because of the many terms to which we refer by acronym in this
notice, we are listing the acronyms used and their corresponding terms
in alphabetical order below:
BBRA Medicare, Medicaid and SCHIP [State Children's Health Insurance
Program] Balanced Budget Refinement Act of 1999, (Pub. L. 106-113)
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
DSM-IV-TR Diagnostic and Statistical Manual of Mental Disorders
Fourth Edition--Text Revision
DRGs Diagnosis-related groups
FY Federal fiscal year
ICD-9-CM International Classification of Diseases, 9th Revision,
Clinical Modification
IPFs Inpatient psychiatric facilities
IRFs Inpatient rehabilitation facilities
LTCHs Long-term care hospitals
MedPAR Medicare provider analysis and review file
RY Rate Year
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, (Pub. L. 97-
248)
I. Background
A. Annual Requirements for Updating the IPF PPS
In November 2004, we implemented the inpatient psychiatric
facilities (IPF) prospective payment system (PPS) in a final rule that
appeared in the November 15, 2004 Federal Register (69 FR 66922). In
developing the IPF PPS, in order to ensure that the IPF PPS is able to
account adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient and facility characteristics to determine those
characteristics associated with statistically significant cost
differences on a per diem basis. For characteristics with statistically
significant cost differences, we used the regression coefficients of
those variables to determine the size of the corresponding payment
adjustments.
In that final rule, we explained that we believe it is important to
delay updating the adjustment factors derived from the regression
analysis until we have IPF PPS data that includes as much information
as possible regarding the patient-level characteristics of the
population that each IPF serves. Therefore, we indicated that we did
not intend to update the regression analysis and recalculate the
Federal per diem base rate and the patient- and facility-level
adjustments until we complete that analysis. Until that analysis is
complete, we stated our intention to publish a notice in the Federal
Register each spring to update the IPF PPS (71 FR 27041).
Updates to the IPF PPS as specified in 42 CFR 412.428 include the
following:
A description of the methodology and data used to
calculate the updated Federal per diem base payment amount.
The rate of increase factor as described in Sec.
412.424(a)(2)(iii), which is based on the excluded hospital with
capital market basket under the update methodology of section
1886(b)(3)(B)(ii) of the Social Security Act (the Act) for each year
(effective from the implementation period until June 30, 2006).
For discharges occurring on or after July 1, 2006, the
rate of increase factor for the Federal portion of the IPF's payment,
which is based on the rehabilitation, psychiatric, and long-term care
(RPL) market basket.
The best available hospital wage index and information
regarding whether an adjustment to the Federal per diem base rate is
needed to maintain budget neutrality.
Updates to the fixed dollar loss threshold amount in order
to maintain the appropriate outlier percentage.
Description of the International Classification of
Diseases, 9th Revision, Clinical Modification (ICD-9-CM) coding and
diagnosis-related groups (DRGs) classification changes discussed in the
annual update to the hospital inpatient prospective payment system
(IPPS) regulations.
Update to the electroconvulsive therapy (ECT) payment by a
factor specified by CMS.
Update to the national urban and rural cost-to-charge
ratio medians and ceilings.
Update to the cost of living adjustment factors for IPFs
located in Alaska and Hawaii, if appropriate.
Our most recent annual update occurred in the May 2008 IPF PPS
notice (73 FR 25709) that set forth updates to the IPF PPS payment
rates for RY 2009. This notice updates the IPF per diem payment rates
that were published in the May 2008 IPF PPS notice in accordance with
our established policies.
B. Overview of the Legislative Requirements for the IPF PPS
Section 124 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999, (Pub.
L. 106-113) (BBRA) required implementation of the IPF PPS.
Specifically, section 124 of the BBRA mandated that the Secretary
develop a per diem PPS for inpatient hospital services furnished in
psychiatric hospitals and psychiatric units that includes an adequate
patient classification system that reflects the differences in patient
resource use and costs among psychiatric hospitals and psychiatric
units.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF
PPS to distinct part psychiatric units of critical access hospitals
(CAHs).
To implement these provisions, we published various proposed and
final rules in the Federal Register. For more information regarding
these rules, see the CMS Web sites http://www.cms.hhs.gov/
InpatientPsychFacilPPS/ and http://www.cms.hhs.gov/
InpatientpsychfacilPPS/02_regulations.asp.
C. IPF PPS--General Overview
The November 2004 IPF PPS final rule (69 FR 66922) established the
IPF PPS, as authorized under section 124 of the BBRA and codified at
subpart N of part 412 of the Medicare regulations. The November 2004
IPF PPS final rule set forth the per diem Federal rates for the
implementation year (the 18-month period from January 1, 2005 through
June 30, 2006), and it provided payment for the inpatient operating and
capital costs to IPFs for covered psychiatric services they furnish
(that is, routine, ancillary, and capital costs, but not costs of
approved educational activities, bad debts, and other services or items
that are outside the scope of the IPF PPS). Covered psychiatric
services include services for which benefits are provided under the
fee-for-service Part A (Hospital Insurance Program) Medicare program.
The IPF PPS established the Federal per diem base rate for each
patient day in an IPF derived from the national average daily routine
operating, ancillary, and capital costs in IPFs in FY 2002. The average
per diem cost was updated to the midpoint of the first year under the
IPF PPS, standardized to account for the overall positive effects of
the IPF PPS payment adjustments, and adjusted for budget neutrality.
The Federal per diem payment under the IPF PPS is comprised of the
Federal per diem base rate described above and certain patient- and
facility-level payment adjustments that were found in the regression
analysis to be associated with statistically significant per diem cost
differences.
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The patient-level adjustments include age, DRG assignment,
comorbidities, and variable per diem adjustments to reflect higher per
diem costs in the early days of an IPF stay. Facility-level adjustments
include adjustments for the IPF's wage index, rural location, teaching
status, a cost of living adjustment for IPFs located in Alaska and
Hawaii, and presence of a qualifying emergency department (ED).
The IPF PPS provides additional payment policies for: Outlier
cases; stop-loss protection (which was applicable only during the IPF
PPS transition period); interrupted stays; and a per treatment
adjustment for patients who undergo ECT.
A complete discussion of the regression analysis appears in the
November 2004 IPF PPS final rule (69 FR 66933 through 66936).
Section 124 of BBRA does not specify an annual update rate strategy
for the IPF PPS and is broadly written to give the Secretary discretion
in establishing an update methodology. Therefore, in the November 2004
IPF PPS final rule, we implemented the IPF PPS using the following
update strategy:
Calculate the final Federal per diem base rate to be
budget neutral for the 18-month period of January 1, 2005 through June
30, 2006.
Use a July 1 through June 30 annual update cycle.
Allow the IPF PPS first update to be effective for
discharges on or after July 1, 2006 through June 30, 2007.
II. Transition Period for Implementation of the IPF PPS
In the November 2004 IPF PPS final rule, we provided for a 3-year
transition period. During this 3-year transition period, an IPF's total
payment under the PPS was based on an increasing percentage of the
Federal rate with a corresponding decreasing percentage of the IPF PPS
payment that is based on reasonable cost concepts. However, effective
for cost reporting periods beginning on or after January 1, 2008, IPF
PPS payments are based on 100 percent of the Federal rate.
III. Updates to the IPF PPS for RY Beginning July 1, 2009
The IPF PPS is based on a standardized Federal per diem base rate
calculated from IPF average per diem costs and adjusted for budget-
neutrality in the implementation year. The Federal per diem base rate
is used as the standard payment per day under the IPF PPS and is
adjusted by the applicable wage index factor and the patient-and
facility-level adjustments that are applicable to the IPF stay. A
detailed explanation of how we calculated the average per diem cost
appears in the November 2004 IPF PPS final rule (69 FR 66926).
A. Determining the Standardized Budget-Neutral Federal Per Diem Base
Rate
Section 124(a)(1) of the BBRA requires that we implement the IPF
PPS in a budget neutral manner. In other words, the amount of total
payments under the IPF PPS, including any payment adjustments, must be
projected to be equal to the amount of total payments that would have
been made if the IPF PPS were not implemented. Therefore, we calculated
the budget-neutrality factor by setting the total estimated IPF PPS
payments to be equal to the total estimated payments that would have
been made under the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been
implemented.
Under the IPF PPS methodology, we calculated the final Federal per
diem base rate to be budget neutral during the IPF PPS implementation
period (that is, the 18-month period from January 1, 2005 through June
30, 2006) using a July 1 update cycle. We updated the average cost per
day to the midpoint of the IPF PPS implementation period (that is,
October 1, 2005), and this amount was used in the payment model to
establish the budget-neutrality adjustment.
A step-by-step description of the methodology used to estimate
payments under the TEFRA payment system appears in the November 2004
IPF PPS final rule (69 FR 66926).
1. Standardization of the Federal Per Diem Base Rate and
Electroconvulsive Therapy (ECT) Rate
In the November 2004 IPF PPS final rule, we describe how we
standardized the IPF PPS Federal per diem base rate in order to account
for the overall positive effects of the IPF PPS payment adjustment
factors. To standardize the IPF PPS payments, we compared the IPF PPS
payment amounts calculated from the FY 2002 Medicare Provider Analysis
and Review (MedPAR) file to the projected TEFRA payments from the FY
2002 cost report file updated to the midpoint of the IPF PPS
implementation period (that is, October 2005). The standardization
factor was calculated by dividing total estimated payments under the
TEFRA payment system by estimated payments under the IPF PPS. The
standardization factor was calculated to be 0.8367.
As described in detail in the May 2006 IPF PPS final rule (71 FR
27045), in reviewing the methodology used to simulate the IPF PPS
payments used for the November 2004 IPF PPS final rule, we discovered
that due to a computer code error, total IPF PPS payments were
underestimated by about 1.36 percent. Since the IPF PPS payment total
should have been larger than the estimated figure, the standardization
factor should have been smaller (0.8254 vs. 0.8367). In turn, the
Federal per diem base rate and the ECT rate should have been reduced by
0.8254 instead of 0.8367.
To resolve this issue, in RY 2007, we amended the Federal per diem
base rate and the ECT payment rate prospectively. Using the
standardization factor of 0.8254, the average cost per day was
effectively reduced by 17.46 percent (100 percent minus 82.54 percent =
17.46 percent).
2. Calculation of the Budget Neutrality Adjustment
To compute the budget neutrality adjustment for the IPF PPS, we
separately identified each component of the adjustment, that is, the
outlier adjustment, stop-loss adjustment, and behavioral offset.
A complete discussion of how we calculate each component of the
budget neutrality adjustment appears in the November 2004 IPF PPS final
rule (69 FR 66932 through 66933) and in the May 2006 IPF PPS final rule
(71 FR 27044 through 27046).
a. Outlier Adjustment
Since the IPF PPS payment amount for each IPF includes applicable
outlier amounts, we reduced the standardized Federal per diem base rate
to account for aggregate IPF PPS payments estimated to be made as
outlier payments. The outlier adjustment was calculated to be 2
percent. As a result, the standardized Federal per diem base rate was
reduced by 2 percent to account for projected outlier payments.
b. Stop-Loss Provision Adjustment
As explained in the November 2004 IPF PPS final rule, we provided a
stop-loss payment during the transition from cost-based reimbursement
to the per diem payment system to ensure that an IPF's total PPS
payments were no less than a minimum percentage of their TEFRA payment,
had the IPF PPS not been implemented. We reduced the standardized
Federal per diem base rate by the percentage of aggregate IPF PPS
payments estimated to be made for stop-loss payments. As a result, the
standardized Federal per diem base rate was reduced by 0.39 percent to
account for stop-loss payments. Since the transition was completed in
RY 2009,
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the stop-loss provision is no longer applicable, and for cost reporting
periods beginning on or after January 1, 2008, IPFs were paid 100
percent PPS.
c. Behavioral Offset
As explained in the November 2004 IPF PPS final rule,
implementation of the IPF PPS may result in certain changes in IPF
practices, especially with respect to coding for comorbid medical
conditions. As a result, Medicare may make higher payments than assumed
in our calculations. Accounting for these effects through an adjustment
is commonly known as a behavioral offset.
