[Federal Register: May 8, 1998 (Volume 63, Number 89)]
[Proposed Rules]
[Page 25575-25624]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08my98-15]
[[Page 25575]]
Table of Contents
Supplementary Information
Addendum
Appendix A
Appendix B: Technical Appendix on the Capital Acquisition Model and Required Adjustments
______________________________________________________________________
Part III
Department of Health and Human Services
_______________________________________________________________________
Health Care Financing Administration
_______________________________________________________________________
42 CFR Parts 405, 412, and 413
Medicare Program; Changes to the Hospital Inpatient Prospective Payment
Systems and Fiscal Year 1999 Rates; Proposed Rule
[[Page 25576]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 405, 412, and 413
[HCFA-1003-P]
RIN 0938-AI22
Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 1999 Rates
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems for operating costs and capital-related
costs to implement applicable statutory requirements, including section
4407 of the Balanced Budget Act of 1997, as well as changes arising
from our continuing experience with the systems. In addition, in the
addendum to this proposed rule, we are describing proposed changes in
the amounts and factors necessary to determine rates for Medicare
hospital inpatient services for operating costs and capital-related
costs. These changes would be applicable to discharges occurring on or
after October 1, 1998. We are also setting forth proposed rate-of-
increase limits as well as proposing changes for hospitals and hospital
units excluded from the prospective payment systems.
DATES: Comments will be considered if received at the appropriate
address, as provided below, no later than 5 p.m. on July 7, 1998.
ADDRESSES: Mail written comments (an original and three copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: HCFA-1003-P, P.O. Box 7517,
Baltimore, MD 21207-0517.
If you prefer, you may deliver your written comments (an original
and three copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW,
ashington, DC 20201, or
Room C5-09-26, Central Building, 7500 Security Boulevard, Baltimore, MD
21244-1850.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code HCFA-1003-P. Comments received timely will be available
for public inspection as they are received, generally beginning
approximately three weeks after publication of a document, in Room 309-
G of the Department's offices at 200 Independence Avenue, SW,
Washington, DC, on Monday through Friday of each week from 8:30 a.m. to
5 p.m. (phone: (202) 690-7890).
For comments that relate to information collection requirements,
mail a copy of comments to:
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Allison Herron Eydt, HCFA Desk Officer; and
Office of Financial and Human Resources, Management Planning and
Analysis Staff, Room C2-26-17, 7500 Security Boulevard, Baltimore, MD
21244-1850.
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FOR FURTHER INFORMATION CONTACT:
Nancy Edwards, (410) 786-4531, Operating Prospective Payment, DRG, and
Wage Index Issues.
Tzvi Hefter, (410) 786-4487, Capital Prospective Payment, Excluded
Hospitals, and Graduate Medical Education Issues.
SUPPLEMENTARY INFORMATION:
I. Background
A. Summary
Sections 1886(d) and (g) of the Social Security Act (the Act), set
forth a system of payment for the operating costs of acute care
hospital inpatient stays under Medicare Part A (Hospital Insurance)
based on prospectively-set rates. Section 1886(g) of the Act requires
the Secretary to pay for the capital-related costs of hospital
inpatient stays under a prospective payment system. Under these
prospective payment systems, Medicare payment for hospital inpatient
operating and capital-related costs is made at predetermined, specific
rates for each hospital discharge. Discharges are classified according
to a list of diagnosis-related groups (DRGs).
Certain specialty hospitals are excluded from the prospective
payment systems. Under section 1886(d)(1)(B) of the Act, the following
hospitals and units are excluded from PPS: psychiatric hospitals or
units, rehabilitation hospitals or units, children's hospitals, long
term care hospitals, and cancer hospitals. For these hospitals and
units, Medicare payment for operating costs is based on reasonable
costs subject to a hospital-specific annual limit.
Under section 1886(a)(4) of the Act, costs incurred in connection
with approved graduate medical education (GME) programs are excluded
from the operating costs of inpatient hospital services. Hospitals with
approved GME programs are paid for the direct costs of GME in
accordance with section 1886(h) of the Act; the amount of payment for
direct GME costs for a cost reporting period is based on the number of
the hospital's residents in that period and the hospital's costs per
resident in a base year.
The regulations governing the hospital inpatient prospective
payment system are located in 42 CFR Part 412. The regulations
governing excluded hospitals are located in both Parts 412 and 413, and
the graduate medical education regulations are found in Part 413.
On August 29, 1997, we published a final rule with comment period
in the Federal Register (62 FR 45966) setting forth both statutorily
required changes and other changes to the Medicare hospital inpatient
prospective payment systems for both operating costs and capital-
related costs, which were effective for discharges occurring on or
after October 1, 1997. This rule also
[[Page 25577]]
implemented changes addressing payments for excluded hospitals and
payments for graduate medical education costs. This final rule with
comment period followed a proposed rule published in the Federal
Register on June 2, 1997 (62 FR 29902) that set forth proposed updates
and changes.
B. Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare hospital inpatient prospective payment systems for both
operating costs and capital-related costs. This proposed rule would be
effective for discharges occurring on or after October 1, 1998.
Following is a summary of the major changes that we are proposing to
make:
1. Changes to the DRG Classifications and Relative Weights
As required by section 1886(d)(4)(C) of the Act, we must adjust the
DRG classifications and relative weights at least annually. Our
proposed changes for FY 1999 are set forth in section II. of this
preamble.
2. Changes to the Hospital Wage Index
In section III. of this preamble, we discuss proposed revisions to
the wage index and the annual update of the wage data. Specific issues
addressed in this section include the following:
--- FY 1999 wage index update.
--- Changes to the data categories included in the wage index.
--- Revisions to the wage index based on hospital
redesignations.
3. Other Decisions and Changes to the Prospective Payment System for
Inpatient Operating and Graduate Medical Education Costs
In section IV. of this preamble, we discuss several provisions of
the regulations in 42 CFR parts 412 and 413 and set forth certain
proposed changes concerning the following:
--- Definition of transfer cases.
--- Rural referral centers.
--- Disproportionate share adjustment.
--- Bad debts.
--- Direct graduate medical education programs.
4. Changes to the Prospective Payment System for Capital-Related Costs
In section V. of this preamble, we discuss several provisions of
the regulations in 42 CFR part 412 and set forth certain proposed
changes and clarifications concerning the following:
--- Capital indirect medical education payments.
--- Payments to new hospitals.
5. Changes for Hospitals and Hospital Units Excluded from the
Prospective Payment Systems
In section VI. of this preamble, we discuss the following criteria
governing excluded hospital issues:
--- Hospital-within-a-hospital.
--- Adjustments to the target amounts for FY 1999.
6. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits
In the addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the FY 1999
prospective payment rates for operating costs and capital-related
costs. We are also proposing update factors for determining the rate-
of-increase limits for cost reporting periods beginning in FY 1999 for
hospitals and hospital units excluded from the prospective payment
system.
7. Impact Analysis
In Appendix A, we set forth an analysis of the impact that the
proposed changes described in this proposed rule would have on affected
entities.
8. Capital Acquisition Model
Appendix B contains the technical appendix on the proposed FY 1999
capital cost model.
9. Report to Congress on the Update Factor for Prospective Payment
Hospitals and Hospitals Excluded from the Prospective Payment System
Section 1886(e)(3)(B) of the Act requires that the Secretary report
to Congress on our initial estimate of a recommended update factor for
FY 1999 for both hospitals included in and hospitals excluded from the
prospective payment systems. This report is included as Appendix C to
this proposed rule.
10. Proposed Recommendation of Update Factor for Hospital Inpatient
Operating Costs
As required by sections 1886(e)(4) and (e)(5) of the Act, Appendix
D provides our recommendation of the appropriate percentage change for
FY 1999 for the following:
--- Large urban area and other area average standardized
amounts (and hospital-specific rates applicable to sole community and
Medicare-dependent, small rural hospitals) for hospital inpatient
services paid for under the prospective payment system for operating
costs.
--- Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by hospitals and
hospital units excluded from the prospective payment system.
11. Discussion of Medicare Payment Advisory Commission Recommendations
The Balanced Budget Act of 1997 abolished the Prospective Payment
Assessment Commission (ProPAC) and created the Medicare Payment
Advisory Commission (MedPAC). Under section 1805(b) of the Act, MedPAC
is required to submit a report to Congress, not later than March 1 of
each year, that reviews and makes recommendations on Medicare payment
policies. The March 1, 1998 report made several recommendations
concerning hospital inpatient payment policies. We reviewed those
recommendations and this document sets forth our responses to those
recommendations.
Although it has been our practice to include a reprint of ProPAC's
March 1 report as an appendix to the proposed rule, we are not
following that practice with MedPAC reports. For further information
relating specifically to that report or to obtain a copy of the report,
contact MedPAC at (202) 653-7220.
II. Proposed Changes to DRG Classifications and Relative Weights
A. Background
Under the prospective payment system, we pay for inpatient hospital
services on the basis of a rate per discharge that varies by the DRG to
which a beneficiary's stay is assigned. The formula used to calculate
payment for a specific case takes an individual hospital's payment rate
per case and multiplies it by the weight of the DRG to which the case
is assigned. Each DRG weight represents the average resources required
to care for cases in that particular DRG relative to the average
resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
annually. These adjustments are made to reflect changes in treatment
patterns, technology, and any other factors that may change the
relative use of hospital resources. The proposed changes to the DRG
classification system and the proposed recalibration of the DRG weights
for discharges occurring on or after October 1, 1998 are discussed
below.
[[Page 25578]]
B. DRG Reclassification
1. General
Cases are classified into DRGs for payment under the prospective
payment system based on the principal diagnosis, up to eight additional
diagnoses, and up to six procedures performed during the stay, as well
as age, sex, and discharge status of the patient. The diagnosis and
procedure information is reported by the hospital using codes from the
International Classification of Diseases, Ninth Revision, Clinical
Modification (ICD-9-CM). The Medicare fiscal intermediary enters the
information into its claims system and subjects it to a series of
automated screens called the Medicare Code Editor (MCE). These screens
are designed to identify cases that require further review before
classification into a DRG can be accomplished.
After screening through the MCE and any further development of the
claims, cases are classified by the GROUPER software program into the
appropriate DRG. The GROUPER program was developed as a means of
classifying each case into a DRG on the basis of the diagnosis and
procedure codes and demographic information (that is, sex, age, and
discharge status). It is used both to classify past cases in order to
measure relative hospital resource consumption to establish the DRG
weights and to classify current cases for purposes of determining
payment. The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights.
Currently, cases are assigned to one of 496 DRGs in 25 major
diagnostic categories (MDCs). Most MDCs are based on a particular organ
system of the body (for example, MDC 6, Diseases and Disorders of the
Digestive System); however, some MDCs are not constructed on this basis
since they involve multiple organ systems (for example, MDC 22, Burns).
In general, cases are assigned to an MDC based on the principal
diagnosis, before assignment to a DRG. However, there are five DRGs to
which cases are directly assigned on the basis of procedure codes.
These are the DRGs for liver, bone marrow, and lung transplant (DRGs
480, 481, and 495, respectively) and the two DRGs for tracheostomies
(DRGs 482 and 483). Cases are assigned to these DRGs before
classification to an MDC.
Within most MDCs, cases are then divided into surgical DRGs (based
on a surgical hierarchy that orders individual procedures or groups of
procedures by resource intensity) and medical DRGs. Medical DRGs
generally are differentiated on the basis of diagnosis and age. Some
surgical and medical DRGs are further differentiated based on the
presence or absence of complications or comorbidities (hereafter CC).
Generally, GROUPER does not consider other procedures; that is,
nonsurgical procedures or minor surgical procedures generally not
performed in an operating room are not listed as operating room (OR)
procedures in the GROUPER decision tables. However, there are a few
non-OR procedures that do affect DRG assignment for certain principal
diagnoses, such as extracorporeal shock wave lithotripsy for patients
with a principal diagnosis of urinary stones.
The changes we are proposing to make to the DRG classification
system for FY 1999 and other decisions concerning DRGs are set forth
below. Unless otherwise noted, our DRG analysis is based on the full
(100 percent) FY 1997 MedPAR file based on bills received through
September 1997.
2. MDC 5 (Diseases and Disorders of the Circulatory System)
In the August 29, 1997 hospital inpatient final rule with comment
period (62 FR 45974), we noted that, because of the many recent changes
in heart surgery, we were considering conducting a comprehensive review
of the MDC 5 surgical DRGs. We have begun that review, and based upon
our analysis thus far, we believe it is appropriate to propose some DRG
changes immediately. These proposed changes are set forth below.
a. Coronary Bypass. There are two DRGs that capture coronary bypass
procedures: DRG 106 (Coronary Bypass with Cardiac Catheterization) and
DRG 107 (Coronary Bypass without Cardiac Catheterization). The
procedures that allow a coronary bypass case to be assigned to DRG 106
include percutaneous valvuloplasty, percutaneous transluminal coronary
angioplasty (PTCA), cardiac catheterization, coronary angiography, and
arteriography.
In analyzing the FY 1997 MedPAR file, we noted that, of cases
assigned to DRG 106, the average standardized charges for coronary
bypass cases with PTCA were significantly higher than those cases
without PTCA. There were approximately 4,400 cases in DRG 106 where
PTCA is performed as a secondary procedure. These cases have an average
standardized charge of approximately $69,000. The average charge of the
approximately 95,000 cases in DRG 106 without PTCA is approximately
$52,000.
Based on this analysis, we are proposing to create a new DRG for
coronary bypass cases with PTCA. The cases currently in DRG 106 without
PTCA would be assigned to another DRG and the cases currently assigned
to DRG 107 would be unmodified. Because we would replace two DRGs with
three new DRGs, we would revise the DRG numbers and titles accordingly.
The new DRGs and their titles are set forth below:
DRG 106 Coronary Bypass with PTCA
DRG 107 Coronary Bypass with Cardiac Catheterization
DRG 109 Coronary Bypass without Cardiac Catheterization
We note that DRG 109 has been an empty DRG for the last several
years.
b. Implantable Heart Assist System and Annuloplasty. In the August
29, 1997 final rule with comment period, we moved implant of an
implantable, pulsatile heart assist system (procedure code 37.66) from
DRGs 110 and 111 (Major Cardiovascular Procedures) <SUP>1</SUP> to DRG
108 (Other Cardiothoracic Procedures). Although this move improved
payment for these procedures, they were still much more expensive than
the other cases in DRG 108 ($96,000 for heart assist versus an average
of $54,000 for all other cases in the FY 1996 MedPAR file). We stated
that we would continue to review the MDC 5 surgical DRGs in an attempt
to find a DRG placement for these cases that would be more similar in
terms of resource use.
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\1\ A single title combined with two DRG numbers is used to
signify pairs. Generally, the first DRG is for cases with CC and the
second DRG is for cases without CC. If a third number is included,
it represents cases with patients who are age 0-17. Occasionally, a
pair of DRGs is split between age >17 and age 0-17.
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In reviewing the FY 1997 MedPAR file, we note that heart assist
system implant continues to be the most expensive procedure in DRG 108.
In fact, other than heart transplant, heart assist system implant is
the most expensive procedure in MDC 5. The average FY 1997 charge for
these cases, when assigned to DRG 108, is over $150,000 compared to
about $53,000 for all cases in DRG 108. Obviously, the charges for
heart assist implant are increasing at a much greater rate than the
average charges for DRG 108. In addition, the length of stay for cases
coded with 37.66 is approximately 32 days compared to about 11 days for
all other DRG 108 cases.
[[Page 25579]]
One possibility for improving payment for these cases is to move
them to DRGs 104 and 105 (Cardiac Valve Procedures). Those DRGs, which
split on the basis of the performance of cardiac catheterization, have
average charges of approximately $66,000 and $51,000, respectively.
While heart assist implant cases are still more expensive than the
average case in these DRGs, payment would be improved. Clinically,
placement of heart assist implant in DRGs 104 and 105 is not without
precedent. Effective with FY 1988, we placed implant of a total
automatic implantable cardioverter defibrillator (AICD) in these DRGs.
In addition, the vast majority of procedures assigned to DRG 108
involve surgically splitting open the sternum to perform the procedure.
However, implant of the heart assist device does not require this
approach.
While reviewing the DRG 108 cases, we also noted that procedure
code 35.33 (annuloplasty) is assigned to this DRG. Annuloplasty is a
valve procedure and is clinically more similar to the cases assigned to
DRGs 104 and 105 than it is to the cases assigned to DRG 108. In
addition, the average standardized charge for annuloplasty cases
assigned to DRG 108 is about $67,000, well above the overall average
charge of approximately $53,000 for cases in DRG 108. Therefore, we are
proposing to move annuloplasty from DRG 108 to DRGs 104 and 105.
In order to more accurately reflect the cases assigned to DRGs 104
and 105, we would retitle them as follows:
DRG 104 Cardiac Valve and Other Major Cardiothoracic Procedures
with Cardiac Catheterization
DRG 105 Cardiac Valve and Other Major Cardiothoracic Procedures
without Cardiac Catheterization.
3. MDC 22 (Burns)
Under the current DRG system, burn cases are assigned to one of six
DRGs in MDC 22 (Burns), which have not been revised since 1986. In our
FY 1998 hospital inpatient proposed rule (June 2, 1997; 62 FR 29912),
in response to inquiries we had received, we indicated that we would
conduct a comprehensive review of MDC 22 to determine whether changes
in these DRGs could more appropriately capture the variation in
resource use associated with different classes of burn patients. We
solicited public comments on this issue, particularly asking for
recommendations on ways to categorize related diagnosis and procedure
codes to produce DRG groupings that would be more homogeneous in terms
of resource use.
Among the comments we received was a proposal (endorsed by the
American Burn Association (ABA)) for restructuring the DRGs based on
several statistical and clinical criteria, including age, severity of
the burn, and the presence of complications or comorbidities. Although
this proposal was structured for a patient population encompassing all
ages of patients, we believed that it showed great promise for Medicare
patients as well. During the last several months, we have worked
closely with representatives of the ABA and with the clinicians who
developed the proposal in order to refine it for Medicare purposes.
Based on this work, we are proposing a new set of DRGs for burn
cases. Under this proposal, we would replace the six existing DRGs in
MDC 22 with eight new DRGs. For ease of reference and classification,
the current DRGs in MDC 22, DRGs 456 through 460 and 472, would no
longer be valid, and we would establish new DRGs 504 through 511 to
contain all cases that currently group to MDC 22. (The complete titles
of the new DRGs are set forth below.)
In reviewing the Medicare burn cases, we found that the most
important distinguishing characteristic in terms of resource use was
the amount of body surface affected by the burn and how much of that
burn was a 3rd degree burn. The second most important factor was
whether or not the patient received a skin graft. Thus, a patient with
burns covering at least 20 percent of body area, with at least 10
percent of that a 3rd degree burn, consumed the most resources.
However, if a patient met these criteria and did not receive a skin
graft, then the case was much less expensive and the average length of
stay fell from over 30 days to 8 days. The first two proposed burn DRGs
would reflect these distinctions (DRGs 504 and 505).
After classifying the most extensive burn cases, we found that the
patients with 3rd degree burns that did not meet the criteria to be
assigned to DRGs 504 and 505 were the most expensive of the remaining
cases (that is, those patients whose burns that did not meet the at
least 20 percent body area or at least 10 percent 3rd degree criteria).
These burns are referred to clinically as "full-thickness burns." A
subset of these full-thickness burn cases, those with skin graft or an
inhalation injury, were much more expensive than the other cases. After
dividing these patients into two groups, with or without skin graft or
inhalation injury, we examined whether other factors had an influence
on resource use. We found that patients who had a CC (complication or
comorbidity) or a concomitant significant trauma consumed more
resources whether or not they had a skin graft or inhalation injury.
Thus, the next four DRGs were defined as full-thickness burns with skin
graft or inhalation injury with or without CC or significant trauma, or
full-thickness burns without skin graft or inhalation injury with or
without CC or significant trauma (DRGs 506 through 509).
Finally, the last two proposed DRGs (510 and 511) are for cases
with nonextensive burns. These cases are also split on the basis of CCs
or concomitant significant trauma.
Consistent with the recommendations of several commenters on last
year's proposed rule, the new burn DRGs would no longer include a
separate DRG for cases in which burn patients were transferred to
another acute care facility. Overall, we estimate that these proposed
changes would increase by more than 25 percent the amount of variation
in resource use explained by the DRGs in MDC 22. They would also
improve the clinical coherence of the cases within each DRG. Thus, we
believe that the proposed DRGs would provide for improved payment for
cases assigned to MDC 22.
The specific diagnosis and procedure codes that would be included
in each of the eight DRGs and their titles are as follows:
DRGs 504 and 505--Extensive 3rd Degree Burns with and without Skin
Graft
DRGs 504 and 505 would include all cases with burns involving at
least 20 percent of body surface area combined with a 3rd degree burn
covering at least 10 percent of body surface area. Thus, these cases
would have diagnosis codes of 948.xx, with a fourth digit of 2 or
higher (indicating that burn extends over 20 percent or more of body
surface) and a fifth digit of 1 or higher (indicating a 3rd degree burn
extending over 10 percent or more of body surface). Cases with the
appropriate diagnosis codes would be classified into DRG 504 if one of
the following skin graft procedure codes is present:
85.82 Split-thickness graft to breast
85.83 Full-thickness graft to breast
85.84 Pedicle graft to breast
86.60 Free skin graft, NOS
86.61 Full-thickness skin graft to hand
86.62 Other skin graft to hand
86.63 Full-thickness skin graft to other sites
86.65 Heterograft to skin
86.66 Homograft to skin
86.67 Dermal regenerative graft (new code in FY 1999--see Table 6A
in section V. of the Addendum)
86.69 Other skin graft to other sites
86.70 Pedicle of flap graft, NOS
[[Page 25580]]
86.71 Cutting and preparation of pedicle grafts or flaps
86.72 Advancement of pedicle graft
86.73 Attachment of pedicle or flap graft to hand
86.74 Attachment of pedicle or flap graft to other sites
86.75 Revision of pedicle or flap graft
86.93 Insertion of tissue expander
DRGs 506 and 507--Full Thickness Burn with Skin Graft or Inhalation
Injury with or without CC or Significant Trauma
These DRGs would include all other cases of 3rd degree burns that
also have either a skin graft or an inhalation injury. Thus, these
cases would have diagnosis codes of 941.xx through 946.xx, and 949.xx,
with a fourth digit of 3 or higher, as well as cases with codes of
948.xx that did not group into DRGs 504 or 505 (that is, 948.00,
948.01, and 948.1x through 948.9x with a fifth digit of 0). In
addition, cases classified into DRGs 506 and 507 must have either one
of the skin graft procedure codes listed above or one of the following
diagnosis codes for inhalation injuries:
518.5 Pulmonary insufficiency following trauma and surgery
518.81 Respiratory failure
518.84 Acute and chronic respiratory failure (new code in FY 1999--
see Table 6A in section V. of the Addendum)
947.1 Burn of larynx, trachea, or lung
987.9 Toxic effect of gas, fume, or vapor, NOS
Cases that meet both of these coding criteria would be assigned to
DRG 506 if there is a diagnosis code indicating either a CC (based on
the standard DRG CC list) or concomitant significant trauma (based on
the significant trauma diagnosis codes, listed by body site, used for
classification in MDC 24).
DRGs 508 and 509--Full Thickness Burn without Skin Graft or Inhalation
Injury with or without CC or Significant Trauma
These DRGs would include all other cases of 3rd degree burns. Thus,
these DRGs would include all cases without a skin graft or inhalation
injury that have diagnosis codes of 941.xx through 946.xx, and 949.xx,
with a fourth digit of 3 or higher, as well as cases with codes of
948.xx that did not group into DRGs 504 or 505. DRG 508 would also
require a secondary diagnosis from the standard CC list or the trauma
list based on the significant trauma diagnosis codes, listed by body
site, used for classification in MDC 24.
DRGs 510 and 511--Nonextensive Burns with and without CC or Significant
Trauma
The remaining burn cases would be classified into one of these two
DRGs, depending on whether or not the claim included a diagnosis code
reflecting the presence of a CC or a significant trauma, as explained
above.
4. Legionnaires' Disease
Effective with discharges occurring on or after October 1, 1997, a
new diagnosis code was created for pneumonia due to Legionnaires'
disease (code 482.84). In the August 29, 1997 final rule with comment
period, we assigned this code to DRGs 79, 80, and 81 (Respiratory
Infections and Inflammations) (62 FR 46090). However, we did not
include this code as a human immunodeficiency virus (HIV) major related
condition in MDC 25 (HIV Infections). Because pneumonia due to
Legionnaires' disease is a serious respiratory condition that has a
deleterious effect on patients with HIV, we are proposing to assign
diagnosis code 482.84 to DRG 489 (HIV with Major Related Condition) as
a major related condition. In addition, we did not assign the code as a
major problem in DRGs 387 (Prematurity with Major Problems) and 389
(Full Term Neonate with Major Problems). These DRGs are assigned to MDC
15 (Newborns and Other Neonates with Conditions Originating in the
Perinatal Period). Again, as a part of this proposed rule, we would
assign diagnosis code 482.84 as a major problem in DRGs 387 and 389
because of its effect on resource use in treating newborns.
5. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. It is, therefore, necessary to have a decision rule by which
these cases are assigned to a single DRG. The surgical hierarchy, an
ordering of surgical classes from most to least resource intensive,
performs that function. Its application ensures that cases involving
multiple surgical procedures are assigned to the DRG associated with
the most resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibration, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications, to determine if the ordering of classes coincided
with the intensity of resource utilization, as measured by the same
billing data used to compute the DRG relative weights.
A surgical class can be composed of one or more DRGs. For example,
in MDC 5, the surgical class "heart transplant" consists of a single
DRG (DRG 103) and the class "major cardiovascular procedures"
consists of two DRGs (DRGs 110 and 111). Consequently, in many cases,
the surgical hierarchy has an impact on more than one DRG. The
methodology for determining the most resource-intensive surgical class
involves weighting each DRG for frequency to determine the average
resources for each surgical class. For example, assume surgical class A
includes DRGs 1 and 2 and surgical class B includes DRGs 3, 4, and 5.
Assume also that the average charge of DRG 1 is higher than that of DRG
3, but the average charges of DRGs 4 and 5 are higher than the average
charge of DRG 2. To determine whether surgical class A should be higher
or lower than surgical class B in the surgical hierarchy, we would
weight the average charge of each DRG by frequency (that is, by the
number of cases in the DRG) to determine average resource consumption
for the surgical class. The surgical classes would then be ordered from
the class with the highest average resource utilization to that with
the lowest, with the exception of "other OR procedures" as discussed
below.
This methodology may occasionally result in a case involving
multiple procedures being assigned to the lower-weighted DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER searches for the procedure in the
most resource-intensive surgical class this result is unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average relative
weight is ordered above a surgical class with a higher average relative
weight. For example, the "other OR procedures" surgical class is
uniformly ordered last in the surgical hierarchy of each MDC in which
it occurs, regardless of the fact that the relative weight for the DRG
or DRGs in that surgical class may be higher than that for other
surgical classes in the MDC. The "other OR procedures" class is a
group of procedures that are least likely to be related to the
diagnoses in the MDC but are occasionally performed on patients with
these diagnoses. Therefore, these procedures should only be considered
if
[[Page 25581]]
no other procedure more closely related to the diagnoses in the MDC has
been performed.
A second example occurs when the difference between the average
weights for two surgical classes is very small. We have found that
small differences generally do not warrant reordering of the hierarchy
since, by virtue of the hierarchy change, the relative weights are
likely to shift such that the higher-ordered surgical class has a lower
average weight than the class ordered below it.
Based on the preliminary recalibration of the DRGs, we are
proposing to modify the surgical hierarchy as set forth below. As we
stated in the September 1, 1989 final rule (54 FR 36457), we are unable
to test the effects of the proposed revisions to the surgical hierarchy
and to reflect these changes in the proposed relative weights due to
the unavailability of revised GROUPER software at the time this
proposed rule is prepared. Rather, we simulate most major
classification changes to approximate the placement of cases under the
proposed reclassification and then determine the average charge for
each DRG. These average charges then serve as our best estimate of
relative resource use for each surgical class. We test the proposed
surgical hierarchy changes after the revised GROUPER is received and
reflect the final changes in the DRG relative weights in the final
rule. Further, as discussed below in section II.C of this preamble, we
anticipate that the final recalibrated weights will be somewhat
different from those proposed, since they will be based on more
complete data. Consequently, further revision of the hierarchy, using
the above principles, may be necessary in the final rule.
At this time, we would revise the surgical hierarchy for MDC 3
(Diseases and Disorders of the Ear, Nose, Mouth and Throat) as follows:
--- We would reorder Sinus and Mastoid Procedures (DRGs 53-54)
above Myringotomy with Tube Insertion (DRGs 61-62).
--- We would reorder Mouth Procedures (DRGs 168-169) above
Tonsil and Adenoid Procedure Except Tonsillectomy and/or Adeniodectomy
Only (DRGs 57-58).
6. Refinement of Complications and Comorbidities List
There is a standard list of diagnoses that are considered CCs. We
developed this list using physician panels to include those diagnoses
that, when present as a secondary condition, would be considered a
substantial complication or comorbidity. In previous years, we have
made changes to the standard list of CCs, either by adding new CCs or
deleting CCs already on the list. At this time, we do not propose to
delete any of the diagnosis codes on the CC list.
In the September 1, 1987 final notice concerning changes to the DRG
classification system (52 FR 33143), we modified the GROUPER logic so
that certain diagnoses included on the standard list of CCs would not
be considered a valid CC in combination with a particular principal
diagnosis. Thus, we created the CC Exclusions List. We made these
changes to preclude coding of CCs for closely related conditions, to
preclude duplicative coding or inconsistent coding from being treated
as CCs, and to ensure that cases are appropriately classified between
the complicated and uncomplicated DRGs in a pair.
In the May 19, 1987 proposed notice concerning changes to the DRG
classification system (52 FR 18877), we explained that the excluded
secondary diagnoses were established using the following five
principles:
--- Chronic and acute manifestations of the same condition
should not be considered CCs for one another (as subsequently corrected
in the September 1, 1987 final notice (52 FR 33154)).
--- Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for a condition should not be considered CCs for
one another.
--- Conditions that may not co-exist, such as partial/total,
unilateral/bilateral, obstructed/unobstructed, and benign/malignant,
should not be considered CCs for one another.
--- The same condition in anatomically proximal sites should
not be considered CCs for one another.
--- Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. The FY 1988 revisions were intended to be
only a first step toward refinement of the CC list in that the criteria
used for eliminating certain diagnoses from consideration as CCs were
intended to identify only the most obvious diagnoses that should not be
considered complications or comorbidities of another diagnosis. For
that reason, and in light of comments and questions on the CC list, we
have continued to review the remaining CCs to identify additional
exclusions and to remove diagnoses from the master list that have been
shown not to meet the definition of a CC. (See the September 30, 1988
final rule for the revision made for the discharges occurring in FY
1989 (53 FR 38485); the September 1, 1989 final rule for the FY 1990
revision (54 FR 36552); the September 4, 1990 final rule for the FY
1991 revision (55 FR 36126); the August 30, 1991 final rule for the FY
1992 revision (56 FR 43209); the September 1, 1992 final rule for the
FY 1993 revision (57 FR 39753); the September 1, 1993 final rule for
the FY 1994 revisions (58 FR 46278); the September 1, 1994 final rule
for the FY 1995 revisions (59 FR 45334); the September 1, 1995 final
rule for the FY 1996 revisions (60 FR 45782); the August 30, 1996 final
rule for the FY 1997 revisions (61 FR 46171); and the August 29, 1997
final rule for the FY 1998 revisions (62 FR 45966)).
We are proposing a limited revision of the CC Exclusions List to
take into account the changes that will be made in the ICD-9-CM
diagnosis coding system effective October 1, 1998. (See section II.B.8,
below, for a discussion of ICD-9-CM changes.) These proposed changes
are being made in accordance with the principles established when we
created the CC Exclusions List in 1987.
Tables 6F and 6G in section V. of the Addendum to this proposed
rule contain the proposed revisions to the CC Exclusions List that
would be effective for discharges occurring on or after October 1,
1998. Each table shows the principal diagnoses with proposed changes to
the excluded CCs. Each of these principal diagnoses is shown with an
asterisk and the additions or deletions to the CC Exclusions List are
provided in an indented column immediately following the affected
principal diagnosis.
CCs that are added to the list are in Table 6F--Additions to the CC
Exclusions List. Beginning with discharges on or after October 1, 1998,
the indented diagnoses will not be recognized by the GROUPER as valid
CCs for the asterisked principal diagnosis.
CCs that are deleted from the list are in Table 6G--Deletions from
the CC Exclusions List. Beginning with discharges on or after October
1, 1998 the indented diagnoses will be recognized by the GROUPER as
valid CCs for the asterisked principal diagnosis.
Copies of the original CC Exclusions List applicable to FY 1988 can
be obtained from the National Technical Information Service (NTIS) of
the Department of Commerce. It is available in hard copy for $92.00
plus $6.00 shipping and handling and on microfiche for $20.50, plus
$4.00 for shipping and handling. A request for the FY 1988 CC
Exclusions List (which
[[Page 25582]]
should include the identification accession number (PB) 88-133970)
should be made to the following address: National Technical Information
Service; United States Department of Commerce; 5285 Port Royal Road;
Springfield, Virginia 22161; or by calling (703) 487-4650.
Users should be aware of the fact that all revisions to the CC
Exclusions List (FYs 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996,
1997, and 1998) and those in Tables 6F and 6G of this document must be
incorporated into the list purchased from NTIS in order to obtain the
CC Exclusions List applicable for discharges occurring on or after
October 1, 1998.
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with HCFA, is
responsible for updating and maintaining the GROUPER program. The
current DRG Definitions Manual, Version 15.0, is available for $195.00,
which includes $15.00 for shipping and handling. Version 16.0 of this
manual, which will include the final FY 1999 DRG changes, will be
available in October 1998 for $225.00. These manuals may be obtained by
writing 3M/HIS at the following address: 100 Barnes Road; Wallingford,
Connecticut 06492; or by calling (203) 949-0303. Please specify the
revision or revisions requested.
7. Review of Procedure Codes in DRGs 468, 476, and 477
Each year, we review cases assigned to DRG 468 (Extensive OR
Procedure Unrelated to Principal Diagnosis), DRG 476 (Prostatic OR
Procedure Unrelated to Principal Diagnosis), and DRG 477 (Nonextensive
OR Procedure Unrelated to Principal Diagnosis) in order to determine
whether it would be appropriate to change the procedures assigned among
these DRGs.
DRGs 468, 476, and 477 are reserved for those cases in which none
of the OR procedures performed is related to the principal diagnosis.
These DRGs are intended to capture atypical cases, that is, those cases
not occurring with sufficient frequency to represent a distinct,
recognizable clinical group. DRG 476 is assigned to those discharges in
which one or more of the following prostatic procedures are performed
and are unrelated to the principal diagnosis:
60.0 Incision of prostate
60.12 Open biopsy of prostate
60.15 Biopsy of periprostatic tissue
60.18 Other diagnostic procedures on prostate and periprostatic
tissue
60.21 Transurethral prostatectomy
60.29 Other transurethral prostatectomy
60.61 Local excision of lesion of prostate
60.69 Prostatectomy NEC
60.81 Incision of periprostatic tissue
60.82 Excision of periprostatic tissue
60.93 Repair of prostate
60.94 Control of (postoperative) hemorrhage of prostate
60.95 Transurethral balloon dilation of the prostatic urethra
60.99 Other operations on prostate
All remaining OR procedures are assigned to DRGs 468 and 477, with
DRG 477 assigned to those discharges in which the only procedures
performed are nonextensive procedures that are unrelated to the
principal diagnosis. The original list of the ICD-9-CM procedure codes
for the procedures we consider nonextensive procedures, if performed
with an unrelated principal diagnosis, was published in Table 6C in
section IV. of the Addendum to the September 30, 1988 final rule (53 FR
38591). As part of the final rules published on September 4, 1990,
August 30, 1991, September 1, 1992, September 1, 1993, September 1,
1994, September 1, 1995, August 30, 1996, and August 29, 1997, we moved
several other procedures from DRG 468 to 477, as well as moving some
procedures from DRG 477 to 468. (See 55 FR 36135, 56 FR 43212, 57 FR
23625, 58 FR 46279, 59 FR 45336, 60 FR 45783, 61 FR 46173, and 62 FR
45981, respectively.)
a. Adding Procedure Codes to MDCs. We annually conduct a review of
procedures producing DRG 468 or 477 assignments on the basis of volume
of cases in these DRGs with each procedure. Our medical consultants
then identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical DRGs for the MDC in which the diagnosis falls.
Based on this year's review, we did not identify any necessary changes;
therefore, we are not proposing to move any procedures from DRGs 468
and 477 to one of the surgical DRGs.
b. Reassignment of Procedures Among DRGs 468, 476, and 477. We
also reviewed the list of procedures that produce assignments to DRGs
468, 476, and 477 to ascertain if any of those procedures should be
moved from one of these DRGs to another based on average charges and
length of stay. Generally, we move only those procedures for which we
have an adequate number of discharges to analyze the data. Based on our
review this year, we are not proposing to move any procedures from DRG
468 to DRGs 476 or 477, from DRG 476 to DRGs 468 or 477, or from DRG
477 to DRGS 468 or 476.
