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Centers for Medicare & Medicaid Services (CMS), HHS.
This notice updates the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs), for fiscal year (FY) 2003, as required by statute. Annual updates to the PPS rates are required by section 1888(e) of the Social Security Act (the Act), as amended by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (the BBRA), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (the BIPA), relating to Medicare payments and consolidated billing for SNFs.
This notice is effective on October 1, 2002.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Dana Burley, (410) 786-4547 (for information related to the case-mix classification methodology).
John Davis, (410) 786-0008 (for information related to the Wage Index).
Sheila Lambowitz, (410) 786-7605 (for information related to swing-bed providers).
Bill Ullman, (410) 786-5667 (for information related to level of care determinations, consolidated billing, and general information).End Further Info End Preamble Start Supplemental Information
Because of the many terms to which we refer by abbreviation in this notice, we are listing these abbreviations and their corresponding terms in alphabetical order below:
ADL—Activity of Daily Living
AHE—Average Hourly Earnings
ARD—Assessment Reference Date
BBA—Balanced Budget Act of 1997, Pub.L. 105-33
BBRA—Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999, Pub.L. 106-113
BEA—(U.S.) Bureau of Economic Analysis
BIPA—Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Pub.L. 106-554
CAH—Critical Access Hospital
CFR—Code of Federal Regulations
CMS—Centers for Medicare & Medicaid Services
CPT—(Physicians') Current Procedural Terminology
DRG—Diagnosis Related Group
GAO—General Accounting Office
HCPCS—Healthcare Common Procedure Coding System
ICD-9-CM—International Classification of Diseases, Ninth Edition, Clinical Modification
IFC—Interim Final Rule with Comment Period
MDS—Minimum Data Set
MEDPAR—Medicare Provider Analysis and Review File
MIP—Medicare Integrity Program
MSA—Metropolitan Statistical Area
NECMA—New England County Metropolitan Area
OIG—Office of the Inspector General
OMRA—Other Medicare Required Assessment
PCE—Personal Care Expenditures
PPI—Producer Price Index
PPS—Prospective Payment System
PRM—Provider Reimbursement Manual
RAI—Resident Assessment Instrument
RAP—Resident Assessment Protocol
RAVEN—Resident Assessment Validation Entry
RFA—Regulatory Flexibility Act, Pub.L. 96-354
RIA—Regulatory Impact Analysis
RUG—Resource Utilization Groups
SCHIP—State Children's Health Insurance Program
SNF—Skilled Nursing Facility
STM—Staff Time Measure
UMRA—Unfunded Mandates Reform Act, Pub.L. 104-4
On July 31, 2001, we published in the Federal Register (66 FR 39562) a final rule that set forth updates to the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs), for fiscal year (FY) 2002. Annual updates to the PPS rates are required by section 1888(e) of the Social Security Act (the Act), as amended by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), relating to Medicare payments and consolidated billing for SNFs.
A. Current System for Payment of Skilled Nursing Facility Services Under Part A of the Medicare Program
Section 4432 of the Balanced Budget Act of 1997 (BBA) amended section 1888 of the Act to provide for the implementation of a per diem PPS for SNFs, covering all costs (routine, ancillary, and capital-related) of covered SNF services furnished to beneficiaries under Part A of the Medicare program, effective for cost reporting periods beginning on or after July 1, 1998. In this notice, we are updating the per diem payment rates for SNFs, for FY 2003. Major elements of the SNF PPS include:
- Rates. Per diem Federal rates were established for urban and rural areas using allowable costs from FY 1995 cost reports. These rates also included an estimate of the cost of services that, before July 1, 1998, had been paid under Part B but furnished to Medicare beneficiaries in a SNF during a Part A covered stay. The rates were adjusted annually using a SNF market basket index. Rates were case-mix adjusted using a classification system (Resource Utilization Groups, version III (RUG-III)) based on beneficiary assessments (using the Minimum Data Set (MDS) 2.0). The rates were also adjusted by the hospital wage index to account for geographic variation in wages. (In section II.C of this notice, we discuss the wage index adjustment in detail.) A correction notice was published on March 22, 2002 (67 FR 13278) that announced corrections to several of the wage factors. Additionally, as noted in the July 31, 2001 final rule (66 FR 39562), section 101 of the BBRA and sections 311, 312, and 314 of the BIPA also affect the payment rate.
- Transition. The SNF PPS included an initial 3-year, phased transition that blended a facility-specific payment rate with the Federal case-mix adjusted rate. For each cost reporting period after a facility migrated to the new system, the facility-specific portion of the blend decreased and the Federal portion increased in 25 percentage point increments. For most facilities, the facility-specific rate was based on allowable costs from FY 1995; however, since the last year of the transition was FY 2001, all facilities were paid at the full Federal rate by the following fiscal year (FY 2002). Therefore, we are no longer including adjustment factors related to facility-specific rates for the coming fiscal year.