Based on accepted actuarial practices and consistent with the
assumptions made in other PPSs, we assumed in determining the
behavioral offset that IPFs would regain 15 percent of potential
``losses'' and augment payment increases by 5 percent. We applied this
actuarial assumption, which is based on our historical experience with
new payment systems, to the estimated ``losses'' and ``gains'' among
the IPFs. The behavioral offset for the IPF PPS was calculated to be
2.66 percent. As a result, we reduced the standardized Federal per diem
base rate by 2.66 percent to account for behavioral changes. As
indicated in the November 2004 IPF PPS final rule, we do not plan to
change adjustment factors or projections until we analyze IPF PPS data.
If we find that an adjustment is warranted, the percent difference
may be applied prospectively to the established PPS rates to ensure the
rates accurately reflect the payment level intended by the statute. In
conducting this analysis, we will be interested in the extent to which
improved coding of patients' principal and other diagnoses, which may
not reflect real increases in underlying resource demands, has occurred
under the PPS.
B. Update of the Federal Per Diem Base Rate and Electroconvulsive
Therapy Rate
1. Market Basket for IPFs Reimbursed Under the IPF PPS
As described in the November 2004 IPF PPS final rule (69 FR 66931),
the average per diem cost was updated to the midpoint of the
implementation year. This updated average per diem cost of $724.43 was
reduced by 17.46 percent to account for standardization to projected
TEFRA payments for the implementation period, by 2 percent to account
for outlier payments, by 0.39 percent to account for stop-loss
payments, and by 2.66 percent to account for the behavioral offset. The
Federal per diem base rate in the implementation year was $575.95. The
increase in the per diem base rate for RY 2009 included the 0.39
percent increase due to the removal of the stop-loss provision. We
indicated in the November 2004 IPF PPS final rule (69 FR 66932) that we
would remove this 0.39 percent reduction to the Federal per diem base
rate after the transition. For RY 2009 and beyond, the stop-loss
provision has ended and is therefore no longer a part of budget
neutrality.
Applying the market basket increase of 2.1 percent and the wage
index budget neutrality factor of 1.0009 to the RY 2009 Federal per
diem base rate of $637.78 yields a Federal per diem base rate of
$651.76 for RY 2010. Similarly, applying the market basket increase and
wage index budget neutrality factor to the RY 2009 ECT rate yields an
ECT rate of $280.60 for RY 2010.
a. Market Basket Index for the IPF PPS
The market basket index that was used to develop the IPF PPS was
the excluded hospital with capital market basket. This market basket
was based on 1997 Medicare cost report data and included data for
Medicare-participating IPFs, inpatient rehabilitation facilities
(IRFs), long-term care hospitals (LTCHs), cancer, and children's
hospitals.
Beginning with the May 2006 IPF PPS final rule (71 FR 27046 through
27054), IPF PPS payments were updated using a 2002-based market basket
reflecting the operating and capital cost structures for IRFs, IPFs,
and LTCHs (hereafter referred to as the rehabilitation, psychiatric,
long-term care (RPL) market basket).
We excluded cancer and children's hospitals from the RPL market
basket because their payments are based entirely on reasonable costs
subject to rate-of-increase limits established under the authority of
section 1886(b) of the Act, which are implemented in regulations at
Sec. 413.40. They are not reimbursed through a PPS. Also, the FY 2002
cost structures for cancer and children's hospitals are noticeably
different than the cost structures of the IRFs, IPFs, and LTCHs. A
complete discussion of the RPL market basket appears in the May 2006
IPF PPS final rule (71 FR 27046 through 27054).
We seek comments below on the possibility of creating a stand-alone
IPF market basket.
b. Overview of the RPL Market Basket
The RPL market basket is a fixed weight, Laspeyres-type price
index. A market basket is described as a fixed-weight index because it
answers the question of how much it would cost, at another time, to
purchase the same mix (quantity and intensity) of goods and services
needed to provide hospital services in a base period. The effects on
total expenditures resulting from changes in the mix of goods and
services purchased subsequent to the base period are not measured. In
this manner, the market basket measures pure price change only. Only
when the index is rebased would changes in the quantity and intensity
be captured in the cost weights. Therefore, we rebase the market basket
periodically so that cost weights reflect recent changes in the mix of
goods and services that hospitals purchase to furnish patient care
between base periods.
The terms ``rebasing'' and ``revising,'' while often used
interchangeably, actually denote different activities. Rebasing means
moving the base year for the structure of costs of an input price index
(for example, shifting the base year cost structure from FY 1997 to FY
2002). Revising means changing data sources, methodology, or price
proxies used in the input price index. In 2006, we rebased and revised
the market basket used to update the IPF PPS.
Table 1 below sets forth the completed FY 2002-based RPL market
basket including the cost categories, weights, and price proxies.
Table 1--FY 2002-Based RPL Market Basket Cost Categories, Weights, and Price Proxies
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FY 2002-based RPL
Cost categories market basket cost FY 2002-based RPL market basket price proxies
weight
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Total.................................... 100.000 .......................................................................................
Compensation............................. 65.877 .......................................................................................
Wages and Salaries\*\................ 52.895 ECI-Wages and Salaries, Civilian Hospital Workers.
Employee Benefits\*\................. 12.982 ECI-Benefits, Civilian Hospital Workers.
Professional Fees, Non-Medical\*\........ 2.892 ECI-Compensation for Professional & Related occupations.
[[Page 20366]]
Utilities................................ 0.656 .......................................................................................
Electricity.......................... 0.351 PPI-Commercial Electric Power.
Fuel Oil, Coal, etc.................. 0.108 PPI-Commercial Natural Gas.
Water and Sewage..................... 0.197 CPI-U--Water & Sewage Maintenance.
Professional Liability Insurance......... 1.161 CMS Professional Liability Premium Index.
All Other Products and Services.......... 19.265 .......................................................................................
All Other Products................... 13.323 .......................................................................................
Pharmaceuticals...................... 5.103 PPI Prescription Drugs.
Food: Direct Purchase................ 0.873 PPI Processed Foods & Feeds.
Food: Contract Service............... 0.620 CPI-U Food Away From Home.
Chemicals............................ 1.100 PPI Industrial Chemicals.
Medical Instruments.................. 1.014 PPI Medical Instruments & Equipment.
Photographic Supplies................ 0.096 PPI Photographic Supplies.
Rubber and Plastics.................. 1.052 PPI Rubber & Plastic Products.
Paper Products....................... 1.000 PPI Converted Paper & Paperboard Products.
Apparel.............................. 0.207 PPI Apparel.
Machinery and Equipment.............. 0.297 PPI Machinery & Equipment
Miscellaneous Products\**\........... 1.963 PPI Finished Goods less Food & Energy.
All Other Services....................... 5.942 .......................................................................................
Telephone............................ 0.240 CPI-U Telephone Services.
Postage.............................. 0.682 CPI-U Postage.
All Other: Labor Intensive\*\........ 2.219 ECI-Compensation for Private Service Occupations.
All Other: Non-labor Intensive....... 2.800 CPI-U All Items.
Capital-Related Costs\***\............... 10.149 .......................................................................................
Depreciation............................. 6.186 .......................................................................................
Fixed Assets......................... 4.250 Boeckh Institutional Construction 23-year useful life.
Movable Equipment.................... 1.937 WPI Machinery & Equipment 11-year useful life.
Interest Costs........................... 2.775 .......................................................................................
Nonprofit............................ 2.081 Average yield on domestic municipal bonds (Bond Buyer 20 bonds) vintage-weighted (23
years).
For Profit........................... 0.694 Average yield on Moody's Aaa bond vintage-weighted (23 years).
Other Capital-Related Costs.............. 1.187 CPI-U Residential Rent.
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\*\ Labor-related.
\**\ Blood and blood-related products is included in miscellaneous products.
\***\ A portion of capital costs (0.46) are labor-related.
Note: Due to rounding, weights may not sum to total.
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance. Reliability indicates that the
index is based on valid statistical methods and has low sampling
variability. Timeliness implies that the proxy is published regularly
(preferably at least once a quarter). Availability means that the proxy
is publicly available. Finally, relevance means that the proxy is
applicable and representative of the cost category weight to which it
is applied. The Consumer Price Indexes (CPIs), Producer Price Indexes
(PPIs), and Employment Cost Indexes (ECIs) used as proxies in this
market basket meet these criteria.
We note that the proxies are the same as those used for the FY
1997-based excluded hospital with capital market basket. Because these
proxies meet our criteria of reliability, timeliness, availability, and
relevance, we believe they continue to be the best measure of price
changes for the cost categories. For further discussion on the FY 1997-
based excluded hospital with capital market basket, see the August 1,
2002 hospital inpatient prospective payment system (IPPS) final rule
(67 FR at 50042).
The RY 2010 (that is, beginning July 1, 2009) update for the IPF
PPS using the FY 2002-based RPL market basket and Information Handling
Services (IHS) Global Insight's 1st quarter 2009 forecast for the
market basket components is 2.1 percent. This includes increases in
both the operating section and the capital section for the 12-month RY
period (that is, July 1, 2009 through June 30, 2010). IHS Global
Insight, Inc. is a nationally recognized economic and financial
forecasting firm that contracts with CMS to forecast the components of
the market baskets.
2. Labor-Related Share
Due to the variations in costs and geographic wage levels, we
believe that payment rates under the IPF PPS should continue to be
adjusted by a geographic wage index. This wage index applies to the
labor-related portion of the Federal per diem base rate, hereafter
referred to as the labor-related share.
The labor-related share is determined by identifying the national
average proportion of operating costs that are related to, influenced
by, or vary with the local labor market. Using our current definition
of labor-related, the labor-related share is the sum of the relative
importance of wages and salaries, fringe benefits, professional fees,
labor-intensive services, and a portion of the capital share from an
appropriate market basket. We used the FY 2002-based RPL market basket
cost weights relative importance to determine the labor-related share
for the IPF PPS.
The labor-related share for RY 2010 is the sum of the RY 2010
relative importance of each labor-related cost category, and reflects
the different rates of price change for these cost categories between
the base year (FY 2002) and RY 2010. The sum of the relative importance
for the RY 2010 operating costs (wages and salaries, employee benefits,
professional fees, and labor-
[[Page 20367]]
intensive services) is 71.935, as shown in below. The portion of
capital that is influenced by the local labor market is estimated to be
46 percent, which is the same percentage used in the FY 1997-based IRF
and IPF payment systems.
Since the relative importance for capital is 8.596 percent of the
FY 2002-based RPL market basket in RY 2010, we are taking 46 percent of
8.596 percent to determine the labor-related share of capital for RY
2010. The result is 3.954 percent, which we added to 71.935 percent for
the operating cost amount to determine the total labor-related share
for RY 2010. Thus, the labor-related share that we are using for IPF
PPS in RY 2010 is 75.889 percent. Table 2 below shows the RY 2010
labor-related share using the FY 2002-based RPL market basket. We note
that this labor-related share is determined by using the same
methodology as employed in calculating all previous IPF labor-related
shares.
A complete discussion of the IPF labor-related share methodology
appears in the November 2004 IPF PPS final rule (69 FR 66952 through
66954).
Table 2--Total Labor-Related Share--Relative Importance for RY 2010
------------------------------------------------------------------------
FY 2002-based RPL FY 2002[dash]based
market basket labor- RPL market basket
Cost category related share labor-related share
relative importance relative importance
(percent) RY 2009* (percent) RY 2010**
------------------------------------------------------------------------
Wages and salaries............ 52.645 53.062
Employee benefits............. 14.004 13.852
Professional fees............. 2.895 2.895
All other labor-intensive 2.137 2.126
services.....................
-----------------------------------------
Subtotal.................. 71.681 71.935
Labor-related share of capital 3.950 3.954
costs (0.46).................
-----------------------------------------
Total..................... 75.631 75.889
------------------------------------------------------------------------
* Based on 2008 1st Quarter forecast.
** Based on 2009 1st Quarter forecast.
3. One-time Prospective Adjustment to the Standard Federal Rate
As we discussed in the November 2004 IPF PPS final rule, consistent
with the statutory requirement for budget neutrality in section 124 of
the BBRA, we estimated aggregate payments under the IPF PPS for the IPF
PPS implementation year (that is, the 18-month period from January 1,
2005 through June 30, 2006) to be equal to the estimated aggregate
payments that would be made if the IPF PPS had not been implemented.
Our methodology for estimating payments for purposes of the budget
neutrality calculations used the best available data at the time and
necessarily reflected several assumptions (for example, costs,
inflation factors and intensity of services provided).