8. Changes to the ICD-9-CM Coding System
As discussed above in section II.B.1 of this preamble, the ICD-9-CM
is a coding system that is used for the reporting of diagnoses and
procedures performed on a patient. In September 1985, the ICD-9-CM
Coordination and Maintenance Committee was formed. This is a Federal
interdepartmental committee charged with the mission of maintaining and
updating the ICD-9-CM. That mission includes approving coding changes,
and developing errata, addenda, and other modifications to the ICD-9-CM
to reflect newly developed procedures and technologies and newly
identified diseases. The Committee is also responsible for promoting
the use of Federal and non-Federal educational programs and other
communication techniques with a view toward standardizing coding
applications and upgrading the quality of the classification system.
The Committee is co-chaired by the National Center for Health
Statistics (NCHS) and HCFA. The NCHS has lead responsibility for the
ICD-9-CM diagnosis codes included in the Tabular List and Alphabetic
Index for Diseases while HCFA has lead responsibility for the ICD-9-CM
procedure codes included in the Tabular List and Alphabetic Index for
Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding fields, such
as the American Health Information Management Association (AHIMA)
(formerly American Medical Record Association (AMRA)), the American
Hospital Association (AHA), and various physician specialty groups as
well as physicians, medical record administrators, health information
management professionals, and other members of the public to contribute
ideas on coding matters. After considering the opinions expressed at
the public meetings and in writing, the Committee formulates
recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes at public
meetings held on June 5 and December 4 and 5, 1997, and finalized the
coding changes after consideration of comments received at the meetings
and in writing
[[Page 25583]]
within 30 days following the December 1997 meeting. The initial meeting
for consideration of coding issues for implementation in FY 2000 will
be held on June 4, 1998. Copies of the minutes of the 1997 meetings can
be obtained from the HCFA Home Page @ http://www.hcfa.gov/pubaffr.htm,
under the "What's New" listing. Paper copies of these minutes are no
longer available and the mailing list has been discontinued. We
encourage commenters to address suggestions on coding issues involving
diagnosis codes to: Donna Pickett, Co-Chairperson; ICD-9-CM
Coordination and Maintenance Committee; NCHS; Room 1100; 6525 Belcrest
Road; Hyattsville, Maryland 20782. Comments may be sent by E-mail to:
dfp4@cdc.gov.
Questions and comments concerning the procedure codes should be
addressed to: Patricia E. Brooks, Co-Chairperson; ICD-9-CM Coordination
and Maintenance Committee; HCFA, Center for Health Plans and Providers,
Plan and Provider Purchasing Policy Group, Division of Acute Care; C5-
06-27; 7500 Security Boulevard; Baltimore, Maryland 21244-1850.
Comments may be sent by E-mail to: pbrooks@hcfa.gov.
The ICD-9-CM code changes that have been approved will become
effective October 1, 1998. The new ICD-9-CM codes are listed, along
with their proposed DRG classifications, in Tables 6A and 6B (New
Diagnosis Codes and New Procedure Codes, respectively) in section V. of
the Addendum to this proposed rule. As we stated above, the code
numbers and their titles were presented for public comment in the ICD-
9-CM Coordination and Maintenance Committee meetings. Both oral and
written comments were considered before the codes were approved.
Therefore, we are soliciting comments only on the proposed DRG
classifications.
Further, the Committee has approved the expansion of certain ICD-9-
CM codes to require an additional digit for valid code assignment.
Diagnosis codes that have been replaced by expanded codes, other codes,
or have been deleted are in Table 6C (Invalid Diagnosis Codes). These
invalid diagnosis codes will not be recognized by the GROUPER beginning
with discharges occurring on or after October 1, 1998. The
corresponding new or expanded diagnosis codes are included in Table 6A.
Procedure codes that have been replaced by expanded codes, other codes,
or have been deleted are in Table 6D (Invalid Procedure Codes).
Revisions to diagnosis code titles are in Table 6E (Revised Diagnosis
Code Titles), which also include the proposed DRG assignments for these
revised codes. For FY 1999, there are no revisions to procedure code
titles.
9. Other Issues--
a. Palliative Care. Effective October 1, 1996 (FY 1997), we
introduced a diagnosis code to allow the identification of those cases
in which palliative care was delivered to a hospital inpatient. This
code, V66.7 (Encounter for palliative care), was unusual in that there
had been no previous code assignment that included the concept of
palliative care. Since this was a new concept, instructional materials
were developed and distributed by the AHA as well as specialty groups
on the use of this new code. With new codes, it sometimes takes several
years for physician documentation to improve and for coders to become
accustomed to looking for this type of information in order to assign a
code. There is an inclusion note listed under V66.7 which indicates
that this code should be used as a secondary diagnosis only; the
patient's medical problem would always be listed first. Currently, use
of diagnosis code V66.7 does not have an impact on DRG assignment.
Consistent with prior practice, we have waited until the FY 1997 data
became available for analysis before considering any possible
modifications to the DRGs.
In analyzing the FY 1997 bills received through September 1997, we
found that 4,769 discharges included V66.7 as a secondary diagnosis.
These cases were widely distributed throughout 199 DRGs. The vast
majority of these DRGs included five or fewer discharges with use of
palliative care. Only 12 DRGs included more than 100 cases. These were
the following:
------------------------------------------------------------------------
Number of
DRG Title cases
------------------------------------------------------------------------
10............................... Nervous System Neoplasms 144
with CC.
14............................... Specific Cerebrovascular 272
Disorders Except TIA.
79............................... Respiratory Infections 139
and Inflammations Age
>17 with CC.
82............................... Respiratory Neoplasms... 526
89............................... Simple Pneumonia and 200
Pleurisy Age >17 with
CC.
127.............................. Heart Failure and Shock. 184
172.............................. Digestive Malignancy 226
with CC.
203.............................. Malignancy of 285
Hepatobiliary System or
Pancreas.
239.............................. Pathological Fractures 218
and Musculoskeletal and
Connective Tissue
Malignancy.
296.............................. Nutritional and 173
Miscellaneous Metabolic
Disorders Age >17 with
CC.
403.............................. Lymphoma and Non-Acute 178
Leukemia with CC.
416.............................. Septicemia Age >17...... 147
------------------------------------------------------------------------
Six of these DRGs are cancer-related; however, the other DRGs are
quite diverse. Upon further analysis, we found that, for the most part,
discharges with code V66.7 do not significantly differ in length of
stay from the discharges in the same DRG without code V66.7. Discharges
with code V66.7 are sometimes longer and sometimes shorter and the
comparative length of stay for a given DRG tends to vary by only one
day. In general, the average charges for a palliative care case
discharge with a secondary code of V66.7 were lower than the charges
for other discharges within the DRG. However, these differences were
relatively small and were well within the standard variation of charges
for cases in the DRG.
One approach we could take to revise the DRGs would be to divide
those DRGs with a large number of cases coded with V66.7 into two
different DRGs, with and without palliative care. However, the
relatively small proportion of cases in each DRG argues against this
approach; no DRG has more than 1 percent of its cases coded with
palliative care and, in most cases, the percentage is well under 1
percent. An alternative approach would be to group all palliative care
cases, regardless of the underlying disease or condition, into one new
DRG. However, the charges of these cases are so varied that this is not
a logical choice. In addition, there is a lack of clinical coherence in
such an approach. The underlying diagnoses of
[[Page 25584]]
these cases range from respiratory conditions to heart failure to
septicemia. Because there are so few cases in the FY 1997 data and they
are so widely dispersed among different DRGs, we are not proposing a
DRG modification at this time. We will make a more detailed analysis of
these cases over the next year based on a more complete FY 1997 data
file as well as review of the FY 1998 cases that will be available
later this year. As time goes by, hospital coders and physicians should
become more aware of this code and we hope that more complete data will
assist our decision making process.
b. PTCA. Effective with discharges occurring on or after October 1,
1997, we reassigned cases of PTCA with coronary artery stent implant
from DRG 112 to DRG 116. In the August 29, 1997 final rule with comment
period, we responded to several commenters who contended that PTCA
cases treated with platelet inhibitors were as resource intensive as
the PTCA with stent implant cases and that these cases should also be
moved to DRG 116. However, there is currently no code that describes
the infusion of platelet inhibitors. Therefore, we were unable to make
any changes in the DRGs for FY 1998.
As set forth in Table 6B, New Procedure Codes in section V. of the
addendum to this proposed rule, a new procedure code for injection or
infusion of platelet inhibitors (code 99.20) will be effective with
discharges occurring on or after October 1, 1998. Our usual policy on
new codes is to assign them to the same DRG or DRGs as their
predecessor code. Because infusion of platelet inhibitors is currently
assigned to a non-OR procedure code, we followed our usual practice and
designated code 99.20 as a non-OR code that does not affect DRG
assignment.
We will not have any data on this new code until we receive bills
for FY 1999. Thus, we would be unable to make any changes in DRG
assignment until FY 2001. We note, however, that the Conference Report
that accompanied the Balanced Budget Act of 1997 contained language
stating that "* * * in order to ensure that Medicare beneficiaries
have access to innovative new drug therapies, the Conferees believe
that HCFA should consider, to the extent feasible, reliable, validated
data other than MedPAR data in annually recalibrating and reclassifying
the DRGs." (H.R. Rep. No. 105-217.734). At this time, we have received
no data that would allow us to make an appropriate modification of DRG
112 for PTCA cases with platelet infusion therapy. When we develop the
final rule, we will review and analyze any data we receive about the
use of platelet inhibitors for Medicare beneficiaries. If we believe
that the data are adequate to allow identification of the percentage of
cases in DRG 112 that receive this therapy and the charge and length of
stay data convince us that these cases should be moved, we will
consider such a move effective for discharges occurring on or after
October 1, 1998.
C. Recalibration of DRG Weights
We are proposing to use the same basic methodology for the FY 1999
recalibration as we did for FY 1998. (See the August 29, 1997 final
rule with comment (62 FR 45982).) That is, we would recalibrate the
weights based on charge data for Medicare discharges. However, we would
use the most current charge information available, the FY 1997 MedPAR
file, rather than the FY 1996 MedPAR file. The MedPAR file is based on
fully-coded diagnostic and surgical procedure data for all Medicare
inpatient hospital bills.
The proposed recalibrated DRG relative weights are constructed from
FY 1997 MedPAR data, based on bills received by HCFA through December
1997, from all hospitals subject to the prospective payment system and
short-term acute care hospitals in waiver States. The FY 1997 MedPAR
file includes data for approximately 11.2 million Medicare discharges.
The methodology used to calculate the proposed DRG relative weights
from the FY 1997 MedPAR file is as follows:
--- To the extent possible, all the claims were regrouped
using the proposed DRG classification revisions discussed above in
section II.B of this preamble. As noted in section II.B.5, due to the
unavailability of revised GROUPER software, we simulate most major
classification changes to approximate the placement of cases under the
proposed reclassification. However, there are some changes that cannot
be modeled.
--- Charges were standardized to remove the effects of
differences in area wage levels, indirect medical education costs,
disproportionate share payments, and, for hospitals in Alaska and
Hawaii, the applicable cost-of-living adjustment.
--- The average standardized charge per DRG was calculated by
summing the standardized charges for all cases in the DRG and dividing
that amount by the number of cases classified in the DRG.
--- We then eliminated statistical outliers, using the same
criteria as was used in computing the current weights. That is, all
cases that are outside of 3.0 standard deviations from the mean of the
log distribution of both the charges per case and the charges per day
for each DRG.
--- The average charge for each DRG was then recomputed
(excluding the statistical outliers) and divided by the national
average standardized charge per case to determine the relative weight.
A transfer case is counted as a fraction of a case based on the ratio
of its length of stay to the geometric mean length of stay of the cases
assigned to the DRG. That is, a 5-day length of stay transfer case
assigned to a DRG with a geometric mean length of stay of 10 days is
counted as 0.5 of a total case.
--- We established the relative weight for heart and heart-
lung, liver, and lung transplants (DRGs 103, 480, and 495) in a manner
consistent with the methodology for all other DRGs except that the
transplant cases that were used to establish the weights were limited
to those Medicare-approved heart, heart-lung, liver, and lung
transplant centers that have cases in the FY 1995 MedPAR file.
(Medicare coverage for heart, heart-lung, liver, and lung transplants
is limited to those facilities that have received approval from HCFA as
transplant centers.)
--- Acquisition costs for kidney, heart, heart-lung, liver,
and lung transplants continue to be paid on a reasonable cost basis.
Unlike other excluded costs, the acquisition costs are concentrated in
specific DRGs (DRG 302 (Kidney Transplant); DRG 103 (Heart Transplant
for heart and heart-lung transplants); DRG 480 (Liver Transplant); and
DRG 495 (Lung Transplant)). Because these costs are paid separately
from the prospective payment rate, it is necessary to make an
adjustment to prevent the relative weights for these DRGs from
including the effect of the acquisition costs. Therefore, we subtracted
the acquisition charges from the total charges on each transplant bill
that showed acquisition charges before computing the average charge for
the DRG and before eliminating statistical outliers.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We propose to use that same case threshold
in recalibrating the DRG weights for FY 1999. Using the FY 1997 MedPAR
data set, there are 38 DRGs that contain fewer than 10 cases. We
computed the weights for the 38 low-volume DRGs by adjusting the FY
1998 weights of these DRGs by the percentage change in the average
weight of the cases in the other DRGs.
The weights developed according to the methodology described above,
using the proposed DRG classification
[[Page 25585]]
changes, result in an average case weight that is different from the
average case weight before recalibration. Therefore, the new weights
are normalized by an adjustment factor, so that the average case weight
after recalibration is equal to the average case weight before
recalibration. This adjustment is intended to ensure that recalibration
by itself neither increases nor decreases total payments under the
prospective payment system.
Section 1886(d)(4)(C)(iii) of the Act requires that beginning with
FY 1991, reclassification and recalibration changes be made in a manner
that assures that the aggregate payments are neither greater than nor
less than the aggregate payments that would have been made without the
changes. Although normalization is intended to achieve this effect,
equating the average case weight after recalibration to the average
case weight before recalibration does not necessarily achieve budget
neutrality with respect to aggregate payments to hospitals because
payment to hospitals is affected by factors other than average case
weight. Therefore, as we have done in past years and as discussed in
section II.A.4.b of the Addendum to this proposed rule, we are
proposing to make a budget neutrality adjustment to assure that the
requirement of section 1886(d)(4)(C)(iii) of the Act is met.
III. Proposed Changes to the Hospital Wage Index
A. Background
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary must adjust the standardized amounts "for area differences
in hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level." In
accordance with the broad discretion conferred under the Act, we
currently define hospital labor market areas based on the definitions
of Metropolitan Statistical Areas (MSAs), Primary MSAs (PMSAs), and New
England County Metropolitan Areas (NECMAs) issued by the Office of
Management and Budget (OMB). OMB also designates Consolidated MSAs
(CMSAs). A CMSA is a metropolitan area with a population of one million
or more, comprised of two or more PMSAs (identified by their separate
economic and social character). For purposes of the hospital wage
index, we use the PMSAs rather than CMSAs since they allow a more
precise breakdown of labor costs. If a metropolitan area is not
designated as part of a PMSA, we use the applicable MSA. Rural areas
are areas outside a designated MSA, PMSA, or NECMA.
We note that effective April 1, 1990, the term Metropolitan Area
(MA) replaced the term Metropolitan Statistical Area (MSA) (which had
been used since June 30, 1983) to describe the set of metropolitan
areas comprised of MSAs, PMSAs, and CMSAs. The terminology was changed
by OMB in the March 30, 1990 Federal Register to distinguish between
the individual metropolitan areas known as MSAs and the set of all
metropolitan areas (MSAs, PMSAs, and CMSAs) (55 FR 12154). For purposes
of the prospective payment system, we will continue to refer to these
areas as MSAs.
Section 1886(d)(3)(E) of the Act also requires that the wage index
be updated annually beginning October 1, 1993. Furthermore, this
section provides that the Secretary base the update on a survey of
wages and wage-related costs of short-term, acute care hospitals. The
survey should measure, to the extent feasible, the earnings and paid
hours of employment by occupational category, and must exclude the
wages and wage-related costs incurred in furnishing skilled nursing
services. We also adjust the wage index, as discussed below in section
III.F, to take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act.
B. FY 1999 Wage Index Update
The proposed FY 1999 wage index in section V of the Addendum
(effective for hospital discharges occurring on or after October 1,
1998 and before October 1, 1999) is based on the data collected from
the Medicare cost reports submitted by hospitals for cost reporting
periods beginning in FY 1995 (the FY 1998 wage index was based on FY
1994 wage data). The proposed FY 1999 wage index includes the following
categories of data, which were also included in the FY 1998 wage index:
--- Total salaries and hours from short-term, acute care
hospitals.
--- Home office costs and hours.
--- Direct patient care contract labor costs and hours.
The proposed wage index also continues to exclude the direct
salaries and hours for nonhospital services such as skilled nursing
facility services, home health services, or other subprovider
components that are not subject to the prospective payment system.
Finally, as discussed in detail in the August 29, 1997 final rule with
comment period, we would calculate a separate Puerto Rico-specific wage
index and apply it to the Puerto Rico standardized amount. (See 62 FR
45984 and 46041) This wage index is based solely on Puerto Rico's data.
For FY 1999 we are proposing to include two changes to the
categories: we will add contract labor costs and hours for top
management positions and replace the fringe benefit category with the
wage-related costs associated with hospital and home office salaries
category. These two changes reflect changes to the Medicare cost report
that were implemented in the FY 1995 hospital prospective payment
system September 1, 1994 final rule with comment period (59 FR 45355).
The changes were made to the cost report for cost reporting periods
beginning during FY 1995. Because we are using wage data from the FY
1995 cost report for the proposed FY 1999 wage index, these two changes
will be reflected in the wage index for the first time in FY 1999.
As discussed in detail in the September 1, 1994 final rule with
comment period (59 FR 45355), we expanded the definition of contract
services reported on the Worksheet S-3 to include the labor-related
costs associated with contract personnel in a hospital's top four
management positions: Chief Executive Officer (CEO)/Hospital
Administrator, Chief Operating Officer (COO), Chief Financial Officer
(CFO), and Nursing Administrator. We also revised the cost report to
reflect a change in terminology from "fringe benefits" to "wage-
related costs," to promote the consistent reporting of these costs.
(See September 1, 1994 final rule with comment period 59 FR 45356-
45359.) We made this change in terminology because we believe that it
will eliminate confusion regarding those wage-related costs that are
incorporated in the wage index versus the broader definition of fringe
benefits recognized under the Medicare cost reimbursement principles.
Wage-related costs, which include core and other wage-related costs,
are reported on the Form HCFA-339, the Provider Cost Report
Reimbursement Questionnaire.
Finally, we have analyzed the wage data for the following costs,
which were separately reported for the first time on the FY 1995 cost
reports:
--- Physician Part A costs.
--- Resident and Certified Registered Nurse Anesthetist (CRNA)
Part A costs.
--- Overhead cost and hours by cost center.
Our analysis and proposals concerning these data are set forth
below in section III.C.
[[Page 25586]]
C. Proposals Concerning the FY 1999 Wage Index
1. Physician Part A Costs.
Currently, if a hospital directly employs a physician, the Part A
portion of the physician's salary and wage-related costs (that is,
administrative and teaching service) is included in the calculation of
the wage index. However, the costs for contract physician Part A
services are not included. Our policy has been that, to be included in
the wage index calculation, a contracted service must be related to
direct patient care, or, beginning with the FY 1999 wage index, top
level management (see discussion above). Because some States have laws
that prohibit hospitals from directly hiring physicians, the hospitals
in those States have claimed that they are disadvantaged by the wage
index's exclusion of contract physician Part A costs. We began
collecting separate wage data for both direct and contract physician
Part A services on the FY 1995 cost report in order to analyze this
issue. As we discussed in the September 1, 1994 final rule with comment
period (59 FR 45354), our original purpose in collecting these data was
to exclude all Part A physician costs from the wage index.
When we made the change to the cost report, there were five States
in which hospitals were prohibited from directly employing physicians.
We understand that only two States currently maintain this prohibition:
Texas and California. Thus, the number of hospitals affected by our
current policy has decreased. Nevertheless, the fact that hospitals in
these two States are still prohibited from directly employing
physicians for Part A services and, therefore, must enter into
contractual agreements with physicians for these services, perpetuates
the perceived inequity.
The main reasons we planned to exclude all Part A physician costs
rather than include the contract costs was our concern that it would be
difficult to accurately attribute the Part A costs and hours of these
contract physicians and including these costs could inappropriately
inflate the hospitals' average hourly wages. That is, we anticipated
that average costs for contract physicians would be significantly
higher than the costs for those physicians directly employed by the
hospital. However, our analysis of the data shows that the average
hourly wages for contract physician Part A costs are very similar to,
and, in fact slightly lower than, the costs for salaried Part A
physician services.
Based on this result, we believe that continuing to include the
direct physician Part A costs and adding the costs for contract
physicians would be the better policy. Thus, we are proposing to
calculate the FY 1999 wage index including both direct and contract
physician Part A costs.
Of the 5,115 hospitals included in the FY 1995 wage data file,
approximately 23 percent reported contract physician Part A costs.
Including these costs would raise the wage index values for one MSA (2
hospitals) by more than 5 percent and 5 MSAs (60 hospitals) by between
2 and 5 percent. One Statewide rural area (68 hospitals) would
experience a decrease between 2 and 5 percent. The wage index values
for the remaining 365 areas (5,055 hospitals) would be relatively
unaffected, experiencing changes of between -2 and 2 percent. We
understand that an unusually large number of hospitals have requested
changes to these wage data; therefore, there may be relatively
significant differences between the wage data file used to calculate
the proposed wage index and the final corrected wage data in the file
used to calculate the final wage index. Because of this, we will
reevaluate our decision based on that final wage data, which will be
submitted by April 6, 1998. If we find significant differences in the
contract labor costs, we may reconsider our proposal.
2. Resident and CRNA Part A Costs
The wage index presently includes salaries and wage-related costs
for residents in approved medical education programs and for CRNAs
employed by hospitals under the rural pass-through provision. However,
Medicare pays for these costs outside the prospective payment system.
Removing these costs from the wage index calculation would be
consistent with our general policy to exclude costs that are not paid
through the prospective payment system, but, because they were not
separately identifiable, we could not remove them.
In the September 1, 1994 final rule with comment period (59 FR
45355), we stated that we would begin collecting the resident and CRNA
wage data separately and would evaluate the data before proposing a
change in computing the wage index. However, there were data reporting
problems associated with these costs on the FY 1995 cost report. The
original instructions for reporting resident costs on Line 6 of
Worksheet S-3, Part III, erroneously included teaching physician
salaries and other teaching program costs from Worksheet A of the cost
report. Although we issued revised instructions to correct this error,
we now understand these revisions may not have been uniformly
instituted. Another issue relating to residents' salaries stems from
apparent underreporting of these costs by hospitals and inconsistent
treatment of the associated wage-related costs.
In addition, the original Worksheet S-3 and reporting instructions
did not provide for the separate reporting of CRNA wage-related costs.
Another issue with the FY 1995 wage data is the inclusion of contract
CRNA Part A costs in the contract labor costs reported on Worksheet S-
3. We believe that much of the CRNA Part A costs are reported under
contract labor, rather than under salaried employee costs, due to the
heavy use of contract labor by rural hospitals. We do not believe that
it would be feasible at this time to try to remove these CRNA Part A
costs from the contract labor costs. We improved the reporting
instructions for CRNA costs on the FY 1996 cost report.
Our analysis of the CRNA and resident wage data submitted on the FY
1995 cost report convinces us that these data are inaccurately and
incompletely reported by hospitals. For example, although there are
over 900 teaching hospitals receiving graduate medical education
payments, only about 800 hospitals reported resident cost data. Because
we do not want to make a relatively significant change in the wage
index data calculation without complete and accurate data upon which to
base our decision, we are proposing to delay any decision regarding
excluding resident and CRNA costs from the wage index until at least
next year. We will review the FY 1996 data when it becomes available
later this year and present our analysis and any proposals in next
year's proposed rule.
3. Overhead Allocation
Prior years' wage index calculations have excluded the direct wages
and hours associated with certain subprovider components that are
excluded from the prospective payment system; however, the overhead
costs associated with excluded components have not been removed. We
have previously attempted to remove the overhead costs associated with
these excluded areas of the hospital on two separate occasions. Based
on the quality of the data, as well as comments we received from the
public, these proposals were never implemented.
In the September 1, 1995 final rule with comment period (60 FR
45797), we discussed the results of the second of these efforts. Our
analysis was prompted by several suggestions from hospital
representatives that the current methodology, which removes the higher
[[Page 25587]]
nursing costs in excluded areas from the hospital's direct salaries but
leaves in the lower general services salaries, negatively distorts
wages. However, the results of our analysis at that time dissuaded us
from proposing to exclude these areas' overhead costs because the data
were unreliable. We revised the FY 1995 cost report to allow for the
reporting of the overhead salaries and hours. We stated that we would
reexamine this issue when the FY 1995 cost report data became
available.
To allocate overhead costs based on the data reported on Worksheet
S-3, we first determined the ratio of the hours reported directly to
excluded areas compared to the total hours. Total overhead hours and
salaries were then multiplied by this ratio to allocate the proportion
of overhead costs attributable to excluded areas. Next, the overhead
hours and salaries attributable to excluded areas were subtracted from
the hospital's total hours and salaries, and an average hourly wage
reflecting this overhead allocation was computed.
Of the 5,115 hospitals in the FY 1995 wage data file, 3,661
reported overhead hours (hospitals were only required to separately
report overhead hours if their number of directly assigned excluded
hours exceeded 5 percent of their total hours). The overhead allocation
would result in an increase in the wage index value of more than 5
percent for only one MSA (2 hospitals). A total of 12 labor areas (5
Statewide rural (206 hospitals) and 7 MSAs (25 hospitals)) would
experience an increase of between 2 percent and 5 percent. Only one MSA
(29 hospitals) would experience a decline of between 2 and 5 percent.
The wage index value for the remaining 358 areas (4,921 hospitals)
would be affected by less than 2 percent.
We are proposing to include this exclusion of overhead allocation
in the calculation of the FY 1999 wage index. Although the overall
impact on hospitals of this change is relatively small, we believe it
is an appropriate step toward improving the overall consistency of the
wage index. Additionally, we believe this change will significantly
increase the accuracy of the wage data for individual hospitals,
especially hospitals that have a relatively small portion of their
facility devoted to acute inpatient care.
D. Verification of Wage Data From the Medicare Cost Report
The data for the proposed FY 1999 wage index were obtained from
Worksheet S-3, Parts III and IV of the FY 1995 Medicare cost reports.
The data file used to construct the proposed wage index includes FY
1995 data submitted to the Health Care Provider Cost Report Information
System (HCRIS) as of early January 1998. As in past years, we performed
an intensive review of the wage data, mostly through the use of edits
designed to identify aberrant data.
Of the 5,123 hospitals originally in the data file, 851 hospitals
had data elements that failed an edit. From mid-January to mid-February
1998, intermediaries contacted hospitals to revise or verify data
elements that resulted in the edit failures.
As of February 17, 1998, 31 hospitals still had unresolved data
elements. These unresolved data elements are included in the
calculation of the proposed FY 1999 wage index pending their resolution
before calculation of the final FY 1999 wage index. We have instructed
the intermediaries to complete their verification of questionable data
elements and to transmit any changes to the wage data (through HCRIS)
no later than April 6, 1998. We expect that all unresolved data
elements will be resolved by that date. The revised data will be
reflected in the final rule.
Also, as part of our editing process, we deleted data for eight
hospitals that failed edits. For two of these hospitals, we were unable
to obtain sufficient documentation to verify or revise the data because
the hospitals are no longer participating in the Medicare program or
are in bankruptcy status. The data from the remaining six participating
hospitals were removed because inclusion of their data would have
significantly distorted the wage index values. The data for these six
hospitals will be included in the final wage index if we receive
corrected data that passes our edits. As a result, the proposed FY 1999
wage index is calculated based on FY 1995 wage data for 5,115
hospitals.
E. Computation of the Wage Index
The method used to compute the proposed wage index is as follows:
Step 1--As noted above, we are proposing to base the FY 1999 wage
index on wage data reported on the FY 1995 Medicare cost reports. We
gathered data from each of the non-Federal, short-term, acute care
hospitals for which data were reported on the Worksheet S-3, Parts III
and IV of the Medicare cost report for the hospital's cost reporting
period beginning on or after October 1, 1994 and before October 1,
1995. In addition, we included data from a few hospitals that had cost
reporting periods beginning in September 1994 and reported a cost
reporting period exceeding 52 weeks. These data were included because
no other data from these hospitals would be available for the cost
reporting period described above, and particular labor market areas
might be affected due to the omission of these hospitals. However, we
generally describe these wage data as FY 1995 data.
Step 2--For each hospital, we subtracted the excluded salaries
(that is, direct salaries attributable to skilled nursing facility
services, home health services, and other subprovider components not
subject to the prospective payment system) from gross hospital salaries
to determine net hospital salaries. To determine total salaries plus
wage-related costs, we added the costs of contract labor for direct
patient care, certain top management, and physician Part A services;
hospital wage-related costs, and any home office salaries and wage-
related costs reported by the hospital, to the net hospital salaries.
The actual calculation is the sum of lines 2, 4, 6, and 33 of Worksheet
S-3, Part III. This calculation differs from the one computed on line
32 of Worksheet S-3, Part III. Therefore, a hospital's average hourly
wage calculated under Step 2 will be different from the average hourly
wage shown on line 32, column 5.
Step 3--For each hospital, we subtracted the reported excluded
hours from the gross hospital hours to determine net hospital hours. To
determine total hours, we increased the net hours by the addition of
home office hours and hours for contract labor attributable to direct
patient care, certain top management, and physician Part A salaries.
Step 4--For each hospital reporting both total overhead salaries
and total overhead hours greater than zero, we then allocated overhead
costs. First, we determined the ratio of excluded area hours (Line 24
of Worksheet S-3, Part III) to revised total hours (Line 9 of Worksheet
S-3, Part III, adding back CRNA Part A, physician Part A, and resident
hours). Second, we computed the amounts of overhead salaries and hours
to be allocated to excluded areas by multiplying the above ratio by the
total overhead salaries and hours reported on Line 16 of Worksheet S-3,
Part IV. Finally, we subtracted the computed overhead salaries and
hours associated with excluded areas from the total salaries and hours
derived in Steps 2 and 3.
Step 5--For each hospital, we adjusted the total salaries plus
wage-related costs to a common period to determine total adjusted
salaries plus wage-related costs. To make the wage inflation
adjustment, we estimated the percentage change in the employment
[[Page 25588]]
cost index (ECI) for compensation for each 30-day increment from
October 14, 1994 through April 15, 1996, for private industry hospital
workers from the Bureau of Labor Statistics Compensation and Working
Conditions. For previous wage indexes, we used the percentage change in
average hourly earnings for hospital industry workers to make the wage
inflation adjustment. For FY 1999 we are proposing to use the ECI for
compensation for private industry hospital workers because it reflects
the price increase associated with total compensation (salaries plus
fringes) rather than just the increase in salaries, which is what the
average hourly earnings category reflected. In addition, the ECI
includes managers as well as other hospital workers. We are also
proposing to change the methodology used to compute the monthly update
factors. This new methodology uses actual quarterly ECI data to
determine the monthly update factors. The methodology assures that the
update factors match the actual quarterly and annual percent changes.
The inflation factors used to inflate the hospital's data were based on
the midpoint of the cost reporting period as indicated below.
Midpoint of Cost Reporting Period
------------------------------------------------------------------------
Adjustment
After Before factor
------------------------------------------------------------------------
10/14/94...................................... 11/15/94 1.032882
11/14/94...................................... 12/15/94 1.030771
12/14/94...................................... 01/15/95 1.028721
01/14/95...................................... 02/15/95 1.026731
02/14/95...................................... 03/15/95 1.024776
03/14/95...................................... 04/15/95 1.022827
04/14/95...................................... 05/15/95 1.020886
05/14/95...................................... 06/15/95 1.018901
06/14/95...................................... 07/15/95 1.016822
07/14/95...................................... 08/15/95 1.014649
08/14/95...................................... 09/15/95 1.012446
09/14/95...................................... 10/15/95 1.010279
10/14/95...................................... 11/15/95 1.008146
11/14/95...................................... 12/15/95 1.006047
12/14/95...................................... 01/15/96 1.003981
01/14/96...................................... 02/15/96 1.001950
02/14/96...................................... 03/15/96 1.000000
03/14/96...................................... 04/15/96 0.998181
------------------------------------------------------------------------
For example, the midpoint of a cost reporting period beginning
January 1, 1995 and ending December 31, 1995 is June 30, 1995. An
inflation adjustment factor of 1.016822 would be applied to the wages
of a hospital with such a cost reporting period. In addition, for the
data for any cost reporting period that began in FY 1995 and covers a
period of less than 360 days or greater than 370 days, we annualized
the data to reflect a 1-year cost report. Annualization is accomplished
by dividing the data by the number of days in the cost report and then
multiplying the results by 365.
Step 6--Each hospital was assigned to its appropriate urban or
rural labor market area prior to any reclassifications under sections
1886(d)(8)(B) or 1886(d)(10) of the Act. Within each urban or rural
labor market area, we added the total adjusted salaries plus wage-
related costs obtained in Step 5 for all hospitals in that area to
determine the total adjusted salaries plus wage-related costs for the
labor market area.
Step 7--We divided the total adjusted salaries plus wage-related
costs obtained in Step 6 by the sum of the total hours (from Step 4)
for all hospitals in each labor market area to determine an average
hourly wage for the area.
Step 8--We added the total adjusted salaries plus wage-related
costs obtained in Step 5 for all hospitals in the Nation and then
divided the sum by the national sum of total hours from Step 4 to
arrive at a national average hourly wage. Using the data as described
above, the national average hourly wage is $20.6036.
Step 9--For each urban or rural labor market area, we calculated
the hospital wage index value by dividing the area average hourly wage
obtained in Step 7 by the national average hourly wage computed in Step
8.
Step 10--Following the process set forth above, we developed a
separate Puerto Rico-specific wage index for purposes of adjusting the
Puerto Rico standardized amounts. We added the total adjusted salaries
plus wage-related costs (as calculated in Step 5) for all hospitals in
Puerto Rico and divided the sum by the total hours for Puerto Rico (as
calculated in Step 4) to arrive at an overall average hourly wage of
$9.3339 for Puerto Rico. For each labor market area in Puerto Rico, we
calculated the hospital wage index value by dividing the area average
hourly wage (as calculated in Step 7) by the overall Puerto Rico
average hourly wage.
Step 11--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is not located in a rural area may not be less
than the area wage index applicable to hospitals located in rural areas
in that State. Furthermore, this wage index floor is to be implemented
in such a manner as to assure that aggregate prospective payment system
payments are not greater or less than those which would have been made
in the year if this section did not apply. For FY 1999, this change
affects 229 hospitals in 34 MSAs. The MSAs affected by this provision
are identified in Table 4A by a footnote.
F. Revisions to the Wage Index Based on Hospital Redesignation
Under section 1886(d)(8)(B) of the Act, hospitals in certain rural
counties adjacent to one or more MSAs are considered to be located in
one of the adjacent MSAs if certain standards are met. Under section
1886(d)(10) of the Act, the Medicare Geographic Classification Review
Board (MGCRB) considers applications by hospitals for geographic
reclassification for purposes of payment under the prospective payment
system.
The methodology for determining the wage index values for
redesignated hospitals is applied jointly to the hospitals located in
those rural counties that were deemed urban under section 1886(d)(8)(B)
of the Act and those hospitals that were reclassified as a result of
the MGCRB decisions under section 1886(d)(10) of the Act. Section
1886(d)(8)(C) of the Act provides that the application of the wage
index to redesignated hospitals is dependent on the hypothetical impact
that the wage data from these hospitals would have on the wage index
value for the area to which they have been redesignated. Therefore, as
provided in section 1886(d)(8)(C) of the Act, the wage index values
were determined by considering the following:
--- If including the wage data for the redesignated hospitals
would reduce the wage index value for the area to which the hospitals
are redesignated by 1 percentage point or less, the area wage index
value determined exclusive of the wage data for the redesignated
hospitals applies to the redesignated hospitals.
--- If including the wage data for the redesignated hospitals
reduces the wage index value for the area to which the hospitals are
redesignated by more than 1 percentage point, the hospitals that are
redesignated are subject to that combined wage index value.
--- If including the wage data for the redesignated hospitals
increases the wage index value for the area to which the hospitals are
redesignated, both the area and the redesignated hospitals receive the
combined wage index value.
--- The wage index value for a redesignated urban or rural
hospital cannot be reduced below the wage index value for the rural
areas of the State in which the hospital is located.
--- Rural areas whose wage index values would be reduced by
excluding the wage data for hospitals that have been redesignated to
another area continue to have their wage index values calculated as if
no redesignation had occurred.
--- Rural areas whose wage index values increase as a result
of excluding
[[Page 25589]]
the wage data for the hospitals that have been redesignated to another
area have their wage index values calculated exclusive of the wage data
of the redesignated hospitals.
--- The wage index value for an urban area is calculated
exclusive of the wage data for hospitals that have been reclassified to
another area. However, geographic reclassification may not reduce the
wage index value for an urban area below the statewide rural wage index
value.