- Coverage. The establishment of the SNF PPS did not change Medicare's fundamental requirements for SNF coverage; however, because RUG-III classification is based, in part, on the beneficiary's need for skilled nursing care and therapy, we have attempted, where possible, to coordinate claims review procedures with the outputs of beneficiary assessment and RUG-III classifying activities. We discuss this coordination in greater detail in section II.E of this notice.
- Consolidated Billing. The SNF PPS includes a consolidated billing provision (described in greater detail in Start Printed Page 49799section IV of this notice) that requires a SNF to submit consolidated Medicare bills for almost all of the services that its residents receive during the course of a covered Part A stay. In addition, this provision places with the SNF the Medicare billing responsibility for physical, occupational, and speech-language therapy that the resident receives during a noncovered stay. The statute excludes a small list of services from the consolidated billing provision (primarily those of physicians and certain other types of practitioners).
- Application of the SNF PPS to SNF services furnished by swing-bed hospitals. Section 1883 of the Act permits certain small, rural hospitals to enter into a Medicare swing-bed agreement, under which the hospital can use its beds to provide either acute or SNF care, as needed. Part A currently pays for SNF services furnished by swing-bed hospitals on a cost-related basis. Section 1888(e)(7) of the Act requires the SNF PPS to encompass these services no earlier than cost reporting periods beginning on July 1, 1999, and no later than the end of the SNF PPS transition period described in section 1888(e)(2)(E) of the Act. A more detailed discussion of this provision appears in section V of this notice.
B. Requirements of the Balanced Budget Act of 1997 (BBA) for Updating the Prospective Payment System for Skilled Nursing Facilities
Section 1888(e)(4)(H) of the Act requires that we publish in the Federal Register:
1. The unadjusted Federal per diem rates to be applied to days of covered SNF services furnished during the FY.
2. The case-mix classification system to be applied with respect to these services during the FY.
3. The factors to be applied in making the area wage adjustment with respect to these services.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we would announce any changes to the guidelines for Medicare level of care determinations related to modifications in the RUG-III classification structure (see section II.E of this notice).
This notice provides the annual updates to the Federal rates as mandated by the Act.
C. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA)
There were several provisions in the BBRA that resulted in adjustments to the SNF PPS. These provisions were described in detail in the final rule that we published in the Federal Register on July 31, 2000 (65 FR 46770). In particular, section 101(a) of the BBRA provided for a temporary, 20 percent increase in the per diem adjusted payment rates for 15 specified RUG-III groups (SE3, SE2, SE1, SSC, SSB, SSA, CC2, CC1, CB2, CB1, CA2, CA1, RHC, RMC, and RMB). Under the statute, this temporary increase remains in effect until the later of October 1, 2000, or the implementation of case-mix refinements in the PPS. Section 101(d) included a 4 percent across-the-board increase in the adjusted Federal per diem payment rates each year for FYs 2001 and 2002, exclusive of the 20 percent increase.
We included further information on all of the provisions of the BBRA that affect the SNF PPS in Program Memorandums A-99-53 and A-99-61 (December 1999), and Program Memorandum AB-00-18 (March 2000). In addition, for swing-bed hospitals with more than 49 (but less than 100) beds, section 408 of the BBRA provided for the repeal of certain statutory restrictions on length of stay and aggregate payment for patient days, effective with the end of the SNF PPS transition period described in section 1888(e)(2)(E) of the Act. In the July 31, 2001 final rule (66 FR 39562), we made conforming changes to the regulations at § 413.114(d), effective for services furnished in cost reporting periods beginning on or after July 1, 2002.
D. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA)
The BIPA also included several provisions that resulted in adjustments to the PPS for SNFs. These provisions were described in detail in the final rule that we published in the Federal Register on July 31, 2001 (66 FR 39562), as follows:
- Section 203 of the BIPA exempted critical access hospital (CAH) swing-beds from the SNF PPS; we included further information on this provision in Program Memorandum A-01-09 (January 16, 2001).
- Section 311 of the BIPA eliminated the one percentage point reduction in the SNF market basket that the statutory update formula had previously specified for FY 2001, changed the one percentage point reduction specified for FY 2002 to a 0.5 percentage point reduction, and established an update factor for FY 2003 of market basket minus 0.5 percentage point. This section also required us to conduct a study of alternative case-mix classification systems for the SNF PPS, and to submit a report to the Congress by January 1, 2005.
- Section 312 of the BIPA provided for a temporary 16.66 percent increase in the nursing component of the case-mix adjusted Federal rate for services furnished on or after April 1, 2001, and before October 1, 2002. This section also required the General Accounting Office (GAO) to conduct an audit of SNF nursing staff ratios and submit a report to the Congress on whether the temporary increase in the nursing component should be continued.
- Section 313 of the BIPA repealed the consolidated billing requirement for services (other than physical, occupational, and speech-language therapy) furnished to SNF residents during noncovered stays, effective January 1, 2001.