We indicated from the inception of the IPF PPS that it was possible
for the aggregate amount of actual payments in the implementation year
to be significantly higher or lower than the estimates on which the
budget neutrality calculations were based to the extent that later,
more complete data differ significantly from the data that were
available at the time of the original calculations.
Section 124 of the BBRA provides broad authority to the Secretary
in developing the IPF PPS, including the authority for establishing
appropriate adjustments. Under this broad authority to make appropriate
adjustments, we provided in Sec. 412.424(c)(3)(ii) for the possibility
of making a one-time prospective adjustment to the IPF PPS rates, so
that the effect of any significant difference between actual payments
and estimated payments for the first year of the IPF PPS would not be
perpetuated in the IPF PPS rates for future years.
The November 2004 IPF PPS final rule implementing the IPF PPS (69
FR 66922), was based upon the broad authority granted to the Secretary
under section 124 of the BBRA. In that same final rule, we discussed
our authority to make a one-time prospective adjustment to the IPF PPS
rates, which was reflected in Sec. 412.424(c)(3)(ii).
Evaluating the appropriateness of the possible one-time prospective
adjustment under Sec. 412.424(c)(3)(ii) requires a thorough review of
the relevant IPF data. When we established the IPF PPS Federal per diem
base rate in a budget neutral manner, we used the most recent IPF cost
report data available at that time (that is, FY 2002 data), and trended
that data forward to estimate what CMS would have paid to IPFs in the
implementation year under the TEFRA payment system if the PPS were not
implemented (69 FR 66927). We have since conducted a review of the
relevant data. From the cost reports, we have TEFRA and PPS payment
data for January 1, 2005 through June 30, 2006, the 18-month period for
the implementation of the IPF PPS. These data are drawn from reports
with cost reporting periods beginning in FY 2005 and FY 2006. More than
70 percent of the cost reports from FY 2005 were settled. However, only
approximately 33 percent of the cost reports from FY 2006 have been
settled. The remaining 67 percent from FY 2006 are either as-submitted
or have been reopened. Therefore, because we lack a complete set of
final cost report data from the IPF PPS 18-month implementation period,
we are not making a one-time adjustment to the IPF PPS rates for RY
2010.
We plan to revisit the possibility of making a one-time prospective
adjustment to the IPF PPS rates as more cost report data becomes
available.
IV. Update of the IPF PPS Adjustment Factors
A. Overview of the IPF PPS Adjustment Factors
The IPF PPS payment adjustments were derived from a regression
analysis of 100 percent of the FY 2002 MedPAR data file, which
contained 483,038 cases. For this notice, we used the same results of
the regression analysis used to implement the November 2004 IPF PPS
final rule. For a more detailed description of the data file used for
the regression analysis, see the November 2004 IPF PPS final rule (69
FR 66935 through 66936). While we have since used more recent claims
data to set the fixed dollar loss threshold amount, we use the same
results of this regression
[[Page 20368]]
analysis to update the IPF PPS for RY 2009 as well as RY 2010.
As previously stated, we do not plan to update the regression
analysis until we are able to analyze IPF PPS claims and cost report
data. However, we continue to monitor claims and payment data
independently from cost report data to assess issues, to determine
whether changes in case-mix or payment shifts have occurred among
freestanding governmental, non-profit and private psychiatric
hospitals, and psychiatric units of general hospitals, and CAHs and
other issues of importance to IPFs.
B. Patient-Level Adjustments
In the May 2008 IPF PPS notice (73 FR 25709), we provided payment
adjustments for the following patient-level characteristics: Medicare
Severity diagnosis related groups (MS-DRGs) assignment of the patient's
principal diagnosis, selected comorbidities, patient age, and the
variable per diem adjustments.
1. Adjustment for MS-DRG Assignment
The IPF PPS includes payment adjustments for the psychiatric DRG
assigned to the claim based on each patient's principal diagnosis. The
IPF PPS recognizes the MS-DRGs. The DRG adjustment factors were
expressed relative to the most frequently reported psychiatric DRG in
FY 2002, that is, DRG 430 (psychoses). The coefficient values and
adjustment factors were derived from the regression analysis.
In accordance with Sec. 412.27(a), payment under the IPF PPS is
conditioned on IPFs admitting ``only patients whose admission to the
unit is required for active treatment, of an intensity that can be
provided appropriately only in an inpatient hospital setting, of a
psychiatric principal diagnosis that is listed in Chapter Five
(``Mental Disorders'') of the International Classification of Diseases,
Ninth Revision, Clinical Modification (ICD-9-CM)]'' or in the Fourth
Edition, Text Revision of the American Psychiatric Association's
Diagnostic and Statistical Manual, (DSM-IV-TR). IPF claims with a
principal diagnosis included in Chapter Five of the ICD-9-CM or the
DSM-IV-TR are paid the Federal per diem base rate under the IPF PPS and
all other applicable adjustments, including any applicable DRG
adjustment. Psychiatric principal diagnoses that do not group to one of
the designated DRGs still receive the Federal per diem base rate and
all other applicable adjustments, but the payment would not include a
DRG adjustment.
The Standards for Electronic Transaction final rule published in
the Federal Register on August 17, 2000 (65 FR 50312), adopted the ICD-
9-CM as the designated code set for reporting diseases, injuries,
impairments, other health related problems, their manifestations, and
causes of injury, disease, impairment, or other health related
problems. Therefore, we use the ICD-9-CM as the designated code set for
the IPF PPS.
We believe that it is important to maintain the same diagnostic
coding and DRG classification for IPFs that are used under the IPPS for
providing the psychiatric care. Therefore, when the IPF PPS was
implemented for cost reporting periods beginning on or after January 1,
2005, we adopted the same diagnostic code set and DRG patient
classification system (that is, the CMS DRGs) that were utilized at the
time under the hospital inpatient prospective payment system (IPPS).
Since the inception of the IPF PPS, the DRGs used as the patient
classification system under the IPF PPS have corresponded exactly with
the CMS DRGs applicable under the IPPS for acute care hospitals.
Every year, changes to the ICD-9-CM coding system are addressed in
the IPPS proposed and final rules. The changes to the codes are
effective October 1 of each year and must be used by acute care
hospitals as well as other providers to report diagnostic and procedure
information. The IPF PPS has always incorporated ICD-9-CM coding
changes made in the annual IPPS update. We publish coding changes in a
Transmittal/Change Request, similar to how coding changes are announced
by the IPPS and LTCH PPS. Those ICD-9-CM coding changes are also
published in the following IPF PPS RY update, in either the IPF PPS
proposed and final rules, or in an IPF PPS update notice.
In the May 2008 IPF PPS notice (73 FR 25714), we discussed CMS'
effort to better recognize resource use and the severity of illness
among patients. CMS adopted the new MS-DRGs for the IPPS in the FY 2008
IPPS final rule with comment period (72 FR 47130). We believe by better
accounting for patients' severity of illness in Medicare payment rates,
the MS-DRGs encourage hospitals to improve their coding and
documentation of patient diagnoses. The MS-DRGs, which are based on the
CMS DRGs, represent a significant increase in the number of DRGs (from
538 to 745, an increase of 207). For a full description of the
development and implementation of the MS-DRGs, see the FY 2008 IPPS
final rule with comment period (72 FR 47141 through 47175).
All of the ICD-9-CM coding changes are reflected in the FY 2009
GROUPER, Version 26.0, effective for IPPS discharges occurring on or
after October 1, 2008 through September 30, 2009. The GROUPER Version
26.0 software package assigns each case to an MS-DRG on the basis of
the diagnosis and procedure codes and demographic information (that is,
age, sex, and discharge status). The Medicare Code Editor (MCE) 25.0
uses the new ICD-9-CM codes to validate coding for IPPS discharges on
or after October 1, 2008. For additional information on the GROUPER
Version 26.0 and MCE 25.0, see Transmittal 1610 (Change Request 6189),
dated October 3, 2008. The IPF PPS has always used the same GROUPER and
Code Editor as the IPPS. Therefore, the ICD-9-CM changes, which were
reflected in the GROUPER Version 26.0 and MCE 25.0 on October 1, 2008,
also became effective for the IPF PPS for discharges occurring on or
after October 1, 2008.
The impact of the new MS-DRGs on the IPF PPS was negligible.
Mapping to the MS-DRGs resulted in the current 17 MS-DRGs, instead of
the original 15, for which the IPF PPS provides an adjustment. Although
the code set is updated, the same associated adjustment factors apply
now that have been in place since implementation of the IPF PPS, with
one exception that is unrelated to the update to the codes. When DRGs
521 and 522 were consolidated into MS-DRG 895, we carried over the
adjustment factor of 1.02 from DRG 521 to the newly consolidated MS-
DRG. This was done to reflect the higher claims volume under DRG 521,
with more than eight times the number of claims than billed under DRG
522. The updates are reflected in Table 5. For a detailed description
of the mapping changes from the original DRG adjustment categories to
the current MS-DRG adjustment categories we refer readers to the May
2008 IPF PPS notice (73 FR 25714).
The official version of the ICD-9-CM is available on CD-ROM from
the U.S. Government Printing Office. The FY 2009 version can be ordered
by contacting the Superintendent of Documents, U.S. Government Printing
Office, Department 50, Washington, DC 20402-9329, telephone number
(202) 512-1800. Questions concerning the ICD-9-CM should be directed to
Patricia E. Brooks, Co-Chairperson, ICD-9-CM Coordination and
Maintenance Committee, CMS, Center for Medicare Management, Hospital
and Ambulatory Policy Group, Division of Acute Care, Mailstop C4-08-06,
7500 Security
[[Page 20369]]
Boulevard, Baltimore, Maryland 21244-1850.
Further information concerning the official version of the ICD-9-CM
can be found in the IPPS final rule with comment period, ``Changes to
Hospital Inpatient Prospective Payment System and Fiscal Year 2009
Rates'' in the August 19, 2008 Federal Register (73 FR 48434) and at
http://www.cms.hhs.gov/AcuteInpatientPPS/IPPS/list.asp#TopOfPage.
Tables 3 and 4 below list the FY 2009 new and invalid ICD-9-CM
diagnosis codes that group to one of the 17 MS-DRGs for which the IPF
PPS provides an adjustment. These tables are only a listing of FY 2009
changes and do not reflect all of the currently valid and applicable
ICD-9-CM codes classified in the MS-DRGs. When coded as a principal
code or diagnosis, these codes receive the correlating MS-DRG
adjustment.
Table 3--FY 2009 New Diagnosis Codes
------------------------------------------------------------------------
Diagnosis code Description MS-DRG
------------------------------------------------------------------------
046.11........................... Variant Creutzfeldt- 056, 057
Jakob disease.
046.19........................... Other and unspecified 056, 057
Creutzfeldt-Jakob
disease.
046.71........................... Gerstmann- 056, 057
Str[auml]ussler-
Scheinker syndrome.
046.72........................... Fatal familial insomnia. 056, 057
046.79........................... Other and unspecified 056, 057
prion disease of
central nervous system.
------------------------------------------------------------------------
Table 4--FY 2009 Invalid Diagnosis Codes
------------------------------------------------------------------------
Diagnosis code Description MS-DRG
------------------------------------------------------------------------
046.1............................ Jakob-Creutzfeldt....... 056, 057
------------------------------------------------------------------------
We do not plan to update the regression analysis until we are able
to analyze IPF PPS data. The MS-DRG adjustment factors (as shown in
Table 5) will continue to be paid for discharges occurring in RY 2010.
Table 5--RY 2010 Current MS-DRGs Applicable for the Principal Diagnosis
Adjustment
------------------------------------------------------------------------
Adjustment
MS-DRG MS-DRG descriptions factor
------------------------------------------------------------------------
056.............................. Degenerative nervous 1.05
system disorders w MCC.
057.............................. Degenerative nervous 1.05
system disorders w/o
MCC.
080.............................. Nontraumatic stupor & 1.07
coma w MCC.
081.............................. Nontraumatic stupor & 1.07
coma w/o MCC.
876.............................. O.R. procedure w 1.22
principal diagnoses of
mental illness.
880.............................. Acute adjustment 1.05
reaction & psychosocial
dysfunction.
881.............................. Depressive neuroses..... 0.99
882.............................. Neuroses except 1.02
depressive.