We note that, except for those rural areas where redesignation
would reduce the rural wage index value, the wage index value for each
area is computed exclusive of the wage data for hospitals that have
been redesignated from the area for purposes of their wage index. As a
result, several urban areas listed in Table 4a have no hospitals
remaining in the area. This is because all the hospitals originally in
these urban areas have been reclassified to another area by the MGCRB.
These areas with no remaining hospitals receive the prereclassified
wage index value. The prereclassified wage index value will apply as
long as the area remains empty.
The proposed revised wage index values for FY 1999 are shown in
Tables 4A, 4B, 4C, and 4F in the Addendum to this proposed rule.
Hospitals that are redesignated should use the wage index values shown
in Table 4C. Areas in Table 4C may have more than one wage index value
because the wage index value for a redesignated urban or rural hospital
cannot be reduced below the wage index value for the rural areas of the
State in which the hospital is located. When the wage index value of
the area to which a hospital is redesignated is lower than the wage
index value for the rural areas of the State in which the hospital is
located, the redesignated hospital receives the higher wage index
value, that is, the wage index value for the rural areas of the State
in which it is located, rather than the wage index value otherwise
applicable to the redesignated hospitals.
Tables 4D and 4E list the average hourly wage for each labor market
area, prior to the redesignation of hospitals, based on the FY 1995
wage data. In addition, Table 3C in the Addendum to this proposed rule
includes the adjusted average hourly wage for each hospital based on
the FY 1995 data (as calculated from Steps 4 and 5, above). The MGCRB
will use the average hourly wage published in the final rule to
evaluate a hospital's application for reclassification, unless that
average hourly wage is later revised in accordance with the wage data
correction policy described in Sec. 412.63(w)(2). In such cases, the
MGCRB will use the most recent revised data used for purposes of the
hospital wage index. Hospitals that choose to apply before publication
of the final rule may use the proposed wage data in applying to the
MGCRB for wage index reclassifications that would be effective for FY
2000. We note that in adjudicating these wage index reclassification
requests during FY 1999, the MGCRB will use the average hourly wages
for each hospital and labor market area that are reflected in the final
FY 1999 wage index.
At the time this proposed wage index was constructed, the MGCRB had
completed its review. The proposed FY 1999 wage index values
incorporate all 435 hospitals redesignated for purposes of the wage
index (hospitals redesignated under section 1886(d)(8)(B) or
1886(d)(10) of the Act) for FY 1999. The final number of
reclassifications may be different because some MGCRB decisions are
still under review by the Administrator and because some hospitals may
withdraw their requests for reclassification.
Any changes to the wage index that result from withdrawals of
requests for reclassification, wage index corrections, appeals, and the
Administrator's review process will be incorporated into the wage index
values published in the final rule. The changes may affect not only the
wage index value for specific geographic areas, but also whether
redesignated hospitals receive the wage index value for the area to
which they are redesignated, or a wage index value that includes the
data for both the hospitals already in the area and the redesignated
hospitals. Further, the wage index value for the area from which the
hospitals are redesignated may be affected.
Under Sec. 412.273, hospitals that have been reclassified by the
MGCRB are permitted to withdraw their applications within 45 days of
the publication of this Federal Register document. The request for
withdrawal of an application for reclassification that would be
effective in FY 1999 must be received by the MGCRB by June 22, 1998. A
hospital that requests to withdraw its application may not later
request that the MGCRB decision be reinstated.
G. Requests for Wage Data Corrections
As a part of the August 29, 1997 final rule with comment period, we
implemented a new timetable for requesting wage data corrections (62 FR
45990). In February 1998, we notified hospitals again of these changes
through a memorandum to the fiscal intermediaries. To allow hospitals
time to evaluate the wage data used to construct the proposed FY 1999
hospital wage index, we made available to the public a data file
containing the FY 1995 hospital wage data. In a memorandum dated
February 2, 1998, we instructed all Medicare intermediaries to inform
the prospective payment hospitals that they serve of the availability
of the wage data file and the process and timeframe for requesting
revisions. The wage data file was made available February 6, 1998,
through the Internet at HCFA's home page (http://www.hcfa.gov). The
intermediaries were also instructed to advise hospitals of the
alternative availability of these data through their representative
hospital organizations or directly from HCFA. Additional details on
ordering this data file are discussed in section IX.A of this preamble,
"Requests for Data from the Public."
In addition, Table 3C in the Addendum to this proposed rule
contains each hospital's adjusted average hourly wage used to construct
the proposed wage index values. A hospital can verify its adjusted
average hourly wage, as calculated from Steps 4 and 5 of the
computation of the wage index (see section III.E of this preamble,
above) based on the wage data on the hospital's cost report (after
taking into account any adjustments made by the intermediary), by
dividing the adjusted average hourly wage in Table 3C by the applicable
wage adjustment factors as set forth above in Step 5 of the computation
of the wage index. As noted above, however, a hospital's average hourly
wages using this calculation will vary from the average hourly wages
shown on Line 32 of Worksheet S-3, Part III. An updated Table 3C (along
with applicable wage adjustment factors) will be included in the final
rule.
We believe hospitals have had ample time to ensure the accuracy of
their FY 1995 wage data. Moreover, the ultimate responsibility for
accurately completing the cost report rests with the hospital, which
must attest to the accuracy of the data at the time the cost report is
filed. However, if after review of the wage data file released February
6, a hospital believed that its FY 1995 wage data were incorrectly
reported, the hospital was to submit corrections along with complete,
detailed supporting documentation to its intermediary by March 9, 1998.
To be reflected in the final wage index, any wage data corrections must
be reviewed and verified by the intermediary and transmitted to HCFA on
or before April 6, 1998. These deadlines are necessary
[[Page 25590]]
to allow sufficient time to review and process the data so that the
final wage index calculation can be completed for development of the
final prospective payment rates to be published by August 1, 1998. We
cannot guarantee that corrections transmitted to HCFA after April 6
will be reflected in the final wage index.
After reviewing requested changes submitted by hospitals,
intermediaries transmitted any revised cost reports to HCRIS and
forwarded a copy of the revised Worksheet S-3, Parts III and IV to the
hospitals. If requested changes were not accepted, fiscal
intermediaries notified hospitals of the reasons why the changes were
not accepted. This procedure ensures that hospitals have every
opportunity to verify the data that will be used to construct their
wage index values. We believe that fiscal intermediaries are generally
in the best position to make evaluations regarding the appropriateness
of a particular cost and whether it should be included in the wage
index data. However, if a hospital disagrees with the intermediary's
resolution of a requested change, the hospital may contact HCFA in an
effort to resolve policy disputes. We note that the April 6 deadline
also applies to these requested changes. We will not consider factual
determinations at this time as these should have been resolved earlier
in the process.
We have created the process described above to resolve all
substantive wage data correction disputes before we finalize the wage
data for the FY 1999 payment rates. Accordingly, hospitals that do not
meet the procedural deadlines set forth above will not be afforded a
later opportunity to submit wage corrections or to dispute the
intermediary's decision with respect to requested changes.
We note that, beginning this year with the FY 1999 wage index, the
final wage index that is published August 1 will incorporate all
corrections, including those to correct data entry or tabulation errors
of the final wage data by the intermediary or HCFA. The final wage data
public use file will be released by May 7, 1998. Hospitals will have
until June 5, 1998, to submit requests to correct errors in the final
wage data due to data entry or tabulation errors by the intermediary or
HCFA. The correction requests that will be considered after the March 9
deadline will be limited to errors in the entry or tabulation of the
final wage data which the hospital could not have known about prior to
March 9, 1998.
The final wage data file released in early May will contain the
wage data that will be used to construct the wage index values in the
final rule. As with the file made available in February, HCFA will make
the final wage data file released in May available to hospital
associations and the public (on the Internet). This file, however, is
being made available only for the limited purpose of identifying any
potential errors made by HCFA or the intermediary in the entry of the
final wage data that result from the correction process described above
(with the March 9 deadline), not for the initiation of new wage data
correction requests. Hospitals are encouraged to review their hospital
wage data promptly after the release of the final file.
If, after reviewing the final file, a hospital believes that its
wage data are incorrect due to a fiscal intermediary or HCFA error in
the entry or tabulation of the final wage data, it should send a letter
to both its fiscal intermediary and HCFA. The letters should outline
why the hospital believes an error exists and provide all supporting
information, including dates. These requests must be received by HCFA
and the intermediaries no later than June 5, 1998. Requests mailed to
HCFA should be sent to: Health Care Financing Administration; Center
for Health Plans and Providers; Attention: Stephen Phillips, Technical
Advisor; Division of Acute Care; C5-06-27; 7500 Security Boulevard;
Baltimore, MD 21244-1850. Each request also must be sent to the
hospital's fiscal intermediary. The intermediary will review requests
upon receipt and contact HCFA immediately to discuss its findings.
At this time, changes to the hospital wage data will be made only
in those very limited situations involving an error by the intermediary
or HCFA that the hospital could not have known about before its review
of the final wage data file. Specifically, neither the intermediary nor
HCFA will accept the following types of requests at this stage of the
process:
--- Requests for wage data corrections that were submitted too
late to be included in the data transmitted to HCRIS on or before April
6, 1998.
--- Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the February 1998
wage data file.
--- Requests to revisit factual determinations or policy
interpretations made by the intermediary or HCFA during the wage data
correction process.
Verified corrections to the wage index received timely (that is, by
June 5, 1998) will be incorporated into the final wage index to be
published by August 1, 1998, and effective October 1, 1998.
Again, we believe the wage data correction process described above
provides hospitals with sufficient opportunity to bring errors in their
wage data to the intermediary's attention. Moreover, because hospitals
will have access to the final wage data by early May, they will have
the opportunity to detect any data entry or tabulation errors made by
the intermediary or HCFA before the development and publication of the
FY 1999 wage index by August 1, 1998, and the implementation of the FY
1999 wage index on October 1, 1998. If hospitals avail themselves of
this opportunity, the wage index implemented on October 1 should be
free of such errors. Nevertheless, in the unlikely event that errors
should occur after that date, we retain the right to make midyear
changes to the wage index under very limited circumstances.
Specifically, in accordance with Sec. 412.63(w)(2), we may make
midyear corrections to the wage index only in those limited
circumstances where a hospital can show: (1) That the intermediary or
HCFA made an error in tabulating its data; and (2) that the hospital
could not have known about the error, or did not have an opportunity to
correct the error, before the beginning of FY 1999 (that is, by the
June 5, 1998 deadline). As indicated earlier, since a hospital will
have the opportunity to verify its data, and the intermediary will
notify the hospital of any changes, we do not foresee any specific
circumstances under which midyear corrections would be made. However,
should a midyear correction be necessary, the wage index change for the
affected area will be effective prospectively from the date the
correction is made.
IV.-V. Other Decisions and Changes to the Prospective Payment
System for Inpatient Operating Costs
A. Definition of Transfers (Sec. 412.4)
Pursuant to section 1886(d)(5)(I) of the Act, the prospective
payment system distinguishes between "discharges," situations in
which a patient leaves an acute care (prospective payment) hospital
after receiving complete acute care treatment, and "transfers,"
situations in which the patient is transferred to another acute care
hospital for related care. If a full DRG payment were made to each
hospital involved in a transfer situation, irrespective of the length
of time the patient spent in the "sending" hospital prior to
transfer, a strong incentive to increase transfers would be created,
thereby unnecessarily endangering
[[Page 25591]]
patients' health. Therefore, our policy, which is set forth in the
regulations at Sec. 412.4, provides that, in a transfer situation, full
payment is made to the final discharging hospital and each transferring
hospital is paid a per diem rate for each day of the stay, not to
exceed the full DRG payment that would have been made if the patient
had been discharged without being transferred.
Currently, the per diem rate paid to a transferring hospital is
determined by dividing the full DRG payment that would have been paid
in a nontransfer situation by the geometric mean length of stay for the
DRG into which the case falls. Hospitals receive twice the per diem for
the first day of the stay and the per diem for every following day up
to the full DRG amount. Transferring hospitals are also eligible for
outlier payments for cases that meet the cost outlier criteria
established for all other cases (nontransfer and transfer cases alike)
classified to the DRG. Two exceptions to the transfer payment policy
are transfer cases classified into DRG 385 (Neonates, Died or
Transferred to Another Acute Care Facility) and DRG 456 (Burns,
Transferred to Another Acute Care Facility), which receive the full DRG
payment instead of being paid on a per diem basis.
Under section 1886(d)(5)(J) of the Act, which was added by section
4407 of the Balanced Budget Act of 1997, a "qualified discharge" from
one of 10 DRGs selected by the Secretary to a postacute care provider
will be treated as a transfer case beginning with discharges on or
after October 1, 1998. Section 1886(d)(5)(J)(iii) confers broad
authority on the Secretary to select 10 DRGs "based upon a high volume
of discharges classified within such group and a disproportionate use
of" certain post discharge services. Section 1886(d)(5)(J)(ii) defines
a "qualified discharge" as a discharge from a prospective payment
hospital of an individual whose hospital stay is classified in one of
the 10 selected DRGs if, upon such discharge, the individual--
--- Is admitted to a hospital or hospital unit that is not a
prospective payment system hospital;
--- Is admitted to a skilled nursing facility; or
--- Is provided home health services by a home health agency
if the services relate to the condition or diagnosis for which the
individual received inpatient hospital services and if these services
are provided within an appropriate period as determined by the
Secretary.
The Conference Agreement that accompanied the law noted that
"(t)he Conferees are concerned that Medicare may in some cases be
overpaying hospitals for patients who are transferred to a post acute
care setting after a very short acute care hospital stay. The Conferees
believe that Medicare's payment system should continue to provide
hospitals with strong incentives to treat patients in the most
effective and efficient manner, while at the same time, adjust PPS
[prospective payment system] payments in a manner that accounts for
reduced hospital lengths of stay because of a discharge to another
setting." (H.R. Rep. No. 105-217, 740.) In its March 1, 1997 report,
ProPAC expressed similar concerns: "* * * length of stay declines have
been greater in DRGs associated with substantial postacute care use,
suggesting a shift in care from hospital inpatient to postacute
settings" (pp. 21-22).
In fact, based on the latest available data, overall Medicare
hospital costs per case have decreased during FYs 1994 and 1995. This
unprecedented real decline in costs per case has led to historically
high Medicare operating margins (over 10 percent on average). Along
with these declining lengths of stay and costs per case, there has been
an increase in the utilization of postacute care. In 1990, the rate of
skilled nursing facility services per 1,000 Medicare enrollees was 19.
By 1995, it had grown to 33. Corresponding numbers for home health
agency services are 58 per 1,000 Medicare enrollees during 1990 and 93
per 1,000 enrollees during 1995. Although home health services are not
always directly related to a hospitalization episode, there does appear
to be a trend toward increased use of home health for the provision of
postacute care rehabilitation services. Previous analysis of the
percentage of hospital discharges that receive postacute home health
care showed a 10.3 percent increase in 1994 compared to 1992.
Our proposals to implement section 1886(d)(5)(J) of the Act are set
forth below.
1. Selection of 10 DRGs
Section 1886(d)(5)(J)(iii)(I) of the Act provides that the
Secretary select 10 DRGs based on a high volume of discharges to
postacute care and a disproportionate use of postacute care services.
Therefore, in order to select the DRGs to be paid as transfers, we
first identified those DRGs with the highest percentage of postacute
care.
We used the FY 1996 MedPAR file because the complete FY 1997 MedPAR
file was not available at the time we conducted our analysis. To
identify postacute care utilization, we merged hospital inpatient bill
files with postacute care bill files matching beneficiary
identification numbers and discharge and admission dates. We created
this file rather than depend on information concerning discharge
destination on the inpatient bill because we have found that the
discharge destination codes included on the hospital bills are often
inaccurate in identifying discharges to a facility other than another
prospective payment hospital.
Section 1886(d)(5)(J)(ii)(III) of the Act requires the Secretary to
choose an appropriate window of days in which the home health services
start in order for the discharge to meet the definition of a transfer.
In order to include postdischarge home health utilization in our
analysis, we identified all hospital discharges for patients who
received any home health care within 7 days after the date of
discharge. (As described below in section IV.A.2., we ultimately
decided to propose 3 days as the window for home health services.)
Starting with the DRG with the highest percentage of postacute care
discharges and continuing in descending order, we selected the first 20
DRGs that had a relatively large number of discharges to postacute care
(our lower limit was 14,000 cases). In order to select 10 DRGs from the
20 DRGs on our list, for each of the DRGs we considered the volume and
percent age of discharges to postacute care that occurred before the
mean length of stay and whether the discharges occurring early in the
stay were more likely to receive postacute care. The following table
lists the 10 DRGs we are proposing to include under our expanded
transfer definition, their percentage of postacute utilization compared
to total cases, and the total number of cases identified as going to
postacute care.
[[Page 25592]]
------------------------------------------------------------------------
Percent of Number of
DRG Title and type of DRG postacute postacute
(surgical or medical) utilization cases
------------------------------------------------------------------------
14................. Specific Cerebrovascular 49.5 186,845
Disorders Except
Transient Ischemic
Attack (Medical).
113................ Amputation for 59.0 28,402
Circulatory System
Disorders Excluding
Upper Limb and Toe
(Surgical).
209................ Major Joint Limb 71.9 257,875
Reattachment Procedures
of Lower Extremity
(Surgical).
210................ Hip and Femur Procedures 77.8 111,799
Except Major Joint Age
>17 With CC (Surgical).
211................ Hip and Femur Procedures 74.2 19,548
Except Major Joint Age
>17 Without CC
(Surgical).
236................ Fractures of Hip and 61.2 24,498
Pelvis (Medical).
263................ Skin Graft and/or 49.4 14,499
Debridement for Skin
Ulcer or Cellulitis With
CC (Surgical).
264................ Skin Graft and/or 39.3 1,328
Debridement for Skin
Ulcer or Cellulitis W/O
CC (Surgical).
429................ Organic Disturbances and 45.4 19,314
Mental Retardation
(Medical).
483................ Tracheostomy Except for 45.3 18,254
Face, Mouth and Neck
Diagnoses (Surgical).
------------------------------------------------------------------------
We included DRG 263 on the list because of its ranking in the top
20 DRGs in terms of postacute utilization and volume of discharges to
postacute care. DRGs 263 and 264 are paired DRGS; that is, the only
difference in the cases assigned to DRG 263 as opposed to DRG 264 is
that the patient has a complicating or comorbid condition. If we
included only DRG 263 in the list, it would be possible for a transfer
case with a relatively short length of stay that should be assigned to
DRG 263 and receive a relatively small transfer payment to be assigned
instead to DRG 264, and receive the full DRG payment, simply by failing
to include the CC diagnosis code on the bill. Therefore, our choice was
to either delete DRG 263 from the list or add DRG 264. We decided to
include DRG 264 in the proposed list because DRG 263 fully meets all
the conditions for inclusion on the list of 10 DRGS.
2. Postacute Care Settings
Section 1886(d)(5)(J)(ii) of the Act requires the Secretary to
define and pay as transfers cases from one of 10 DRGs selected by the
Secretary if the individual is discharged to one of the following
settings:
--- A hospital or hospital unit that is not a subsection
[1886](d) hospital, that is a hospital or unit excluded from the
inpatient prospective payment system.
--- A skilled nursing facility that is, a facility that meets
the definition of a skilled nursing facility set forth at section 1819
of the Act.
--- Home health services provided by a home health agency, if
the services are related to the condition or diagnosis for which the
individual received inpatient hospital services, and if the home health
services are provided within an appropriate period (as determined by
the Secretary).
Section 1886(d)(1)(B) of the Act defines the hospitals and hospital
units that are excluded from the prospective payment system as the
following: psychiatric, rehabilitation, childrens', long-term care, and
cancer hospitals and psychiatric and rehabilitation distinct part units
of a hospital. Therefore, any discharge from a prospective payment
hospital from one of the 10 proposed DRGS that is admitted to one of
these types of facilities on the date of discharge from the acute
hospital, on or after October 1, 1998, would be considered a transfer
and paid accordingly under the prospective payment systems (operating
and capital) for inpatient hospital services.
A discharge from a prospective payment hospital to a skilled
nursing facility would include cases discharged from one of the 10 DRGS
from an inpatient bed in the hospital to a bed in the same hospital
that has been designated for the provision of skilled nursing care (a
"swing" bed). The swing bed provision allows certain small rural
hospitals to furnish services in inpatient beds which, if furnished by
a skilled nursing facility, would constitute extended care services. In
addition, any patient who receives swing-bed services is deemed to have
received extended care services as if furnished by a skilled nursing
facility. Thus, if swing beds are not included in the transfer policy,
those hospitals with swing bed agreements could move patients assigned
to one of the 10 selected DRGs as if it were a discharge from an
inpatient bed to a swing bed and receive payment. We do not believe
that this would be a fair policy in that it would create a payment
advantage for swing bed hospitals. Therefore, we are providing in the
regulations that a discharge to a swing bed will be paid as a transfer
when the patient is classified to one of the 10 selected DRGs.
Section 1886(d)(5)(J)(ii)(III) of the Act states that the discharge
of an individual who receives home health services upon discharge will
be treated as a transfer if "such services are provided within an
appropriate period (as determined by the Secretary) * * *." As
discussed above in section IV.A.1, we began our analysis using 7 days
(one week) as the time period we would consider. We now believe that 3
days after the date of discharge is a more appropriate timeframe. Based
on our analysis of the FY 1996 bills, approximately 90 percent of
patients began receiving home health care within 3 days. We are
particularly interested in receiving comments on the appropriate period
of time in which home health services should begin in the context of
the transfer policy.
With regard to an appropriate definition of "home health services
* * * relate[d] to the condition or diagnosis for which the individual
received inpatient hospital services * * *", we considered several
possible approaches. Under one approach we could compare the principal
diagnosis of the inpatient stay to the diagnosis code indicated on the
home health bill, similar to our policy on the 3-day payment window for
preadmission services. However, we believe that is far too restrictive
in terms of qualifying discharges for transfer payment. In addition, a
hospital will not know when it discharges a patient to home health what
diagnosis code the home health agency will put on the bill. Therefore,
the hospital would not be able to correctly code the inpatient bill as
a transfer or discharge.
We also considered proposing that any home health care that begins
within the designated timeframe be included "as related" in our
definition. However, this definition might be too broad and the
hospital would not be able to predict which cases should be coded as
transfers because the hospital often may not know about home health
services that are provided upon discharge but were not ordered or
planned for as part of the hospital discharge plan.
We are proposing that home health services would be considered
related to the hospital discharge if the patient is discharged from the
hospital with a written plan of care for the provision of home health
care services from a home health agency. In this way, the hospital
would be fully aware of the status of the patient when discharged and
could be held responsible for correctly coding the
[[Page 25593]]
discharge as a transfer on the inpatient bill. In general, this would
mean that the home health service would qualify as a Part A home health
benefit under section 1861(tt) of the Act as added by section 4611(b)
of the BBA.
We note, however, that we plan to compare inpatient bills with home
health service bills for care provided within 3 days after discharge,
similar to our current claims edit for hospital to hospital transfers.
If we find that home health services were provided within the
postdischarge window, the hospital will be notified and the hospital
payment adjusted unless the hospital can submit documentation verifying
the discharge status of the patient. This will alert hospitals if there
are problems with their discharge/transfer billing and allow them to
adjust their discharge planning process and billing practices. If we
find a continued pattern of a hospital billing for cases from the 10
DRGs as discharges and our records indicate that the patients are
receiving postacute care services from an excluded hospital, a skilled
nursing facility, or within the 3-day home health service window, the
hospitals may be investigated for fraudulent or abusive billing
practices.
3. Payment Methodology
The statute does not dictate the payment methodology we must use
for these transfer cases. However, section 1886(d)(5)(J)(i) of the Act
provides that the payment amount for a case may not exceed the sum of
half the full DRG payment amount and half of the payment amount under
the current per diem payment methodology.
Based on our analysis comparing the costs per case for the
transfers in the 10 DRGs with payments under our current transfer
payment methodology, we found that most of the 10 DRGs are
appropriately paid using our current methodology (that is, twice the
per diem for the first day and the per diem for each subsequent day).
In fact, this payment would, on average, slightly exceed costs.
However, this is not true of DRGs 209, 210, and 211. For those three
DRGs, a disproportionate percentage (about 50 percent) of the costs of
the case are incurred on the first day of the stay. Therefore, we are
proposing to pay DRGs 209, 210, and 211 based on 50 percent of the DRG
payment for the first day of the stay and 50 percent of the per diem
for the remaining days of the stay. The other seven DRGs would be paid
under the current transfer payment methodology.
In Appendix E to this proposed rule, we have included tables that
illustrate, for 9 of the 10 DRGs, the number of total and postacute
discharges by length of stay, the geometric mean lengths of stay from
FY 1983 through FY 1997, and the estimated average costs and transfer
payments by length of stay. (The summary information for DRG 264 was
not available at the time of publication because it was not included in
the original data file of 20 DRGs used for our analysis.) For DRGs 209,
210, and 211, the payment line is determined on the basis of the
alternative payment formula described above.
These tables demonstrate that a very large number of discharges
from these 10 DRGs receive postacute care. In addition, the length of
stay for these DRGs has decreased sharply over the last several years.
We believe that this proposed policy will both decrease the hospitals'
financial incentive to discharge patients very early in the stay, often
before the full course of acute care treatment has ended, as well as
pay the hospital at an appropriate level when it does move patients
into postacute care.
We would revise Sec. 412.4 to reflect these proposed policies. In
addition, we would delete the reference in current Sec. 412.4(d)(2) to
DRG 456 (Burns, Transferred to Another Acute Care Facility) because we
are proposing to replace that DRG, as discussed in section II.B.3 of
this preamble. There would no longer be any burn DRG with a transfer
designation.
B. Rural Referral Centers (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act,
Sec. 412.96 sets forth the criteria a hospital must meet in order to
receive special treatment under the prospective payment system as a
rural referral center. For discharges occurring before October 1, 1994,
rural referral centers received the benefit of payment based on the
other urban rather than the rural standardized amount. As of that date,
the other urban and rural standardized amounts were the same. However,
rural referral centers continue to receive special treatment under both
the disproportionate share hospital payment adjustment and the criteria
for geographic reclassification.
One of the criteria under which a rural hospital may qualify as a
rural referral center is to have 275 or more beds available for use. A
rural hospital that does not meet the bed size criterion can qualify as
a rural referral center if the hospital meets two mandatory criteria
(specifying a minimum case-mix index and a minimum number of
discharges) and at least one of the three optional criteria (relating
to specialty composition of medical staff, source of inpatients, or
volume of referrals). With respect to the two mandatory criteria, a
hospital may be classified as a rural referral center if its--
--- Case-mix index is at least equal to the lower of the
median case-mix index for urban hospitals in its census region,
excluding hospitals with approved teaching programs, or the median
case-mix index for all urban hospitals nationally; and
--- Number of discharges is at least 5,000 discharges per year
or, if fewer, the median number of discharges for urban hospitals in
the census region in which the hospital is located. (The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year.)
1. Case-Mix Index
Section 412.96(c)(1) provides that HCFA will establish updated
national and regional case-mix index values in each year's annual
notice of prospective payment rates for purposes of determining rural
referral center status. The methodology we use to determine the
proposed national and regional case-mix index values, is set forth in
regulations at Sec. 412.96(c)(1)(ii). The proposed national case-mix
index value includes all urban hospitals nationwide, and the proposed
regional values are the median values of urban hospitals within each
census region, excluding those with approved teaching programs (that
is, those hospitals receiving indirect medical education payments as
provided in Sec. 412.105).
These values are based on discharges occurring during FY 1997
(October 1, 1996 through September 30, 1997) and include bills posted
to HCFA's records through December 1997. Therefore, in addition to
meeting other criteria, for hospitals with fewer than 275 beds, we are
proposing that to qualify for initial rural referral center status for
cost reporting periods beginning on or after October 1, 1998, a
hospital's case-mix index value for FY 1997 would have to be at least--
--- 1.3578; or
--- Equal to the median case-mix index value for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 412.105) calculated by HCFA for the census region in
which the hospital is located.
The median case-mix values by region are set forth in the table
below:
------------------------------------------------------------------------
Case-mix
Region index
value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)..................... 1.2533
2. Middle Atlantic (PA, NJ, NY)............................. 1.2499
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)...... 1.3468
[[Page 25594]]
4. East North Central (IL, IN, MI, OH, WI).................. 1.2717
5. East South Central (AL, KY, MS, TN)...................... 1.2965
6. West North Central (IA, KS, MN, MO, NE, ND, SD).......... 1.2264
7. West South Central (AR, LA, OK, TX)...................... 1.3351
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)................ 1.3752
9. Pacific (AK, CA, HI, OR, WA)............................. 1.3405
------------------------------------------------------------------------
The above numbers will be revised in the final rule to the extent
required to reflect the updated MedPAR file, which will contain data
from additional bills received for discharges through March 31, 1997.
For the benefit of hospitals seeking to qualify as referral centers
or those wishing to know how their case-mix index value compares to the
criteria, we are publishing each hospital's FY 1997 case-mix index
value in Table 3C in section IV. of the Addendum to this proposed rule.
In keeping with our policy on discharges, these case-mix index values
are computed based on all Medicare patient discharges subject to DRG-
based payment.
2. Discharges
Section 412.96(c)(2)(i) provides that HCFA will set forth the
national and regional numbers of discharges in each year's annual
notice of prospective payment rates for purposes of determining
referral center status. As specified in section 1886(d)(5)(C)(ii) of
the Act, the national standard is set at 5,000 discharges. However, we
are proposing to update the regional standards. The proposed regional
standards are based on discharges for urban hospitals' cost reporting
periods that began during FY 1996 (that is, October 1, 1995 through
September 30, 1996). That is the latest year for which we have complete
discharge data available.
Therefore, in addition to meeting other criteria, we are proposing
that to qualify for initial rural referral center status for cost
reporting periods beginning on or after October 1, 1998, the number of
discharges a hospital must have for its cost reporting period that
began during FY 1997 would have to be at least--
--- 5,000; or
--- Equal to the median number of discharges for urban
hospitals in the census region in which the hospital is located, as
indicated in the table below.
------------------------------------------------------------------------
Number of
Region discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)..................... 6658
2. Middle Atlantic (PA, NJ, NY)............................. 8477
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)...... 7505
4. East North Central (IL, IN, MI, OH, WI).................. 7273
5. East South Central (AL, KY, MS, TN)...................... 6852
6. West North Central (IA, KS, MN, MO, NE, ND, SD).......... 5346
7. West South Central (AR, LA, OK, TX)...................... 5179
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)................ 7926
9. Pacific (AK, CA, HI, OR, WA)............................. 5945
------------------------------------------------------------------------
We note that the number of discharges for hospitals in each census
region is greater than the national standard of 5,000 discharges.
Therefore, 5,000 discharges is the minimum criteria for all hospitals.
These numbers will be revised in the final rule based on the latest FY
1996 cost report data.
We reiterate that, to qualify for rural referral center status for
cost reporting periods beginning on or after October 1, 1998, an
osteopathic hospital's number of discharges for its cost reporting
period that began during FY 1996 would have to be at least 3,000.
C. Payments to Disproportionate Share Hospitals: Conforming Change
Regarding Interpretation of Medicaid Patient Days Included in
Disproportionate Patient Percentage (Sec. 412.106)
Effective for discharges beginning on or after May 1, 1986,
hospitals that treat a disproportionately large number of low-income
patients receive additional payments through the disproportionate share
(DSH) adjustment. One means of determining a hospital's DSH payment
adjustment for a cost reporting period requires calculation of its
disproportionate patient percentage for the period. The
disproportionate patient percentage is the sum of a prescribed Medicare
fraction and a Medicaid fraction for the hospital's fiscal period.
Under clause (I) of section 1886(d)(5)(F)(vi) of the Act and
Sec. 412.106(b)(2), the Medicare fraction is determined by dividing the
number of the hospital's patient days for patients who were entitled
(for such days) to benefits under both Medicare Part A and Supplemental
Security Income (SSI) under Title XVI of the Act, by the total number
of the hospital's patient days for the patients who were entitled to
Medicare Part A. The Medicaid fraction is determined, in accordance
with clause (II) of section 1886(d)(5)(F)(vi) of the Act and
Sec. 412.106(b)(4), by dividing the number of the hospital's patient
days for patients who (for such days) were eligible for medical
assistance under a State Medicaid plan approved under Title XIX of the
Act but who were not entitled to Medicare Part A, by the total number
of the hospital's patient days for that period.
Initially, HCFA calculated the Medicaid fraction by interpreting
section 1886(d)(5)(F)(vi)(II) of the Act to recognize as Medicaid
patient days only those days for which the hospital received Medicaid
payment for inpatient hospital services. See 51 FR 31454, 31460 (1986).
The agency's interpretation was declared invalid by four Federal
circuit courts of appeals. See Cabell Huntington Hosp., Inc. v.
Shalala, 101 F.3d 984, 990-91 (4th Cir. 1996) (following three other
circuits). These courts held that the statute requires, for purposes of
calculating the Medicaid fraction, inclusion of each patient day of
service for which a patient was eligible on that day for medical
assistance under an approved State Medicaid plan. Specifically, the
statute requires inclusion of each hospital patient day for a patient
eligible for Medicaid on such day, regardless of whether particular
items or services were covered or paid under the State Medicaid plan.
On February 27, 1997, the HCFA Administrator issued HCFA Ruling 97-
2, which acquiesced in the four adverse appellate court decisions. The
Ruling changed the agency's statutory construction to comport with
those decisions, in order to facilitate nationwide uniformity in the
calculation of the Medicaid fraction. Like the court decisions, the
Ruling provides that a hospital's Medicaid patient days include each
patient day of service for which a patient was eligible on such day for
medical assistance under an approved State Medicaid plan, regardless of
whether particular items or services were covered or paid under the
State plan. The Ruling also reflects the hospital's burden of
furnishing data adequate to prove each claimed Medicaid patient day,
and of verifying with the State that a patient was eligible for
Medicaid during each day of the inpatient hospital stay.
The Ruling further provides that the agency's new interpretation is
effective February 27, 1997 for each cost reporting period that: (1)
Begins on or after that effective date; (2) was not settled, as of that
date, on the Medicaid patient days issue, by means of an applicable
notice of program reimbursement (NPR) (see Sec. 405.1803); or (3) was
settled through such an NPR
[[Page 25595]]
as of the Ruling's effective date and is the subject of a pending
administrative appeal or civil action that satisfies all applicable
jurisdictional requirements of the Medicare statute and regulations.
The Ruling also provides, however, that the change in statutory
interpretation effected by the Ruling is not a basis for reopening a
hospital cost reporting period (see Secs. 405.1885-405.1889) that was
finalized previously on the same matter at issue.
We propose to revise Sec. 412.106(b)(4) in order to conform the
Medicare regulations to the new statutory construction issued in HCFA
Ruling 97-2. The revisions are necessary to ensure that the regulations
comport with the four appellate court decisions that declared invalid
the agency's prior interpretation and led to the issuance of the HCFA
Ruling. The proposed revisions will further facilitate nationwide
uniformity in the calculation of the Medicaid fraction.
Since the proposed revisions are intended simply to conform the
regulations to HCFA Ruling 97-2 (and hence to the four adverse court
decisions), revised Sec. 412.106(b)(4) would reiterate the Ruling's
change of interpretation that the Medicaid fraction under section
1886(d)(5)(F)(vi)(II) of the Act includes each hospital patient day for
a patient eligible for Medicaid on such day, regardless of whether
particular items or services were covered or paid under the State
Medicaid Plan. Our proposed revisions to Sec. 412.106(b)(4), like the
Ruling, would continue to place on the hospital the burdens of
production, proof, and verification as to each claimed Medicaid patient
day.
Under our proposal, revised Sec. 412.106(b)(4) would apply to cost
reporting periods beginning on or after October 1, 1998. HCFA Ruling
97-2, which includes the same provisions as proposed
Sec. 412.106(b)(4), would continue to apply to any cost reporting
period beginning before October 1, 1998 provided that, as of February
27, 1997, there is for such period: no submitted cost report; no cost
report settled on the Medicaid patient days issue through an applicable
NPR; or a cost report settled on that issue, which is also the subject
of a jurisdictionally proper administrative appeal or civil action on
the issue.
D. Payment for Bad Debts (Sec. 413.80)
Section 4451 of the Balanced Budget Act of 1997 reduces the payment
for enrollee bad debt for hospitals. Specifically, this provision
reduces the amount of bad debts otherwise treated as allowable costs,
attributable to the deductibles and coinsurance amounts under this
title, by 25 percent for cost reporting periods beginning during fiscal
year 1998, by 40 percent for cost reporting periods beginning during
fiscal year 1999, and by 45 percent for cost reporting periods
beginning during a subsequent fiscal year. This proposed rule would
conform the regulations to the statute.
Section 4451 of the Balanced Budget Act of 1997 also provides that
in determining such reasonable costs for hospitals, any copayments
reduced under the election available for hospital outpatient services
under section 1833(t)(5)(B) of the Act will not be treated as a bad
debt. This provision will be implemented in the outpatient prospective
payment system regulation that implements section 4521, 4522, and 4523
of the Balanced Budget Act of 1997, to be published later this year.
E. Payment for Direct Costs of Graduate Medical Education to Hospitals
and Nonhospital Providers (Secs. 405.2468, 413.85, and 413.86)
1. Introduction
Currently, under section 1886(h) of the Act, Medicare pays only
hospitals for the costs of graduate medical education (GME) training.
We do not pay nonhospital sites for the costs they incur in training
medical residents. There has been a general trend to shift patient care
from the inpatient setting to the less expensive nonhospital setting
where appropriate. Consistent with this trend in patient care, the BBA
allows for direct GME payment to qualified nonhospital providers to
encourage more training of future physicians in nonhospital settings.
Under section 1886(k) of the Act, as added by section 4625 of the
BBA, the Secretary is now authorized, but not required, to pay
qualified nonhospital providers for the direct costs of GME training.
The Conference Report also notes that the Conferees believe paying
nonhospital providers for GME costs may help alleviate physician
shortages in underserved rural areas. We believe that providing
Medicare payment directly to nonhospital providers may facilitate more
training and better quality training in nonhospital sites.
2. Statutory Background
Section 1886(k) of the Act states: "For cost reporting periods
beginning on or after October 1, 1997, the Secretary may establish
rules for payment to qualified nonhospital providers for their direct
costs of medical education, if those costs are incurred in the
operation of an approved medical residency training programs described
in subsection (h)." The statute further provides that, to the extent
the Secretary exercises this broad discretionary authority, the rules
"shall specify the amounts, form, and manner in which such payments
will be made and the portion of such payments that will be made from
each of the trust funds under this title."
a. Payments Only to "Qualified Nonhospital Providers". The
statute confers broad discretion on the Secretary regarding whether and
how to pay nonhospital providers for direct GME costs. However, the
statute does specify the entities whom the Secretary can pay--
"qualified nonhospital providers." Section 1886(k)(2) of the Act
defines "qualified nonhospital providers" to include: Federally
Qualified Health Centers (FQHCs), as defined in section 1861(aa)(4);
Rural Health Centers (RHCs), as defined in section 1861(aa)(2);
Medicare+Choice organizations; and such other providers (other than
hospitals) as the Secretary determines to be appropriate.
b. Payments Only for the "Direct Costs" of Training. The statute
also specifies the costs the Secretary can pay for under section
1886(k) of the Act. Medicare pays hospitals for both the direct and
indirect costs of medical education under sections 1886(h) and
1886(d)(5)(B) of the Act respectively, but section 1886(k) of the Act
provides for payment to nonhospital providers only for the direct costs
of medical education.
In addition, section 1886(k) of the Act provides for payment for
the direct costs of training medical residents only if those costs are
incurred in the operation of an "approved medical residency training
program." Section 1886(h)(5)(A) of the Act defines an "approved
medical residency training program" as a "residency or other
postgraduate medical training program participation in which may be
counted toward certification in a specialty or subspecialty and
includes formal postgraduate training programs in geriatric medicine
approved by the Secretary." Implementing regulations at Sec. 413.86(b)
state that an approved medical residency training program includes
allopathic and osteopathic training programs as well as training
programs for dentistry and podiatry. Therefore, the statute authorizes
Medicare payments to nonhospital providers only for the costs of
training medical residents, not for the costs of training other health
professionals.
In addition to adding section 1886(k) of the Act, section 4625 of
the BBA amends section 1886(h)(3)(B) of the Act to prohibit double
payments for direct
[[Page 25596]]
GME to a hospital and a qualified nonhospital provider. This
prohibition on double payments requires that the Secretary reduce a
hospital's GME payments (the "aggregate approved amount" as defined
in section 1886(h)(3)(b) of the Act) to the extent we pay a nonhospital
provider for GME under section 1886(k) of the Act.
3. Proposed Policies
Pursuant to section 4625 of the BBA, we are proposing policies to
provide Medicare payment to nonhospital providers for the direct costs
of GME training, effective for portions of cost reporting periods
occurring on or after January 1, 1999. We believe that these payments
will serve the Congressional intent to encourage and support training
in nonhospital settings.
a. Definition of "Qualified Non-Hospital Providers". Under our
proposed policy, Medicare would make GME payments to the following
"qualified nonhospital providers"--FQHCs, RHCs, and Medicare+Choice
organizations. Under the authority of section 1886(k)(2)(D) of the Act,
the Secretary may expand the definition of a "qualified nonhospital
provider" to include such other providers (other than hospitals) as
the Secretary determines to be appropriate. Once we have gained
experience providing direct GME payments to FQHCs, RHCs, and
Medicare+Choice organizations, we may consider including other types of
nonhospital providers in the definition of a "qualified nonhospital
provider."
Additionally, we propose that, under certain circumstances, a
hospital may continue to receive GME payments for residents who train
in the nonhospital setting. In those instances where a hospital is
eligible to continue receiving GME payments for residents who train in
the nonhospital setting, the nonhospital provider could receive payment
from the hospital for costs they incur in training medical residents.
Thus, our policy promotes the intent of section 4625 of the BBA to
provide financial support, either directly from Medicare or through the
hospital, to nonhospital providers for the direct costs of training
residents in the nonhospital site.
b. Definition of "Direct Costs" of Medical Education for Non-
Hospital Providers. Section 4625 of the BBA provides for payment to
nonhospital providers only for the direct costs of training residents.
Our proposed definition of "direct costs" for nonhospital providers
is comparable to the direct costs for hospitals under section 1886(h)
of the Act. Under our proposed policy, direct GME costs are those costs
that are incurred by the nonhospital site for the education activities
of the approved program and that are the proximate result of training
medical residents in the nonhospital site. Direct costs for nonhospital
providers would include:
--- Residents' salaries and fringe benefits (including related
travel and lodging expenses where applicable);
--- That portion of costs of the teaching physicians' salaries
and fringe benefits that are related to the time spent in teaching and
supervision of residents; and
--- Other related GME overhead costs.
Consistent with our policies on direct GME costs for hospitals,
direct GME costs for nonhospital providers would not include normal
operating costs or the marginal increase in costs that the nonhospital
site experiences as a result of having an approved medical residency
training program. For example, a decrease in productivity and increased
intensity in treatment patterns as the result of a training program do
not constitute "direct costs" of training residents in the
nonhospital setting; rather, these are the "indirect costs" of such
training.
Also consistent with our policies for direct GME payments to
hospitals, we propose to pay qualified nonhospital providers only for
training that is related to the delivery of patient care services.
Sections 1886(h) ("Payments for Direct GME Costs") and 1886(h)(4)(E)
of the Act ("Counting Time Spent in Outpatient Settings") provide
support continuing our longstanding policy of paying only for training
that is associated with patient care services. In particular, section
1886(h)(4)(E) of the Act states:
Such rules shall provide that only time spent in activities
relating to patient care shall be counted and that all the time so
spent by a resident under an approved medical residency training
program shall be counted towards the determination of full-time
equivalency, without regard to the setting in which the activities
are performed, if the hospital incurs all, or substantially all, of
the costs for the training program in that setting.
In addition, section 1861(b) of the Act describes the types of patient
care services that are reimbursable. Specifically, section 1861(b)(6)
of the Act indicates that the training of interns or residents under an
approved teaching program are included as reimbursable patient care
costs.
Moreover, direct GME costs for nonhospital providers, like direct
GME costs for hospitals, would include only that portion of costs of
the teaching physicians' salaries and fringe benefits associated with
time spent in teaching and supervising residents. Specifically, a
teaching physician's time spent on teaching of a general nature would
constitute a direct GME cost, while teaching of a patient-specific
nature would not constitute a direct cost. In addition, direct costs in
the nonhospital setting would include that portion of teaching
physicians' salaries and fringe benefits associated with time spent
developing resident schedules and evaluating or rating the residents.
Direct costs would also include a teaching physician's office costs
allocated to GME.
By contrast, direct GME costs for nonhospital providers would not
include the following: A teaching physician's time spent in the care of
individual patients which results in billable services; teaching
physicians' activities that are related to the education of other
health professionals (i.e., classroom instruction in connection with
approved activities other than GME such as provider-operated nursing
programs); teaching physicians' time spent on administrative and
supervisory services to the provider that are unrelated to approved
educational activities (i.e. operating costs); and teaching physician
activities that involve nonallowable costs such as research and medical
school activities that are not related to patient care in the
nonhospital setting.
GME overhead costs include only those costs that are allocable to
direct GME and that are not used in patient care. For example, a
portion of administrative and general costs could be appropriately
allocated to an RHC or FQHC's GME cost center. Similarly, a conference
room that is dedicated specifically for the training of residents could
be appropriately allocated to an RHC or FQHC's GME cost center. By
contrast, patient care rooms added to an RHC or an FQHC cannot be
appropriately allocated to an RHC or FQHC's GME cost center.
One of the advantages of our proposed definition of "direct
costs" is that it is administratively feasible. Our definition of
"direct costs" for nonhospital providers is comparable to the direct
costs that are included in the per resident amount paid to hospitals
under section 1886(h) of the Act. At present, there is limited
information regarding the actual costs of training residents in
nonhospital sites. After we gain experience providing direct GME
payments to qualified nonhospital providers and have reviewed the GME
costs separately reported by these nonhospital providers, we may revise
the definition of "direct costs." We are
[[Page 25597]]
soliciting comments on other elements that may constitute direct costs
of GME in the nonhospital site that can be identified, reported, and
verified as directly attributable to GME activities through the cost
reporting process. We are interested in comments on whether we should
include other costs in the definition of "direct costs" for
nonhospital providers and on the administrative feasibility of
identifying the GME portion of those costs.
c. Determining Direct Costs. One of our major concerns in
developing policies for paying nonhospital providers for the direct
costs of GME is the administrative feasibility of determining the
amount of direct costs incurred by the nonhospital provider. It is our
understanding that, currently, hospitals and nonhospital sites often
share, to varying degrees, the costs of training residents in the
nonhospital site. Because of the difficulty in apportioning costs
between the hospital and the nonhospital for the training in the
nonhospital site, we believe that it is not administratively feasible
to pay both the hospital and the nonhospital site for the cost of
training in the nonhospital site. We have been unable to devise a
method for accurately apportioning costs between the two entities.
Furthermore, the potential for both the hospital and the
nonhospital site to be paid for the same direct GME expenses poses a
significant problem for complying with section 1886(h)(3)(B) of the
Act, as amended by the BBA, which specifically prohibits double
payments. Under this provision, the Secretary shall reduce the
hospital's GME payment (the "aggregate approved amount") to the
extent we pay nonhospital providers for GME costs under section 1886(k)
of the Act. Consequently, our policy must ensure that Medicare does not
pay two entities for the same training time in the nonhospital site.
Given that the hospital's per resident amount can include, but is
not necessarily based on the costs of training in the nonhospital site,
we were not able to devise an equitable way of reducing the hospital's
per resident payment to reflect payments made under section 1886(k) of
the Act. It would not be equitable to subtract the exact amount of
payment made to the qualified nonhospital provider from the hospital's
per resident payment because the payment made to the nonhospital site
is unrelated to the hospital's per resident amount. The hospital per
resident amount is based on specific GME costs incurred by the hospital
in the 1984 base year. Those costs included in the per resident amount
have no relevance to the costs incurred in the nonhospital setting
almost 15 years after the 1984 base year. We believe that the
residents' salaries, teaching physicians' salaries, and overhead costs
for the nonhospital setting will constitute a different proportion of
the total GME costs in the nonhospital setting as compared with the
hospital setting. Rather, it would be more equitable to determine the
proportion of costs incurred by each entity and reduce the hospital's
per resident payment by the proportion of GME costs incurred by the
nonhospital site; however, since specific components of the per
resident amount were not identified in the hospital's GME base year
(1984), we cannot accurately determine the appropriate amount to reduce
the current year hospital per resident payment amount. Moreover, to
reduce the hospital's GME payments based solely on the amount paid to
the nonhospital site could result in inequitable payments to the
hospital, which has ongoing costs even when the resident is training in
the nonhospital site. In fact, it could leave the hospital at risk of
receiving no payment for the GME costs it has incurred.
In order to encourage training in nonhospital sites, it is
important to develop a policy that, while providing payment to
nonhospital providers, would also be equitable to hospitals. We believe
that paying only the nonhospital site for the training costs could
result in hospitals choosing not to rotate their residents to the
nonhospital site. We have been unable to devise an equitable and
accurate method for dividing up the GME payment for training in the
nonhospital site if neither the hospital, nor the nonhospital site
incurs "all or substantially all" of the costs. As such, we are
soliciting comment on possible methods for allocating the GME payments
for training in the nonhospital site where neither the hospital nor the
nonhospital provider is incurring "all or substantially all" of the
costs for the training program. We believe that the proposed policies
discussed below are equitable to both hospital and nonhospital
providers and will achieve Congress' objective of encouraging and
supporting training in the nonhospital setting.
Given our concerns about administrative feasibility, the statutory
prohibition on double payments, and developing policies that are
equitable to hospitals as well as nonhospital providers, we believe the
only feasible way to pay for training in nonhospital settings is to pay
either the hospital or the nonhospital provider. Currently, hospitals
may receive payment for the time residents spend in the nonhospital
setting if the hospital incurs "all or substantially all" of the
training costs. We propose to adopt a similar policy for nonhospital
providers; that is, a qualified nonhospital provider may receive
payment for the direct costs of GME if the nonhospital provider incurs
"all or substantially all" of the training costs.
d. Modifications of Policy To Pay Hospitals For GME. In the course
of developing our policies for nonhospital providers, we have reviewed
our method for paying hospitals for the costs of training residents in
the nonhospital site. Accordingly, as part of our policy to pay
nonhospital providers for the costs of training residents, we are
proposing necessary and appropriate modifications to our current policy
for paying hospitals for such nonhospital training. Specifically, as
part of our proposal to implement section 1886(k) of the Act, we
propose to modify the regulations at Sec. 413.86(f).
Presently, under sections 1886(d)(5)(B)(iv) and 1886(h)(4)(E) of
the Act, if a hospital incurs "all or substantially all" of the costs
of training residents in the nonhospital site, then the hospital may
include the resident in its indirect medical education (IME) and direct
GME full-time equivalent count. Under Sec. 413.86(f)(1)(iii), currently
a hospital incurs "all or substantially all" of the costs of training
the resident in the nonhospital site if the hospital pays the
residents' salaries and fringe benefits. Based on our review of data in
Medicare cost reports on the Hospital Cost Reporting Information System
(HCRIS), we decided to reexamine the issue of what constitutes "all or
substantially all" of the costs of training the resident. In our
analysis, we determined that, on average, residents' salaries and
fringe benefits are less than half of the total amount of the direct
costs of a hospital's GME program. Therefore, we are proposing to
revise the standard for incurring "all or substantially all" of the
costs for the training program in the nonhospital setting.
We propose to redefine "all or substantially all" of the costs
for the training program in the nonhospital setting to include at a
minimum:
--- the portion of costs of the teaching physicians' salaries
and fringe benefits that are related to the time spent in teaching and
supervision of residents; and
--- residents' salaries and fringe benefits (including travel
and lodging expenses where applicable).
e. Payment Proposal. In light of the numerous considerations
discussed
[[Page 25598]]
above, we are proposing a system whereby we will pay either the
hospital or the nonhospital site for the cost of training in the
nonhospital site, depending on which entity incurs "all or
substantially all" of the costs of training in the nonhospital site.
An entity incurs "all or substantially all" of the costs for the
training program in the nonhospital setting if it pays for, at a
minimum: that portion of the costs of the teaching physicians' salaries
and fringe benefits that are related to the time spent in teaching and
supervision of residents; and residents' salaries and fringe benefits
(including travel and lodging expenses where applicable). Our proposal
accommodates three alternative payment scenarios that are discussed
below.
i. Payment to FQHCs and RHCs. In the first payment scenario, if the
FQHC or RHC incurs "all or substantially all" of the costs for the
training program in the nonhospital setting, we are proposing to pay
the nonhospital site cost-based reimbursement for the direct costs of
training. By reporting these direct GME costs in a reimbursable cost
center on the cost report, an FQHC or RHC would be attesting that it is
incurring "all or substantially all" of the costs for the training
program in the nonhospital site. Conversely, where an FQHC or RHC is
not incurring "all or substantially all" of the costs of training
residents in the nonhospital site, the FQHC or RHC would report these
training costs in a nonreimbursable cost center on the cost report.
As previously stated, we propose to define the direct costs of
training to include:
--- Residents' salaries and fringe benefits (including related
travel and lodging expenses where applicable);
--- That portion of the costs of teaching physicians' salaries
and fringe benefits that are related to the time spent in teaching and
supervision of residents; and
--- Other related overhead costs that are allocated to GME.
We are proposing that the FQHC's and RHC's allowable direct GME
costs be subject to reasonable cost principles in 42 CFR part 413 and
other relevant provisions referenced in part 413. As such we are
proposing to add language to Sec. 415.60 to make the reasonable cost
principles applicable to FQHC's and RHC's. In addition, the FQHC's and
RHC's direct GME costs would be subject to the Reasonable Compensation
Equivalency limits under Secs. 415.60 and 415.70. Accordingly, we are
proposing to add language to Sec. 415.70 to make the reasonable
compensation equivalency limits applicable to FQHC's and RHC's.
Also, Medicare would pay only for Medicare's share of the direct
costs of training in the nonhospital site. We are proposing that the
FQHC's and RHC's Medicare share equal the nonhospital provider's ratio
of Medicare visits to total visits. Thus, the amount of Medicare
payment would equal the product of the clinic's Medicare allowed direct
GME costs and the clinic's ratio of Medicare visits to total visits.
For FQHCs and RHCs that incur "all or substantially all" of the
costs for the training program in the nonhospital setting, the direct
GME costs are not subject to the existing per visit payment caps for
reimbursement under sections 505.1 and 505.2 of the Medicare Rural
Health Clinic and Federally Qualified Health Centers Manual. Moreover,
we believe participation in GME training should not affect any FQHCs or
RHCs ability to meet the productivity standards outlined in section 503
of the Medicare Rural Health Clinic and Federally Qualified Health
Centers Manual. Therefore, we are proposing that, where payment is
available under section 1886(k) of the Act for residents working in
either an FQHC or an RHC, the FQHCs and RHCs do not need to include
residents as health care staff in the calculation of productivity
standards under section 503 of the Manual.
ii. Payment to Medicare+Choice organizations. In the second payment
scenario, if a Medicare+Choice organization incurs "all or
substantially all" of the costs for the training program in the
nonhospital setting, we propose making the direct GME payment to the
Medicare+Choice organization. The Medicare+Choice organization would be
eligible to receive cost-based reimbursement for the residents'
salaries and fringe benefits only for the time that the resident spends
in the nonhospital setting. In addition, we are proposing that the
Medicare+Choice organization's allowed costs include only that portion
of the teaching physician salaries and fringe benefits that is related
to training in the nonhospital setting.
Unlike our proposed policy in paying FQHCs and RHCs for GME, at
this time we are not proposing to pay Medicare+Choice organizations for
the costs of overhead that are directly associated with a GME program.
We have no historical data on the GME costs of managed care
organizations and the extent to which these costs are incurred directly
or indirectly under contracts between the managed care organization and
physician groups or other providers engaged in ambulatory care.
Moreover, we have an established methodology for allocating and
reporting overhead costs for FQHCs and RHCs on Medicare cost reports
that does not currently exist for Medicare+Choice organizations. Since
Medicare+Choice organizations do not use the Medicare cost report,
there is currently no mechanism to review and audit these costs in the
managed care context. Because Medicare+Choice organizations are paid on
a capitated basis, we have no method for paying Medicare+Choice
organizations for variable costs such as GME overhead that require a
sophisticated cost allocation methodology. By contrast, it is currently
feasible to pay Medicare+Choice organizations for the costs of the
residents' salaries and teaching physicians' salaries because those
costs are more readily documented and auditable.
However, we are open to suggestions about how we can create a
methodology for allocating and reporting overhead costs for
Medicare+Choice organizations. Any comments should include not only a
proposed methodology for paying Medicare+Choice organizations for GME
overhead costs, but also proposed mechanisms for the audit and review
of the costs of these organizations.
Similar to our proposed policy for paying FQHCs and RHCs for direct
costs of GME, the Medicare+Choice organization's reimbursement for
residents' salaries and fringe benefits (including related travel and
lodging expenses where applicable) would be subject to the reasonable
cost principles in 42 CFR part 413 and any other relevant provisions
referenced in part 413. As such we are proposing to add language to
Sec. 415.60 to make the reasonable cost principles applicable to
Medicare+Choice organizations. In addition, the Medicare+Choice
organization's GME reimbursement would also be subject to the
Reasonable Compensation Equivalency limits under Secs. 415.60 and
415.70. Accordingly, we are proposing to add language to Sec. 415.70 to
make reasonable compensation equivalency limits applicable to
Medicare+Choice organizations. While we would pay the Medicare+Choice
organization for certain GME costs in nonhospital settings under this
proposal, the cost of residents' and teaching physicians' salaries and
fringe benefits in the hospital setting would be paid to the hospital,
not the Medicare+Choice organization.
The Medicare+Choice organization would receive direct GME payment
only for the direct costs of training in the nonhospital site that are
associated with the delivery of patient care services. In
[[Page 25599]]
determining the amount of direct GME payments to Medicare+Choice
organizations, we must adjust for Medicare's share of those education
costs. Medicare's share would equal the ratio of the total number of
Medicare enrollees in the Medicare+Choice organization to total
enrollees in the Medicare+Choice organization.
We are proposing that, in order to receive the direct GME payment,
the Medicare+Choice organization must produce a contractual agreement
between itself and the nonhospital providers. Medicare+Choice
organizations may contract with any nonhospital patient care site,
including freestanding clinics, nursing homes, and physicians' offices
in connection with approved programs. The contract between the
Medicare+Choice organization and the nonhospital site must indicate
that, for the time that residents spend in the nonhospital site, the
Medicare+Choice organization agrees to pay for the cost of residents'
salaries and fringe benefits. In addition, the contract must indicate
that the Medicare+Choice organization agrees to pay the portion of the
costs of teaching physicians' salaries and fringe benefits that is
related to the time spent in teaching and supervision of residents and
that is unrelated to the volume of services. The contract must
stipulate the portion of each teaching physician's time that will be
spent training residents in the nonhospital setting. Moreover, the
contract must indicate that the Medicare+Choice organization agrees to
identify an amount for the cost of the teaching physician's salary
based on the time that the resident spends in the nonhospital setting,
not based upon a capitated rate for the delivery of physician services.
Under our proposed rule, we could pay a Medicare+Choice
organization for the direct costs of training medical residents in a
physician's office if such office had a contractual agreement with the
organization whereby the organization agrees to pay for "all or
substantially all" of the costs for the training program in the
nonhospital setting. However, an independent physician office would not
be eligible to receive payment directly from Medicare for the cost of
training residents because it would not be a "qualified nonhospital
provider" under our proposed policy. Similarly, if a hospital rotates
a resident through a physician's office, the hospital must pay for
"all or substantially all" of the costs of training the resident in
the physician's office in order to include that resident in its FTE
count for IME and direct GME purposes. (In this instance, the
hospital's responsibility in assuming "all or substantially all" of
the costs of training the resident in the nonhospital site would not be
based on section 4625 of BBA which permits payment to nonhospital
providers.) The hospital would have to assume "all or substantially
all" of the training costs for that nonhospital training time in order
to avail itself of the benefit of including the resident in the
hospital's FTE count for IME and direct GME purposes based on the
proposed modifications to Sec. 413.86.
iii. Payment to Hospitals. In the third payment scenario, if the
hospital itself incurs "all or substantially all" of the costs for
the training program in the nonhospital setting, then the hospital may
include the residents' training time in the nonhospital setting in the
hospital's FTE counts for direct GME and for IME. In order to include
the residents' training in the nonhospital site, the hospital must
produce a contractual agreement between the hospital and the
nonhospital provider. Under Sec. 413.86(f)(1)(iii), hospitals may
contract with any nonhospital patient care provider such as
freestanding clinics, nursing homes, and physicians' offices in
connection with approved programs.
Currently, a hospital must produce a written agreement between the
hospital and the nonhospital provider that states that the resident's
compensation for training time spent outside of the hospital setting is
to be paid by the hospital. Since this proposal changes the definition
of what constitutes "all or substantially all" of the costs of
training in the nonhospital site, hospitals must produce a written
agreement that demonstrates that they are assuming responsibility for
more of the costs of training in the nonhospital site than had
previously been required.
In accordance with our proposed definition of what constitutes
"all or substantially all" of the costs of training while the
resident is in the nonhospital site, we are proposing that the contract
must indicate that the hospital is assuming financial responsibility
for, at a minimum, the cost of residents' salaries and fringe benefits
(including travel and lodging expenses where applicable) and the costs
for that portion of teaching physicians' salaries and fringe benefits
related to the time spent in teaching and supervision of residents.
The contract must indicate that the hospital is assuming financial
responsibility for these costs directly or that the hospital agrees to
reimburse the nonhospital provider for such costs. The contract must
also contain an acknowledgment on the part of the nonhospital provider
that, since the residents' time is being counted by the hospital, the
nonhospital site cannot claim GME costs on their Medicare cost report.
The nonhospital provider must agree to report its direct GME costs as
well as any money received from the hospital for GME purposes in a
nonallowable cost center on its cost report. In addition, in order to
determine teaching physician compensation that may be allocated to
direct GME, the nonhospital provider must specify the portion of the
teaching physicians' time that will be spent training residents in the
nonhospital setting. Finally, any payment to the hospital for the
direct costs of GME training in the nonhospital setting will continue
to reflect Medicare's share, which equals the hospital's ratio of
Medicare inpatient days to total inpatient days.
Hospitals that have residents who rotate to nonhospital sites are,
like all teaching hospitals, subject to an institutional cap on the
number of FTE residents that may be counted for both indirect and
direct GME under sections 1886(d)(5)(B)(v) and 1886(h)(6)(F) of the
Act. For hospitals that have residents who rotate to a nonhospital
site, those residents will be subject to the hospital's FTE caps.
f. Trust Funds. Under section 1886(k)(1) of the Act, the rules
established by the Secretary for paying nonhospital providers for GME
must specify the portion of Medicare payments that will be made from
each of the Medicare trust funds. We propose that GME payments made
directly to an FQHC, RHC, or Medicare+Choice organization would be made
from the Federal Supplementary Medical Insurance Trust Fund.
g. Conclusion. Under this proposed rule, clinics that are presently
ineligible to receive payments for direct GME may now receive such
payments. Moreover, this proposal provides Medicare+Choice
organizations the opportunity to receive direct GME payments for
training residents in the nonhospital setting. As Medicare+Choice
organizations, managed care entities will, for the first time, be
eligible to receive direct GME payments for training residents in
various types of nonhospital sites. This proposed rule would help
bridge the disparity between hospital and nonhospital providers in
obtaining payment for direct GME costs.
We believe this proposed rule may encourage the development of new
programs in nonhospital settings. Similarly, it may also encourage
approved residency training programs to
[[Page 25600]]
rotate additional residents to nonhospital sites.
In developing this proposed rule, we considered establishing a
fixed payment rate for the direct costs of training residents in the
nonhospital setting. We are not proposing a policy of a fixed payment
at this time because we presently have no reliable data on the direct
costs of training residents in nonhospital settings. Moreover, we are
concerned that a fixed payment for these costs may not be appropriate
if there is significant variation in cost among participating
nonhospital sites.
Given these considerations, our policy to pay FQHCs, RHCs, and
Medicare+Choice organizations on a cost reimbursement basis may be
revised in the future. Once we have acquired data such that we can
estimate the direct costs of training residents in the nonhospital
site, we will revisit our payment methodology for paying FQHCs, RHCs,
and Medicare+Choice organizations for direct GME. We believe that
ultimately it might be appropriate to pay FQHCs, RHCs, and
Medicare+Choice organizations using a national average per resident
amount. This national per resident amount would be based on the
national average for the direct costs of training medical residents in
the nonhospital site. As such, we are interested in receiving comments
on a fixed payment methodology and on how to derive such a payment.
These comments should include empirical data on training costs in
nonhospital sites.
The effective date of these provisions for FQHCs, RHCs,
Medicare+Choice organizations, and hospitals will be January 1, 1999.
In particular, the effective date for IME payments to hospitals under
this provision applies to discharges occurring on or after January 1,
1999. In addition, the effective date for direct medical education
payments to FQHCs, RHCs, Medicare+Choice organizations, and hospitals
applies to that portion of cost reporting periods occurring on or after
January 1, 1999.
VI. Changes to the Prospective Payment System for Capital-Related
Costs
A. Proposed Cap on the Capital Indirect Medical Education Adjustment
Ratio (Sec. 417.322)
Under section 1886(g) of the Act, the Secretary has broad
discretion in implementing the capital prospective payment system.
Section 412.322 of the regulations specifies the formula for the
capital indirect medical education (IME) adjustment factor. The capital
IME adjustment is intended to pay the capital prospective payment
system share of the indirect costs of medical education to teaching
hospitals. The formula was adopted in the August 30, 1991 final rule
for the capital prospective payment system (56 FR 43380) and uses the
ratio of interns and residents to average daily census (defined as
total inpatient days divided by the number of days in the cost
reporting period). Section 1886(d)(5)(B) of the Act requires the use of
the ratio of residents-to-beds to calculate the IME adjustment for the
operating Prospective payment system. However, pursuant to our
authority under section 1886(g) of the Act, we adopted the resident to
average daily census ratio for the capital prospective payment system
because we believed it was a more appropriate method for measuring
teaching intensity and because we believed it was less subject to
manipulation.
The IME adjustment factor increases by approximately 2.8 percentage
points for each .10 increase in the hospital's ratio of residents to
average daily census. The IME adjustment for inpatient capital-related
costs for hospitals paid under the prospective payment system takes the
form of e raised to the power (.2822 x ratio of interns and residents
to average daily census)-1] where e is the natural antilogy of 1, based
on the total cost regression results. In order to determine the Federal
rate portion of the hospital's payment, the IME adjustment factor is
multiplied by the standard federal rate, the DRG weight, the geographic
adjustment factor, and any other relevant payment adjustments such as
the DSH adjustment or the large urban add-on. The formula is as
follows: (Standard Federal Rate) x (DRG weight) x (GAF) x (Large
Urban Add-on, if applicable) x (COLA adjustment for hospitals located
in Alaska and Hawaii) x (1 + Disproportionate Share Adjustment Factor
+ IME Adjustment Factor, if applicable).
It has come to our attention that because of the application of the
capital IME adjustment, one hospital would receive a capital IME
payment greater than its total hospital costs. We have also recently
learned that of the approximately 1,200 teaching hospitals in the
United States, based on December 1997 data, 8 hospitals have a resident
to average daily census ratio of more than 1.5. A resident to average
daily census ratio of 1.5 results in a capital IME adjustment factor of
.53, which increases the Federal rate portion of the hospital's capital
payment by 53 percent.
To address this unintended effect of the capital IME methodology,
we are proposing to cap the capital IME ratio at 1.5. A ratio greater
than 1.5 means a hospital has, on average, considerably more residents
than inpatients. Capping the ratio at 1.5 would allow for one resident
per patient on the inpatient side plus some outpatient training, and
would keep capital IME payments more consistent with the costs
incurred. Because of the large number of unoccupied beds in most
hospitals, the operating IME ratio has only slightly exceeded 1.0 in
two cases. This change would ensure that the capital IME adjustment is
more in line with hospital costs.
B. Payment Methodology for Mergers Involving New Hospitals
(Sec. 412.331)
The August 30, 1991 final rule (56 FR 43418), which implemented the
capital prospective payment system, established special payment
provisions for new hospitals. Under Sec. 412.324(b), a new hospital is
paid 85 percent of its allowable Medicare capital-related costs through
its first cost reporting period ending at least 2 years after the
hospital accepts its first patient. The first cost reporting period
beginning at least 1 year after the hospital accepts its first patient
is the hospital's base year for purposes of determining its hospital-
specific rate. Section 412.302(b) defines a new hospital's old capital
costs as allowable capital-related costs for land and depreciable
assets that were put in use for patient care on or before the last day
of the hospital's base year cost reporting period. Beginning with the
third year, the hospital is paid under the fully prospective or hold-
harmless payment methodology, as appropriate. If the hospital is paid
under the hold-harmless payment methodology, the hospital's hold-
harmless payments for its old capital costs can continue for up to 8
years.
In the August 30, 1991 final rule, we defined a new hospital as one
that had operated (under previous or present ownership) for less than 2
years and did not have a 12-month cost reporting period that ended on
or before December 31, 1990. In the September 1, 1992 final rule (57 FR
39789), as a result of situations brought to our attention after
publication of the prospective payment system final rule, we clarified
the new hospital exemption under the capital prospective payment
system. We explained that the new hospital exemption would not apply to
a facility that opened as an acute care hospital if that hospital had
previously operated under current or prior ownership and had a historic
asset base. We also clarified that a hospital that replaced its entire
facility (with or without a change of ownership) would not qualify for
a
[[Page 25601]]
new hospital exemption and that a previously existing excluded hospital
(paid under section 1886(b) of the Act) that became an acute care
hospital (paid under section 1886(d)) of the Act would not qualify.
We explained our belief that the reasonable cost payment protection
under the new hospital exemption should only be available to those
hospitals that had not received reasonable cost payments in the past
and needed special protection during their initial period of operation.
We also stated in the June 4, 1992 proposed rule (57 FR 23649) that we
were clarifying the new hospital exemption to ensure that hospitals
that had an existing asset base before December 31, 1990 were not
provided with an extended transition period and inappropriately higher
payments relative to other hospitals. We also explained our belief that
it was essential to maintain the integrity of the capital prospective
payment system by allowing only truly new providers of hospital care to
qualify for the new hospital exemption.
Since publication of our last clarification of the payment rules
for new hospitals, questions have arisen regarding application of our
rules for payment of new hospitals in merger situations. Consistent
with our previously stated policy that only truly new hospitals without
an existing asset base should be eligible for the new hospital
exemption, we are further clarifying the new hospital payment
provisions.
If during the period it is eligible for payment as a new hospital
(as defined at Sec. 412.300(b) and Sec. 412.328(b)), a new hospital
merges with one or more existing hospitals and the merger meets the
existing capital-related reasonable cost rules regarding the criteria
for recognizing a merger at Sec. 413.134 and the new hospital is the
surviving corporation (as defined in Sec. 413.134(l)(2)) we would treat
as old capital only those assets of the existing hospital that met the
definition of old capital (as defined in Sec. 412.302(b)) prior to the
merger, for purposes of determining payments after the merger.
Any assets of the existing hospital that were considered new
capital prior to the merger will still be considered new capital after
the merger. The merger cannot be used to convert the existing
hospital's new capital into old capital. After the merger, the
discharges of each campus of the merged entity would maintain their
pre-merger payment methodology until the end of the 2 year period that
the "new hospital" campus was eligible for reasonable cost
reimbursement as defined at Sec. 412.324(b). At the end of this period,
the intermediary would devise a hospital specific rate for the "new"
campus of the merged hospital. Finally, the calculation methodology for
hospital mergers at new Sec. 412.331(a)(1) and (2) would be performed
and a combined hospital-specific rate would be determined and a payment
methodology selected for the merged hospital as a whole.
The calculation at Sec. 412.331(a)(1) and (2) uses each hospital's
base year old capital costs. Any new capital of the previously existing
hospital would not be used in the determination. If the new merged
entity qualifies for the hold-harmless payment methodology, only the
capital which meets the definition of old capital at Sec. 412.302(b)
would be eligible for hold-harmless payments.
We note that this proposed change is consistent with the principles
underlying existing Sec. 412.331(a)(3), which provides that in the case
of a merger only the existing capital-related costs related to the
assets of each merged or consolidated hospital as of December 31, 1990
are recognized as old capital costs during the transition period. If
the hospital is paid under the hold-harmless methodology after merger
or consolidation, only that original base year old capital is eligible
for hold-harmless payments.
Example: Hospital A is a new hospital in its first 2 years of
operation and is being paid 85 percent of its allowable Medicare
inpatient hospital capital-related costs. Hospital A's base year for
establishing its hospital-specific rate will end September 30, 1998.
Hospital B is an existing hospital whose base year for capital
prospective payment system purposes was June 30, 1990. Hospital B is
a hold-harmless hospital paid 100 percent of the Federal rate.
Hospital A merged with Hospital B (in accordance with to
Sec. 413.134(l)) on March 1, 1998, and Hospital A is a new merged
entity, with two campuses: one which used to be the original
Hospital A--the "new" hospital, and one which used to be hospital
B--the "existing" hospital). The merged Hospital A retains the
corporate structure, provider number, and cost reporting period of
the original Hospital A, which is the surviving hospital. The merged
Hospital A's discharges will be paid under two different payment
methodologies until the "new" campus completes its base period
under the payment rules for new hospitals and a hospital-specific
rate and a payment methodology can be determined for the merged
Hospital A. Until that time, the discharges of the "new" hospital
campus (previously the original Hospital A) will be paid in
accordance with Sec. 412.324(b) as a new hospital. Any capital that
meets the definition of old capital acquired by the "new" campus
before the end of its base year will be accorded old capital status
in accordance with Sec. 412.302(b). The "existing" hospital campus
(previously hospital B) will continue to be paid on a hold-harmless
basis. Any capital acquired by the "existing" campus will be
accorded new capital status in accordance with section 2807.3A of
the Provider Reimbursement Manual (PRM). At the end of the "new"
campus' base year, a hospital-specific rate will be determined for
that campus. After a hospital specific rate is determined, the
calculation methodology for hospital mergers at Sec. 412.331(a)(1)
and (2) will be performed. As part of the calculation and before
combining the data, the base years of the two hospitals used to
establish the hospital-specific rate are brought to the same point
by discharge-weighting and updating. The calculation uses only the
old capital costs of each hospital in order to determine a combined
hospital-specific rate and payment methodology. After a payment
methodology determination is made, the two campuses will be paid
using the same payment methodology for all of their discharges.