883.............................. Disorders of personality 1.02
& impulse control.
884.............................. Organic disturbances & 1.03
mental retardation.
885.............................. Psychoses............... 1.00
886.............................. Behavioral & 0.99
developmental disorders.
887.............................. Other mental disorder 0.92
diagnoses.
894.............................. Alcohol/drug abuse or 0.97
dependence, left AMA.
895.............................. Alcohol/drug abuse or 1.02
dependence w
rehabilitation therapy.
896.............................. Alcohol/drug abuse or 0.88
dependence w/o
rehabilitation therapy
w MCC.
897.............................. Alcohol/drug abuse or 0.88
dependence w/o
rehabilitation therapy
w/o MCC.
------------------------------------------------------------------------
2. Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the
increased costs associated with comorbid conditions by providing
additional payments for certain concurrent medical or psychiatric
conditions that are expensive to treat. In the May 2008 IPF PPS notice
(73 FR 25716), we explained that the IPF PPS includes 17 comorbidity
categories and identified the new, revised, and deleted ICD-9-CM
diagnosis codes that generate a comorbid condition payment adjustment
under the IPF PPS for RY 2009 (73 FR 25718).
Comorbidities are specific patient conditions that are secondary to
the patient's principal diagnosis and that require treatment during the
stay. Diagnoses that relate to an earlier episode of care and have no
bearing on the current hospital stay are excluded and must not be
reported on IPF claims. Comorbid conditions must exist at the time of
admission or develop subsequently, and affect the treatment received,
length of stay (LOS), or both treatment and LOS.
For each claim, an IPF may receive only one comorbidity adjustment
per comorbidity category, but it may receive an adjustment for more
than one comorbidity category. Billing instructions require that IPFs
must enter the full ICD-9-CM codes for up to 8 additional diagnoses if
they co-exist at the time of admission or develop subsequently and
impact the treatment provided.
The comorbidity adjustments were determined based on the regression
analysis using the diagnoses reported by IPFs in FY 2002. The principal
diagnoses were used to establish the DRG adjustments and were not
accounted for in establishing the comorbidity category adjustments,
except where ICD-9-CM ``code first'' instructions apply. As we
explained in
[[Page 20370]]
the May 2008 IPF PPS notice (73 FR 25716), the code first rule applies
when a condition has both an underlying etiology and a manifestation
due to the underlying etiology. For these conditions, the ICD-9-CM has
a coding convention that requires the underlying conditions to be
sequenced first followed by the manifestation. Whenever a combination
exists, there is a ``use additional code'' note at the etiology code
and a code first note at the manifestation code.
As discussed in the MS-DRG section, it is our policy to maintain
the same diagnostic coding set for IPFs that is used under the IPPS for
providing the same psychiatric care. Although the ICD-9-CM code set has
been updated, the same adjustment factors have been in place since the
implementation of the IPF PPS. Table 6 below lists the FY 2009 new ICD
diagnosis codes that impact the comorbidity adjustments under the IPF
PPS. Table 6 is not a list of all currently valid ICD codes applicable
for the IPF PPS comorbidity adjustments.
Table 6--FY 2009 New ICD Codes Applicable for the Comorbidity Adjustment
----------------------------------------------------------------------------------------------------------------
Diagnosis code Description Comorbidity category
----------------------------------------------------------------------------------------------------------------
038.12.................................. Methicillin resistant Infectious Disease.
Staphylococcus aureus
septicemia.
046.11.................................. Variant Creutzfeldt-Jakob Infectious Disease.
disease.
046.19.................................. Other and unspecified Infectious Disease.
Creutzfeldt-Jakob disease.
046.71.................................. Gerstmann-Str[auml]ussler- Infectious Disease.
Scheinker syndrome.
046.72.................................. Fatal familial insomnia......... Infectious Disease.
046.79.................................. Other and unspecified prion Infectious Disease.
disease of central nervous
system.
051.01.................................. Cowpox.......................... Infectious Disease.
051.02.................................. Vaccinia not from vaccination... Infectious Disease.
059.00.................................. Orthopoxvirus infection, Infectious Disease.
unspecified.
059.01.................................. Monkeypox....................... Infectious Disease.
059.09.................................. Other orthopoxvirus infections.. Infectious Disease.
059.10.................................. Parapoxvirus infection, Infectious Disease.
unspecified.
059.11.................................. Bovine stomatitis............... Infectious Disease.
059.12.................................. Sealpox......................... Infectious Disease.
059.19.................................. Other parapoxvirus infections... Infectious Disease.
059.20.................................. Yatapoxvirus infection, Infectious Disease.
unspecified.
059.21.................................. Tanapox......................... Infectious Disease.
059.22.................................. Yaba monkey tumor virus......... Infectious Disease.
059.8................................... Other poxvirus infections....... Infectious Disease.
059.9................................... Poxvirus infections, unspecified Infectious Disease.
199.2................................... Malignant neoplasm associated Oncology Treatment.
with transplant organ.
203.02.................................. Multiple myeloma, in relapse.... Oncology Treatment.
203.12.................................. Plasma cell leukemia, in relapse Oncology Treatment.
203.82.................................. Other immunoproliferative Oncology Treatment.
neoplasms, in relapse.
204.02.................................. Acute lymphoid leukemia, in Oncology Treatment.
relapse.
204.12.................................. Chronic lymphoid leukemia, in Oncology Treatment.
relapse.
204.22.................................. Subacute lymphoid leukemia, in Oncology Treatment.
relapse.
204.82.................................. Other lymphoid leukemia, in Oncology Treatment.
relapse.
204.92.................................. Unspecified lymphoid leukemia, Oncology Treatment.
in relapse.
205.02.................................. Acute myeloid leukemia, in Oncology Treatment.
relapse.
205.12.................................. Chronic myeloid leukemia, in Oncology Treatment.
relapse.
205.22.................................. Subacute myeloid leukemia, in Oncology Treatment.
relapse.
205.32.................................. Myeloid sarcoma, in relapse..... Oncology Treatment.
205.82.................................. Other myeloid leukemia, in Oncology Treatment.
relapse.
205.92.................................. Unspecified myeloid leukemia, in Oncology Treatment.
relapse.
206.02.................................. Acute monocytic leukemia, in Oncology Treatment.
relapse.
206.12.................................. Chronic monocytic leukemia, in Oncology Treatment.
relapse.
206.22.................................. Subacute monocytic leukemia, in Oncology Treatment.
relapse.
206.82.................................. Other monocytic leukemia, in Oncology Treatment.
relapse.
206.92.................................. Unspecified monocytic leukemia, Oncology Treatment.
in relapse.
207.02.................................. Acute erythremia and Oncology Treatment.
erythroleukemia, in relapse.
207.12.................................. Chronic erythremia, in relapse.. Oncology Treatment.
207.22.................................. Megakaryocytic leukemia, in Oncology Treatment.
relapse.
207.82.................................. Other specified leukemia, in Oncology Treatment.
relapse.
208.02.................................. Acute leukemia of unspecified Oncology Treatment.
cell type, in relapse.
208.12.................................. Chronic leukemia of unspecified Oncology Treatment.
cell type, in relapse.
208.22.................................. Subacute leukemia of unspecified Oncology Treatment.
cell type, in relapse.
208.82.................................. Other leukemia of unspecified Oncology Treatment.
cell type, in relapse.
208.92.................................. Unspecified leukemia, in relapse Oncology Treatment.
209.00.................................. Malignant carcinoid tumor of the Oncology Treatment.
small intestine, unspecified
portion.
209.01.................................. Malignant carcinoid tumor of the Oncology Treatment.
duodenum.
209.02.................................. Malignant carcinoid tumor of the Oncology Treatment.
jejunum.
209.03.................................. Malignant carcinoid tumor of the Oncology Treatment.
ileum.
209.10.................................. Malignant carcinoid tumor of the Oncology Treatment.
large intestine, unspecified
portion.
209.11.................................. Malignant carcinoid tumor of the Oncology Treatment.
appendix.
209.12.................................. Malignant carcinoid tumor of the Oncology Treatment.
cecum.
209.13.................................. Malignant carcinoid tumor of the Oncology Treatment.
ascending colon.
209.14.................................. Malignant carcinoid tumor of the Oncology Treatment.
transverse colon.
209.15.................................. Malignant carcinoid tumor of the Oncology Treatment.
descending colon.
209.16.................................. Malignant carcinoid tumor of the Oncology Treatment.
sigmoid colon.
209.17.................................. Malignant carcinoid tumor of the Oncology Treatment.
rectum.
[[Page 20371]]
209.20.................................. Malignant carcinoid tumor of Oncology Treatment.
unknown primary site.
209.21.................................. Malignant carcinoid tumor of the Oncology Treatment.
bronchus and lung.
209.22.................................. Malignant carcinoid tumor of the Oncology Treatment.
thymus.
209.23.................................. Malignant carcinoid tumor of the Oncology Treatment.
stomach.
209.24.................................. Malignant carcinoid tumor of the Oncology Treatment.
kidney.
209.25.................................. Malignant carcinoid tumor of Oncology Treatment.
foregut, not otherwise
specified.
209.26.................................. Malignant carcinoid tumor of Oncology Treatment.
midgut, not otherwise specified.
209.27.................................. Malignant carcinoid tumor of Oncology Treatment.
hindgut, not otherwise
specified.
209.29.................................. Malignant carcinoid tumor of Oncology Treatment.
other sites.
209.30.................................. Malignant poorly differentiated Oncology Treatment.
neuroendocrine carcinoma, any
site.
209.40.................................. Benign carcinoid tumor of the Oncology Treatment.
small intestine, unspecified
portion.
209.41.................................. Benign carcinoid tumor of the Oncology Treatment.
duodenum.
209.42.................................. Benign carcinoid tumor of the Oncology Treatment.
jejunum.
209.43.................................. Benign carcinoid tumor of the Oncology Treatment.
ileum.
209.50.................................. Benign carcinoid tumor of the Oncology Treatment.
large intestine, unspecified
portion.
209.51.................................. Benign carcinoid tumor of the Oncology Treatment.
appendix.
209.52.................................. Benign carcinoid tumor of the Oncology Treatment.
cecum.
209.53.................................. Benign carcinoid tumor of the Oncology Treatment.
ascending colon.
209.54.................................. Benign carcinoid tumor of the Oncology Treatment.
transverse colon.
209.55.................................. Benign carcinoid tumor of the Oncology Treatment.
descending colon.
209.56.................................. Benign carcinoid tumor of the Oncology Treatment.
sigmoid colon.
209.57.................................. Benign carcinoid tumor of the Oncology Treatment.
rectum.
209.60.................................. Benign carcinoid tumor of Oncology Treatment.
unknown primary site.
209.61.................................. Benign carcinoid tumor of the Oncology Treatment.
bronchus and lung.
209.62.................................. Benign carcinoid tumor of the Oncology Treatment.
thymus.
209.63.................................. Benign carcinoid tumor of the Oncology Treatment.
stomach.
209.64.................................. Benign carcinoid tumor of the Oncology Treatment.
kidney.
209.65.................................. Benign carcinoid tumor of Oncology Treatment.
foregut, not otherwise
specified.
209.66.................................. Benign carcinoid tumor of Oncology Treatment.
midgut, not otherwise specified.
209.67.................................. Benign carcinoid tumor of Oncology Treatment.
hindgut, not otherwise
specified.
209.69.................................. Benign carcinoid tumor of other Oncology Treatment.
sites.
238.77.................................. Post-transplant Oncology Treatment.
lymphoproliferative disorder
(PTLD).
V45.11.................................. Renal dialysis status........... Chronic Renal Failure.
V45.12.................................. Noncompliance with renal Chronic Renal Failure.
dialysis.
----------------------------------------------------------------------------------------------------------------
Table 7 lists the FY 2009 revised ICD diagnosis codes that are
applicable for the comorbidity adjustment.
Table 7--FY 2009 Revised ICD Codes Applicable for the Comorbidity Adjustment
----------------------------------------------------------------------------------------------------------------
Diagnosis code Description Comorbidity category
----------------------------------------------------------------------------------------------------------------
038.11.................................. Methicillin susceptible Infectious Disease.
Staphylococcus aureus
septicemia.
203.00.................................. Multiple myeloma, without Oncology Treatment.
mention of having achieved
remission.