VII. Changes for Hospitals and Units Excluded From the Prospective
Payment System
Limits on and Adjustments to the Target Amounts for Excluded Hospitals
and Units (Sec. 413.40(g))
1. Updated Caps
Section 1886(b)(3) of the Act as amended by section 4414 of the BBA
established caps on the target amounts for excluded hospitals and units
for cost reporting periods beginning on or after October 1, 1997,
through September 30, 2002. The caps on the target amounts apply to the
following three categories of excluded hospitals: psychiatric hospitals
and units, rehabilitation hospitals and units, and long-term care
hospitals.
A discussion of how the caps on the target amounts were calculated
can be found in the August 29, 1997 final rule with comment period (62
FR 46018). For purposes of calculating the caps for cost reporting
periods beginning during FY 1999 through FY 2002, the statute requires
us to calculate the 75th percentile of the target amounts for each
class of hospital (psychiatric, rehabilitation, or long-term care) for
cost reporting periods ending during FY 1996. The resulting amounts are
updated by the market basket percentage to the applicable fiscal year.
The projected market basket for excluded hospitals and units for FY
1999 is 2.5 percent. Accordingly, the caps on the target amount for FY
1999 as follows:
(1) Psychiatric hospitals and units: $10,443
(2) Rehabilitation hospitals and units: $18,938
(3) Long-term care hospitals: $37,360
[[Page 25602]]
2. Classification of Hospitals and Units
Since publication of the August 29, 1997 final rule with comment
period, some excluded facilities have suggested that if they are
currently excluded as one class of hospital or unit but also qualify
for exclusion as another class of hospital, they should be permitted to
choose which classification applies for purposes of applying the cap on
target amounts. For example, some hospitals that participate in
Medicare as psychiatric hospitals (defined under section 1861(f) of the
Act, and the special conditions of participation in 42 CFR part 482
subpart E) have noted that they have average lengths of stay greater
than 25 days. Those hospitals have asked to be "reclassified" as
long-term care hospitals and given the benefit of the higher cap on
target amounts applicable to that hospital class.
We have considered these hospitals' suggestions, but we believe it
would not be appropriate to adopt them. Section 1886(b)(3)(H)(iv) of
Act makes it clear that each category of hospital and corresponding
units--psychiatric (section 1886(d)(1)(B)(I)), rehabilitation (section
1886(d)(1)(B)(ii)), and long-term care hospitals (section
1886(d)(1)(B)(iv)) is treated separately. We believe it is consistent
with effective implementation of this provision to prevent hospitals or
units that could potentially be assigned to more than one category of
excluded facility from choosing the category to which they wish to be
assigned. Even though some hospitals or units in one group might
potentially have been assigned to a different group, each group has its
own limit based on the target amounts for similarly classified
facilities. It would not be appropriate to apply a limit to a hospital
or unit based on the target amount derived from the cost experience of
differently classified hospitals and units.
In addition, there are a number of hospitals that could potentially
move from the psychiatric hospital cap to the long-term care hospital
cap. This movement would have a significant impact on the
appropriateness of both caps. In the case of the psychiatric hospitals,
had those hospitals with the longest lengths of stay and therefore
higher per discharge target amount been excluded in the original
calculation of the caps, the cap for all remaining psychiatric
hospitals would invariably have been lower. Furthermore, had those
psychiatric hospitals been included in the calculation of the long-term
care hospital cap, that cap could also have been lower. To allow such a
significant change in the application of the caps is to raise a serious
question as to the appropriateness of the current caps for all
psychiatric and long-term care hospitals.
Thus, to clarify the application of the caps, we propose to revise
Sec. 413.40(c)(4)(iii) to specify that, for purposes of that paragraph,
the classification of a hospital that was excluded from the prospective
payment system for its cost reporting period ending in FY 1996 will be
determined by its classification (that is, the basis on which it was
excluded) in FY 1996. If a hospital or unit was not excluded for a cost
reporting period ending in FY 1996 but could be excluded on more than
one basis (for example, as either a rehabilitation or long-term care
hospital) it will be assigned to the classification group with the
lowest limit.
3. Exceptions
The August 29, 1997 final rule with comment period (62 FR 46018)
specified that a hospital that has a target amount that is capped at
the 75th percentile would not be granted an adjustment payment to the
target amount (also referred to as an exception payment) as governed by
Sec. 413.40(g) based solely on a comparison of its costs or patient mix
in its base year to its costs or patient mix in the payment year. Since
the hospital's target amount would not be determined based on its own
experience in a base year, any comparison of costs or patient mix in
its base year to costs or patient mix in the payment year would be
irrelevant.
We propose to clarify that, to the extent we grant an exception to
a hospital not affected by the cap, the amount of the exception would
be limited to the cap on the hospital's target amount. This policy is
consistent with the caps. By establishing caps on TEFRA target amounts,
Congress has limited payments to individual hospitals based on amounts
that reflect the cost experience of other hospitals. Therefore, in
determining the extent of any adjustment paid to a hospital as an
exception under our regulations at Sec. 413.40(g)(3), we believe it is
consistent with Congressional intent to limit the extent of the
adjustment to the hospital's cap on its target amount.
We propose to revise Sec. 413.40(g)(1) to set forth the limitation
on the adjustment payments.
VIII. MedPAC Recommendations
We have reviewed the March 1998 report submitted by MedPAC to
Congress and have given its recommendations careful consideration in
conjunction with the proposals set forth in this document.
Recommendations concerning the update factors for inpatient operating
costs and for hospitals and hospital distinct-part units excluded from
the prospective payment system are discussed in Appendix D, to this
proposed rule. The remaining recommendations are discussed below.
A. Disproportionate Share Hospitals (DSH)
Recommendation: The Medicare Payment Advisory Commission (MedPAC)
made several recommendations concerning the Medicare disproportionate
share adjustment calculation. In general, the Commission's proposal
would base the amount of DSH payment each hospital receives on its
volume and mix of cases paid under the prospective payment system and
its share of low-income patients. The low-income share measure would
reflect the costs of care provided to low-income individuals (Medicare
patients eligible for Supplemental Security Income (SSI), Medicaid
patients, patients sponsored by local indigent care programs, and
patients receiving uncompensated care) as a proportion of total patient
care expenses. Both inpatient and outpatient costs were included in the
data used to calculate the low-income shares, although payment would be
made only on inpatient discharges.
The same formula would be applied to all prospective payment
hospitals. Under the recommendation, there would be a threshold or
minimum low-income share, that must be reached for a hospital to
receive any Medicare disproportionate share adjustment. The payment the
hospital would receive is proportionate to the segment of its low-
income share that lies above the threshold. MedPAC simulated the
potential effects of applying their approach on the distribution of
Medicare disproportionate share payments made in 1995. For purposes of
MedPAC's simulations, the threshold was set at a level that would limit
payments to about 40 percent of prospective payment hospitals--roughly
the same as under the current DSH adjustment. MedPAC stated that this
proportion could be adjusted, or the threshold could be set using a
different method, as deemed appropriate by policy makers. (For more
information see Volume 1, chapter 6, page 63 of the March 1998 report.)
Response: Section 1886(d)(5)(F) of the Act, as amended by section
4403(b) of the BBA, requires us to prepare a report to Congress, due by
August 5, 1998, which will include our recommendations for an
appropriate
[[Page 25603]]
formula for determining DSH payments. We appreciate MedPAC's efforts to
assist HCFA in restructuring the Medicare disproportionate share
adjustment and we will further examine and consider their
recommendations as we develop our report to Congress.
B. Potential Effects of Target Amount Caps
Recommendation: The wage-related portion of the excluded hospital
target amount caps should be adjusted by the appropriate hospital wage
index to account for geographic differences in wages. (For more
information see Volume 1, chapter 7, page 71 of the March 1998 report.)
Response: As MedPAC indicated in its recommendation, legislation
would be required to adjust the target amount caps in such a
substantial manner as to adjust for differences in area labor costs.
IX. Other Required Information
A. Requests for Data From the Public
In order to respond promptly to public requests for data related to
the prospective payment system, we have set up a process under which
commenters can gain access to the raw data on an expedited basis.
Generally, the data are available in computer tape or cartridge format;
however, some files are available on diskette as well as on the
Internet at HTTP://WWW.HCFA.GOV/STATS/PUBFILES.HTML. Data files are
listed below with the cost of each. Anyone wishing to purchase data
tapes, cartridges, or diskettes should submit a written request along
with a company check or money order (payable to HCFA-PUF) to cover the
cost to the following address: Health Care Financing Administration,
Public Use Files, Accounting Division, P.O. Box 7520, Baltimore,
Maryland 21207-0520, (410) 786-3691. Files on the Internet may be
downloaded without charge.
1. Expanded Modified MEDPAR-Hospital (National)
The Medicare Provider Analysis and Review (MedPAR) file contains
records for 100 percent of Medicare beneficiaries using hospital
inpatient services in the United States. (The file is a Federal fiscal
year file, that is, discharges occurring October 1 through September 30
of the requested year.)
The records are stripped of most data elements that will permit
identification of beneficiaries. The hospital is identified by the 6-
position Medicare billing number. The file is available to persons
qualifying under the terms of the Notice of Proposed New Routine Uses
for an Existing System of Records published in the Federal Register on
December 24, 1984 (49 FR 49941), and amended by the July 2, 1985 notice
(50 FR 27361). The national file consists of approximately 11 million
records. Under the requirements of these notices, an agreement for use
of HCFA Beneficiary Encrypted Files must be signed by the purchaser
before release of these data. For all files requiring a signed
agreement, please write or call to obtain a blank agreement form before
placing an order. Two versions of this file are created each year. They
support the following:
--- Notice of Proposed Rulemaking (NPRM) published in the
Federal Register, usually available by the end of May (April beginning
in 1998). This file is derived from the MedPAR file with a cutoff of 3
months after the end of the fiscal year (December file).
--- Final Rule published in the Federal Register, usually
available by the first week of September (August beginning with the FY
1999 final rule). For final rules published before 1998, this file is
derived from the MedPAR file with a cutoff of 9 months after the end of
the fiscal year (June file). The FY 1997 MedPar file used for the FY
1999 final rule will have a cutoff of 6 months after the end of the
fiscal year (March file).
Media: Tape/Cartridge
File Cost: $3,415.00 per fiscal year
Periods Available: FY 1988 through FY 1997
2. Expanded Modified MedPAR-Hospital (State)
The State MedPAR file contains records for 100 percent of Medicare
beneficiaries using hospital inpatient services in a particular State.
The records are stripped of most data elements that will permit
identification of beneficiaries. The hospital is identified by the 6-
position Medicare billing number. The file is available to persons
qualifying under the terms of the Notice of Proposed New Routine Uses
for an Existing System of Records published in the December 24, 1984
Federal Register notice, and amended by the July 2, 1985 notice. This
file is a subset of the Expanded Modified MedPAR-Hospital (National) as
described above. Under the requirements of these notices, an agreement
for use of HCFA Beneficiary Encrypted Files must be signed by the
purchaser before release of these data. Two versions of this file are
created each year. They support the following:
--- NPRM published in the Federal Register, usually available
by the end of May (April beginning in 1998). This file is derived from
the MedPAR file with a cutoff of 3 months after the end of the fiscal
year (December file).
--- Final Rule published in the Federal Register, usually
available by the first week of September (August beginning with the FY
1999 final rule). For final rules published before 1998, this file is
derived from the MedPAR file with a cutoff of 9 months after the end of
the fiscal year (June file). The FY 1997 MedPar file used for the FY
1999 final rule will be cut off 6 months after the end of the fiscal
year (March file).
Media: Tape/Cartridge
File Cost: $1,050.00 per State per year
Periods Available: FY 1988 through FY 1997
3. HCFA Wage Data
This file contains the hospital hours and salaries for 1995 used to
create the proposed FY 1999 prospective payment system wage index. The
file will be available by the beginning of February for the NPRM and
the beginning of May for the final rule.
------------------------------------------------------------------------
Processing year Wage data year PPS fiscal year
------------------------------------------------------------------------
1998................... 1995 1999
1997................... 1994 1998
1996................... 1993 1997
1995................... 1992 1996
1994................... 1991 1995
1993................... 1990 1994
1992................... 1989 1993
1991................... 1988 1992
------------------------------------------------------------------------
These files support the following:
--- NPRM published in the Federal Register, usually by the end
of April.
--- Final Rule published in the Federal Register, usually by
the first week of August.
Media: Diskette/Internet
File Cost: $145.00 per year
Periods Available: FY 1999 PPS Update
4. HCFA Hospital Wages Indices (Formally: Urban and Rural Wage Index
Values Only)
This file contains a history of all wage indices since October 1,
1983.
Media: Diskette/Internet
File Cost: $145.00 per year
Periods Available: FY 1999 PPS Update
5. PPS SSA/FIPS MSA State and County Crosswalk
This file contains a crosswalk of State and county codes used by
the Social Security Administration (SSA) and the Federal Information
Processing Standards (FIPS), county name, and a historical list of
Metropolitan Statistical Area (MSA).
Media: Diskette/Internet
[[Page 25604]]
File Cost: $145.00 per year
Periods Available: FY 1999 PPS Update
6. Reclassified Hospitals by Provider Only
This file contains a list of hospitals that were reclassified for
the purpose of the proposed FY 1999 wage index. Two versions of these
files are created each year.
They support the following:
--- NPRM published in the Federal Register, usually by the end
of April.
--- Final Rule published in the Federal Register, usually by
the first week of August.
Media: Diskette/Internet
File Cost: $145.00 per year
Periods Available: FY 1999 PPS Update
7. PPS-IV to PPS-XII Minimum Data Sets
The Minimum Data Set contains cost, statistical, financial, and
other information from Medicare hospital cost reports. The data set
includes only the most current cost report (as submitted, final
settled, or reopened) submitted for a Medicare participating hospital
by the Medicare Fiscal Intermediary to HCFA. This data set is updated
at the end of each calendar quarter and is available on the last day of
the following month.
Media: Tape/Cartridge
------------------------------------------------------------------------
Periods
beginning and before
on or after
------------------------------------------------------------------------
PPS IV........................................ 10/01/86 10/01/87
PPS V......................................... 10/01/87 10/01/88
PPS VI........................................ 10/01/88 10/01/89
PPS VII....................................... 10/01/89 10/01/90
PPS VIII...................................... 10/01/90 10/01/91
PPS IX........................................ 10/01/91 10/01/92
PPS X......................................... 10/01/92 10/01/93
PPS XI........................................ 10/01/93 10/01/94
PPS XII....................................... 10/01/94 10/01/95
------------------------------------------------------------------------
(Note: The PPS XIII Minimum Data Set covering FY 1997 will not be
available until July 31, 1998.)
File Cost: $715.00 per year
8. PPS-IX to PPS-XII Capital Data Set
The Capital Data Set contains selected data for capital-related
costs, interest expense and related information and complete balance
sheet data from the Medicare hospital cost report. The data set
includes only the most current cost report (as submitted, final settled
or reopened) submitted for a Medicare certified hospital by the
Medicare fiscal intermediary to HCFA. This data set is updated at the
end of each calendar quarter and is available on the last day of the
following month.
Media: Tape/Cartridge
------------------------------------------------------------------------
Periods
beginning and before
on or after
------------------------------------------------------------------------
PPS IX........................................ 10/01/91 10/01/92
PPS X......................................... 10/01/92 10/01/93
PPS XI........................................ 10/01/93 10/01/94
PPS XII....................................... 10/01/94 10/01/95
------------------------------------------------------------------------
(Note: The PPS XIII Capital Data Set covering FY 1997 will not be
available until July 31, 1998.)
File Cost: $715.00 per year
9. Provider-Specific File
This file is a component of the PRICER program used in the fiscal
intermediary's system to compute DRG payments for individual bills. The
file contains records for all prospective payment system eligible
hospitals, including hospitals in waiver States, and data elements used
in the prospective payment system recalibration processes and related
activities. Beginning with December 1988, the individual records were
enlarged to include pass-through per diems and other elements.
Media: Diskette/Internet
File Cost: $265.00
Periods Available: FY 1998 PPS Update
10. HCFA Medicare Case-Mix Index File
This file contains the Medicare case-mix index by provider number
as published in each year's update of the Medicare hospital inpatient
prospective payment system. The case-mix index is a measure of the
costliness of cases treated by a hospital relative to the cost of the
national average of all Medicare hospital cases, using DRG weights as a
measure of relative costliness of cases. Two versions of this file are
created each year. They support the following:
--- NPRM published in the Federal Register, usually by the end
of May (April beginning in 1998).
--- Final rule published in the Federal Register, usually by
the first week of September (August beginning in 1998).
Media: Diskette/Internet
Price: $145.00 per year
Periods Available: FY 1985 through FY 1997 (Internet--FY 1997)
11. DRG Relative Weights (Formerly Table 5 DRG)
This file contains a listing of DRGs, DRG narrative description,
relative weights, and geometric and arithmetic mean lengths of stay as
published in the Federal Register. The hardcopy image has been copied
to diskette. There are two versions of this file as published in the
Federal Register:
a. NPRM, usually published by the end of May (April beginning in
1998).
b. Final rule, usually published by the first week of September
(August beginning in 1999).
Media: Diskette/Internet
File Cost: $145.00
Periods Available: FY 1999 PPS Update
12. PPS Payment Impact File
This file contains data used to estimate payments under Medicare's
hospital inpatient prospective payment systems for operating and
capital-related costs. The data are taken from various sources,
including the Provider-Specific File, Minimum Data Sets, and prior
impact files. The data set is abstracted from an internal file used for
the impact analysis of the changes to the prospective payment systems
published in the Federal Register. This file is available for release 1
month after the proposed and final rules are published in the Federal
Register.
Media: Diskette/Internet
File Cost: $145.00
Periods Available: FY 1999 PPS Update
13. AOR/BOR Tables
This file contains data used to develop the DRG relative weights.
It contains mean, maximum, minimum, standard deviation, and coefficient
of variation statistics by DRG for length of stay and standardized
charges. The BOR tables are "Before Outliers Removed" and the AOR is
"After Outliers Removed." (Outliers refers to statistical outliers,
not payment outliers.) Two versions of this file are created each year.
They support the following:
--- NPRM published in the Federal Register, usually by the end
of April.
--- Final rule published in the Federal Register, usually by
the first week of August.
Media: Diskette/Internet
File Cost: $145.00
Periods Available: FY 1999 PPS Update
For further information concerning these data tapes, contact Mary
R. White at (410) 786-3691.
Commenters interested in obtaining or discussing any other data
used in constructing this rule should contact Stephen Phillips at (410)
786-4548.
B. Public Comments
Because of the large number of items of correspondence we normally
receive on a proposed rule, we are not able to acknowledge or respond
to them individually. However, in preparing the final rule, we will
consider all comments concerning the provisions of this proposed rule
that we receive by the date and time specified in the Dates
[[Page 25605]]
section of this preamble and respond to those comments in the preamble
to that rule. We emphasize that, given the statutory requirement under
section 1886(e)(5) of the Act that our final rule for FY 1999 be
published by August 1, 1998, we will consider only those comments that
deal specifically with the matters discussed in this proposed rule.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping
requirements, Rural areas, X-rays.
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
42 CFR Chapter IV would be amended as set forth below:
A. Part 405 is amended as follows:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
1. The authority citation for part 405 is revised to read as
follows:
Authority: Secs. 1102, 1861, 1862(a), 1871, 1874, 1881, and
1886(k) of the Social Security Act (42 U.S.C. 1302, 1395x, 1395y(a),
1395hh, 1395kk, 1395rr and 1395ww(k)), and sec. 353 of the Public
Health Service Act (42 U.S.C. 263a), unless otherwise noted.
Subpart X--Rural Health Clinic and Federally Qualified Health
Center Services
Sec. 405.2468 [Amended]
2. In Sec. 405.2468, a new paragraph (f) is added to read as
follows:
* * * * *
(f) Graduate medical education. (1) Effective for that portion of
cost reporting periods occurring on or after January 1, 1999, if an RHC
or an FQHC incurs "all or substantially all" of the costs for the
training program in the nonhospital setting as defined in
Sec. 413.86(b) of this chapter, the RHC or FQHC may receive direct
graduate medical education payment for those residents.
(2) Direct graduate medical education costs are not included as
allowable cost under Sec. 405.2466(b)(1)(i); and therefore, are not
subject to the limit on the all-inclusive rate for allowable costs.
(3) Allowable graduate medical education costs must be reported on
the RHC's or the FQHC's cost report under a separate cost center.
(4) Allowable direct graduate medical education costs under
paragraphs (f)(5) and (6)(i) of this section, are subject to reasonable
cost principles under part 413 and the reasonable compensation
equivalency limits in Secs. 415.60 and 415.70 of this chapter.
(5) The allowable direct graduate medical education costs are those
costs incurred by the nonhospital site for the educational activities
associated with patient care services of an approved program, subject
to the redistribution and community support principles in
Sec. 413.85(c).
(i) The following costs are included in allowable direct graduate
medical education costs to the extent that they are reasonable--
(A) The costs of the residents' salaries and fringe benefits
(including travel and lodging expenses where applicable).
(B) The portion of teaching physicians' salaries and fringe
benefits that are related to the time spent teaching and supervising
residents.
(C) Facility overhead costs that are allocated to direct graduate
medical education.
(ii) The following costs are not included as allowable graduate
medical education costs--
(A) Costs associated with training, but not related to patient care
services.
(B) Normal operating and capital-related costs.
(C) The marginal increase in patient care costs that the RHC or
FQHC experiences as a result of having an approved program.
(D) The costs associated with activities described in
Sec. 413.85(d) of this chapter.
(6) Payment is equal to the product of--
(i) The RHC's or the FQHC's allowable direct graduate medical
education costs; and
(ii) Medicare's share of the direct graduate medical education
payment which is equal to the ratio of Medicare visits to the total
number of visits (as defined in Sec. 405.2463).
(7) Direct graduate medical education payments to RHCs and FQHCs
made under this section are made from the Federal Supplementary Medical
Insurance Trust Fund.
* * * * *
B. Part 412 is amended as set forth below:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
1. The authority citation for part 412 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1895hh).
Subpart A--General Provisions
2. Section 412.4 is revised to read as follows:
Sec. 412.4 Discharges and transfers.
(a) Discharges. Subject to the provisions of paragraphs (b) and (c)
of this section, a hospital inpatient is considered discharged from a
hospital paid under the prospective payment system when --
(1) The patient is formally released from the hospital; or
(2) The patient dies in the hospital.
(b) Transfer--Basic rule. A discharge of a hospital inpatient is
considered to be a transfer for purposes of payment under this part if
the discharge is made under any of the following circumstances:
(1) From a hospital to the care of another hospital that is--
(i) Paid under the prospective payment system; or
(ii) Excluded from being paid under the prospective payment system
because of participation in an approved Statewide cost control program
as described in subpart C of part 403 of this chapter.
(2) From one inpatient area or unit of a hospital to another
inpatient area or unit of the hospital that is paid under the
prospective payment system.
(c) Transfers--Special 10 DRG rule. For discharges occurring on or
after October 1, 1998, a discharge of a hospital inpatient is
considered to be a transfer for purposes of this part when the
patient's discharge is assigned, as described in Sec. 412.60(c), to one
of the qualifying diagnosis-related groups (DRGs) listed in paragraph
(d) of this section and the discharge is made under any of the
following circumstances--
(1) To a hospital or distinct part hospital unit excluded from the
prospective payment system under subpart B of this part.
(2) To a skilled nursing facility or to a swing bed in the hospital
that meets the provisions of Sec. 482.66 of this chapter.
(3) To home under a written plan of care for the provision of home
health services from a home health agency and those services begin
within 3 days after the date of discharge.
[[Page 25606]]
(d) Qualifying DRGs. The qualifying DRGs for purposes of paragraph
(c) of this section are DRGs 14, 113, 209, 210, 211, 236, 263, 264,
429, and 483.
(e) Payment for discharges. The hospital discharging an inpatient
(under paragraph (a) of this section) is paid in full, in accordance
with Sec. 412.2(b).
(f) Payment for transfers--(1) General rule. Except as provided in
paragraph (f)(2) or (f)(3) of this section, a hospital that transfers
an inpatient under the circumstances described in paragraph (b) or (c)
of this section, is paid a graduated per diem rate for each day of the
patient's stay in that hospital, not to exceed the amount that would
have been paid under subparts D and M of this part if the patient had
been discharged to another setting. The per diem rate is determined by
dividing the appropriate prospective payment rates (as determined under
subparts D, and M of this part) by the geometric mean length of stay
for the specific which the case is assigned. Payment is graduated by
paying twice the per diem amount for the first day of the stay, and the
per diem amount for each subsequent day, up to the full DRG payment.
(2) Special rule for DRGs 209, 210, and 211. A hospital that
transfers an inpatient under the circumstances described in paragraph
(c) of this section and the transfer is assigned to DRGs 209, 210 or
211 is paid as follows:
(i) 50 percent of the appropriate prospective payment rate (as
determined under subparts D and M of this part) for the first day of
the stay; and
(ii) 50 percent of the per diem amount as calculated under
paragraph (f)(1) of this section for the remaining days of the stay, up
to the full DRG payment.
(3) Transfer assigned to DRG 385. If a transfer is classified into
DRG No. 385 (Neonates, died or transferred) the transferring hospital
is paid in accordance with Sec. 412.2(e).
(4) Outliers. Effective with discharges occurring on or after
October 1, 1994, a transferring hospital may qualify for an additional
payment for extraordinarily high-cost cases that meet the criteria for
cost outliers as described in subpart F of this part.
Subpart G--Special Treatment of Certain Facilities Under the
Prospective Payment System for Inpatient Operating Costs
3. In Sec. 412.106, paragraph (b)(4) is revised to read as follows:
Sec. 412.106 Special treatment: Hospitals that serve a
disproportionate share of low-income patients.
* * * * *
(b) * * *
(4) Second computation. The fiscal intermediary determines, for the
same cost reporting period used for the first computation, the number
of the hospital's patient days of service for which patients were
eligible for Medicaid but not entitled to Medicare Part A, and divides
that number by the total number of patient days in the same period.
(i) For purpose of paragraph (b)(4), a patient is deemed eligible
for Medicaid on a given day if the patient is eligible for medical
assistance under an approved State Medicaid plan on such day,
regardless of whether particular items or services were covered or paid
under the State plan.
(ii) The hospital has the burden of furnishing data adequate to
prove eligibility for each Medicaid patient day claimed under this
paragraph, and of verifying with the State that a patient was eligible
for Medicaid during each claimed patient hospital day.
* * * * *
Subpart M--Prospective Payment System for inpatient Hospital
Capital Costs
4. In Sec. 412.322, a new sentence is added at the end of paragraph
(a)(3) to read as follows:
Sec. 412.322 Indirect medical education adjustment factor.
(a) * * *
(3) * * * This ratio cannot exceed 1.5.
* * * * *
5. In Sec. 412.331, paragraphs (a) and (b) are redesignated as
paragraphs (b) and (c) respectively, a new paragraph (a) is added, and
the first sentences of new paragraphs (b) introductory text and (b)(2)
are revised to read as follows:
Sec. 412.331 Determining hospital-specific rates in cases of hospital
merger, consolidation, or dissolution.
(a) New hospital merger or consolidation. If, after a new hospital
accepts its first patient but before the end of its base year, it
merges with one or more existing hospitals, and two or more separately
located hospital campuses are maintained, hospital specific rate and
payment determination for the merged entity are determined as follows--
(1) The "new" campus continues to be paid based on reasonable
costs until the end of its base year. The existing campus remains on
its previous payment methodology until the end of the new campus' base
year. Effective with the first cost reporting period beginning after
the "new" campus, the intermediary determines a hospital-specific
rate applicable to the new campus, and then determines a revised
hospital-specific rate for the merged entity in accordance with
paragraph(a) of this section.
(2) Payment determination. To determine the applicable payment
methodology under Sec. 412.336 and for payment purposes under
Sec. 412.340 or Sec. 412.344, the discharge-weighted hospital-specific
rate is compared to the Federal rate. The revised payment methodology
is effective on the first day of the cost reporting period beginning
after the end of the "new" campus" base year.
(b) Hospital merger or consolidation. If, after the base year, two
or more hospitals merge or consolidate into one hospital as provided
for under Sec. 413.134(k) of this chapter and are not subject to the
provisions of paragraph (a) of this section, the intermediary
determines a revised hospital-specific rate applicable to the combined
facility under Sec. 412.328, which is effective beginning with the date
of merger or consolidation. * * *
(2) Payment determination. To determine the applicable payment
methodology under Sec. 412.336 and for payment purposes under
Sec. 412.340 or Sec. 412.344, the discharge-weighted hospital-specific
rate is compared to the Federal rate. * * *
* * * * *
C. Part 413 is amended as set forth below:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT FOR SKILLED NURSING FACILITIES
1. The authority citation for part 413 is revised to read as
follows:
Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (I) and
(n), 1861(v), 1871, 1881, 1883, and 1866 of the Social Security Act
(42 U.S.C. 1302, 1395f(b), 1395g, 1395l, 1395l(a), (I) and (n),
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww).
Subpart C--Limits on Cost Reimbursement
2. In Sec. 413.40, paragraph (c)(4)(iv) is redesignated as
paragraph (v), a new paragraph (iv) is added, and paragraph (g)(1) is
revised to read as follows:
Sec. 413.40 Ceiling on the rate of increase in hospital inpatient
costs.
* * * * *
(c) * * *
[[Page 25607]]
(4) * * *
(iv) For purposes of the limits on target amounts established under
paragraph (c)(4)(iii) of this section, each hospital or unit that was
excluded from the prospective payment system for its cost reporting
period ending during FY 1996 will be classified in the same way (that
is, as a psychiatric hospital or unit, or a long-term care hospital) as
it was classified under subpart B of part 412 of this chapter for
purposes of exclusion from prospective payment systems for its cost
reporting period ending during FY 1996. If a hospital or unit was not
excluded from the prospective payment system for a cost reporting
period ending during FY 1996 but could qualify to be classified in more
than one way under the exclusion criteria in subpart B of part 412 of
this chapter, the hospital is assigned to the classification group that
has the lowest limit on its target amounts.
* * * * *
(g) Adjustments--(1) General rule. HCFA may adjust the amount of
the operating costs considered in establishing the rate-of-increase
ceiling for one or more cost reporting periods, including both periods
subject to the ceiling and the hospital's base period, under the
circumstances specified below. When an adjustment is requested by the
hospital, HCFA makes an adjustment only to the extent that the
hospital's operating costs are reasonable, attributable to the
circumstances specified separately identified by the hospital, and
verified by the intermediary. HCFA may grant an adjustment requested by
the hospital only if the hospital's operating costs exceed the rate-of-
increase ceiling imposed under this section. In the case of a
psychiatric hospital or unit, rehabilitation hospital or unit, or long
term care hospital, the amount of payment made to a hospital after an
adjustment under paragraph (g)(3) of this section may not exceed the
75th percentile of the target amounts for hospitals of the same class
as described in Sec. 413.40(c)(4)(iii).
Subpart F--Specific Categories of Costs
3. In Sec. 413.80, paragraph (h) is redesignated as paragraph (i),
and a new paragraph (h) is added to read as follows:
Sec. 413.80 Bad debts, charity, and courtesy allowances.
* * * * *
(h) Limitations on bad debts. In determining reasonable costs for
hospitals, the amount of bad debts otherwise treated as allowable costs
(as defined in paragraph (e) of this section) is reduced--
(1) For cost reporting periods beginning during fiscal year 1998,
by 25 percent;
(2) For cost reporting periods beginning during fiscal year 1999,
by 40 percent; and
(3) For cost reporting periods beginning during a subsequent fiscal
year, by 45 percent.
* * * * *
4. In Sec. 413.85, a new paragraph (h) is added to read as follows:
Sec. 413.85 Cost of educational activities.
* * * * *
(h) Medicare+Choice organizations. (1) Effective for that portion
of cost reporting periods occurring on or after January 1, 1999,
Medicare+Choice organizations may receive direct graduate medical
education payments for the time that residents spend in nonhospital
provider settings such as freestanding clinics, nursing homes, and
physicians' offices in connection with approved programs.
(2) Medicare+Choice organizations may receive direct graduate
medical education payments if all of the following conditions are met--
(i) The resident spends his or her time in patient care activities.
(ii) The Medicare+Choice organization incurs "all or substantially
all" of the costs for the training program in the nonhospital setting
as defined in Sec. 413.86(b).
(iii) There is a written agreement between the Medicare+Choice
organization and the nonhospital provider that contains--
(A) A statement by the nonhospital provider that, all or
substantially all of the direct graduate medical education costs as
defined in paragraph (f)(1)(ii) of this section are being assumed by
the Medicare+Choice organization;
(B) A statement that the nonhospital site agrees to offset the
revenue received from the Medicare+Choice organization.
(C) A statement that the nonhospital site agrees to report its
direct graduate medical education costs in a nonreimbursable cost
center on its cost report; and
(D) A statement indicating how much time the teaching physicians
will spend training residents in the nonhospital setting, subject to
the provisions of Secs. 415.60 and 415.70 of this chapter.
(3) A Medicare+Choice organization's allowable direct graduate
medical education costs, subject to the redistribution and community
support principles in Sec. 413.85(c), consist of--
(i) Residents' salaries and fringe benefits (including travel and
lodging where applicable); and
(ii) The portion of teaching physicians' salaries and fringe
benefits that are related to the time spent in teaching and supervising
residents.
(4) Allowable direct graduate medical education costs under
paragraph (h)(3) of this section are subject to the reasonable cost
principles of part 413 and the reasonable compensation equivalency
limits in Secs. 415.60 and 415.70 of this chapter.
(5) The direct graduate medical education payment is equal to the
product of--
(i) The Medicare+Choice organization's allowable direct graduate
medical education costs as defined in paragraph (h)(3) of this section;
and
(ii) Medicare's share of the Medicare+Choice organization's direct
graduate medical education payment in the nonhospital site which is
equal to the ratio of the number of Medicare beneficiaries enrolled to
the total number of individuals enrolled in the Medicare+Choice
organization.
(6) Direct graduate medical education payments made to
Medicare+Choice organizations under this section are made from the
Federal Supplementary Medical Insurance Trust Fund.
* * * * *
5. In Sec. 413.86, the introductory text of paragraph (b) is
republished, a new definition in alphabetical order is added to
paragraph (b), paragraphs (i) and (j) are redesignated as paragraphs
(j) and (k) respectively, paragraph (f)(2) is redesignated as new
paragraph (i), paragraphs (f)(2)(i) through (vii) are redesignated as
paragraphs (i)(1) through (7) respectively, the introductory text of
paragraph (f)(1) is redesignated as the introductory text of paragraph
(f), paragraphs (f)(1)(i) through (iii) are redesignated as paragraphs
(f)(1) through (3) respectively, paragraphs (f)(1)(iii)(A) and (B) are
redesignated as (f)(3)(i) and (ii) respectively, new paragraph (f)(2)
and the introductory text of new paragraph (f)(3) are revised, and a
new paragraph (f)(4) is added to read as follows:
Sec. 413.86 Direct graduate medical education payments.
* * * * *
(b) Definitions. For purposes of this section, the following
definitions apply:
* * * * *
All or substantially all of the costs for the training program in
the nonhospital setting means the residents' salaries and fringe
benefits (including travel and lodging where applicable) and the
[[Page 25608]]
portion of the cost of teaching physicians' salaries and fringe
benefits.
* * * * *
(f) * * *
(2) No individual may be counted as more than one FTE. If a
resident spends time in more than one hospital or, except as provided
in paragraphs (f)(3) and (4) of this section, in a nonprovider setting,
the resident counts as partial FTE based on the proportion of time
worked at the hospital to the total time worked. A part-time resident
counts as a partial FTE based on the proportion of allowable time
worked compared to the total time necessary to fill a full-time
internship or residency slot.
(3) On or after July 1, 1987 and for the portion of the cost
reporting period ocurring before January 1, 1999, the time residents
spend in nonprovider settings such as freestanding clinics, nursing
homes, and physicians' offices in connection with approved programs is
not excluded in determining the number of FTE residents in the
calculation of a hospital's resident count if the following conditions
are met--
* * * * *
(4) On or after July 1, 1987 and for the portion cost reporting
period occurring on or after January 1, 1999, the time residents spend
in nonprovider settings such as freestanding clinics, nursing homes,
and physicians' offices in connection with approved programs is not
excluded in determining the number of FTE residents in the calculation
of a hospital's resident count if the following conditions are met--
(i) The resident spends his or her time in patient care activities.
(ii) The written agreement between the hospital and the nonhospital
provider must contain--
(A) A statement by the nonhospital provider that, all or
substantially all of the direct graduate medical education costs as
defined in paragraph (b) of this section are being assumed by the
hospital;
(B) A statement that the nonhospital site agrees to offset the
revenue received from the hospital;
(C) A statement that the nonhospital site agrees to report its
direct graduate medical education costs on its cost report in a
graduate medical education cost center; and
(D) A statement indicating how much time the teaching physicians
will spend training residents in the nonhospital setting, subject to
the provisions of Secs. 415.60 and 415.70 of this chapter.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance)
Dated: April 28, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
Dated: May 1, 1998.
Donna E. Shalala,
Secretary.
[Editorial Note: The following addendum and appendixes will not
appear in the Code of Federal Regulations.]
Addendum--Proposed Schedule of Standardized Amounts Effective With
Discharges Occurring On or After October 1, 1998 and Update Factors and
Rate-of-Increase Percentages Effective With Cost Reporting Periods
Beginning On or After October 1, 1998
I. Summary and Background
In this addendum, we are setting forth the proposed amounts and
factors for determining prospective payment rates for Medicare
inpatient operating costs and Medicare inpatient capital-related costs.
We are also setting forth proposed rate-of-increase percentages for
updating the target amounts for hospitals and hospital units excluded
from the prospective payment system.
For discharges occurring on or after October 1, 1998, except for
sole community hospitals, Medicare-dependent, small rural hospitals,
and hospitals located in Puerto Rico, each hospital's payment per
discharge under the prospective payment system will be based on 100
percent of the Federal national rate.
Sole community hospitals are paid based on whichever of the
following rates yield the greatest aggregate payment: The Federal
national rate, the updated hospital-specific rate based on FY 1982 cost
per discharge, or the updated hospital-specific rate based on FY 1987
cost per discharge. Medicare-dependent, small rural hospitals are paid
based on the Federal national rate or, if higher, the Federal national
rate plus 50 percent of the difference between the Federal national
rate and the updated hospital-specific rate based on FY 1982 or FY 1987
cost per discharge, whichever is higher. For hospitals in Puerto Rico,
the payment per discharge is based on the sum of 50 percent of a Puerto
Rico rate and 50 percent of a national rate.
As discussed below in section II, we are proposing to make changes
in the determination of the prospective payment rates for Medicare
inpatient operating costs. The changes, to be applied prospectively,
would affect the calculation of the Federal rates. In section III of
this addendum, we discuss our proposed changes for determining the
prospective payment rates for Medicare inpatient capital-related costs.
Section IV of this addendum sets forth our proposed changes for
determining the rate-of-increase limits for hospitals excluded from the
prospective payment system. The tables to which we refer in the
preamble to the proposed rule are presented at the end of this addendum
in section V.
II. Proposed Changes to Prospective Payment Rates for Inpatient
Operating Costs for FY 1999
The basic methodology for determining prospective payment rates for
inpatient operating costs is set forth at Sec. 412.63 for hospitals
located outside of Puerto Rico. The basic methodology for determining
the prospective payment rates for inpatient operating costs for
hospitals located in Puerto Rico is set forth at Secs. 412.210 and
412.212. Below, we discuss the proposed factors used for determining
the prospective payment rates. The Federal and Puerto Rico rate
changes, once issued as final, would be effective with discharges
occurring on or after October 1, 1998. As required by section
1886(d)(4)(C) of the Act, we must also adjust the DRG classifications
and weighting factors for discharges in FY 1999.
In summary, the proposed standardized amounts set forth in Tables
1A and 1C of section V of this addendum reflect--
--- Updates of 0.7 percent for all areas (that is, the market
basket percentage increase of 2.6 percent minus 1.9 percentage points);
--- An adjustment to ensure budget neutrality as provided for
in sections 1886(d)(4)(C)(iii) and (d)(3)(E) of the Act by applying new
budget neutrality adjustment factors to the large urban and other
standardized amounts;
--- An adjustment to ensure budget neutrality as provided for
in section 1886(d)(8)(D) of the Act by removing the FY 1998 budget
neutrality factor and applying a revised factor;
--- An adjustment to apply the revised outlier offset by
removing the FY 1998 outlier offsets and applying a new offset; and
--- An adjustment in the Puerto Rico standardized amounts to
reflect the application of a Puerto Rico-specific wage index.
The standardized amounts set forth in Tables 1E and 1F of section V
of this addendum, which apply to "temporary relief" hospitals (see 62
FR 46001 for a discussion of these hospitals), reflect updates of 1.0
percent for all areas but otherwise reflect the same adjustments
[[Page 25609]]
as the national standardized amounts. As described in Sec. 412.107,
these hospitals receive an update that is 0.3 percentage points more
than the update factor applicable to all other prospective payment
hospitals for FY 1999.
A. Calculation of Adjusted Standardized Amounts
1. Standardization of Base-Year Costs or Target Amounts
Section 1886(d)(2)(A) of the Act required the establishment of
base-year cost data containing allowable operating costs per discharge
of inpatient hospital services for each hospital. The preamble to the
September 1, 1983 interim final rule (48 FR 39763) contains a detailed
explanation of how base-year cost data were established in the initial
development of standardized amounts for the prospective payment system
and how they are used in computing the Federal rates.
Section 1886(d)(9)(B)(i) of the Act required that Medicare target
amounts be determined for each hospital located in Puerto Rico for its
cost reporting period beginning in FY 1987. The September 1, 1987 final
rule contains a detailed explanation of how the target amounts were
determined and how they are used in computing the Puerto Rico rates (52
FR 33043, 33066).
The standardized amounts are based on per discharge averages of
adjusted hospital costs from a base period or, for Puerto Rico,
adjusted target amounts from a base period, updated and otherwise
adjusted in accordance with the provisions of section 1886(d) of the
Act. Sections 1886(d)(2)(B) and (C) of the Act required that the base-
year per discharge costs be updated for FY 1984 and then standardized
in order to remove from the cost data the effects of certain sources of
variation in cost among hospitals. These include case mix, differences
in area wage levels, cost of living adjustments for Alaska and Hawaii,
indirect medical education costs, and payments to hospitals serving a
disproportionate share of low-income patients.
Under sections 1886(d)(2)(H) and (d)(3)(E) of the Act, in making
payments under the prospective payment system, the Secretary estimates
from time to time the proportion of costs that are wages and wage-
related costs. Since October 1, 1997, when the market basket was last
revised, we have considered 71.1 percent of costs to be labor-related
for purposes of the prospective payment system. We are revising the
Puerto Rico standardized amounts by the average labor share in Puerto
Rico of 71.3 percent. We are revising the discharge-weighted national
standardized amount for Puerto Rico to reflect the proportion of
discharges in large urban and other areas from the FY 1997 MedPAR file.
2. Computing Large Urban and Other Area Averages
Sections 1886(d) (2)(D) and (3) of the Act require the Secretary to
compute two average standardized amounts for discharges occurring in a
fiscal year: One for hospitals located in large urban areas and one for
hospitals located in other areas. In addition, under sections
1886(d)(9)(B)(iii) and (C)(i) of the Act, the average standardized
amount per discharge must be determined for hospitals located in urban
and other areas in Puerto Rico. Hospitals in Puerto Rico are paid a
blend of 50 percent of the applicable Puerto Rico standardized amount
and 50 percent of a national standardized payment amount.
Section 1886(d)(2)(D) of the Act defines "urban area" as those
areas within a Metropolitan Statistical Area (MSA). A "large urban
area" is defined as an urban area with a population of more than
1,000,000. In addition, section 4009(i) of Public Law 100-203 provides
that a New England County Metropolitan Area (NECMA) with a population
of more than 970,000 is classified as a large urban area. As required
by section 1886(d)(2)(D) of the Act, population size is determined by
the Secretary based on the latest population data published by the
Bureau of the Census. Urban areas that do not meet the definition of a
"large urban area" are referred to as "other urban areas." Areas
that are not included in MSAs are considered "rural areas" under
section 1886(d)(2)(D) of the Act. Payment for discharges from hospitals
located in large urban areas will be based on the large urban
standardized amount. Payment for discharges from hospitals located in
other urban and rural areas will be based on the other standardized
amount.
Based on 1996 population estimates published by the Bureau of the
Census, 60 areas meet the criteria to be defined as large urban areas
for FY 1999. These areas are identified by a footnote in Table 4A.
3. Updating the Average Standardized Amounts
Under section 1886(d)(3)(A) of the Act, we update the area average
standardized amounts each year. In accordance with section
1886(d)(3)(A)(iv) of the Act, we are proposing to update the large
urban and the other areas average standardized amounts for FY 1999
using the applicable percentage increases specified in section
1886(b)(3)(B)(i) of the Act. Section 1886(b)(3)(B)(i)(XIV) of the Act
specifies that, for hospitals in all areas, the update factor for the
standardized amounts for FY 1999 is equal to the market basket
percentage increase minus 1.9 percentage points. The "temporary
relief" provision under section 4401 of Public Law 105-33 provides for
an update equal to the market basket percentage increase minus 1.6
percentage points for hospitals that are not Medicare-dependent, small
rural hospitals, that receive no IME or DSH payments, that are located
in a state in which aggregate Medicare operating payments for such
hospitals were less than their aggregate allowable Medicare operating
costs for their cost reporting periods beginning during FY 1995, and
whose Medicare operating payments are less than their allowable
Medicare operating costs for their cost reporting period beginning
during FY 1999.
The percentage change in the market basket reflects the average
change in the price of goods and services purchased by hospitals to
furnish inpatient care. The most recent forecast of the proposed
hospital market basket increase for FY 1999 is 2.6 percent. Thus, for
FY 1999, the proposed update to the average standardized amounts equals
0.7 percent (1.0 percent for those hospitals qualifying under the
"temporary relief" provision of Public Law 105-33).
As in the past, we are adjusting the FY 1998 standardized amounts
to remove the effects of the FY 1998 geographic reclassifications and
outlier payments before applying the FY 1999 updates. That is, we are
increasing the standardized amounts to restore the reductions that were
made for the effects of geographic reclassification and outliers. We
then apply the new offsets to the standardized amounts for outliers and
geographic reclassifications for FY 1999.
Although the update factor for FY 1999 is set by law, we are
required by section 1886(e)(3) of the Act to report to Congress on our
initial recommendation of update factors for FY 1999 for both
prospective payment hospitals and hospitals excluded from the
prospective payment system. For general information purposes, we have
included the report to Congress as Appendix C to this proposed rule.
Our proposed recommendation on the update factors (which is required by
sections 1886(e)(4)(A) and (e)(5)(A) of the Act), as well as our
responses to MedPAC's recommendation concerning the update factor, are
set forth as Appendix D to this proposed rule.
[[Page 25610]]
4. Other Adjustments to the Average Standardized Amounts
a. Recalibration of DRG Weights and Updated Wage Index--Budget
Neutrality Adjustment. Section 1886(d)(4)(C)(iii) of the Act specifies
that beginning in FY 1991, the annual DRG reclassification and
recalibration of the relative weights must be made in a manner that
ensures that aggregate payments to hospitals are not affected. As
discussed in section II of the preamble, we normalized the recalibrated
DRG weights by an adjustment factor, so that the average case weight
after recalibration is equal to the average case weight prior to
recalibration.
Section 1886(d)(3)(E) of the Act specifies that the hospital wage
index must be updated on an annual basis beginning October 1, 1993.
This provision also requires that any updates or adjustments to the
wage index must be made in a manner that ensures that aggregate
payments to hospitals are not affected by the change in the wage index.
To comply with the requirement of section 1886(d)(4)(C)(iii) of the
Act that DRG reclassification and recalibration of the relative weights
be budget neutral, and the requirement in section 1886(d)(3)(E) of the
Act that the updated wage index be budget neutral, we used historical
discharge data to simulate payments and compared aggregate payments
using the FY 1998 relative weights and wage index to aggregate payments
using the proposed FY 1999 relative weights and wage index. The same
methodology was used for the FY 1998 budget neutrality adjustment. (See
the discussion in the September 1, 1992 final rule (57 FR 39832).)
Based on this comparison, we computed a budget neutrality adjustment
factor equal to 0.999227. We adjust the Puerto Rico-specific
standardized amounts for the effect of DRG reclassification and
recalibration. We computed a budget neutrality adjustment factor for
Puerto Rico-specific standardized amounts equal to 0.998946. These
budget neutrality adjustment factors are applied to the standardized
amounts without removing the effects of the FY 1998 budget neutrality
adjustments. We do not remove the prior budget neutrality adjustment
because estimated aggregate payments after the changes in the DRG
relative weights and wage index should equal estimated aggregate
payments prior to the changes. If we removed the prior year adjustment,
we would not satisfy this condition.
In addition, we are proposing to continue to apply the same FY 1999
adjustment factor to the hospital-specific rates that are effective for
cost reporting periods beginning on or after October 1, 1998, in order
to ensure that we meet the statutory requirement that aggregate
payments neither increase nor decrease as a result of the
implementation of the FY 1999 DRG weights and updated wage index. (See
the discussion in the September 4, 1990 final rule (55 FR 36073).)
b. Reclassified Hospitals--Budget Neutrality Adjustment. Section
1886(d)(8)(B) of the Act provides that certain rural hospitals are
deemed urban effective with discharges occurring on or after October 1,
1988. In addition, section 1886(d)(10) of the Act provides for the
reclassification of hospitals based on determinations by the Medicare
Geographic Classification Review Board (MGCRB). Under section
1886(d)(10) of the Act, a hospital may be reclassified for purposes of
the standardized amount or the wage index, or both.
Under section 1886(d)(8)(D) of the Act, the Secretary is required
to adjust the standardized amounts so as to ensure that total aggregate
payments under the prospective payment system after implementation of
the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the
Act are equal to the aggregate prospective payments that would have
been made absent these provisions. To calculate this budget neutrality
factor, we used historical discharge data to simulate payments, and
compared total prospective payments (including IME and DSH payments)
prior to any reclassifications to total prospective payments after
reclassifications. We are applying an adjustment factor of 0.994019 to
ensure that the effects of reclassification are budget neutral.
The adjustment factor is applied to the standardized amounts after
removing the effects of the FY 1998 budget neutrality adjustment
factor. We note that the proposed FY 1999 adjustment reflects wage
index and standardized amount reclassifications approved by the MGCRB
or the Administrator as of February 27, 1998. The effects of any
additional reclassification changes resulting from appeals and reviews
of the MGCRB decisions for FY 1999 or from a hospital's request for the
withdrawal of a reclassification request will be reflected in the final
budget neutrality adjustment required under section 1886(d)(8)(D) of
the Act and published in the final rule for FY 1999.
c. Outliers. Section 1886(d)(5)(A) of the Act provides for payments
in addition to the basic prospective payments for "outlier" cases,
cases involving extraordinarily high costs (cost outliers). Section
1886(d)(3)(B) of the Act requires the Secretary to adjust both the
large urban and other area national standardized amounts by the same
factor to account for the estimated proportion of total DRG payments
made to outlier cases. Similarly, section 1886(d)(9)(B)(iv) of the Act
requires the Secretary to adjust the large urban and other standardized
amounts applicable to hospitals in Puerto Rico to account for the
estimated proportion of total DRG payments made to outlier cases.
Furthermore, under section 1886(d)(5)(A)(iv) of the Act, outlier
payments for any year must be projected to be not less than 5 percent
nor more than 6 percent of total payments based on DRG prospective
payment rates.
For FY 1998, the fixed loss cost outlier threshold is equal to the
prospective payment for the DRG plus $11,050 ($10,080 for hospitals
that have not yet entered the prospective payment system for capital-
related costs). The marginal cost factor for cost outliers (the percent
of costs paid after costs for the case exceed the threshold) is 80
percent. We applied an outlier adjustment to the FY 1998 standardized
amounts of 0.948840 for the large urban and other areas rates and
0.9382 for the capital Federal rate.
We are proposing a fixed loss cost outlier threshold in FY 1999
equal to the prospective payment rate for the DRG plus $11,350 ($10,355
for hospitals that have not yet entered the prospective payment system
for capital-related costs). In addition, we are proposing to maintain
the marginal cost factor for cost outliers at 80 percent.
In accordance with section 1886(d)(5)(A)(iv) of the Act, we
calculated proposed outlier thresholds so that outlier payments are
projected to equal 5.1 percent of total payments based on DRG
prospective payment rates. In accordance with section 1886(d)(3)(E), we
reduced the proposed FY 1999 standardized amounts by the same
percentage to account for the projected proportion of payments paid to
outliers.
As stated in the September 1, 1993 final rule (58 FR 46348), we
establish outlier thresholds that are applicable to both inpatient
operating costs and inpatient capital-related costs. When we modeled
the combined operating and capital outlier payments, we found that
using a common set of thresholds resulted in a higher percentage of
outlier payments for capital-related costs than for operating costs. We
project that the proposed thresholds for FY 1999 will result in outlier
payments equal to 5.1
[[Page 25611]]
percent of operating DRG payments and 6.2 percent of capital payments
based on the Federal rate.
The proposed outlier adjustment factors applied to the standardized
amounts for FY 1999 are as follows:
------------------------------------------------------------------------
Operating
standardized Capital
amounts federal rate
------------------------------------------------------------------------
National................................ 0.948819 0.9378
Puerto Rico............................. 0.972962 0.9626
------------------------------------------------------------------------
We apply the proposed outlier adjustment factors after removing the
effects of the FY 1998 outlier adjustment factors on the standardized
amounts.
Table 8A in section V of this addendum contains the updated
Statewide average operating cost-to-charge ratios for urban hospitals
and for rural hospitals to be used in calculating cost outlier payments
for those hospitals for which the intermediary is unable to compute a
reasonable hospital-specific cost-to-charge ratio. These Statewide
average ratios would replace the ratios published in the August 29,
1997 final rule with comment period (62 FR 46113), effective October 1,
1998. Table 8B contains comparable Statewide average capital cost-to-
charge ratios. These average ratios would be used to calculate cost
outlier payments for those hospitals for which the intermediary
computes operating cost-to-charge ratios lower than 0.217279 or greater
than 1.28985 and capital cost-to-charge ratios lower than 0.01281 or
greater than 0.18084. This range represents 3.0 standard deviations
(plus or minus) from the mean of the log distribution of cost-to-charge
ratios for all hospitals. We note that the cost-to-charge ratios in
Tables 8A and 8B would be used during FY 1999 when hospital-specific
cost-to-charge ratios based on the latest settled cost report are
either not available or outside the three standard deviations range.
In the August 29, 1997 final rule with comment period (62 FR
46041), we stated that, based on available data, we estimated that
actual FY 1997 outlier payments would be approximately 4.8 percent of
actual total DRG payments. This was computed by simulating payments
using actual FY 1996 bill data available at the time. That is, the
estimate of actual outlier payments did not reflect actual FY 1997
bills but instead reflected the application of FY 1997 rates and
policies to available FY 1996 bills. Our current estimate, using
available FY 1997 bills, is that actual outlier payments for FY 1997
were approximately 5.5 percent of actual total DRG payments. We note
that the MedPAR file for FY 1997 discharges continues to be updated.
We currently estimate that actual outlier payments for FY 1998 will
be approximately 5.4 percent of actual total DRG payments, slightly
higher than the 5.1 percent we projected in setting outlier policies
for FY 1998. This estimate is based on simulations using the December
1997 update of the provider-specific file and the December 1997 update
of the FY 1997 MedPAR file (discharge data for FY 1997 bills). We used
these data to calculate an estimate of the actual outlier percentage
for FY 1998 by applying FY 1998 rates and policies to available FY 1997
bills.
In FY 1994, we began using a cost inflation factor rather than a
charge inflation factor to update billed charges for purposes of
estimating outlier payments. This refinement was made to improve our
estimation methodology. For FY 1998, we used a cost inflation factor of
minus 2.005 percent (a cost per case decrease of 2.005 percent). For FY
1999, based on more recent data, we are proposing a cost inflation
factor of minus 1.831 percent to set outlier thresholds. We will
reevaluate this factor when we develop the final rule for FY 1999. At
that time, more recent data should be available for analysis,
specifically, cost report data for cost reporting periods beginning in
FY 1997.
5. FY 1999 Standardized Amounts
The adjusted standardized amounts are divided into labor and
nonlabor portions. Table 1A (Table 1E for "temporary relief"
hospitals) contains the two national standardized amounts that we are
proposing to be applicable to all hospitals, except for hospitals in
Puerto Rico. Under section 1886(d)(9)(A)(ii) of the Act, the Federal
portion of the Puerto Rico payment rate is based on the discharge-
weighted average of the national large urban standardized amount and
the national other standardized amount (as set forth in Table 1A and
1E). The labor and nonlabor portions of the national average
standardized amounts for Puerto Rico hospitals are set forth in Table
1C (Table 1F for "temporary relief" hospitals). These tables also
include the Puerto Rico standardized amounts.
B. Adjustments for Area Wage Levels and Cost of Living
Tables 1A, 1C, 1E and 1F, as set forth in this addendum, contain
the proposed labor-related and nonlabor-related shares that would be
used to calculate the prospective payment rates for hospitals located
in the 50 States, the District of Columbia, and Puerto Rico. This
section addresses two types of adjustments to the standardized amounts
that are made in determining the prospective payment rates as described
in this addendum.
1. Adjustment for Area Wage Levels
Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require
that an adjustment be made to the labor-related portion of the
prospective payment rates to account for area differences in hospital
wage levels. This adjustment is made by multiplying the labor-related
portion of the adjusted standardized amounts by the appropriate wage
index for the area in which the hospital is located. In section III of
the preamble, we discuss certain revisions we are making to the wage
index. The wage index is set forth in Tables 4A through 4F of this
addendum.
2. Adjustment for Cost of Living in Alaska and Hawaii
Section 1886(d)(5)(H) of the Act authorizes an adjustment to take
into account the unique circumstances of hospitals in Alaska and
Hawaii. Higher labor-related costs for these two States are taken into
account in the adjustment for area wages described above. For FY 1999,
we propose to adjust the payments for hospitals in Alaska and Hawaii by
multiplying the nonlabor portion of the standardized amounts by the
appropriate adjustment factor contained in the table below. If the
Office of Personnel Management releases revised cost-of-living
adjustment factors before July 1, 1998, we will publish them in the
final rule and use them in determining FY 1999 payments.
Table of Cost-of-Living Adjustment Factors, Alaska and Hawaii Hospitals
------------------------------------------------------------------------
------------------------------------------------------------------------
Alaska--All areas................................................ 1.25
Hawaii:
County of Honolulu............................................. 1.225
County of Hawaii............................................... 1.15
County of Kauai................................................ 1.225
County of Maui................................................. 1.225
County of Kalawao.............................................. 1.225
------------------------------------------------------------------------
(The above factors are based on data obtained from the U.S. Office
of Personnel Management.)
C. DRG Relative Weights
As discussed in section II of the preamble, we have developed a
classification system for all hospital discharges, assigning them into
DRGs, and have developed relative weights for each DRG that reflect the
resource utilization of cases in each DRG relative
[[Page 25612]]
to Medicare cases in other DRGs. Table 5 of section V of this addendum
contains the relative weights that we propose to use for discharges
occurring in FY 1999. These factors have been recalibrated as explained
in section II of the preamble.
D. Calculation of Prospective Payment Rates for FY 1999
General Formula for Calculation of Prospective Payment Rates for FY
1999
Prospective payment rate for all hospitals located outside of
Puerto Rico except sole community hospitals and Medicare-dependent,
small rural hospitals = Federal rate.
Prospective payment rate for sole community hospitals = Whichever
of the following rates yields the greatest aggregate payment: 100
percent of the Federal rate, 100 percent of the updated FY 1982
hospital-specific rate, or 100 percent of the updated FY 1987 hospital-
specific rate.
Prospective payment rate for Medicare-dependent, small rural
hospitals = 100 percent of the Federal rate plus, if the greater of the
updated FY 1982 hospital-specific rate or the updated FY 1987 hospital-
specific rate is higher than the Federal rate, 50 percent of the
difference between the applicable hospital-specific rate and the
Federal rate.
Prospective payment rate for Puerto Rico = 50 percent of the Puerto
Rico rate + 50 percent of a discharge-weighted average of the national
large urban standardized amount and the national other standardized
amount.
1. Federal Rate
For discharges occurring on or after October 1, 1998 and before
October 1, 1999, except for sole community hospitals, Medicare-
dependent, small rural hospitals, and hospitals in Puerto Rico, the
hospital's payment is based exclusively on the Federal national rate.
The payment amount is determined as follows:
Step 1--Select the appropriate national standardized amount
considering the type of hospital and designation of the hospital as
large urban or other (see Tables 1A or 1E, in section V of this
addendum).
Step 2--Multiply the labor-related portion of the standardized
amount by the applicable wage index for the geographic area in which
the hospital is located (see Tables 4A, 4B, and 4C of section V of this
addendum).
Step 3--For hospitals in Alaska and Hawaii, multiply the nonlabor-
related portion of the standardized amount by the appropriate cost-of-
living adjustment factor.
Step 4--Add the amount from Step 2 and the nonlabor-related portion
of the standardized amount (adjusted if appropriate under Step 3).
Step 5--Multiply the final amount from Step 4 by the relative
weight corresponding to the appropriate DRG (see Table 5 of section V
of this addendum).
2. Hospital-Specific Rate (Applicable Only to Sole Community Hospitals
and Medicare-Dependent, Small Rural Hospitals)
Sections 1886(d)(5)(D)(i) and (b)(3)(C) of the Act provide that
sole community hospitals are paid based on whichever of the following
rates yields the greatest aggregate payment: the Federal rate, the
updated hospital-specific rate based on FY 1982 cost per discharge, or
the updated hospital-specific rate based on FY 1987 cost per discharge.
Sections 1886(d)(5)(G) and (b)(3)(D) of the Act provide that
Medicare-dependent, small rural hospitals are paid based on whichever
of the following rates yields the greatest aggregate payment: the
Federal rate or the Federal rate plus 50 percent of the difference
between the Federal rate and the greater of the updated hospital-
specific rate based on FY 1982 and FY 1987 cost per discharge.
Hospital-specific rates have been determined for each of these
hospitals based on both the FY 1982 cost per discharge and the FY 1987
cost per discharge. For a more detailed discussion of the calculation
of the FY 1982 hospital-specific rate and the FY 1987 hospital-specific
rate, we refer the reader to the September 1, 1983 interim final rule
(48 FR 39772); the April 20, 1990 final rule with comment (55 FR
15150); and the September 4, 1990 final rule (55 FR 35994).
a. Updating the FY 1982 and FY 1987 Hospital-Specific Rates for FY
1999. We are proposing to increase the hospital-specific rates by 0.7
percent (the hospital market basket percentage increase of 2.6 percent
minus 1.9 percentage points) for sole community hospitals and Medicare-
dependent, small rural hospitals located in all areas for FY 1999.
Section 1886(b)(3)(C)(iv) of the Act provides that the update factor
applicable to the hospital-specific rates for sole community hospitals
equals the update factor provided under section 1886(b)(3)(B)(iv) of
the Act, which, for FY 1999, is the market basket rate of increase
minus 1.9 percentage points. Section 1886(b)(3)(D) of the Act provides
that the update factor applicable to the hospital-specific rates for
Medicare-dependent, small rural hospitals equals the update factor
provided under section 1886(b)(3)(B)(iv) of the Act, which, for FY
1999, is the market basket rate of increase minus 1.9 percentage
points.
b. Calculation of Hospital-Specific Rate. For sole community
hospitals and Medicare-dependent, small rural hospitals, the applicable
FY 1999 hospital-specific rate would be calculated by increasing the
hospital's hospital-specific rate for the preceding fiscal year by the
applicable update factor (0.7 percent), which is the same as the update
for all prospective payment hospitals except "temporary relief"
hospitals. In addition, the hospital-specific rate would be adjusted by
the budget neutrality adjustment factor (that is, 0.999227) as
discussed in section II.A.4.a of this Addendum. This resulting rate
would be used in determining under which rate a sole community hospital
or Medicare-dependent, small rural hospital is paid for its discharges
beginning on or after October 1, 1998, based on the formula set forth
above.
3. General Formula for Calculation of Prospective Payment Rates for
Hospitals Located in Puerto Rico Beginning On or After October 1, 1998
and Before October 1, 1999.
a. Puerto Rico Rate. The Puerto Rico prospective payment rate is
determined as follows:
Step 1--Select the appropriate adjusted average standardized amount
considering the large urban or other designation of the hospital (see
Table 1C or 1F of section V of the addendum).
Step 2--Multiply the labor-related portion of the standardized
amount by the appropriate Puerto Rico-specific wage index (see Table 4F
of section V of the addendum).
Step 3--Add the amount from Step 2 and the nonlabor-related portion
of the standardized amount.
Step 4--Multiply the result in Step 3 by 50 percent.
Step 5--Multiply the amount from Step 4 by the appropriate DRG
relative weight (see Table 5 of section V of the addendum).
b. National Rate. The national prospective payment rate is
determined as follows:
Step 1--Multiply the labor-related portion of the national average
standardized amount (see Table 1C or 1F of section V of the addendum)
by the appropriate national wage index (see Tables 4A and 4B of section
V of the addendum).
Step 2--Add the amount from Step 1 and the nonlabor-related portion
of the national average standardized amount.
[[Page 25613]]
Step 3--Multiply the result in Step 2 by 50 percent.
Step 4--Multiply the amount from Step 3 by the appropriate DRG
relative weight (see Table 5 of section V of the addendum).
The sum of the Puerto Rico rate and the national rate computed
above equals the prospective payment for a given discharge for a
hospital located in Puerto Rico.
III. Proposed Changes to Payment Rates for Inpatient Capital-
Related Costs for FY 1999
The prospective payment system for hospital inpatient capital-
related costs was implemented for cost reporting periods beginning on
or after October 1, 1991. Effective with that cost reporting period and
during a 10-year transition period extending through FY 2001, hospital
inpatient capital-related costs are paid on the basis of an increasing
proportion of the capital prospective payment system Federal rate and a
decreasing proportion of a hospital's historical costs for capital.
The basic methodology for determining Federal capital prospective
rates is set forth at Secs. 412.308 through 412.352. Below we discuss
the factors that we used to determine the proposed Federal rate and the
hospital-specific rates for FY 1999. The rates will be effective for
discharges occurring on or after October 1, 1998.
For FY 1992, we computed the standard Federal payment rate for
capital-related costs under the prospective payment system by updating
the FY 1989 Medicare inpatient capital cost per case by an actuarial
estimate of the increase in Medicare inpatient capital costs per case.
Each year after FY 1992 we update the standard Federal rate, as
provided in Sec. 412.308(c)(1), to account for capital input price
increases and other factors. Also, Sec. 412.308(c)(2) provides that the
Federal rate is adjusted annually by a factor equal to the estimated
proportion of outlier payments under the Federal rate to total capital
payments under the Federal rate. In addition, Sec. 412.308(c)(3)
requires that the Federal rate be reduced by an adjustment factor equal
to the estimated proportion of payments for exceptions under
Sec. 412.348. Furthermore, Sec. 412.308(c)(4)(ii) requires that the
Federal rate be adjusted so that the annual DRG reclassification and
the recalibration of DRG weights and changes in the geographic
adjustment factor are budget neutral. For FYs 1992 through 1995,
Sec. 412.352 required that the Federal rate also be adjusted by a
budget neutrality factor so that aggregate payments for inpatient
hospital capital costs were projected to equal 90 percent of the
payments that would have been made for capital-related costs on a
reasonable cost basis during the fiscal year. That provision expired in
FY 1996. Section 412.308(b)(2) describes the 7.4 percent reduction to
the rate which was made in FY 1994, and Sec. 412.308(b)(3) describes
the 0.28 percent reduction to the rate made in FY 1996 as a result of
the revised policy of paying for transfers. In the FY 1998 final rule
with comment period (62 FR 45966) we implemented section 4402 of the
BBA, which required that for discharges occurring on or after October
1, 1997, and before October 1, 2002, the unadjusted standard Federal
rate was reduced by 17.78 percent. A small part of that reduction will
be restored effective October 1, 2002.
For each hospital, the hospital-specific rate was calculated by
dividing the hospital's Medicare inpatient capital-related costs for a
specified base year by its Medicare discharges (adjusted for
transfers), and dividing the result by the hospital's case mix index
(also adjusted for transfers). The resulting case-mix adjusted average
cost per discharge was then updated to FY 1992 based on the national
average increase in Medicare's inpatient capital cost per discharge and
adjusted by the exceptions payment adjustment factor and the budget
neutrality adjustment factor to yield the FY 1992 hospital-specific
rate. Since FY 1992, the hospital-specific rate has been updated
annually for inflation and for changes in the exceptions payment
adjustment factor. For FYs 1992 through 1995, the hospital-specific
rate was also adjusted by a budget neutrality adjustment factor. In the
FY 1998 final rule with comment period (62 FR 46012) we implemented
section 4402 of the BBA, which required that for discharges occurring
on or after October 1, 1997, and before October 1, 2002, the unadjusted
hospital-specific rate should be reduced by 17.78 percent. A small part
of that reduction will also be restored effective October 1, 2002.
To determine the appropriate budget neutrality adjustment factor
and the exceptions payment adjustment factor, we developed a dynamic
model of Medicare inpatient capital-related costs, that is, a model
that projects changes in Medicare inpatient capital-related costs over
time. With the expiration of the budget neutrality provision, the model
is still used to estimate the exceptions payment adjustment and other
factors. The model and its application are described in greater detail
in Appendix B of this proposed rule.
In accordance with section 1886(d)(9)(A) of the Act, under the
prospective payment system for inpatient operating costs, hospitals
located in Puerto Rico are paid for operating costs under a special
payment formula. Prior to FY 1998, hospitals in Puerto Rico were paid a
blended rate that consisted of 75 percent of the applicable
standardized amount specific to Puerto Rico hospitals and 25 percent of
the applicable national average standardized amount. However, effective
October 1, 1998, as a result of section 4406 of the BBA, operating
payments to hospitals in Puerto Rico are based on a blend of 50 percent
of the applicable standardized amount specific to Puerto Rico hospitals
and 50 percent of the applicable national average standardized amount.
In conjunction with this change to the operating blend percentage,
effective with discharges on or after October 1, 1997, we compute
capital payments to hospitals in Puerto Rico based on a blend of 50
percent of the Puerto Rico rate and 50 percent of the Federal rate.
Section 412.374 provides for the use of this blended payment system for
payments to Puerto Rico hospitals under the prospective payment system
for inpatient capital-related costs. Accordingly, for capital-related
costs we compute a separate payment rate specific to Puerto Rico
hospitals using the same methodology used to compute the national
Federal rate for capital.
A. Determination of Federal Inpatient Capital-Related Prospective
Payment Rate Update
For FY 1998, the Federal rate is $371.51. With the changes we are
proposing to the factors used to establish the Federal rate, the
proposed FY 1999 Federal rate is $377.25.
In the discussion that follows, we explain the factors that were
used to determine the proposed FY 1999 Federal rate. In particular, we
explain why the proposed FY 1999 Federal rate has increased 1.55
percent compared to the FY 1998 Federal rate. Even though we estimate
that Medicare hospital inpatient discharges will decline by
approximately 2.25 between FY 1998 and FY 1999, we also estimate that
aggregate capital payments will increase by 2.60 percent during this
same period. This aggregate increase is primarily due to the change in
the federal rate blend percentage from 70 percent to 80 percent, the
1.55 percent increase in the rate, and a projected increase in case
mix.
The major factor contributing to the increase in the proposed
capital Federal rate for FY 1999 relative to FY 1998 is
[[Page 25614]]
that the proposed FY 1999 exceptions reduction factor is 1.06 percent
higher than the factor for FY 1998. The exceptions reduction factor
equals 1 minus the projected percentage of exceptions payments. We
estimate that the projected percentage of exceptions payments for FY
1999 will be lower than the projected percentage for FY 1998;
accordingly, the proposed FY 1999 rate reflects less of a reduction to
account for exceptions than the FY 1998 rate.
Total payments to hospitals under the prospective payment system
are relatively unaffected by changes in the capital prospective
payments. Since capital payments constitute about 10 percent of
hospital payments, a 1 percent change in the capital Federal rate
yields only about 0.1 percent change in actual payments to hospitals.
Aggregate payments under the capital prospective payment transition
system are estimated to increase in FY 1999 compared to FY 1998.
1. Standard Federal Rate Update
a. Description of the Update Framework. Under section
412.308(c)(1), the standard Federal rate is updated on the basis of an
analytical framework that takes into account changes in a capital input
price index and other factors. The update framework consists of a
capital input price index (CIPI) and several policy adjustment factors.
Specifically, we have adjusted the projected CIPI rate of increase as
appropriate each year for case-mix index related changes, for
intensity, and for errors in previous CIPI forecasts. The proposed
update factor for FY 1999 under that framework is 0.2 percent. This
proposal is based on a projected 0.8 percent increase in the CIPI,
policy adjustment factors of -0.2, and a forecast error correction of
-0.4 percent. We explain the basis for the FY 1999 CIPI projection in
section II.D of this addendum. Here we describe the policy adjustments.
The case-mix index is the measure of the average DRG weight for
cases paid under the prospective payment system. Because the DRG weight
determines the prospective payment for each case, any percentage
increase in the case-mix index corresponds to an equal percentage
increase in hospital payments.
The case-mix index can change for any of several reasons:
--- The average resource use of Medicare patients changes
("real" case-mix change);
--- Changes in hospital coding of patient records result in
higher weight DRG assignments ("coding effects"); and
--- The annual DRG reclassification and recalibration changes
may not be budget neutral ("reclassification effect").
We define real case-mix change as actual changes in the mix (and
resource requirements) of Medicare patients as opposed to changes in
coding behavior that result in assignment of cases to higher-weighted
DRGs but do not reflect higher resource requirements. In the update
framework for the prospective payment system for operating costs, we
adjust the update upwards to allow for real case-mix change, but remove
the effects of coding changes on the case-mix index. We also remove the
effect on total payments of prior changes to the DRG classifications
and relative weights, in order to retain budget neutrality for all
case-mix index-related changes other than patient severity. (For
example, we adjusted for the effects of the FY 1992 DRG
reclassification and recalibration as part of our FY 1994 update
recommendation.) The operating adjustment consists of a reduction for
total observed case-mix change, an increase for the portion of case-mix
change that we determine is due to real case-mix change rather than
coding modifications, and an adjustment for the effect of prior DRG
reclassification and recalibration changes. We have adopted this case-
mix index adjustment in the capital update framework as well.