203.10.................................. Plasma cell leukemia, without Oncology Treatment.
mention of having achieved
remission.
203.80.................................. Other immunoproliferative Oncology Treatment.
neoplasms, without mention of
having achieved remission.
204.00.................................. Acute lymphoid leukemia, without Oncology Treatment.
mention of having achieved
remission.
204.10.................................. Chronic lymphoid leukemia, Oncology Treatment.
without mention of having
achieved remission.
204.20.................................. Subacute lymphoid leukemia, Oncology Treatment.
without mention of having
achieved remission.
204.80.................................. Other lymphoid leukemia, without Oncology Treatment.
mention of having achieved
remission.
204.90.................................. Unspecified lymphoid leukemia, Oncology Treatment.
without mention of having
achieved remission.
205.00.................................. Acute myeloid leukemia, without Oncology Treatment.
mention of having achieved
remission.
205.10.................................. Chronic myeloid leukemia, Oncology Treatment.
without mention of having
achieved remission.
205.20.................................. Subacute myeloid leukemia, Oncology Treatment.
without mention of having
achieved remission.
205.30.................................. Myeloid sarcoma, without mention Oncology Treatment.
of having achieved remission.
205.80.................................. Other myeloid leukemia, without Oncology Treatment.
mention of having achieved
remission.
205.90.................................. Unspecified myeloid leukemia, Oncology Treatment.
without mention of having
achieved remission.
206.00.................................. Acute monocytic leukemia, Oncology Treatment.
without mention of having
achieved remission.
206.10.................................. Chronic monocytic leukemia, Oncology Treatment.
without mention of having
achieved remission.
206.20.................................. Subacute monocytic leukemia, Oncology Treatment.
without mention of having
achieved remission.
206.80.................................. Other monocytic leukemia, Oncology Treatment.
without mention of having
achieved remission.
206.90.................................. Unspecified monocytic leukemia, Oncology Treatment.
without mention of having
achieved remission.
207.00.................................. Acute erythremia and Oncology Treatment.
erythroleukemia, without
mention of having achieved
remission.
207.10.................................. Chronic erythremia, without Oncology Treatment.
mention of having achieved
remission.
[[Page 20372]]
207.20.................................. Megakaryocytic leukemia, without Oncology Treatment.
mention of having achieved
remission.
207.80.................................. Other specified leukemia, Oncology Treatment.
without mention of having
achieved remission.
208.00.................................. Acute leukemia of unspecified Oncology Treatment.
cell type, without mention of
having achieved remission.
208.10.................................. Chronic leukemia of unspecified Oncology Treatment.
cell type, without mention of
having achieved remission.
208.20.................................. Subacute leukemia of unspecified Oncology Treatment.
cell type, without mention of
having achieved remission.
208.80.................................. Other leukemia of unspecified Oncology Treatment.
cell type, without mention of
having achieved remission.
208.90.................................. Unspecified leukemia, without Oncology Treatment.
mention of having achieved
remission.
----------------------------------------------------------------------------------------------------------------
Table 8 lists the invalid FY 2009 ICD-9-CM codes no longer
applicable for the comorbidity adjustment.
Table 8--FY 2009 Invalid ICD Codes No Longer Applicable for the Comorbidity Adjustment
----------------------------------------------------------------------------------------------------------------
Diagnosis Code Description Comorbidity category
----------------------------------------------------------------------------------------------------------------
046.1.................................. Jakob-Creutzfeldt disease..... Infectious Disease.
051.0.................................. Cowpox........................ Infectious Disease.
V45.1.................................. Renal dialysis status......... Chronic Renal Failure.
----------------------------------------------------------------------------------------------------------------
For RY 2010, we are applying the seventeen comorbidity categories
for which we are providing an adjustment, their respective codes,
including the new FY 2009 ICD-9-CM codes, and their respective
adjustment factors in Table 9 below.
Table 9--RY 2010 Diagnosis Codes and Adjustment Factors for Comorbidity
Categories
------------------------------------------------------------------------
Adjustment
Description of comorbidity ICD-9CM Code factor
------------------------------------------------------------------------
Developmental Disabilities....... 317, 3180, 3181, 3182, 1.04
and 319.
Coagulation Factor Deficits...... 2860 through 2864....... 1.13
Tracheostomy..................... 51900 through 51909 and 1.06
V440.
Renal Failure, Acute............. 5845 through 5849, 1.11
63630, 63631, 63632,
63730, 63731, 63732,
6383, 6393, 66932,
66934, 9585.
Renal Failure, Chronic........... 40301, 40311, 40391, 1.11
40402, 40412, 40413,
40492, 40493, 5853,
5854, 5855, 5856, 5859,
586, V451, V560, V561,
and V562.
Oncology Treatment............... 1400 through 2399 with a 1.07
radiation therapy code
92.21-92.29 or
chemotherapy code 99.25.
Uncontrolled Diabetes-Mellitus 25002, 25003, 25012, 1.05
with or without complications. 25013, 25022, 25023,
25032, 25033, 25042,
25043, 25052, 25053,
25062, 25063, 25072,
25073, 25082, 25083,
25092, and 25093.
Severe Protein Calorie 260 through 262......... 1.13
Malnutrition.
Eating and Conduct Disorders..... 3071, 30750, 31203, 1.12
31233, and 31234.
Infectious Disease............... 01000 through 04110, 1.07
042, 04500 through
05319, 05440 through
05449, 0550 through
0770, 0782 through
07889, and 07950
through 07959.
Drug and/or Alcohol Induced 2910, 2920, 29212, 2922, 1.03
Mental Disorders. 30300, and 30400.
Cardiac Conditions............... 3910, 3911, 3912, 40201, 1.11
40403, 4160, 4210,
4211, and 4219.
Gangrene......................... 44024 and 7854.......... 1.10
Chronic Obstructive Pulmonary 49121, 4941, 5100, 1.12
Disease. 51883, 51884, V4611 and
V4612, V4613 and V4614.
Artificial Openings--Digestive 56960 through 56969, 1.08
and Urinary. 9975, and V441 through
V446.
Severe Musculoskeletal and 6960, 7100, 73000 1.09
Connective Tissue Diseases. through 73009, 73010
through 73019, and
73020 through 73029.
Poisoning........................ 96500 through 96509, 1.11
9654, 9670 through
9699, 9770, 9800
through 9809, 9830
through 9839, 986, 9890
through 9897.
------------------------------------------------------------------------
3. Patient Age Adjustments
As explained in the November 2004 IPF PPS final rule (69 FR 66922),
we analyzed the impact of age on per diem cost by examining the age
variable (that is, the range of ages) for payment adjustments.
In general, we found that the cost per day increases with age. The
older age groups are more costly than the under 45 age group, the
differences in per diem cost increase for each successive age group,
and the differences are statistically significant.
[[Page 20373]]
For RY 2010, we are continuing to use the patient age adjustments
currently in effect as shown in Table 10 below.
Table 10--Age Groupings and Adjustment Factors
------------------------------------------------------------------------
Adjustment
Age factor
------------------------------------------------------------------------
Under 45................................................... 1.00
45 and under 50............................................ 1.01
50 and under 55............................................ 1.02
55 and under 60............................................ 1.04
60 and under 65............................................ 1.07
65 and under 70............................................ 1.10
70 and under 75............................................ 1.13
75 and under 80............................................ 1.15
80 and over................................................ 1.17
------------------------------------------------------------------------
4. Variable Per Diem Adjustments
We explained in the November 2004 IPF PPS final rule (69 FR 66946)
that the regression analysis indicated that per diem cost declines as
the LOS increases. The variable per diem adjustments to the Federal per
diem base rate account for ancillary and administrative costs that
occur disproportionately in the first days after admission to an IPF.
We used a regression analysis to estimate the average differences
in per diem cost among stays of different lengths. As a result of this
analysis, we established variable per diem adjustments that begin on
day 1 and decline gradually until day 21 of a patient's stay. For day
22 and thereafter, the variable per diem adjustment remains the same
each day for the remainder of the stay. However, the adjustment applied
to day 1 depends upon whether the IPF has a qualifying ED. If an IPF
has a qualifying ED, it receives a 1.31 adjustment factor for day 1 of
each stay. If an IPF does not have a qualifying ED, it receives a 1.19
adjustment factor for day 1 of the stay. The ED adjustment is explained
in more detail in section IV.C.5 of this notice.
For RY 2010, we are to continuing to use the variable per diem
adjustment factors currently in effect as shown in Table 11 below. A
complete discussion of the variable per diem adjustments appears in the
November 2004 IPF PPS final rule (69 FR 66946).
Table 11--Variable Per Diem Adjustments
------------------------------------------------------------------------
Adjustment
Day-of-Stay factor
------------------------------------------------------------------------
Day 1--IPF Without a Qualifying ED......................... 1.19
Day 1--IPF With a Qualifying ED............................ 1.31
Day 2...................................................... 1.12
Day 3...................................................... 1.08
Day 4...................................................... 1.05
Day 5...................................................... 1.04
Day 6...................................................... 1.02
Day 7...................................................... 1.01
Day 8...................................................... 1.01
Day 9...................................................... 1.00
Day 10..................................................... 1.00
Day 11..................................................... 0.99
Day 12..................................................... 0.99
Day 13..................................................... 0.99
Day 14..................................................... 0.99
Day 15..................................................... 0.98
Day 16..................................................... 0.97
Day 17..................................................... 0.97
Day 18..................................................... 0.96
Day 19..................................................... 0.95
Day 20..................................................... 0.95
Day 21..................................................... 0.95
After Day 21............................................... 0.92
------------------------------------------------------------------------
C. Facility-Level Adjustments
The IPF PPS includes facility-level adjustments for the wage index,
IPFs located in rural areas, teaching IPFs, cost of living adjustments
for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED.
1. Wage Index Adjustment
a. Background
As discussed in the May 2006 IPF PPS final rule and in the May 2007
and May 2008 update notices, in providing an adjustment for geographic
wage levels, the labor-related portion of an IPF's payment is adjusted
using an appropriate wage index. Currently, an IPF's geographic wage
index value is determined based on the actual location of the IPF in an
urban or rural area as defined in Sec. 412.64(b)(1)(ii)(A) through
Sec. 412.64(C).
b. Wage Index for RY 2010
Since the inception of the IPF PPS, we have used hospital wage data
in developing a wage index to be applied to IPFs. We are continuing
that practice for RY 2010. We apply the wage index adjustment to the
labor-related portion of the Federal rate, which is 75.889 percent.
This percentage reflects the labor-related relative importance of the
RPL market basket for RY 2010 (see section III.B.2 of this notice). The
IPF PPS uses the pre-floor, pre-reclassified hospital wage index.
Changes to the wage index are made in a budget neutral manner so that
updates do not increase expenditures.
For RY 2010, we are applying the most recent hospital wage index
(that is, the FY 2009 pre-floor, pre-reclassified hospital wage index
because this is the most appropriate index as it best reflects the
variation in local labor costs of IPFs in the various geographic areas)
using the most recent hospital wage data (that is, data from FY 2005
hospital cost reports), and applying an adjustment in accordance with
our budget neutrality policy. This policy requires us to estimate the
total amount of IPF PPS payments in RY 2009 using the applicable wage
index value divided by the total estimated IPF PPS payments in RY 2010
using the most recent wage index. The estimated payments are based on
FY 2007 IPF claims, inflated to the appropriate RY. This quotient is
the wage index budget neutrality factor, and it is applied in the
update of the Federal per diem base rate for RY 2010 in addition to the
market basket described in section III.B.1 of this notice. The wage
index budget neutrality factor for RY 2010 is 1.0009.
The wage index applicable for RY 2010 appears in Table 1 and Table
2 in Addendum B of this notice. As explained in the May 2006 IPF PPS
final rule for RY 2007 (71 FR 27061), the IPF PPS applies the hospital
wage index without a hold-harmless policy, and without an out-commuting
adjustment or out-migration adjustment because the statutory authority
for these policies applies only to the IPPS.
Also in the May 2006 IPF PPS final rule for RY 2007 (71 FR 27061),
we adopted the changes discussed in the Office of Management and Budget
(OMB) Bulletin No. 03-04 (June 6, 2003), which announced revised
definitions for Metropolitan Statistical Areas (MSAs), and the creation
of Micropolitan Statistical Areas and Combined Statistical Areas. In
adopting the OMB Core-Based Statistical Area (CBSA) geographic
designations, since the IPF PPS was already in a transition period from
TEFRA payments to PPS payments, we did not provide a separate
transition for the CBSA-based wage index.