For FY 1999, we are projecting a 1.0 percent increase in the case-
mix index. We estimate that real case-mix increase will equal 0.8
percent in FY 1999. Therefore, the proposed net adjustment for case-mix
change in FY 1999 is -0.2 percentage points.
We estimate that DRG reclassification and recalibration result in a
0.0 percent change in the case mix when compared with the case-mix
index that would have resulted if we had not made the reclassification
and recalibration changes to the DRGs.
The capital update framework contains an adjustment for forecast
error. The input price index forecast is based on historical trends and
relationships ascertainable at the time the update factor is
established for the upcoming year. In any given year there may be
unanticipated price fluctuations that may result in differences between
the actual increase in prices faced by hospitals and the forecast used
in calculating the update factors. In setting a prospective payment
rate under the proposed framework, we make an adjustment for forecast
error only if our estimate of the capital input price index rate of
increase for any year is off by 0.25 percentage points or more. There
is a 2-year lag between the forecast and the measurement of the
forecast error. Thus, for example, we would adjust for a forecast error
made in FY 1997 through an adjustment to the FY 1999 update. Because we
only introduced this analytical framework in FY 1996, FY 1998 was the
first year in which a forecast error adjustment could be required. We
estimate that the FY 1997 CIPI was 0.4 percentage points higher than
our current data show, which means that we estimate a forecast error of
-0.4 percentage points for FY 1997. Therefore we are making an -0.4
percent adjustment for forecast error in FY 1999.
Under the capital prospective payment system framework, we also
make an adjustment for changes in intensity. We calculate this
adjustment using the same methodology and data as in the framework for
the operating prospective payment system. The intensity factor for the
operating update framework reflects how hospital services are utilized
to produce the final product, that is, the discharge. This component
accounts for changes in the use of quality-enhancing services, changes
in within-DRG severity, and expected modification of practice patterns
to remove cost-ineffective services.
We calculate case-mix constant intensity as the change in total
charges per admission, adjusted for price level changes (the CPI
hospital component), and changes in real case mix. The use of total
charges in the calculation of the proposed intensity factor makes it a
total intensity factor, that is, charges for capital services are
already built into the calculation of the factor. We have, therefore,
incorporated the intensity adjustment from the operating update
framework into the capital update framework. Without reliable estimates
of the proportions of the overall annual intensity increases that are
due, respectively, to ineffective practice patterns and to the
combination of quality-enhancing new technologies and within-DRG
complexity, we assume, as in the revised operating update framework,
that one-half of the annual increase is due to each of these factors.
The capital update framework thus provides an add-on to the input price
index rate of increase of one-half of the estimated annual increase in
intensity to allow for within-DRG severity increases and the adoption
of quality-enhancing technology.
For FY 1999, we have developed a Medicare-specific intensity
measure based on a 5-year average using FY 1993-1997 data. In
determining case-mix constant intensity, we found that observed case-
mix increase was 0.9 percent in FY 1993, 0.8 percent in FY
[[Page 25615]]
1994, 1.7 percent in FY 1995, 1.6 percent in FY 1996, and 0.3 percent
in FY 1997. For FY 1995 and FY 1996, we estimate that real case-mix
increase was 1.0 to 1.4 percent each year. The estimate for those years
is supported by past studies of case-mix change by the RAND
Corporation. The most recent study was "Has DRG Creep Crept Up?
Decomposing the Case Mix Index Change Between 1987 and 1988" by G. M.
Carter, J. P. Newhouse, and D. A. Relles, R-4098-HCFA/ProPAC(1991). The
study suggested that real case-mix change was not dependent on total
change, but was usually a fairly steady 1.0 to 1.5 percent per year. We
use 1.4 percent as the upper bound because the RAND study did not take
into account that hospitals may have induced doctors to document
medical records more completely in order to improve payment. Following
that study, we consider up to 1.4 percent of observed case-mix change
as real for FY 1992 through FY 1997. Based on this analysis, we believe
that all of the observed case-mix increase for FY 1993, FY 1994 and FY
1997 is real.
We calculate case-mix constant intensity as the change in total
charges per admission, adjusted for price level changes (the CPI
hospital component), and changes in real case-mix. Given estimates of
real case mix of 0.9 percent for FY 1993, 0.8 percent for FY 1994, 1.0
percent for FY 1995, and 1.0 percent for FY 1996, and 0.3 percent for
FY 1997, we estimate that case-mix constant intensity declined by an
average 1.5 percent during FYs 1993 through 1997, for a cumulative
decrease of 7.3 percent. If we assume that real case-mix increase was
0.9 percent for FY 1993, 0.8 percent for FY 1994, 1.4 percent for FY
1995, 1.4 percent for FY 1996 and 0.3 percent for FY 1997, we estimate
that case-mix constant intensity declined by an average 1.6 percent
during FYs 1993 through 1997, for a cumulative decrease of 7.7 percent.
Since we estimate that intensity has declined during that period, we
are recommending a 0.0 percent intensity adjustment for FY 1999.
b. Comparison of HCFA and MedPAC Update Recommendations. MedPAC
recommends a 0.0 to 0.7 percent update to the standard Federal rate and
we are recommending a 0.2 percent update. There are some significant
differences between the HCFA and MedPAC update frameworks, which
account for the difference in the respective update recommendations. A
major difference is the input price index which each framework uses as
a beginning point to estimate the change in input prices since the
previous year. The HCFA capital input price index (the CIPI) includes
price measures for interest expense, which are an indicator of the
interest rates facing hospitals during their capital purchasing
decisions. The MedPAC capital market basket does not include interest
expense; instead the MedPAC update framework includes an adjustment
when necessary to account for the prolonged changes in interest rates.
HCFA's CIPI is vintage-weighted, meaning that it takes into account
price changes from past purchases of capital when determining the
current period update. MedPAC's capital market basket is not vintage-
weighted, accounting only for the current year price changes. This
year, due to the difference between HCFA's and MedPAC's input price
index, the percentage change in HCFA's CIPI is 0.8 percent, and the
percentage change in MedPAC's market basket is 2.4 percent.
MedPAC and HCFA also differ in the adjustments they make to their
price indices. (See Table 1 for a comparison of HCFA and MedPAC's
update recommendations.) MedPAC makes an adjustment for productivity,
while HCFA has not adopted an adjustment for capital productivity or
efficiency. MedPAC employs the same productivity adjustment in its
operating and capital framework. We have identified a total intensity
factor but have not identified an adequate total productivity measure.
The Commission also includes a product change adjustment to account for
changes in the service content of hospital stays, which adjusts the
base payment rates to eliminate overpayments in the future. MedPAC
recommends a -3.0 to a -1.0 adjustment for product change for FY 1999.
For FY 1999 MedPAC recommends a -0.7 to a -0.3 adjustment for
productivity. We recommend a 0.0 intensity adjustment.
We recommend a -0.2 total case mix adjustment since we are
projecting a 1.0 percent increase in the case mix index and we estimate
that real case-mix increase will equal 0.8 percent in FY 1999. MedPAC
makes a two part adjustment for case mix changes, which takes into
account changes in case mix in the past year. They recommend a -0.2 to
-0.0 adjustment for coding change and an 0.0 to 0.2 adjustment for
within-DRG complexity change. We recommend a -0.4 adjustment for
forecast error correction, and MedPAC recommends a -0.4 adjustment for
forecast error correction.
The net result of these adjustments is that MedPAC's capital update
framework suggests a -1.9 to 1.4 percent update. MedPAC has recommended
a 0.0 to 0.7 percent update to the rate for FY 1999. This range is
consistent with the PPS operating update recommended by the Commission.
We describe the basis for our proposed 0.2 percent total update in the
preceding section. HCFA and MedPAC's update recommendations are quite
close, with HCFA's recommendation within the range recommended by
MedPAC.
Table 1.--HCFA's FY 1999 Update Factor and MedPAC's Recommendation
------------------------------------------------------------------------
HCFA's update MedPAC's recommenda
factor tion
------------------------------------------------------------------------
Capital Input Price Index..... 0.8 2.4
Policy Adjustment Factors:
Productivity.............. ................. -0.7 to -0.3
Intensity................. 0.0 .....................
Science and Technology ................. 0.0 to 0.5
Intensity............. ................. (\1\)
Real within DRG Change ................. (\2\)
Product Change............ ................. -3.0 to -1.0
-----------------------------------------
Subtotal............ 0.0 -3.7 to -0.8
=========================================
Case-Mix Adjustment Factors:
Projected Case-Mix Change. -1.0 .....................
Real Across DRG Change.... 0.8 .....................
[[Page 25616]]
Coding Change............. ................. -0.2 to -0.0
Real within DRG Change.... (\3\) 0.0 to 0.2
-----------------------------------------
Subtotal............ -0.2 -0.2 to 0.2
=========================================
Effect of FY 1996 0.0 .....................
Reclassification and
Recalibration.
Forecast Error Correction..... -0.4 -0.4
-----------------------------------------
Total Update............ 0.2 -1.9 to 1.4
------------------------------------------------------------------------
\1\ Included in MedPAC's productivity measure.
\2\ Included in MedPAC's case-mix adjustment.
\3\ Included in HCFA's intensity factor.
2. Outlier Payment Adjustment Factor
Section 412.312(c) establishes a unified outlier methodology for
inpatient operating and inpatient capital-related costs. A single set
of thresholds is used to identify outlier cases for both inpatient
operating and inpatient capital-related payments. Outlier payments are
made only on the portion of the Federal rate that is used to calculate
the hospital's inpatient capital-related payments (for example, 80
percent for cost reporting periods beginning in FY 1999 for hospitals
paid under the fully prospective methodology). Section 412.308(c)(2)
provides that the standard Federal rate for inpatient capital-related
costs be reduced by an adjustment factor equal to the estimated
proportion of outlier payments under the Federal rate to total
inpatient capital-related payments under the Federal rate. The outlier
thresholds are set so that operating outlier payments are projected to
be 5.1 percent of total operating DRG payments. The inpatient capital-
related outlier reduction factor reflects the inpatient capital-related
outlier payments that would be made if all hospitals were paid 100
percent of the Federal rate. For purposes of calculating the outlier
thresholds and the outlier reduction factor, we model payments as if
all hospitals were paid 100 percent of the Federal rate because, as
explained above, outlier payments are made only on the portion of the
Federal rate that is included in the hospital's inpatient capital-
related payments.
In the August 29, 1997 final rule with comment period, we estimated
that outlier payments for capital in FY 1998 would equal 6.18 percent
of inpatient capital-related payments based on the Federal rate.
Accordingly, we applied an outlier adjustment factor of 0.9382 to the
Federal rate. Based on the thresholds as set forth in section II.A.4.d
of this Addendum, we estimate that outlier payments for capital will
equal 6.22 percent of inpatient capital-related payments based on the
Federal rate in FY 1999. We are, therefore, proposing an outlier
adjustment factor of 0.9378 to the Federal rate. Thus, estimated
capital outlier payments for FY 1999 represent a higher percentage of
total capital standard payments than in FY 1998.
The outlier reduction factors are not built permanently into the
rates; that is, they are not applied cumulatively in determining the
Federal rate. Therefore, the proposed net change in the outlier
adjustment to the Federal rate for FY 1999 is 0.9996 (0.9378/0.9382).
Thus, the outlier adjustment decreases the FY 1999 Federal rate by 0.04
percent (0.9996--1) compared with the FY 1998 outlier adjustment.
3. Budget Neutrality Adjustment Factor for Changes in DRG
Classifications and Weights and the Geographic Adjustment Factor
Section 412.308(c)(4)(ii) requires that the Federal rate be
adjusted so that aggregate payments for the fiscal year based on the
Federal rate after any changes resulting from the annual DRG
reclassification and recalibration and changes in the GAF are projected
to equal aggregate payments that would have been made on the basis of
the Federal rate without such changes. We use the actuarial model,
described in Appendix B of this proposed rule, to estimate the
aggregate payments that would have been made on the basis of the
Federal rate without changes in the DRG classifications and weights and
in the GAF. We also use the model to estimate aggregate payments that
would be made on the basis of the Federal rate as a result of those
changes. We then use these figures to compute the adjustment required
to maintain budget neutrality for changes in DRG weights and in the
GAF.
For FY 1998, we calculated a GAF/DRG budget neutrality factor of
0.9989. For FY 1999, we are proposing a GAF/DRG budget neutrality
factor of 1.0032. The GAF/DRG budget neutrality factors are built
permanently into the rates; that is, they are applied cumulatively in
determining the Federal rate. This follows from the requirement that
estimated aggregate payments each year be no more than they would have
been in the absence of the annual DRG reclassification and
recalibration and changes in the GAF. The proposed incremental change
in the adjustment from FY 1998 to FY 1999 is 1.0032. The proposed
cumulative change in the rate due to this adjustment is 1.0034 (the
product of the incremental factors for FY 1993, FY 1994, FY 1995, FY
1996, FY 1997, FY 1998, and the proposed incremental factor for FY
1999: 0.9980 x 1.0053 x 0.9998 x 0.9994 x 0.9987 x 0.9989 x
1.0032 = 1.0034).
This proposed factor accounts for DRG reclassifications and
recalibration and for changes in the GAF. It also incorporates the
effects on the GAF of FY 1999 geographic reclassification decisions
made by the MGCRB compared to FY 1998 decisions. However, it does not
account for changes in payments due to changes in the disproportionate
share and indirect medical education adjustment factors or in the large
urban add-on.
4. Exceptions Payment Adjustment Factor
Section 412.308(c)(3) requires that the standard Federal rate for
inpatient capital-related costs be reduced by an adjustment factor
equal to the estimated proportion of additional payments for exceptions
under Sec. 412.348 relative to total payments under the hospital-
specific rate and Federal rate. We use the model originally developed
for determining the budget neutrality adjustment factor to determine
the
[[Page 25617]]
exceptions payment adjustment factor. We describe that model in
Appendix B to this proposed rule.
For FY 1998, we estimated that exceptions payments would equal 3.41
percent of aggregate payments based on the Federal rate and the
hospital-specific rate. Therefore, we applied an exceptions reduction
factor of 0.9659 (1-0.0341) in determining the Federal rate. For this
proposed rule, we estimate that exceptions payments for FY 1999 will
equal 2.39 percent of aggregate payments based on the Federal rate and
the hospital-specific rate. Therefore, we are proposing an exceptions
payment reduction factor of 0.9761 to the Federal rate for FY 1999. The
proposed exceptions reduction factor for FY 1999 is 1.06 percent higher
than the factor for FY 1998.
The exceptions reduction factors are not built permanently into the
rates; that is, the factors are not applied cumulatively in determining
the Federal rate. Therefore, the proposed net adjustment to the FY 1999
Federal rate is 0.9761/0.9659, or 1.0106.
5. Standard Capital Federal Rate for FY 1999
For FY 1998, the capital Federal rate was $371.51. With the changes
we are proposing to the factors used to establish the Federal rate, the
FY 1999 Federal rate would be $377.25. The proposed Federal rate for FY
1999 was calculated as follows:
--- The proposed FY 1999 update factor is 1.0020, that is, the
proposed update is 0.20 percent.
--- The proposed FY 1999 budget neutrality adjustment factor
that is applied to the standard Federal payment rate for changes in the
DRG relative weights and in the GAF is 1.0032.
--- The proposed FY 1999 outlier adjustment factor is 0.9378.
--- The proposed FY 1999 exceptions payments adjustment factor
is 0.9761.
Since the Federal rate has already been adjusted for differences in
case mix, wages, cost of living, indirect medical education costs, and
payments to hospitals serving a disproportionate share of low-income
patients, we propose to make no additional adjustments in the standard
Federal rate for these factors other than the budget neutrality factor
for changes in the DRG relative weights and the GAF.
We are providing a chart that shows how each of the factors and
adjustments for FY 1999 affected the computation of the proposed FY
1999 Federal rate in comparison to the FY 1998 Federal rate. The
proposed FY 1999 update factor has the effect of increasing the Federal
rate by 0.20 percent compared to the rate in FY 1998, while the
proposed geographic and DRG budget neutrality factor has the effect of
increasing the Federal rate by 0.32 percent. The proposed FY 1999
outlier adjustment factor has the effect of decreasing the Federal rate
by 0.04 percent compared to FY 1998. The proposed FY 1999 exceptions
reduction factor has the effect of increasing the Federal rate by 1.06
percent compared to the exceptions reduction for FY 1998. The combined
effect of all the proposed changes is to increase the proposed Federal
rate by 1.55 percent compared to the Federal rate for FY 1998.
Comparison of Factors and Adjustments--FY 1998 Federal Rate and Proposed FY 1999 Federal Rate
----------------------------------------------------------------------------------------------------------------
Proposed FY Percent
FY 98 99 Change change
----------------------------------------------------------------------------------------------------------------
Update factor\1\............................................ 1.0090 1.0020 1.0020 0.20
GAF/DRG Adjustment Factor\1\................................ 0.9989 1.0032 1.0032 0.32
Outlier Adjustment Factor\2\................................ 0.9382 0.9378 0.9996 -0.04
Exceptions Adjustment Factor\2\............................. 0.9659 0.9761 1.0106 1.06
Federal Rate................................................ $371.51 $377.25 1.0155 1.55
----------------------------------------------------------------------------------------------------------------
\1\ The update factor and the GAF/DRG budget neutrality factors are built permanently into the rates. Thus, for
example, the incremental change from FY 1998 to FY 1999 resulting from the application of the 1.0032 GAF/DRG
budget neutrality factor for FY 1999 is 1.0032.
\2\ The outlier reduction factor and the exceptions reduction factor are not built permanently into the rates;
that is, these factors are not applied cumulatively in determining the rates. Thus, for example, the net
change resulting from the application of the FY 1999 outlier reduction factor is 0.9378/0.9382, or 0.9996.
6. Special Rate for Puerto Rico Hospitals
As explained at the beginning of this section, hospitals in Puerto
Rico are paid based on 50 percent of the Puerto Rico rate and 50
percent of the Federal rate. The Puerto Rico rate is derived from the
costs of Puerto Rico hospitals only, while the Federal rate is derived
from the costs of all acute care hospitals participating in the
prospective payment system (including Puerto Rico). To adjust
hospitals' capital payments for geographic variations in capital costs,
we apply a geographic adjustment factor (GAF) to both portions of the
blended rate. The GAF is calculated using the operating PPS wage index
and varies depending on the MSA or rural area in which the hospital is
located. We use the Puerto Rico wage index to determine the GAF for the
Puerto Rico part of the capital blended rate and the national wage
index to determine the GAF for the national part of the blended rate.
Since we implemented a separate GAF for Puerto Rico, we also
propose to apply separate budget neutrality adjustments for the
national GAF and for the Puerto Rico GAF. We propose to apply the same
budget neutrality factor for DRG reclassifications and recalibration
nationally and for Puerto Rico. Separate adjustments were unnecessary
for FY 1998 since the Puerto Rico specific GAF was implemented that
year. The Puerto Rico GAF budget neutrality factor is 0.9989, while the
DRG adjustment is 1.0033, for a combined cumulative adjustment of
1.0022. (For a more detailed explanation of this proposed change see
Appendix B.)
In computing the payment for a particular Puerto Rico hospital, the
Puerto Rico portion of the rate (50%) is multiplied by the Puerto Rico-
specific GAF for the MSA in which the hospital is located, and the
national portion of the rate (50%) is multiplied by the national GAF
for the MSA in which the hospital is located (which is computed from
national data for all hospitals in the United States and Puerto Rico).
In FY 1998, we implemented a 17.78 percent reduction to the Puerto Rico
rate as a result of the BBA.
For FY 1998, before application of the GAF, the special rate for
Puerto Rico hospitals was $177.57. With the changes we are proposing to
the factors used to determine the rate, the proposed FY 1999 special
rate for Puerto Rico is $180.73.
B. Determination of Hospital-Specific Rate Update
Section 412.328(e) of the regulations provides that the hospital-
specific rate for FY 1999 be determined by adjusting
[[Page 25618]]
the FY 1998 hospital-specific rate by the following factors:
1. Hospital-Specific Rate Update Factor
The hospital-specific rate is updated in accordance with the update
factor for the standard Federal rate determined under
Sec. 412.308(c)(1). For FY 1999, we are proposing that the hospital-
specific rate be updated by a factor of 1.0020.
2. Exceptions Payment Adjustment Factor
For FYs 1992 through FY 2001, the updated hospital-specific rate is
multiplied by an adjustment factor to account for estimated exceptions
payments for capital-related costs under Sec. 412.348, determined as a
proportion of the total amount of payments under the hospital-specific
rate and the Federal rate. For FY 1999, we estimate that exceptions
payments will be 2.39 percent of aggregate payments based on the
Federal rate and the hospital-specific rate. Therefore, we propose that
the updated hospital-specific rate be reduced by a factor of 0.9761.
The exceptions reduction factors are not built permanently into the
rates; that is, the factors are not applied cumulatively in determining
the hospital-specific rate. The proposed net adjustment to the FY 1999
hospital-specific rate is 0.9761/0.9659, or 1.0106.
3. Net Change to Hospital-Specific Rate
We are providing a chart to show the net change to the hospital-
specific rate. The chart shows the factors for FY 1998 and FY 1999 and
the net adjustment for each factor. It also shows that the proposed
cumulative net adjustment from FY 1998 to FY 1999 is 1.0126, which
represents a proposed increase of 1.26 percent to the hospital-specific
rate. For each hospital, the proposed FY 1999 hospital-specific rate is
determined by multiplying the FY 1998 hospital-specific rate by the
cumulative net adjustment of 1.0126.
Proposed FY 1999 Update and Adjustments to Hospital-Specific Rates
----------------------------------------------------------------------------------------------------------------
Proposed FY Net Percent
FY 98 99 Adjustment Change
----------------------------------------------------------------------------------------------------------------
Update Factor............................................... 1.0090 1.0020 1.0020 0.20
Exceptions Payment Adjustment Factor........................ 0.9659 0.9761 1.0106 1.06
Cumulative Adjustments...................................... 0.9746 0.9869 1.0026 1.26
----------------------------------------------------------------------------------------------------------------
Note: The update factor for the hospital-specific rate is applied cumulatively in determining the rates. Thus,
the incremental increase in the update factor from FY 1998 to FY 1999 is 1.0020. In contrast, the exceptions
payment adjustment factor is not applied cumulatively. Thus, for example, the incremental increase in the
exceptions reduction factor from FY 1998 to FY 1999 is 0.9761/0.9659, or 1.0106.
C. Calculation of Inpatient Capital-Related Prospective Payments for FY
1999
During the capital prospective payment system transition period, a
hospital is paid for the inpatient capital-related costs under one of
two payment methodologies--the fully prospective payment methodology or
the hold-harmless methodology. The payment methodology applicable to a
particular hospital is determined when a hospital comes under the
prospective payment system for capital-related costs by comparing its
hospital-specific rate to the Federal rate applicable to the hospital's
first cost reporting period under the prospective payment system.
The applicable Federal rate was determined by making adjustments as
follows:
--- For outliers by dividing the standard Federal rate by the
outlier redution factor for that fiscal year; and,
--- For the payment adjustment factors applicable to the
hospital (that is, the hospital's GAF, the disproportionate share
adjustment factor, and the indirect medical education adjustment
factor, when appropriate).
--- If the hospital-specific rate is above the applicable
Federal rate, the hospital is paid under the hold-harmless methodology.
If the hospital-specific rate is below the applicable Federal rate, the
hospital is paid under the fully prospective methodology.
For purposes of calculating payments for each discharge under both
the hold-harmless payment methodology and the fully prospective payment
methodology, the standard Federal rate is adjusted as follows:
(Standard Federal Rate) x (DRG weight) x (GAF) x (Large Urban Add-
on, if applicable) x (COLA adjustment for hospitals located in Alaska
and Hawaii) x (1 + Disproportionate Share Adjustment Factor + IME
Adjustment Factor, if applicable).
The result is the adjusted Federal rate.
Payments under the hold-harmless methodology are determined under
one of two formulas. A hold-harmless hospital is paid the higher of the
following:
--- 100 percent of the adjusted Federal rate for each
discharge; or
--- An old capital payment equal to 85 percent (100 percent
for sole community hospitals) of the hospital's allowable Medicare
inpatient old capital costs per discharge for the cost reporting period
plus a new capital payment based on a percentage of the adjusted
Federal rate for each discharge. The percentage of the adjusted Federal
rate equals the ratio of the hospital's allowable Medicare new capital
costs to its total Medicare inpatient capital-related costs in the cost
reporting period.
Once a hospital receives payment based on 100 percent of the
adjusted Federal rate in a cost reporting period beginning on or after
October 1, 1994 (or the first cost reporting period after obligated
capital that is recognized as old capital under Sec. 412.302(c) is put
in use for patient care, if later), the hospital continues to receive
capital prospective payment system payments on that basis for the
remainder of the transition period.
Payment for each discharge under the fully prospective methodology
is the sum of the following:
--- The hospital-specific rate multiplied by the DRG relative
weight for the discharge and by the applicable hospital-specific
transition blend percentage for the cost reporting period; and
--- The adjusted Federal rate multiplied by the Federal
transition blend percentage.
--- The blend percentages for cost reporting periods beginning
in FY 1999 are 80 percent of the adjusted Federal rate and 20 percent
of the hospital-specific rate.
Hospitals may also receive outlier payments for those cases that
qualify under the thresholds established for each fiscal year. Section
412.312(c) provides for a single set of thresholds to identify outlier
cases for both inpatient operating and inpatient capital-related
payments. Outlier payments are made only on that portion of the Federal
rate that is used to calculate the hospital's inpatient capital-related
payments. For fully prospective hospitals, that portion is 80 percent
of the Federal rate for
[[Page 25619]]
discharges occurring in cost reporting periods beginning during FY
1999. Thus, a fully prospective hospital will receive 80 percent of the
capital-related outlier payment calculated for the case for discharges
occurring in cost reporting periods beginning in FY 1999. For hold-
harmless hospitals paid 85 percent of their reasonable costs for old
inpatient capital, the portion of the Federal rate that is included in
the hospital's outlier payments is based on the hospital's ratio of
Medicare inpatient costs for new capital to total Medicare inpatient
capital costs. For hold-harmless hospitals that are paid 100 percent of
the Federal rate, 100 percent of the Federal rate is included in the
hospital's outlier payments.
The proposed outlier thresholds for FY 1999 are in section II.A.4.c
of this Addendum. For FY 1999, a case qualifies as a cost outlier if
the cost for the case (after standardization for the indirect teaching
adjustment and disproportionate share adjustment) is greater than the
prospective payment rate for the DRG plus $11,350.
During the capital prospective payment system transition period, a
hospital may also receive an additional payment under an exceptions
process if its total inpatient capital-related payments are less than a
minimum percentage of its allowable Medicare inpatient capital-related
costs. The minimum payment level is established by class of hospital
under Sec. 412.348. The proposed minimum payment levels for portions of
cost reporting periods occurring in FY 1999 are:
--- Sole community hospitals (located in either an urban or
rural area), 90 percent;
--- Urban hospitals with at least 100 beds and a
disproportionate share patient percentage of at least 20.2 percent ;
and
--- Urban hospitals with at least 100 beds that qualify for
disproportionate share payments under Sec. 412.106(c)(2), 80 percent;
and
--- All other hospitals, 70 percent.
Under Sec. 412.348(d), the amount of the exceptions payment is
determined by comparing the cumulative payments made to the hospital
under the capital prospective payment system to the cumulative minimum
payment levels applicable to the hospital for each cost reporting
period subject to that system. Any amount by which the hospital's
cumulative payments exceed its cumulative minimum payment is deducted
from the additional payment that would otherwise be payable for a cost
reporting period.
New hospitals are exempted from the capital prospective payment
system for their first 2 years of operation and are paid 85 percent of
their reasonable costs during that period. A new hospital's old capital
costs are its allowable costs for capital assets that were put in use
for patient care on or before the later of December 31, 1990 or the
last day of the hospital's base year cost reporting period, and are
subject to the rules pertaining to old capital and obligated capital as
of the applicable date. Effective with the third year of operation, we
will pay the hospital under either the fully prospective methodology,
using the appropriate transition blend in that Federal fiscal year, or
the hold-harmless methodology. If the hold-harmless methodology is
applicable, the hold-harmless payment for assets in use during the base
period would extend for 8 years, even if the hold-harmless payments
extend beyond the normal transition period.
D. Capital Input Price Index
1. Background
Like the prospective payment hospital operating input price index,
the Capital Input Price Index (CIPI) is a fixed-weight price index that
measures the price changes associated with costs during a given year.
The CIPI differs from the operating input price index in one important
aspect--the CIPI reflects the vintage nature of capital, which is the
acquisition and use of capital over time. Capital expenses in any given
year are determined by the stock of capital in that year (that is,
capital that remains on hand from all current and prior capital
acquisitions). An index measuring capital price changes needs to
reflect this vintage nature of capital. Therefore, the CIPI was
developed to capture the vintage nature of capital by using a weighted-
average of past capital purchase prices up to and including the current
year.
Using Medicare cost reports, AHA data, and Securities Data
Corporation data, a vintage-weighted price index was developed to
measure price increases associated with capital expenses. We
periodically update the base year for the operating and capital input
prices to reflect the changing composition of inputs for operating and
capital expenses. Currently, the CIPI is based to FY 1992 and was last
rebased in 1997. The most recent explanation of the CIPI was discussed
in the final rule with comment period for FY 1998 published in the
August 29, 1997 Federal Register (62 FR 46050). The following Federal
Register documents also describe development and revisions of the
methodology involved with the construction of the CIPI: September 1,
1992 (57 FR 40016), May 26, 1993 (58 FR 30448), September 1, 1993 (58
FR 46490), May 27, 1994 (59 FR 27876), September 1, 1994 (59 FR 45517),
June 2, 1995 (60 FR 29229), and September 1, 1995 (60 FR 45815), May
31, 1996 (61 FR 27466), August 30, 1996 (61 FR 46196), and June 2, 1997
(62 FR 29953).
2. Forecast of the CIPI for Federal Fiscal Year 1999
DRI forecasts a 0.8 percent increase in the CIPI for FY 1999. This
is the outcome of a projected 2.0 percent increase in vintage-weighted
depreciation prices (building and fixed equipment, and movable
equipment) and a 2.6 percent increase in other capital expense prices
in FY 1999, partially offset by a 2.7 percent decline in vintage-
weighted interest rates in FY 1999. The weighted average of these three
factors produces the 0.8 percent increase for the CIPI as a whole.
IV. Proposed Changes to Payment Rates for Excluded Hospitals and
Hospital Units: Rate-of-Increase Percentages
A. Rate-of-Increase Percentages for Excluded Hospitals and Hospital
Units
The inpatient operating costs of hospitals and hospital units
excluded from the prospective payment system are subject to rate-of-
increase limits established under the authority of section 1886(b) of
the Act, which is implemented in Sec. 413.40 of the regulations. Under
these limits, an annual target amount (expressed in terms of the
inpatient operating cost per discharge) is set for each hospital, based
on the hospital's own historical cost experience trended forward by the
applicable rate-of-increase percentages (update factors). In the case
of a psychiatric hospital or unit, rehabilitation hospital or unit, or
long-term care hospital, the target amount may not exceed the 75th
percentile of target amounts for hospitals and units in the same class
(psychiatric, rehabilitation, and long-term care). The target amount is
multiplied by the number of Medicare discharges in a hospital's cost
reporting period, yielding the ceiling on aggregate Medicare inpatient
operating costs for the cost reporting period.
Each hospital's target amount is adjusted annually, at the
beginning of its cost reporting period, by an applicable update factor.
Section 1886(b)(3)(B) of the Act provides that for cost reporting
periods beginning on or after October 1, 1998 and before October 1,
1999, the update factor is the market basket less a percentage point
between 0 and 2.5 depending on the hospital's or
[[Page 25620]]
unit's costs in relation to the ceiling. For hospitals with costs
exceeding the ceiling by 10 percent or more, the update factor is the
market basket increase. For hospitals with costs exceeding the ceiling
by less than 10 percent, the update factor is the market basket minus
.25 percent for each percentage point by which costs are less than 10
percent over the ceiling. For hospitals with costs equal to or less
than the ceiling but greater than 66.7 percent of the ceiling, the
update factor is the greater of 0 percent or the market basket minus
2.5 percent. For hospitals with costs that do not exceed 66.7 percent
of the ceiling, the update factor is 0.
The most recent forecast of the market basket increase for FY 1999
for hospitals and hospital units excluded from the prospective payment
system is 2.5 percent; therefore, the update to a hospital's target
amount for its cost reporting period beginning in FY 1999 would be
between 0 and 2.5 percent.
In addition, section 1886(b)(3)(H) of the Act provides that for
cost reporting periods beginning on or after October 1, 1998 and before
October 1, 1999, the target amount for psychiatric hospitals and units,
rehabilitation hospitals and units, and long-term care hospitals will
be the lower of the hospital's specific target amount or the 75th
percentile target amount for hospitals in the same class. The FY 1998
75th percentile target amounts were $10,534 for psychiatric hospitals
and units, $19,104 for rehabilitation hospital and units, and $37,688
for long-term care hospitals. For 1999, these 75th percentile figures
must be updated by the market basket increase. Section 1886(b) of the
Act was revised to change the formulas for determining bonus and relief
payments for excluded hospitals and also establishes an additional
bonus payment for continuous improvement, for cost reporting periods on
or after October 1, 1997. Finally, a new statutory payment methodology
for new hospitals and units (psychiatric, rehabilitation, and long-term
care) was effective October 1, 1997 as governed by section 1886(b)(7)
of the Act.
V. Tables
This section contains the tables referred to throughout the
preamble to this proposed rule and in this Addendum. For purposes of
this proposed rule, and to avoid confusion, we have retained the
designations of Tables 1 through 5 that were first used in the
September 1, 1983 initial prospective payment final rule (48 FR 39844).
Tables 1A, 1C, 1D, 1E, 1F, 3C, 4A, 4B, 4C, 4D, 4E, 4F, 5, 6A, 6B, 6C,
6D, 6E, 6F, 6G, 7A, 7B, 8A, and 8B are presented below. The tables
presented below are as follows:
Table 1A--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor
Table 1C--Adjusted Operating Standardized Amounts for Puerto Rico,
Labor/Nonlabor
Table 1D--Capital Standard Federal Payment Rate
Table 1E--National Adjusted Operating Standardized Amounts for
"Temporary Relief" Hospitals, Labor/Nonlabor
Table 1F--Adjusted Operating Standardized Amounts for "Temporary
Relief" Hospitals in Puerto Rico, Labor/Nonlabor
Table 3C--Hospital Case Mix Indexes for Discharges Occurring in Federal
Fiscal Year 1997 and Hospital Average Hourly Wage for Federal Fiscal
Year 1999 Wage Index
Table 4A--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Urban Areas
Table 4B--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Rural Areas
Table 4C--Wage Index and Capital Geographic Adjustment Factor (GAF) for
Hospitals That Are Reclassified
Table 4D--Average Hourly Wage for Urban Areas
Table 4E--Average Hourly Wage for Rural Areas
Table 4F--Puerto Rico Wage Index and Capital Geographic Adjustment
Factor (GAF)
Table 5--List of Diagnosis Related Groups (DRGs), Relative Weighting
Factors, Geometric Mean Length of Stay, and Arithmetic Mean Length of
Stay Points Used in the Prospective Payment System
Table 6A--New Diagnosis Codes
Table 6B--New Procedure Codes
Table 6C--Invalid Diagnosis Codes
Table 6D--Invalid Procedure Codes
Table 6E--Revised Diagnosis Code Titles
Table 6F--Additions to the CC Exclusions List
Table 6G--Deletions to the CC Exclusions List
Table 7A--Medicare Prospective Payment System Selected Percentile
Lengths of Stay FY 97 MEDPAR Update 12/97 GROUPER V15.0
Table 7B--Medicare Prospective Payment System Selected Percentile
Lengths of Stay FY 97 MEDPAR Update 12/97 GROUPER V16.0
Table 8A--Statewide Average Operating Cost-to-Charge Ratios for Urban
and Rural Hospitals (Case Weighted) March 1998
Table 8B--Statewide Average Capital Cost-to-Charge Ratios (Case
Weighted) March 1998
Table 1A.--National Adjusted Operating Standardized Amounts, Labor/Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
----------------------------------------------------------------------------------------------------------------
Labor-related Nonlabor-related Labor-related Nonlabor-related
----------------------------------------------------------------------------------------------------------------
2,776.21................... 1,128.44 2,732.26 1,110.58
----------------------------------------------------------------------------------------------------------------
Table 1C.--Adjusted Operating Standardized Amounts For Puerto Rico, Labor/Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
---------------------------------------------------
Labor Nonlabor Labor Nonlabor
----------------------------------------------------------------------------------------------------------------
National.................................................... 2,752.36 1,118.74 2,752.36 1,118.74
Puerto Rico................................................. 1,323.01 532.55 1,302.07 524.11
----------------------------------------------------------------------------------------------------------------
[[Page 25621]]
Table 1D.--Capital Standard Federal Payment Rate
------------------------------------------------------------------------
Rate
------------------------------------------------------------------------
National................................................... 371.51
Puerto Rico................................................ 177.57
------------------------------------------------------------------------
Table 1E.--National Adjusted Operating Standardized Amounts For "Temporary Relief" Hospitals, Labor/Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
----------------------------------------------------------------------------------------------------------------
Labor-related Nonlabor-related Labor-related Nonlabor-related
----------------------------------------------------------------------------------------------------------------
2,790.09................... 1,134.08 2,745.92 1,116.13
----------------------------------------------------------------------------------------------------------------
Table 1F.--Adjusted Operating Standardized Amounts For "Temporary Relief" Hospitals in Puerto Rico, Labor/
Nonlabor
----------------------------------------------------------------------------------------------------------------
Large urban areas Other areas
---------------------------------------------------
Labor Nonlabor Labor Nonlabor
----------------------------------------------------------------------------------------------------------------
National.................................................... 2,766.12 1,124.33 2,766.12 1,124.33
Puerto Rico................................................. 1,329.63 535.21 1,308.58 526.73
----------------------------------------------------------------------------------------------------------------
[[Page 25622]]
Table 3C.--Hospital Case Mix Indexes for Discharges Occurring in Federal Fiscal Year 1997; Hospital Average Hourly Wage For Federal Fiscal Year 1999 Wage Index
Page 1 of 15
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Avg. Avg. Avg. Avg. Avg.
Provider Case mix hour Provider Case mix hour Provider Case mix hour Provider Case mix hour Provider Case mix hour
index wage index wage index wage index wage index wage
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
010001....................... 01.4634 15.97 010097.......... 00.9183 14.87 030006......... 01.5689 18.22 040005......... 01.0400 13.38 040118......... 01.3520 15.27
010004....................... 01.0055 13.79 010098.......... 01.1894 13.02 030007......... 01.3034 17.95 040007......... 01.8696 18.99 040119......... 01.1640 15.33
010005....................... 01.1699 15.89 010099.......... 01.1010 09.13 030008......... 02.2412 14.19 040008......... 01.0301 13.20 040124......... 01.0549 16.23
010006....................... 01.4636 16.19 010100.......... 01.3314 15.67 030009......... 01.2640 17.83 040010......... 01.3262 16.83 040126......... 00.9551 13.26
010007....................... 01.1300 14.09 010101.......... 01.0382 14.69 030010......... 01.4386 20.05 040011......... 00.9590 11.65 040134......... 02.6975 ......
010008....................... 01.0838 13.76 010102.......... 00.9504 12.71 030011......... 01.4734 19.48 040014......... 01.2138 18.12 050002......... 01.5241 27.86
010009....................... 01.1456 17.50 010103.......... 01.8119 17.65 030012......... 01.2358 18.04 040015......... 01.1668 14.80 050006......... 01.5662 20.69
010010....................... 01.0888 15.40 010104.......... 01.6869 18.66 030013......... 01.2951 20.90 040016......... 01.6762 16.66 050007......... 01.5312 27.11
010011....................... 01.6411 20.28 010108.......... 01.2192 16.69 030014......... 01.5263 19.07 040017......... 01.2700 14.62 050008......... 01.4438 25.60
010012....................... 01.2728 17.45 010109.......... 01.1224 13.41 030016......... 01.1871 19.00 040018......... 01.2583 18.08 050009......... 01.6484 24.26
010015....................... 01.1428 14.04 010110.......... 01.0248 14.97 030017......... 01.4718 19.72 040019......... 01.1438 12.08 050013......... 01.8476 23.25
010016....................... 01.2538 17.40 010112.......... 01.1997 14.59 030018......... 01.8083 27.57 040020......... 01.5404 15.42 050014......... 01.1816 23.57
010018....................... 00.9607 17.72 010113.......... 01.6522 15.97 030019......... 01.2636 23.65 040021......... 01.2056 16.15 050015......... 01.3820 24.35
010019....................... 01.2435 15.00 010114.......... 01.3201 16.49 030022......... 01.4160 18.79 040022......... 01.5321 23.41 050016......... 01.1889 18.74
010021....................... 01.2461 15.83 010115.......... 00.8706 08.92 030023......... 01.4822 20.04 040024......... 01.0031 13.38 050017......... 02.0973 24.47
010022....................... 01.0069 18.25 010117.......... 00.8624 ....... 030024......... 01.6963 20.87 040025......... 00.9000 12.48 050018......... 01.2579 17.02
010023....................... 01.6877 16.06 010118.......... 01.3033 28.66 030025......... 01.0483 14.97 040026......... 01.5700 17.88 050021......... 01.4154 24.41
010024....................... 01.4236 15.62 010119.......... 00.8398 16.57 030027......... 01.0392 17.17 040027......... 01.2930 13.77 050022......... 01.5819 23.22
010025....................... 01.3834 14.53 010120.......... 01.0107 16.62 030030......... 01.7154 18.21 040028......... 01.0462 14.24 050024......... 01.3639 20.68
010027....................... 00.8180 36.37 010121.......... 01.3471 13.03 030033......... 01.2640 15.67 040029......... 01.2975 17.64 050025......... 01.8279 21.99
010029....................... 01.6109 17.24 010123.......... 01.2883 16.28 030034......... 01.0795 17.44 040030......... 00.8325 12.20 050026......... 01.5433 28.62
010031....................... 01.2801 17.36 010124.......... 01.2886 16.44 030035......... 01.2315 17.93 040032......... 00.9669 11.81 050028......... 01.3707 15.51
010032....................... 00.9803 13.81 010125.......... 01.0743 15.15 030036......... 01.2603 20.35 040035......... 00.9837 10.12 050029......... 01.4900 21.71
010033....................... 01.9671 18.82 010126.......... 01.2171 18.91 030037......... 02.0594 20.18 040036......... 01.5104 17.85 050030......... 01.3267 20.82
010034....................... 01.1086 14.54 010127.......... 01.3575 18.07 030038......... 01.6264 20.57 040037......... 01.1061 12.40 050032......... 01.2557 19.03
010035....................... 01.1827 17.08 010128.......... 00.9738 ....... 030040......... 01.1572 14.74 040039......... 01.2394 13.39 050033......... 01.4502 24.74
010036....................... 01.1899 17.99 010129.......... 01.0590 12.94 030041......... 00.9538 14.31 040040......... 00.9817 15.09 050036......... 01.6546 15.95
010038....................... 01.3028 19.03 010130.......... 00.9980 15.85 030043......... 01.2213 17.92 040041......... 01.2978 17.08 050038......... 01.4456 29.35
010039....................... 01.7055 17.67 010131.......... 01.3864 17.25 030044......... 00.9736 16.04 040042......... 01.2567 15.12 050039......... 01.6097 21.59
010040....................... 01.6110 18.52 010134.......... 00.8391 10.86 030047......... 00.9401 18.63 040044......... 01.0524 13.02 050040......... 01.2411 32.71
010043....................... 01.0489 11.63 010137.......... 01.2373 18.84 030049......... 00.9939 20.75 040045......... 01.0079 17.86 050042......... 01.2889 22.76
010044....................... 01.1028 15.92 010138.......... 00.9399 12.43 030054......... 00.8332 14.41 040047......... 01.1013 15.48 050043......... 01.5649 31.83
010045....................... 01.2056 14.77 010139.......... 01.6766 20.38 030055......... 01.2012 17.65 040050......... 01.1795 12.44 050045......... 01.2364 18.69
010046....................... 01.5054 17.67 010143.......... 01.2743 15.07 030059......... 01.3005 22.74 040051......... 01.1670 13.51 050046......... 01.1880 22.24
010047....................... 00.9884 12.14 010144.......... 01.3459 16.59 030060......... 01.1528 17.75 040053......... 01.1178 15.65 050047......... 01.5646 34.07
010049....................... 01.1575 13.82 010145.......... 01.3390 16.15 030061......... 01.6564 20.08 040054......... 01.0532 13.50 050051......... 01.1348 20.91
010050....................... 01.1489 14.17 010146.......... 01.2470 16.83 030062......... 01.2455 16.61 040055......... 01.4655 15.78 050054......... 01.1263 18.44
010051....................... 00.9234 11.17 010148.......... 00.9483 ....... 030064......... 01.7664 18.45 040058......... 01.0463 15.12 050055......... 01.3276 22.45
010052....................... 01.0479 13.68 010149.......... 01.3349 17.75 030065......... 01.7843 19.91 040060......... 00.9290 11.03 050056......... 01.3074 24.36
010053....................... 01.0750 08.17 010150.......... 01.1552 15.82 030067......... 01.0939 16.99 040062......... 01.6786 15.55 050057......... 01.5828 20.60
010054....................... 01.1995 17.28 010152.......... 01.2892 16.12 030068......... 01.1092 15.82 040064......... 01.0657 13.92 050058......... 01.4871 25.22
010055....................... 01.4737 16.47 010155.......... 01.0788 10.90 030069......... 01.4037 21.66 040066......... 01.1801 16.36 050060......... 01.5008 18.49
010056....................... 01.3306 19.46 020001.......... 01.5208 27.19 030071......... 01.0057 ....... 040067......... 01.2165 12.63 050061......... 01.3507 22.13
010058....................... 00.9765 13.47 020002.......... 01.0595 24.09 030072......... 00.8620 ....... 040069......... 01.1095 15.47 050063......... 01.4701 23.89
010059....................... 01.0774 15.44 020004.......... 01.1712 25.49 030073......... 01.0041 ....... 040070......... 00.9098 14.25 050065......... 01.7005 21.95
010061....................... 01.1893 15.80 020005.......... 00.9285 28.73 030074......... 00.9408 ....... 040071......... 01.6234 16.49 050066......... 01.2265 19.77
010062....................... 01.0206 13.27 020006.......... 01.1834 25.07 030075......... 00.8242 ....... 040072......... 01.0982 15.41 050067......... 01.3204 21.48
010064....................... 01.7552 20.86 020007.......... 00.9834 25.64 030076......... 00.9614 ....... 040074......... 01.2503 16.30 050068......... 01.1315 19.98
010065....................... 01.3692 15.35 020008.......... 01.1238 30.06 030077......... 00.8060 ....... 040075......... 01.0369 12.15 050069......... 01.6246 24.57
010066....................... 00.9184 10.89 020009.......... 00.8881 25.77 030078......... 01.0727 ....... 040076......... 01.0407 16.99 050070......... 01.3716 31.44
010068....................... 01.2837 17.18 020010.......... 01.0169 25.93 030079......... 00.8528 ....... 040077......... 01.0621 12.57 050071......... 01.3791 33.07
010069....................... 01.1851 12.84 020011.......... 00.9299 25.75 030080......... 01.5008 19.77 040078......... 01.5099 22.64 050072......... 01.4414 32.14
010072....................... 01.1579 15.22 020012.......... 01.2746 26.15 030083......... 01.3763 22.10 040080......... 01.0790 16.38 050073......... 01.3063 33.68
010073....................... 01.0650 11.04 020013.......... 01.0266 26.76 030084......... 01.1228 ....... 040081......... 00.9679 10.85 050075......... 01.3412 32.86
010078....................... 01.2573 17.97 020014.......... 01.1152 22.90 030085......... 01.4617 18.59 040082......... 01.2191 14.71 050076......... 01.9181 32.26
010079....................... 01.2411 14.42 020017.......... 01.4752 25.14 030086......... 01.4318 20.19 040084......... 01.1006 16.62 050077......... 01.6304 24.52
010081....................... 01.8296 17.69 020018.......... 00.9680 ....... 030087......... 01.6536 19.77 040085......... 01.1954 15.29 050078......... 01.3632 25.59
010083....................... 01.0337 15.64 020019.......... 00.9067 ....... 030088......... 01.4231 19.42 040088......... 01.4395 13.39 050079......... 01.5434 31.90
010084....................... 01.5048 18.27 020020.......... 00.7369 ....... 030089......... 01.6391 19.70 040090......... 00.9349 14.77 050080......... 01.4214 19.44
010085....................... 01.2796 17.32 020021.......... 00.8551 ....... 030092......... 01.6833 21.25 040091......... 01.1266 18.55 050082......... 01.6661 21.99
010086....................... 01.0395 15.44 020024.......... 01.1349 22.66 030093......... 01.3770 18.77 040093......... 00.9413 13.01 050084......... 01.6759 22.53
010087....................... 01.6587 16.36 020025.......... 01.0164 26.32 030094......... 01.2784 19.19 040100......... 01.2392 12.91 050088......... 00.9877 19.55
010089....................... 01.2392 18.50 020026.......... 01.2873 ....... 030095......... 01.0461 18.85 040105......... 01.0353 13.05 050089......... 01.3688 18.85
010090....................... 01.6235 17.44 020027.......... 01.0891 ....... 030099......... 00.9439 ....... 040106......... 01.0675 13.53 050090......... 01.2668 23.85
010091....................... 01.0247 13.51 030001.......... 01.3399 19.87 040001......... 01.1079 13.42 040107......... 01.1428 16.75 050091......... 01.1370 21.99
010092....................... 01.4011 15.82 030002.......... 01.7944 20.96 040002......... 01.1468 13.33 040109......... 01.1342 13.95 050092......... 00.9386 16.26
010094....................... 01.2128 16.01 030003.......... 02.0396 22.65 040003......... 01.0880 13.97 040114......... 01.8758 17.98 050093......... 01.5500 23.90
010095....................... 00.9779 12.73 030004.......... 01.1011 12.52 040004......... 01.6709 17.69 040116......... 01.2656 16.72 050096......... 01.2374 21.29
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[[Page 25623]]
Page 2 of 15
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Avg. Avg. Avg. Avg. Avg.
Provider Case mix hour Provider Case mix hour Provider Case mix hour Provider Case mix hour Provider Case mix hour
index wage index wage index wage index wage index wage
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
050097....................... 01.3873 18.48 050204.......... 01.5825 24.52 050313......... 01.2044 22.00 050443......... 00.9057 18.82 050571......... 01.5096 20.05
050099....................... 01.4747 23.55 050205.......... 01.2709 21.52 050315......... 01.3579 20.47 050444......... 01.2967 22.54 050573......... 01.6294 28.41
050100....................... 01.6983 33.49 050207.......... 01.2640 20.02 050317......... 01.2655 21.86 050446......... 00.9770 10.06 050575......... 01.1367 ......
050101....................... 01.4168 31.68 050211.......... 01.3186 30.67 050320......... 01.2324 27.70 050447......... 01.0672 18.58 050577......... 01.4644 20.19
050102....................... 01.3532 17.01 050213.......... 01.5794 22.96 050324......... 01.9664 26.19 050448......... 01.0974 20.95 050578......... 01.4689 30.62
050103....................... 01.5661 23.46 050214.......... 01.4659 21.31 050325......... 01.2308 21.08 050449......... 01.3366 21.14 050579......... 01.4970 28.52
050104....................... 01.4815 23.94 050215.......... 01.5572 29.63 050327......... 01.5599 18.67 050454......... 01.8425 25.82 050580......... 01.4380 27.74
050107....................... 01.4511 23.02 050217.......... 01.3457 19.08 050329......... 01.2928 19.88 050455......... 01.7746 16.56 050581......... 01.3930 24.39
050108....................... 01.8295 23.87 050219.......... 01.1139 18.83 050331......... 01.4843 24.20 050456......... 01.1694 16.92 050583......... 01.6266 21.88
050110....................... 01.1656 20.59 050222.......... 01.6256 31.91 050333......... 01.1427 24.96 050457......... 02.0310 31.03 050584......... 01.1966 20.18
050111....................... 01.3578 20.16 050224.......... 01.5705 23.23 050334......... 01.7269 34.59 050459......... 01.2985 29.51 050585......... 01.2772 27.19
050112....................... 01.4824 19.36 050225.......... 01.6075 22.02 050335......... 01.4534 21.39 050464......... 01.8738 22.01 050586......... 01.3490 20.52
050113....................... 01.3756 31.25 050226.......... 01.4119 24.79 050336......... 01.3695 20.14 050468......... 01.3879 19.71 050588......... 01.3220 24.70
050114....................... 01.3693 23.13 050228.......... 01.2880 30.89 050342......... 01.3706 17.71 050469......... 01.0972 16.63 050589......... 01.2474 24.07
050115....................... 01.5640 20.46 050230.......... 01.3342 25.40 050343......... 01.0225 14.95 050470......... 01.1474 18.51 050590......... 01.3578 24.92
050116....................... 01.4487 23.36 050231.......... 01.6681 25.54 050348......... 01.6579 25.44 050471......... 01.8883 23.41 050591......... 01.3784 22.87
050117....................... 01.4515 20.79 050232.......... 01.7123 21.50 050349......... 00.8825 14.57 050476......... 01.3512 21.10 050592......... 01.3661 18.46
050118....................... 01.1901 23.81 050234.......... 01.2536 30.23 050350......... 01.3957 24.28 050477......... 01.4936 26.90 050593......... 01.1846 ......
050121....................... 01.3531 24.60 050235.......... 01.6014 24.55 050351......... 01.4653 32.84 050478......... 00.9635 21.11 050594......... 01.6739 19.05
050122....................... 01.5966 26.85 050236.......... 01.4693 25.40 050352......... 01.3034 19.07 050481......... 01.4648 27.13 050597......... 01.2665 21.36
050124....................... 01.3182 17.12 050238.......... 01.5517 24.76 050353......... 01.6669 24.77 050482......... 01.0978 16.07 050598......... 01.3875 32.07
050125....................... 01.3970 27.55 050239.......... 01.5877 21.67 050355......... 00.9808 16.04 050483......... 01.1821 22.22 050599......... 01.6318 23.23
050126....................... 01.5414 24.94 050240.......... 01.4863 21.17 050357......... 01.4011 23.77 050485......... 01.6561 23.81 050601......... 01.6150 32.05
050127....................... 01.3406 24.15 050241.......... 01.2337 26.32 050359......... 01.2854 19.11 050486......... 01.3493 23.00 050603......... 01.4035 22.60
050128....................... 01.6211 21.63 050242.......... 01.4284 29.91 050360......... 01.4136 31.05 050488......... 01.3349 32.94 050604......... 01.5622 37.27
050129....................... 01.6194 14.25 050243.......... 01.5930 22.58 050366......... 01.3455 22.32 050491......... 01.1935 21.97 050607......... 01.1545 20.69
050131....................... 01.3023 29.90 050245.......... 01.4385 23.33 050367......... 01.2485 27.64 050492......... 01.4113 22.37 050608......... 01.3080 15.26
050132....................... 01.4257 23.74 050248.......... 01.2618 27.54 050369......... 01.2376 21.58 050494......... 01.2167 26.20 050609......... 01.4505 32.31
050133....................... 01.2911 25.55 050251.......... 01.0989 14.91 050373......... 01.4446 24.31 050496......... 01.7259 31.88 050613......... 01.0696 31.83
050135....................... 01.3964 25.36 050253.......... 01.2992 25.63 050376......... 01.3991 26.32 050497......... 00.8270 10.59 050615......... 01.6042 23.31
050136....................... 01.4011 24.04 050254.......... 01.2141 14.11 050377......... 00.9333 19.49 050498......... 01.2434 24.96 050616......... 01.3591 22.85
050137....................... 01.4012 30.81 050256.......... 01.7518 23.91 050378......... 01.1364 20.86 050502......... 01.7222 22.74 050618......... 01.1163 22.63
050138....................... 01.9630 33.22 050257.......... 01.1275 19.38 050379......... 00.9589 15.15 050503......... 01.3400 23.15 050623......... 02.0034 27.05
050139....................... 01.2532 31.55 050260.......... 01.0044 24.07 050380......... 01.6867 29.30 050506......... 01.4395 27.49 050624......... 01.3554 22.18
050140....................... 01.2757 31.54 050261.......... 01.2723 18.81 050382......... 01.3984 23.86 050510......... 01.3791 31.86 050625......... 01.6074 25.23
050144....................... 01.6355 29.12 050262.......... 01.8576 27.43 050385......... 01.4021 26.64 050512......... 01.5743 33.03 050630......... 01.3401 23.93
050145....................... 01.3861 31.48 050264.......... 01.3335 27.45 050388......... 00.9019 20.64 050515......... 01.3473 32.36 050633......... 01.3131 21.95
050146....................... 01.4762 ....... 050267.......... 01.6544 27.78 050390......... 01.1857 16.75 050516......... 01.5400 26.16 050636......... 01.5051 26.10
050148....................... 01.1151 21.00 050270.......... 01.3573 24.13 050391......... 01.3292 21.68 050517......... 01.1822 19.69 050638......... 01.1025 24.90
050149....................... 01.4748 22.78 050272.......... 01.3703 21.55 050392......... 00.9917 18.42 050522......... 01.2252 30.95 050641......... 01.2588 14.88
050150....................... 01.2678 23.95 050274.......... 00.9903 21.63 050393......... 01.4860 17.95 050523......... 01.2384 28.96 050643......... 00.8426 ......
050152....................... 01.3850 23.39 050276.......... 01.2072 33.01 050394......... 01.5488 20.22 050526......... 01.3236 13.42 050644......... 01.0506 22.44
050153....................... 01.6231 28.40 050277.......... 01.4723 19.05 050396......... 01.6148 24.12 050528......... 01.2785 19.70 050660......... 01.4613 ......
050155....................... 01.0917 22.33 050278.......... 01.5669 22.63 050397......... 00.9890 20.00 050531......... 01.1762 20.18 050661......... 00.8186 20.05
050158....................... 01.3649 27.94 050279.......... 01.3441 19.04 050401......... 01.1257 19.64 050534......... 01.4679 23.66 050662......... 00.8651 33.41
050159....................... 01.2998 19.09 050280.......... 01.7639 25.90 050404......... 01.0765 15.96 050535......... 01.3453 23.23 050663......... 01.1547 24.12
050167....................... 01.2885 21.83 050281.......... 01.5490 33.56 050406......... 01.0708 19.56 050537......... 01.3680 18.57 050666......... 00.9460 34.46
050168....................... 01.5276 22.07 050282.......... 01.3068 23.58 050407......... 01.3597 29.45 050539......... 01.2567 19.52 050667......... 01.0189 28.01
050169....................... 01.4399 24.49 050283.......... 01.5231 27.35 050410......... 01.0632 13.08 050541......... 01.5665 33.44 050668......... 01.1332 39.35
050170....................... 01.4906 21.04 050286.......... 00.8525 18.46 050411......... 01.3589 33.17 050542......... 01.1186 14.45 050670......... 00.7487 20.84
050172....................... 01.2523 19.87 050289.......... 01.6964 30.78 050414......... 01.3074 23.74 050543......... 00.9409 23.72 050674......... 01.3219 32.55
050173....................... 01.3729 21.72 050290.......... 01.6895 33.81 050417......... 01.3155 20.45 050545......... 00.8583 27.87 050675......... 01.9709 14.65
050174....................... 01.6799 29.40 050291.......... 01.1544 30.54 050419......... 01.4360 16.25 050546......... 00.6946 31.14 050676......... 00.9474 16.75
050175....................... 01.3660 23.84 050292.......... 01.0469 22.19 050420......... 01.3375 23.41 050547......... 00.8417 36.25 050677......... 01.3998 32.89
050177....................... 01.2731 16.69 050293.......... 01.1254 20.70 050423......... 01.0173 19.31 050549......... 01.7120 26.33 050678......... 01.2229 ......
050179....................... 01.3003 21.22 050295.......... 01.4947 21.01 050424......... 01.8153 23.48 050550......... 01.4607 22.49 050680......... 01.1971 28.94
050180....................... 01.6017 32.17 050296.......... 01.1902 23.74 050425......... 01.3094 34.22 050551......... 01.3289 24.83 050682......... 00.8928 22.32
050183....................... 01.1126 19.44 050298.......... 01.3275 22.54 050426......... 01.3708 25.47 050552......... 01.2293 20.52 050684......... 01.2450 17.19
050186....................... 01.2933 27.51 050299.......... 01.3607 20.49 050427......... 00.9189 19.93 050557......... 01.5109 21.78 050685......... 01.2468 28.37
050188....................... 01.4286 26.90 050300.......... 01.4936 19.23 050430......... 01.0555 19.53 050559......... 01.3996 23.82 050686......... 01.3134 32.42
050189....................... 01.0831 22.39 050301.......... 01.2481 24.81 050432......... 01.6129 22.37 050561......... 01.1996 32.15 050688......... 01.2792 25.15
050191....................... 01.4729 20.67 050302.......... 01.3482 27.55 050433......... 01.1058 20.42 050564......... 01.3309 06.57 050689......... 01.4155 30.16
050192....................... 01.1901 20.19 050305.......... 01.5457 29.10 050434......... 01.1365 19.87 050565......... 01.3544 13.81 050690......... 01.5124 32.17
050193....................... 01.3308 22.67 050307.......... 01.3027 19.99 050435......... 01.2208 29.08 050566......... 00.9061 13.99 050693......... 01.3049 29.48
050194....................... 01.2435 27.41 050308.......... 01.4832 27.92 050436......... 00.9412 15.20 050567......... 01.6269 24.54 050694......... 01.3586 18.36
050195....................... 01.5834 33.92 050309.......... 01.3376 24.61 050438......... 01.8098 19.83 050568......... 01.3990 19.06 050695......... 01.0960 28.46
050196....................... 01.3052 15.36 050310.......... 01.0912 20.24 050440......... 01.3403 18.63 050569......... 01.3783 23.26 050696......... 02.3021 26.75
050197....................... 01.8716 30.49 050312.......... 01.9222 24.66 050441......... 02.0343 26.41 050570......... 01.7110 23.79 050697......... 01.4515 20.60
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[[Page 25624]]
Page 3 of 15
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Avg. Avg. Avg. Avg. Avg.
Provider Case mix hour Provider Case mix hour Provider Case mix hour Provider Case mix hour Provider Case mix hour
index wage index wage index wage index wage index wage
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
050698....................... 00.9075 ....... 060073.......... 01.0655 16.43 100009......... 01.4921 21.67 100102......... 01.0245 18.11 100210......... 01.6031 18.18
050699....................... 00.6236 20.97 060075.......... 01.3102 24.34 100010......... 01.5263 24.50 100103......... 00.9830 16.14 100211......... 01.3282 20.20
050700....................... 01.5678 31.31 060076.......... 01.3829 19.28 100012......... 01.6950 16.74 100105......... 01.4360 21.03 100212......... 01.6623 20.46
050701....................... 01.3360 30.27 060085.......... 00.9348 12.76 100014......... 01.4918 21.94 100106......... 01.0823 16.69 100213......... 01.5199 18.60
050704....................... 01.1294 15.23 060087.......... 01.6777 21.08 100015......... 01.4344 17.47 100107......... 01.3253 18.60 100217......... 01.3379 18.88
050707....................... 01.0702 27.09 060088.......... 00.9931 23.16 100017......... 01.4976 17.71 100108......... 01.0633 14.31 100220......... 01.7265 26.34
050708....................... 01.2629 22.59 060090.......... 00.9777 13.54 100018......... 01.5086 21.03 100109......... 01.3838 18.97 100221......... 01.7374 25.21
050709....................... 01.3280 18.88 060096.......... 01.0685 21.94 100019......... 01.5290 19.50 100110......... 01.4040 20.80 100222......... 01.4127 20.13
050710....................... 01.3480 26.13 060100.......... 01.5060 ....... 100020......... 01.3336 23.86 100112......... 00.9244 12.57 100223......... 01.4858 18.81
050713....................... 00.8060 ....... 060103.......... 01.2902 23.16 100022......... 01.9055 24.49 100113......... 02.1161 19.93 100224......... 01.4049 20.57
050714....................... 01.3480 ....... 060104.......... 01.2502 21.91 100023......... 01.4358 17.35 100114......... 01.4078 18.20 100225......... 01.4014 20.59
050715....................... 01.7138 ....... 060107.......... 01.1286 ....... 100024......... 01.3638 19.67 100117......... 01.3161 19.37 100226......... 01.4003 18.53
050716....................... 03.8652 ....... 070001.......... 01.7599 25.86 100025......... 01.8449 18.06 100118......... 01.2409 19.51 100228......... 01.3287 20.31
050717....................... 00.8003 ....... 070002.......... 01.8086 24.34 100026......... 01.5872 18.06 100121......... 01.2121 16.03 100229......... 01.3032 18.10
050718....................... 00.9336 ....... 070003.......... 01.1454 25.30 100027......... 00.9920 15.86 100122......... 01.3058 16.67 100230......... 01.3648 22.35
050899....................... 00.5288 ....... 070004.......... 01.2352 24.34 100028......... 01.2339 18.03 100124......... 01.3284 14.64 100231......... 01.7051 16.97
060001....................... 01.6504 20.31 070005.......... 01.4131 24.84 100029......... 01.4199 19.56 100125......... 01.3273 18.00 100232......... 01.3660 19.83
060003....................... 01.3293 18.91 070006.......... 01.4122 27.20 100030......... 01.3066 19.01 100126......... 01.4408 18.89 100234......... 01.5349 18.94
060004....................... 01.2793 20.57 070007.......... 01.3912 24.35 100032......... 01.8893 17.78 100127......... 01.6387 19.58 100235......... 01.5525 17.92
060006....................... 01.1829 18.36 070008.......... 01.2534 22.94 100034......... 01.7634 19.44 100128......... 02.1517 21.53 100236......... 01.4246 19.87
060007....................... 01.1389 15.33 070009.......... 01.2944 24.56 100035......... 01.6050 17.98 100129......... 01.2696 17.72 100237......... 02.2024 23.28
060008....................... 01.1684 15.83 070010.......... 01.6774 20.35 100038......... 01.5798 18.23 100130......... 01.2454 18.62 100238......... 01.5894 13.88
060009....................... 01.4660 21.35 070011.......... 01.4579 23.69 100039......... 01.5397 21.36 100131......... 01.3794 20.96 100239......... 01.4442 19.35
060010....................... 01.5585 22.31 070012.......... 01.2488 23.36 100040......... 01.7626 17.97 100132......... 01.3098 19.53 100240......... 00.7775 15.37
060011....................... 01.3645 22.12 070015.......... 01.4162 24.05 100043......... 01.3643 15.33 100134......... 00.9935 13.03 100241......... 00.9329 13.90
060012....................... 01.4391 18.62 070016.......... 01.3810 23.00 100044......... 01.4082 21.18 100135......... 01.6123 17.62 100242......... 01.4132 16.91
060013....................... 01.3221 16.29 070017.......... 01.3702 24.60 100045......... 01.4052 19.25 100137......... 01.3170 18.60 100243......... 01.4048 24.16
060014....................... 01.7402 ....... 070018.......... 01.4229 28.54 100046......... 01.4822 20.36 100138......... 01.0153 10.76 100244......... 01.4078 19.39
060015....................... 01.5816 21.13 070019.......... 01.2953 24.83 100047......... 01.7725 18.92 100139......... 01.1145 15.04 100246......... 01.4106 17.86
060016....................... 01.2616 17.07 070020.......... 01.3139 24.55 100048......... 00.9695 13.58 100140......... 01.2249 17.48 100248......... 01.6271 18.75
060018....................... 01.2400 17.15 070021.......... 01.2930 24.85 100049......... 01.3276 17.97 100142......... 01.2594 18.68 100249......... 01.3503 18.84
060020....................... 01.6773 17.56 070022.......... 01.8192 23.48 100050......... 01.1456 15.90 100144......... 01.2818 19.61 100252......... 01.2846 21.94
060022....................... 01.6160 19.49 070024.......... 01.3153 23.84 100051......... 01.2118 19.11 100146......... 01.0877 16.15 100253......... 01.5082 20.97
060023....................... 01.6591 17.02 070025.......... 01.8600 19.43 100052......... 01.4303 16.90 100147......... 01.0605 14.54 100254......... 01.5827 18.66
060024....................... 01.7966 22.84 070026.......... 01.1616 18.55 100053......... 01.2198 18.09 100150......... 01.3984 19.96 100255......... 01.2900 24.34
060027....................... 01.6866 21.24 070027.......... 01.2854 23.11 100054......... 01.3283 17.76 100151......... 01.7240 18.08 100256......... 02.0081 18.90
060028....................... 01.4966 21.55 070028.......... 01.5443 24.77 100055......... 01.3757 17.93 100154......... 01.5955 19.74 100258......... 01.6280 21.07
060029....................... 00.9005 15.35 070029.......... 01.3587 21.95 100056......... 01.4068 19.38 100156......... 01.2007 19.92 100259......... 01.4194 18.73
060030....................... 01.3241 19.00 070030.......... 01.2292 25.18 100057......... 01.4184 18.63 100157......... 01.5860 21.06 100260......... 01.4513 21.73
060031....................... 01.6355 19.53 070031.......... 01.2535 23.12 100060......... 01.7365 21.02 100159......... 00.9550 11.69 100262......... 01.3943 21.16
060032....................... 01.4770 20.78 070033.......... 01.4122 26.38 100061......... 01.4813 21.68 100160......... 01.2495 18.43 100263......... 01.2482 18.64
060033....................... 01.0722 13.41 070034.......... 01.3825 29.05 100062......... 01.7465 18.11 100161......... 01.7073 21.30 100264......... 01.4012 17.62
060034....................... 01.5666 ....... 070035.......... 01.4072 22.69 100063......... 01.2890 18.31 100162......... 01.4540 19.83 100265......... 01.3352 15.01
060036....................... 01.1694 15.76 070036.......... 01.5709 27.95 100067......... 01.4095 16.81 100165......... 01.1337 13.18 100266......... 01.3566 18.10
060037....................... 01.0286 13.56 070038.......... 01.0707 ....... 100068......... 01.3733 17.72 100166......... 01.4808 19.75 100267......... 01.3379 19.83
060038....................... 01.0310 13.78 070039.......... 00.9302 23.64 100069......... 01.3153 15.88 100167......... 01.4454 20.58 100268......... 01.2241 22.61
060041....................... 00.9383 14.14 080001.......... 01.7025 27.32 100070......... 01.4966 18.19 100168......... 01.3650 19.91 100269......... 01.4247 20.37
060042....................... 01.0363 14.73 080002.......... 01.2023 15.33 100071......... 01.2953 16.97 100169......... 01.8710 20.54 100270......... 00.8682 20.06
060043....................... 00.9025 12.99 080003.......... 01.3849 20.16 100072......... 01.2360 23.32 100170......... 01.4100 15.49 100271......... 01.7428 20.02
060044....................... 01.1085 16.07 080004.......... 01.3094 19.45 100073......... 01.7511 20.04 100172......... 01.3995 14.68 100275......... 01.4146 20.36
060046....................... 01.0901 18.50 080006.......... 01.4184 21.83 100075......... 01.6523 18.22 100173......... 01.6957 17.25 100276......... 01.2702 22.13
060047....................... 00.9872 13.98 080007.......... 01.4486 16.75 100076......... 01.3180 17.07 100174......... 01.3787 17.95 100277......... 01.0519 15.24
060049....................... 01.3479 20.25 090001.......... 01.5888 27.79 100077......... 01.3753 16.82 100175......... 01.2198 15.49 100279......... 01.3775 12.47
060050....................... 01.2593 16.03 090002.......... 01.3122 19.74 100078......... 01.1969 16.33 100176......... 02.0937 23.45 100280......... 01.3550 16.99
060052....................... 01.0840 13.49 090003.......... 01.3697 25.82 100079......... 01.6561 19.15 100177......... 01.3473 18.58 100281......... 01.3003 22.78
060053....................... 01.1047 14.93 090004.......... 01.7397 24.43 100080......... 01.6318 22.70 100179......... 01.7319 19.47 100282......... 01.1124 17.70
060054....................... 01.3319 18.61 090005.......... 01.3450 23.71 100081......... 01.0539 14.21 100180......... 01.4631 19.43 110001......... 01.3047 15.63
060056....................... 00.9946 15.37 090006.......... 01.3214 20.39 100082......... 01.4614 18.91 100181......... 01.2111 21.61 110002......... 01.3058 16.54
060057....................... 01.0133 23.55 090007.......... 01.3635 19.38 100084......... 01.4186 20.77 100183......... 01.2830 18.48 110003......... 01.3845 15.24
060058....................... 00.9506 15.60 090008.......... 01.4969 20.72 100085......... 01.3915 21.33 100187......... 01.4150 19.92 110004......... 01.3881 18.05
060060....................... 00.9769 14.53 090010.......... 01.0223 17.93 100086......... 01.2392 21.23 100189......... 01.3952 24.14 110005......... 01.1802 17.38
060062....................... 00.9096 16.53 090011.......... 02.0090 25.70 100087......... 01.8553 21.28 100191......... 01.2949 20.19 110006......... 01.4001 19.78
060064....................... 01.4880 21.56 100001.......... 01.4825 16.62 100088......... 01.6726 21.08 100199......... 01.3616 19.76 110007......... 01.6056 16.12
060065....................... 01.3260 22.85 100002.......... 01.4763 19.92 100090......... 01.3888 17.89 100200......... 01.3456 21.55 110008......... 01.2651 18.30
060066....................... 01.0226 15.09 100004.......... 01.0119 13.82 100092......... 01.5281 19.47 100204......... 01.6026 19.37 110009......... 01.1532 15.80
060068....................... 01.0475 18.74 100006.......... 01.6406 20.10 100093......... 01.5080 15.93 100206......... 01.3988 19.96 110010......... 02.1459 24.74
060070....................... 01.1221 17.17 100007.......... 01.8866 20.87 100098......... 01.1552 19.33 100208......... 01.5848 22.72 110011......... 01.2262 16.24
060071....................... 01.2194 16.52 100008.......... 01.7096 20.20 100099......... 01.2922 13.50 100209......... 01.5855 17.58 110013......... 01.1130 16.61
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