As was the case in RY 2009, for RY 2010 we will continue to use the
CBSA-based wage index values as presented in Tables 1 and 2 in Addendum
B of this notice. A complete discussion of the CBSA labor market
definitions appears in the May 2006 IPF PPS final rule (71 FR 27061
through 27067).
c. OMB Bulletins
The Office of Management and Budget (OMB) publishes bulletins
regarding CBSA changes, including changes to CBSA numbers and titles.
In the May 2008 IPF PPS notice, we incorporated the CBSA nomenclature
changes published in the most recent OMB bulletin that applies to the
hospital
[[Page 20374]]
wage data used to determine the current IPF PPS wage index (73 FR
25721). We will continue to do the same for all such OMB CBSA
nomenclature changes in future IPF PPS rules and notices, as necessary.
The OMB bulletins may be accessed Online at http://www.whitehouse.gov/
omb/bulletins/index.html.
In summary, for RY 2010 we will use the FY 2009 wage index data
(collected from cost reports submitted by hospitals for cost reporting
periods beginning during FY 2005) to adjust IPF PPS payments beginning
July 1, 2009.
2. Adjustment for Rural Location
In the November 2004 IPF PPS final rule, we provided a 17 percent
payment adjustment for IPFs located in a rural area. This adjustment
was based on the regression analysis, which indicated that the per diem
cost of rural facilities was 17 percent higher than that of urban
facilities after accounting for the influence of the other variables
included in the regression. For RY 2010, we are applying a 17 percent
payment adjustment for IPFs located in a rural area as defined at Sec.
412.64(b)(1)(ii)(C). As stated in the November 2004 IPF PPS final rule,
we do not intend to update the adjustment factors derived from the
regression analysis until we are able to analyze IPF PPS data. A
complete discussion of the adjustment for rural locations appears in
the November 2004 IPF PPS final rule (69 FR 66954).
3. Teaching Adjustment
In the November 2004 IPF PPS final rule, we implemented regulations
at Sec. 412.424(d)(1)(iii) to establish a facility-level adjustment
for IPFs that are, or are part of, teaching institutions. The teaching
adjustment accounts for the higher indirect operating costs experienced
by facilities that participate in graduate medical education (GME)
programs. The payment adjustments are made based on the number of full-
time equivalent (FTE) interns and residents training in the IPF and the
IPF's average daily census.
Medicare makes direct GME payments (for direct costs such as
resident and teaching physician salaries, and other direct teaching
costs) to all teaching hospitals including those paid under the IPPS,
and those that were once paid under the TEFRA rate-of-increase limits
but are now paid under other PPSs. These direct GME payments are made
separately from payments for hospital operating costs and are not part
of the PPSs. The direct GME payments do not address the estimated
higher indirect operating costs teaching hospitals may face.
For teaching hospitals paid under the TEFRA rate-of-increase
limits, Medicare did not make separate medical education payments
because payments to these hospitals were based on the hospitals'
reasonable costs. Since payments under TEFRA were based on hospitals'
reasonable costs, the higher indirect costs that may be associated with
teaching programs were factored automatically into the TEFRA payments.
The results of the regression analysis of FY 2002 IPF data
established the basis for the payment adjustments included in the
November 2004 IPF PPS final rule. The results showed that the indirect
teaching cost variable is significant in explaining the higher costs of
IPFs that have teaching programs. We calculated the teaching adjustment
based on the IPF's ``teaching variable,'' which is one plus the ratio
of the number of FTE residents training in the IPF (subject to
limitations described below) to the IPF's average daily census (ADC).
We established the teaching adjustment in a manner that limited the
incentives for IPFs to add FTE residents for the purpose of increasing
their teaching adjustment. We imposed a cap on the number of FTE
residents that may be counted for purposes of calculating the teaching
adjustment. We emphasize that the cap limits the number of FTE
residents that teaching IPFs may count for the purposes of calculating
the IPF PPS teaching adjustment, not the number of residents teaching
institutions can hire or train. We calculated the number of FTE
residents that trained in the IPF during a ``base year'' and used that
FTE resident number as the cap. An IPF's FTE resident cap is ultimately
determined based on the final settlement of the IPF's most recent cost
report filed before November 15, 2004 (that is, the publication date of
the IPF PPS final rule).
In the regression analysis, the logarithm of the teaching variable
had a coefficient value of 0.5150. We converted this cost effect to a
teaching payment adjustment by treating the regression coefficient as
an exponent and raising the teaching variable to a power equal to the
coefficient value. We note that the coefficient value of 0.5150 was
based on the regression analysis holding all other components of the
payment system constant.
As with other adjustment factors derived through the regression
analysis, we do not plan to rerun the regression analysis until we
analyze IPF PPS data. Therefore, for RY 2010, we are retaining the
coefficient value of 0.5150 for the teaching adjustment to the Federal
per diem base rate.
A complete discussion of how the teaching adjustment was calculated
appears in the November 2004 IPF PPS final rule (69 FR 66954 through
66957) and the May 2008 IPF PPS notice (73 FR 25721). Below, in the
``Request for Comments'' section of this notice, we are seeking public
input on the FTE Intern and Resident Cap Adjustment.
4. Cost of Living Adjustment for IPFs Located in Alaska and Hawaii
The IPF PPS includes a payment adjustment for IPFs located in
Alaska and Hawaii based upon the county in which the IPF is located. As
we explained in the November 2004 IPF PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and Hawaii had per diem costs that
were disproportionately higher than other IPFs. Other Medicare PPSs
(for example, the IPPS and LTCH PPS) have adopted a cost of living
adjustment (COLA) to account for the cost differential of care
furnished in Alaska and Hawaii.
We analyzed the effect of applying a COLA to payments for IPFs
located in Alaska and Hawaii. The results of our analysis demonstrated
that a COLA for IPFs located in Alaska and Hawaii would improve payment
equity for these facilities. As a result of this analysis, we provided
a COLA in the November 2004 IPF PPS final rule.
A COLA adjustment for IPFs located in Alaska and Hawaii is made by
multiplying the non-labor share of the Federal per diem base rate by
the applicable COLA factor based on the COLA area in which the IPF is
located.
As previously stated in the November 2004 IPF PPS final rule, we
will update the COLA factors according to updates established by the
U.S. Office of Personnel Management (OPM), which issued a final rule,
May 28, 2008 to change COLA rates.
The COLA factors are published on the OPM Web site at (http://
www.opm.gov/oca/cola/rates.asp).
We note that the COLA areas for Alaska are not defined by county as
are the COLA areas for Hawaii. In 5 CFR 591.207, the OPM established
the following COLA areas:
(a) City of Anchorage, and 80-kilometer (50-mile) radius by road,
as measured from the Federal courthouse;
(b) City of Fairbanks, and 80-kilometer (50-mile) radius by road,
as measured from the Federal courthouse;
(c) City of Juneau, and 80-kilometer (50-mile) radius by road, as
measured from the Federal courthouse;
(d) Rest of the State of Alaska.
[[Page 20375]]
For RY 2010, IPFs located in Alaska and Hawaii will continue to
receive the updated COLA factors based on the COLA area in which the
IPF is located as shown in Table 12 below.
Table 12--COLA Factors for Alaska and Hawaii IPFs
------------------------------------------------------------------------
Location COLA
------------------------------------------------------------------------
Alaska........................ Anchorage...................... 1.23
Fairbanks...................... 1.23
Juneau......................... 1.23
Rest of Alaska................. 1.25
Hawaii........................ Honolulu County................ 1.25
Hawaii County.................. 1.18
Kauai County................... 1.25
Maui County.................... 1.25
Kalawao County................. 1.25
------------------------------------------------------------------------
5. Adjustment for IPFs With a Qualifying Emergency Department (ED)
Currently, the IPF PPS includes a facility-level adjustment for
IPFs with qualifying EDs. We provide an adjustment to the Federal per
diem base rate to account for the costs associated with maintaining a
full-service ED. The adjustment is intended to account for ED costs
incurred by a freestanding psychiatric hospital with a qualifying ED or
a distinct part psychiatric unit of an acute hospital or a CAH for
preadmission services otherwise payable under the Medicare Outpatient
Prospective Payment System (OPPS) furnished to a beneficiary during the
day immediately preceding the date of admission to the IPF (see Sec.
413.40(c)(2)) and the overhead cost of maintaining the ED. This payment
is a facility-level adjustment that applies to all IPF admissions (with
one exception described below), regardless of whether a particular
patient receives preadmission services in the hospital's ED.
The ED adjustment is incorporated into the variable per diem
adjustment for the first day of each stay for IPFs with a qualifying
ED. That is, IPFs with a qualifying ED receive an adjustment factor of
1.31 as the variable per diem adjustment for day 1 of each stay. If an
IPF does not have a qualifying ED, it receives an adjustment factor of
1.19 as the variable per diem adjustment for day 1 of each patient
stay.
The ED adjustment is made on every qualifying claim except as
described below. As specified in Sec. 412.424(d)(1)(v)(B), the ED
adjustment is not made where a patient is discharged from an acute care
hospital or critical access hospital (CAH) and admitted to the same
hospital's or CAH's psychiatric unit. An ED adjustment is not made in
this case because the costs associated with ED services are reflected
in the DRG payment to the acute care hospital or through the reasonable
cost payment made to the CAH. If we provided the ED adjustment in these
cases, the hospital would be paid twice for the overhead costs of the
ED, as stated in the November 2004 IPF PPS final rule (69 FR 66960).
Therefore, when patients are discharged from an acute care hospital
or CAH and admitted to the same hospital's or CAH's psychiatric unit,
the IPF receives the 1.19 adjustment factor as the variable per diem
adjustment for the first day of the patient's stay in the IPF.
For RY 2010, we are retaining the 1.31 adjustment factor for IPFs
with qualifying EDs. A complete discussion of the steps involved in the
calculation of the ED adjustment factor appears in the November 2004
IPF PPS final rule (69 FR 66959 through 66960) and the May 2006 IPF PPS
final rule (71 FR 27070 through 27072).
D. Other Payment Adjustments and Policies
For RY 2010, the IPF PPS includes: An outlier adjustment to promote
access to IPF care for those patients who require expensive care and to
limit the financial risk of IPFs treating unusually costly patients. In
this section, we also explain the reason for ending the stop-loss
provision that was applicable during the transition period.
1. Outlier Payments
In the November 2004 IPF PPS final rule, we implemented regulations
at Sec. 412.424(d)(3)(i) to provide a per-case payment for IPF stays
that are extraordinarily costly. Providing additional payments to IPFs
for extremely costly cases strongly improves the accuracy of the IPF
PPS in determining resource costs at the patient and facility level.
These additional payments reduce the financial losses that would
otherwise be incurred in treating patients who require more costly care
and, therefore, reduce the incentives for IPFs to under-serve these
patients.
We make outlier payments for discharges in which an IPF's estimated
total cost for a case exceeds a fixed dollar loss threshold amount
(multiplied by the IPF's facility-level adjustments) plus the Federal
per diem payment amount for the case.
In instances when the case qualifies for an outlier payment, we pay
80 percent of the difference between the estimated cost for the case
and the adjusted threshold amount for days 1 through 9 of the stay
(consistent with the median LOS for IPFs in FY 2002), and 60 percent of
the difference for day 10 and thereafter. We established the 80 percent
and 60 percent loss sharing ratios because we were concerned that a
single ratio established at 80 percent (like other Medicare PPSs) might
provide an incentive under the IPF per diem payment system to increase
LOS in order to receive additional payments. After establishing the
loss sharing ratios, we determined the current fixed dollar loss
threshold amount of $6,113 through payment simulations designed to
compute a dollar loss beyond which payments are estimated to meet the 2
percent outlier spending target.
a. Update to the Outlier Fixed Dollar Loss Threshold Amount:
In accordance with the update methodology described in Sec.
412.428(d), we are updating the fixed dollar loss threshold amount used
under the IPF PPS outlier policy. Based on the regression analysis and
payment simulations used to develop the IPF PPS, we established a 2
percent outlier policy which strikes an appropriate balance between
protecting IPFs from extraordinarily costly cases while ensuring the
adequacy of the Federal per diem base rate for all other cases that are
not outlier cases.
We believe it is necessary to update the fixed dollar loss
threshold amount because analysis of the latest available data (that
is, FY 2007 IPF claims) and rate increases indicates adjusting the
fixed dollar loss amount is necessary in order to maintain an outlier
percentage that equals 2 percent of total estimated IPF PPS payments.
In the May 2006 IPF PPS final rule (71 FR 27072), we describe the
process by which we calculate the outlier fixed dollar loss threshold
amount. We continue to use this process for RY 2010. We begin by
simulating aggregate payments with and without an outlier policy, and
applying an iterative process to a fixed dollar loss amount that will
result in outlier payments being equal to 2 percent of total estimated
payments under the simulation. Based on this process, for RY 2010, the
IPF PPS will use $6,565 as the fixed dollar loss threshold amount in
the outlier calculation in order to maintain the 2 percent outlier
policy.
b. Statistical Accuracy of Cost-to-Charge Ratios
As previously stated, under the IPF PPS, an outlier payment is made
if an IPF's cost for a stay exceeds a fixed dollar loss threshold
amount. In order to establish an IPF's cost for a particular case, we
multiply the IPF's reported
[[Page 20376]]
charges on the discharge bill by its overall cost-to-charge ratio
(CCR). This approach to determining an IPF's cost is consistent with
the approach used under the IPPS and other PPSs. In FY 2004, we
implemented changes to the IPPS outlier policy used to determine CCRs
for acute care hospitals because we became aware that payment
vulnerabilities resulted in inappropriate outlier payments. Under the
IPPS, we established a statistical measure of accuracy for CCRs in
order to ensure that aberrant CCR data did not result in inappropriate
outlier payments.
As we indicated in the November 2004 IPF PPS final rule, because we
believe that the IPF outlier policy is susceptible to the same payment
vulnerabilities as the IPPS, we adopted an approach to ensure the
statistical accuracy of CCRs under the IPF PPS (69 FR 66961).
Therefore, we adopted the following procedure in the November 2004 IPF
PPS final rule:
We calculated two national ceilings, one for IPFs located
in rural areas and one for IPFs located in urban areas. We computed the
ceilings by first calculating the national average and the standard
deviation of the CCR for both urban and rural IPFs.
To determine the rural and urban ceilings, we multiplied each of
the standard deviations by 3 and added the result to the appropriate
national CCR average (either rural or urban). The upper threshold CCR
for IPFs in RY 2010 is 1.7381 for rural IPFs, and 1.7647 for urban
IPFs, based on CBSA-based geographic designations. If an IPF's CCR is
above the applicable ceiling, the ratio is considered statistically
inaccurate and we assign the appropriate national (either rural or
urban) median CCR to the IPF.
We are applying the national CCRs to the following situations:
++ New IPFs that have not yet submitted their first Medicare cost
report.
++ IPFs whose overall CCR is in excess of 3 standard deviations
above the corresponding national geometric mean (that is, above the
ceiling).
++ Other IPFs for which the Medicare contractor obtains inaccurate
or incomplete data with which to calculate a CCR.
For new IPFs, we are using these national CCRs until the facility's
actual CCR can be computed using the first tentatively or final settled
cost report.
We are not making any changes to the procedures for ensuring the
statistical accuracy of CCRs in RY 2010. However, we are updating the
national urban and rural CCRs (ceilings and medians) for IPFs for RY
2010 based on the CCRs entered in the latest available IPF PPS Provider
Specific File.
The national CCRs for RY 2010 are 0.6515 for rural IPFs and 0.5300
for urban IPFs and will be used in each of the three situations listed
above. These calculations are based on the IPF's location (either urban
or rural) using the CBSA-based geographic designations.
A complete discussion regarding the national median CCRs appears in
the November 2004 IPF PPS final rule (69 FR 66961 through 66964).
2. Expiration of the Stop-Loss Provision
In the November 2004 IPF PPS final rule, we implemented a stop-loss
policy that reduced financial risk to IPFs projected to experience
substantial reductions in Medicare payments during the period of
transition to the IPF PPS. This stop-loss policy guaranteed that each
facility received total IPF PPS payments that were no less than 70
percent of its TEFRA payments had the IPF PPS not been implemented.
This policy was applied to the IPF PPS portion of Medicare payments
during the 3-year transition.
In the implementation year, the 70 percent of TEFRA payment stop-
loss policy required a reduction in the standardized Federal per diem
and ECT base rates of 0.39 percent in order to make the stop-loss
payments budget neutral. As described in the May 2008 IPF PPS notice
for RY 2009, we increased the Federal per diem base rate and ECT rate
by 0.39 percent because these rates were reduced by 0.39 percent in the
implementation year to ensure stop-loss payments were budget neutral.
The stop-loss provision ended during RY 2009 (that is for
discharges occurring on or after July 1, 2008 through June 30, 2009).
The stop-loss policy is no longer applicable under the IPF PPS.
V. Request for Comments
A. Market Basket Index for the IPF PPS; Costs and Cost Structures of
IPF Providers
We are interested in exploring the possibility of creating a stand-
alone IPF market basket that reflects the cost structures of only IPF
providers. The intent would be to join the Medicare cost report data
from freestanding IPF providers (presently incorporated into the RPL
market basket) with data from hospital-based IPF providers.
An examination of the Medicare cost report data comparing
freestanding and hospital-based IPFs reveals considerable differences
in both cost levels and cost structure. We have reviewed several
explanatory variables such as geographic variation, case mix (including
DRG, comorbidity, and age), urban or rural status, length of stay,
teaching status, and presence of a qualifying emergency department;
however, we are currently unable to fully understand the differences
between these two types of IPF providers. As a result, we feel that
further research is required. Having examined the relevant data that is
internal to CMS, we welcome any help from the public in the form of
additional information, data, or suggested data sources that may help
us to better understand the underlying reasons for the variations in
cost structures between freestanding and hospital-based IPFs.
B. FTE Intern and Resident Cap Adjustment
As previously mentioned, the IPF PPS imposed a cap on the number of
full-time equivalent (FTE) residents that may be used to calculate the
teaching status adjustment. The cap is based on the number of FTE
residents reported in the IPF's most recent cost report filed before
November 15, 2004.
CMS has been asked to reconsider its position under the IPF PPS
regulations regarding application of the FTE resident cap when
residents in a psychiatry residency program must be relocated from one
IPF to another. Specifically, we have been asked to reconsider our
current policy and permit an increase in the FTE resident cap when the
IPF increases the number of FTE residents it trains due to the
acceptance of relocated residents when another IPF closes or closes its
psychiatry residency program.
Currently, if an IPF with a psychiatry residency training program
agrees to accept residents relocated from another IPF after November
2004, the IPF's FTE resident count would continue to be capped at the
number of FTE residents included in the cost report filed before
November 15, 2004. Furthermore, according to Sec.
412.424(d)(1)(iii)(D), an adjustment to the FTE resident cap can only
be made for those IPFs that begin training residents in a new approved
psychiatric residency program after November 15, 2004. For a new
program adjustment, the IPF's FTE cap would be revised beginning with
the fourth year of the new training program. We included these policies
because we believe it is important to limit the total pool of FTE
resident cap positions within the IPF community and avoid incentives
for IPFs to add FTE residents in order to increase their payments.
We are now assessing how many IPFs have been, or expect to be,
adversely affected by their inability to adjust their caps under Sec.
412.424(d)(1) in situations
[[Page 20377]]
where residents from a hospital that closed or from a program that
closed at a hospital are moved to another hospital to complete their
training. To help us access this situation, we specifically request
public comment from IPFs to help us understand the impact of this issue
on IPFs. At a minimum, we need to know the following information:
1. How many IPFs currently training additional residents from a
closed residency program have exceeded their caps because of those
residents?
2. How many IPFs have been asked to train additional residents from
a closed residency program but have not currently agreed because these
additional residents would cause them to exceed the caps?
We will take all comments into consideration as we assess the IPF
PPS regulations with respect to the FTE resident cap and the relocation
of FTE residents from one IPF to another due to closure of an IPF or an
IPF's psychiatry residency training program.
VI. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register to provide a period for public comment before the
provisions of a rule take effect. We can waive this procedure, however,
if we find good cause that notice and comment procedures are
impracticable, unnecessary, or contrary to the public interest and we
incorporate a statement of finding and its reasons in the notice. We
find it is unnecessary to undertake notice and comment rulemaking for
the update in this notice because the update does not make any
substantive changes in policy, but merely reflects the application of
previously established methodologies. Therefore, under 5 U.S.C.
553(b)(3)(B), for good cause, we waive notice and comment procedures.
VII. Collection of Information Requirement
This document does not impose any information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 35).
VIII. 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.
IX. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this notice as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the September 19, 1980 Regulatory Flexibility Act (RFA) (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 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). Although this
notice does not meet the $100 million threshold established by
Executive Order 12866, we are considering this notice to be
``economically significant'' because the redistributive effects are
estimated to be close to constituting a shift of $100 million. For
purposes of Title 5, United States Code, section 804(2), we estimate
that this rulemaking is ``economically significant'', and is also a
major rule under the Congressional Review Act. Accordingly, we have
prepared a Regulatory Impact Analysis that to the best of our ability
presents the costs and benefits of the rulemaking on the 1,706 IPFs.
The updates to the IPF labor-related share and wage indices are
made in a budget neutral manner and thus have no effect on estimated
costs to the Medicare program. Therefore, the estimated increased cost
to the Medicare program is due to the updated IPF payment rates, which
results in an approximate $91 million increase in payments, and the
increase to the outlier fixed dollar loss threshold amount, which
results in about a $4 million decrease in payments. The distribution of
these impacts is summarized in Table 13. The net effect of the updates
described in this notice results in an overall estimated $87 million
increase in payments from RY 2009 to RY 2010.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, we
estimate that the great majority of IPFs are small entities as that
term is used in the RFA (include small businesses, nonprofit
organizations, and small governmental jurisdictions). The majority of
hospitals and most other health care providers and suppliers are small
entities, either by being nonprofit organizations or by meeting the SBA
definition of a small business (having revenues of $7 million to $34.5
million in any 1 year). (For details, see the Small Business
Administration's Interim final rule that set forth size standards at 70
FR 72577, December 6, 2005.) Because we lack data on individual
hospital receipts, we cannot determine the number of small proprietary
IPFs or the proportion of IPFs' revenue that is derived from Medicare
payments. Therefore, we assume that all IPFs are considered small
entities. The Department of Health and Human Services generally uses a
revenue impact of 3 to 5 percent as a significance threshold under the
RFA. As shown in Table 13, we estimate that the net revenue impact of
this notice on all IPFs is to increase payments by about 2.0 percent.
Since the estimated impact of this notice is a net increase in revenue
across all categories of IPFs, we believe that this notice would not
impose a significant burden on small entities. Medicare contractors are
not considered to be small entities. Individuals and States are not
included in the definition of a small entity.
Although section 1102(b) of the Act applies to regulations for
which a proposed rule is published, the HHS policy is to prepare an
analysis of the impact on small rural hospitals for any regulation
published. As a result, we are voluntarily determining whether this
notice will have a significant impact on the operations of a
substantial number of small rural hospitals. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital with
fewer than 100 beds that is located outside of an MSA. As discussed in
detail below, the rates and policies set forth in this notice will not
have an adverse impact on the rural hospitals based on the data of the
317 rural units and 68 rural hospitals in our database of 1,706 IPFs
for which data were available.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 2009, that
threshold is approximately $133
[[Page 20378]]
million. This notice will not impose spending costs on State, local, or
tribal governments in the aggregate, or by the private sector, of $133
million.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have reviewed this notice under the criteria set forth
in Executive Order 13132 and have determined that the notice will not
have any substantial direct impact on State, or local governments,
preempt States, or otherwise have a Federalism implication.
B. Anticipated Effects
We discuss below the historical background of the IPF PPS and the
impact of this notice on the Federal Medicare budget and on IPFs.
1. Budgetary Impact
As discussed in the November 2004 and May 2006 IPF PPS final rules,
we applied a budget neutrality factor to the Federal per diem and ECT
base rates to ensure that total estimated payments under the IPF PPS in
the implementation period would equal the amount that would have been
paid if the IPF PPS had not been implemented. The budget neutrality
factor includes the following components: Outlier adjustment, stop-loss
adjustment, and the behavioral offset. As discussed in the May 2008 IPF
PPS notice (73 FR 25711), the stop-loss adjustment is no longer
applicable under the IPF PPS.
In accordance with Sec. 412.424(c)(3)(ii), we indicated that we
would evaluate the accuracy of the budget neutrality adjustment within
the first 5 years after implementation of the payment system. We may
make a one-time prospective adjustment to the Federal per diem and ECT
base rates to account for differences between the historical data on
cost-based TEFRA payments (the basis of the budget neutrality
adjustment) and estimates of TEFRA payments based on actual data from
the first year of the IPF PPS. As part of that process, we will
reassess the accuracy of all of the factors impacting budget
neutrality.
In addition, as discussed in section III.B.2 of this notice, we are
using the wage index and labor market share in a budget neutral manner
by applying a wage index budget neutrality factor to the Federal per
diem and ECT base rates. Thus, the budgetary impact to the Medicare
program by the update of the IPF PPS will be due to the market basket
update (see section III.B.2.a of this notice) and the increase in the
fixed dollar loss threshold amount.
2. Impacts on Providers
To understand the impact of the changes to the IPF PPS on
providers, discussed in this notice, it is necessary to compare
estimated payments under the IPF PPS rates and factors for RY 2010
versus those under RY 2009. The estimated payments for RY 2009 and RY
2010 will be 100 percent of the IPF PPS payment, since the transition
period has ended and stop-loss payments are no longer paid. We
determined the percent change of estimated RY 2010 IPF PPS payments to
estimated RY 2009 IPF PPS payments for each category of IPFs. In
addition, for each category of IPFs, we have included the estimated
percent change in payments resulting from the increase to the fixed
dollar loss threshold amount, the wage index changes for the RY 2010
IPF PPS, and the market basket update to IPF PPS payments.
To illustrate the impacts of the final RY 2010 changes in this
notice, our analysis begins with a RY 2009 baseline simulation model
based on FY 2007 IPF payments inflated to the midpoint of RY 2009 using
IHS Global Insight's most recent forecast of the market basket update
(see section III.2.b of this notice); the estimated outlier payments in
RY 2009; the CBSA designations for IPFs based on OMB's MSA definitions
after June 2003; the FY 2008 pre-floor, pre-reclassified hospital wage
index; the RY 2009 labor-market share; and the RY 2009 percentage
amount of the rural adjustment. During the simulation, the outlier
payment is maintained at the target of 2 percent of total PPS payments.
Each of the following changes is added incrementally to this
baseline model in order for us to isolate the effects of each change:
The increase to the outlier fixed dollar loss threshold
amount.
The FY 2009 pre-floor, pre-reclassified hospital wage
index and RY 2010 final labor-related share. Our final comparison
illustrates the percent change in payments from RY 2009 (that is, July
1, 2008 to June 30, 2009) to RY 2010 (that is, July 1, 2009 to June 30,
2010) and includes a 2.1 percent market basket update to the IPF PPS
base rates.
Table 13--Projected Impacts
----------------------------------------------------------------------------------------------------------------
CBSA wage Total with
Number of Outlier index & 2.1 market
Facility by type facilities (percent) labor share basket
(percent) (percent)
(1) (2) (3) (4) (5)
----------------------------------------------------------------------------------------------------------------
All Facilities.............................................. 1,706 -0.1 0.0 2.0
Total Urban............................................. 1,321 -0.1 0.0 1.9
Total Rural............................................. 385 -0.2 0.1 2.0
Urban DPU............................................... 924 -0.2 -0.1 1.8
Urban CAH Unit.......................................... 14 -0.4 0.3 2.1
Urban hospital.......................................... 383 0.0 0.1 2.2
Rural DPU............................................... 264 -0.2 0.1 2.0
Rural CAH Unit.......................................... 53 -0.2 -0.1 1.8
Rural hospital.......................................... 68 -0.1 0.3 2.3
Freestanding IPF by Type of Ownership:
Urban Psychiatric Hospitals:
Government.......................................... 149 -0.1 0.2 2.2
Non-Profit.......................................... 86 -0.1 -0.1 1.9
For-Profit.......................................... 148 0.0 0.2 2.3
Rural Psychiatric Hospitals:
Government.......................................... 43 -0.1 0.2 2.2
Non-Profit.......................................... 9 -0.1 0.5 2.5
For-Profit.......................................... 16 -0.2 0.6 2.5
[[Page 20379]]
IPF Units by Type of Ownership:
Urban DPU:
Government.......................................... 158 -0.2 -0.1 1.8
Non-Profit.......................................... 636 -0.2 -0.1 1.8
For-Profit.......................................... 130 -0.1 0.0 1.9
Urban CAH:
Government.......................................... 7 -0.3 0.8 2.5
Non-Profit.......................................... 6 -0.5 -0.1 1.5
For-Profit.......................................... 1 0.0 -0.3 1.8
Rural DPU:
Government.......................................... 63 -0.3 0.0 1.8
Non-Profit.......................................... 154 -0.1 0.0 1.9
For-Profit.......................................... 47 -0.2 0.4 2.4
Rural CAH:
Government.......................................... 23 -0.2 0.0 1.9
Non-Profit.......................................... 27 -0.2 -0.2 1.7
For-Profit.......................................... 3 -0.1 -0.2 1.9
By Teaching Status:
Non-teaching............................................ 1,458 -0.1 0.1 2.0
Less than 10 interns and residents to beds.......... 140 -0.2 -0.3 1.6
10 to 30 interns and residents to beds.............. 73 -0.2 -0.2 1.7
More than 30 interns and residents to beds.......... 35 -0.1 0.2 2.2
By Region:
New England............................................. 119 -0.2 0.2 2.1
Mid-Atlantic............................................ 287 -0.1 -0.6 1.4
South Atlantic.......................................... 238 -0.1 -0.3 1.7
East North Central...................................... 289 -0.2 -0.5 1.4
East South Central...................................... 164 -0.1 -0.2 1.8
West North Central...................................... 151 -0.2 0.3 2.2
West South Central...................................... 236 -0.2 0.4 2.3
Mountain................................................ 85 -0.2 0.1 2.0
Pacific................................................. 130 -0.2 1.5 3.4
By Bed Size:
Psychiatric Hospitals:
Less than 12 beds................................... 25 -0.2 0.2 2.1
12 to 25 beds....................................... 67 -0.1 0.5 2.4
25 to 50 beds....................................... 98 0.0 0.0 2.1
50 to 75 beds....................................... 83 0.0 0.5 2.6
More than 75 beds................................... 178 0.0 0.0 2.1
Psychiatric Units:
Less than 12 beds................................... 487 -0.3 0.1 1.9
12 to 25 beds....................................... 438 -0.2 0.1 2.0
25 to 50 beds....................................... 219 -0.2 -0.1 1.8
50 to 75 beds....................................... 59 -0.2 -0.2 1.7
More than 75 beds................................... 52 -0.1 -0.5 1.5
----------------------------------------------------------------------------------------------------------------
3. Results
Table 13 above displays the results of our analysis. The table
groups IPFs into the categories listed below based on characteristics
provided in the Provider of Services (POS) file, the IPF provider
specific file, and cost report data from HCRIS:
Facility Type.
Location.
Teaching Status Adjustment.
Census Region.
Size.
The top row of the table shows the overall impact on the 1,706 IPFs
included in the analysis.
In column 3, we present the effects of the increase in the fixed
dollar loss threshold amount. The overall aggregate effect, across all
hospital groups, is projected to be a 0.1 percent decrease in payments
to IPFs. All categories of IPFs are projected to receive either a
decrease or no change in payments. There are distributional effects of
this change among different categories of IPFs. Urban, for-profit
freestanding psychiatric hospitals; urban, for-profit IPF units located
in CAHs; and psychiatric hospitals with 25 beds or more will experience
no changes in their payments. Alternatively, urban, non-profit
psychiatric units in CAHs will receive the largest decrease of 0.5
percent.
In column 4, we present the effects of the budget-neutral update to
the labor-related share and the wage index adjustment under the CBSA
geographic area definitions announced by OMB in June 2003. This is a
comparison of the simulated RY 2010 payments under the FY 2009 hospital
wage index under CBSA classification and associated labor-related share
to the simulated RY 2009 payments under the FY 2008 hospital wage index
under CBSA classifications and associated labor-related share. We note
that there is no projected change in aggregate payments
[[Page 20380]]
to IPFs, as indicated in the first row of column 4. However, there
would be small distributional effects among different categories of
IPFs. For example, IPFs located in the Mid-Atlantic region will
experience a 0.6 percent decrease in payments. IPFs located in the
Pacific region will receive the largest increase of 1.5 percent.
Column 5 compares our estimates of the changes reflected in this
notice for RY 2010, to our estimates of payments for RY 2009 (without
these changes). This column reflects all RY 2010 changes relative to RY
2009 (as shown in columns 3 and 4). The average increase for all IPFs
is approximately 2.0 percent. This increase includes the effects of the
market basket update resulting in a 2.1 percent increase in total RY
2010 payments, and an approximate 0.1 percent decrease in RY 2009
payments for the fixed dollar loss threshold amount.
Overall, the largest payment increase is projected to be among IPFs
located in the Pacific region, which will receive a 3.4 percent
increase. IPFs located in the East North Central and Mid-Atlantic
regions will receive the smallest increase of 1.4 percent.
4. Effect on the Medicare Program
Based on actuarial projections resulting from our experience with
other PPSs, we estimate that Medicare spending (total Medicare program
payments) for IPF services over the next 5 years would be as shown in
Table 14 below.
Table 14--Estimated Payments
------------------------------------------------------------------------
Dollars in
Rate year millions
------------------------------------------------------------------------
July 1, 2009 to June 30, 2010............................. 4,531
July 1, 2010 to June 30, 2011............................. 4,745
July 1, 2011 to June 30, 2012............................. 5,005
July 1, 2012 to June 30, 2013............................. 5,320
July 1, 2013 to June 30, 2014............................. 5,656
------------------------------------------------------------------------
These estimates are based on the current estimate of increases in
the RPL market basket as follows:
2.1 percent for RY 2010.
2.8 percent for RY 2011.
2.9 percent for RY 2012.
3.1 percent for RY 2013.
3.2 percent for RY 2014.
We estimate that there would be a change in fee-for-service
Medicare beneficiary enrollment as follows:
0.1 percent in RY 2010.
1.8 percent in RY 2011.
2.9 percent in RY 2012.
3.1 percent in RY 2013.
3.0 percent in RY 2014.
5. Effect on Beneficiaries
Under the IPF PPS, IPFs will receive payment based on the average
resources consumed by patients for each day. We do not expect changes
in the quality of care or access to services for Medicare beneficiaries
under the RY 2010 IPF PPS. In fact, we believe that access to IPF
services will be enhanced due to the patient- and facility-level
adjustment factors, all of which are intended to adequately reimburse
IPFs for expensive cases. Finally, the outlier policy is intended to
assist IPFs that experience high-cost cases.
C. Alternatives Considered
The statute does not specify an update strategy for the IPF PPS and
is broadly written to give the Secretary discretion in establishing an
update methodology. Therefore, we are updating the IPF PPS using the
methodology published in the November 2004 IPF PPS final rule.
We note that this notice does not initiate any policy changes with
regard to the IPF PPS; rather, it simply provides an update to the
rates for RY 2010. Therefore, no options were considered.
D. Accounting Statement
As required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 15 below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this notice. This table
provides our best estimate of the increase in Medicare payments under
the IPF PPS notice, as a result of the changes presented in this
notice, and based on the data for 1,706 IPFs in our database. All
expenditures are classified as transfers to Medicare providers (that
is, IPFs).
Table 15--Accounting Statement: Classification of Estimated
Expenditures, From the 2009 IPF PPS RY to the 2010 IPF PPS RY
[In millions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $87.
From Whom To Whom? Federal Government To IPF
Medicare Providers.
------------------------------------------------------------------------
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by OMB.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: March 6, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: March 20, 2009.
Charles E. Johnson,
Acting Secretary.
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[FR Doc. E9-9962 Filed 4-30-09; 8:45 am]