- Section 314 of the BIPA adjusted the payment rates for all of the rehabilitation RUGs to correct an anomaly under which the existing payment rates for the RHC, RMC, and RMB rehabilitation groups were higher than the rates for some other, more intensive rehabilitation RUGs.
- Section 315 of the BIPA authorized us to establish a geographic reclassification procedure that is specific to SNFs, but only after collecting the data necessary to establish a SNF wage index that is based on wage data from nursing homes.
We included further information on several of these provisions in Program Memorandum A-01-08 (January 16, 2001).
E. Skilled Nursing Facility Prospective Payment—General Overview
The Medicare SNF PPS was implemented for cost reporting periods beginning on or after July 1, 1998. Under the PPS, SNFs are paid through prospective, case-mix adjusted per diem payment rates applicable to all covered SNF services. These payment rates cover all the costs of furnishing covered skilled nursing services (routine, ancillary, and capital-related costs) other than costs associated with approved educational activities. Covered SNF services include post-hospital services for which benefits are provided under Part A and all items and services that, before July 1, 1998, had been paid under Part B (other than physician and certain other services specifically excluded under the BBA) but furnished to Medicare beneficiaries in a SNF during a covered Part A stay. A complete discussion of these provisions appears in the May 12, 1998 interim final rule (63 FR 26252).
1. Payment Provisions—Federal Rate
The PPS uses per diem Federal payment rates based on mean SNF costs in a base year updated for inflation to the first effective period of the PPS. We Start Printed Page 49800developed the Federal payment rates using allowable costs from hospital-based and freestanding SNF cost reports for reporting periods beginning in FY 1995. The data used in developing the Federal rates also incorporated an estimate of the amounts that would be payable under Part B for covered SNF services furnished to individuals during the course of a covered Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to the first effective year of PPS (15-month period beginning July 1, 1998) using a SNF market basket index, and then standardized for the costs of facility differences in case-mix and for geographic variations in wages. Providers that received new provider exemptions from the routine cost limits were excluded from the database used to compute the Federal payment rates, as well as costs related to payments for exceptions to the routine cost limits. In accordance with the formula prescribed in the BBA, we set the Federal rates at a level equal to the weighted mean of freestanding costs plus 50 percent of the difference between the freestanding mean and weighted mean of all SNF costs (hospital-based and freestanding) combined. We computed and applied separately the payment rates for facilities located in urban and rural areas. In addition, we adjusted the portion of the Federal rate attributable to wage-related costs by a wage index.
The Federal rate also incorporates adjustments to account for facility case-mix, using a classification system that accounts for the relative resource utilization of different patient types. This classification system, Resource Utilization Groups, version III (RUG-III), uses beneficiary assessment data from the Minimum Data Set (MDS) completed by SNFs to assign beneficiaries to one of 44 RUG III groups. The May 12, 1998 interim final rule (63 FR 26252) included a complete and detailed description of the RUG-III classification system.
The Federal rates in this notice reflect an update to the rates that we published in the July 31, 2001 Federal Register (66 FR 39562) equal to the SNF market basket index minus 0.5 percentage point, as well as the expiration of the temporary 16.66 percent adjustment to the nursing component of the rates enacted in section 312 of the BIPA. According to section 311 of the BIPA, for FY 2003, we are updating the rate by adjusting the current rates by the SNF market basket index minus 0.5 percentage point.
2. Payment Provisions—Initial Transition Period
The SNF PPS included an initial, phased transition from a facility-specific rate (which reflected the individual facility's historical cost experience) to the Federal case-mix adjusted rate. The transition extended through the facility's first three cost reporting periods under the PPS, up to and including the one that began in FY 2001. Accordingly, starting with cost reporting periods beginning in FY 2002, we base payments entirely on the Federal rates and, as mentioned previously in this notice, we no longer include adjustment factors related to facility-specific rates for the coming fiscal year.
F. Skilled Nursing Facility Market Basket Index
Section 1888(e)(5) of the Act requires us to establish a SNF market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in the covered SNF services. The SNF market basket index is used to update the Federal rates on an annual basis. As mentioned previously in this notice, the final rule published on July 31, 2001 (66 FR 39562) revised and rebased the market basket to reflect 1997 total cost data.
II. Update of Payment Rates Under the Prospective Payment System for Skilled Nursing Facilities
A. Federal Prospective Payment System
This notice sets forth a schedule of Federal prospective payment rates applicable to Medicare Part A SNF services beginning October 1, 2002. The schedule incorporates per diem Federal rates that provide Part A payment for all costs of services furnished to a beneficiary in a SNF during a Medicare-covered stay.
1. Costs and Services Covered by the Federal Rates
The Federal rates apply to all costs (routine, ancillary, and capital-related costs) of covered SNF services other than costs associated with approved educational activities as defined in § 413.85. Under section 1888(e)(2) of the Act, covered SNF services include post-hospital SNF services for which benefits are provided under Part A (the hospital insurance program), as well as all items and services (other than those services excluded by statute) that, before July 1, 1998, were paid under Part B (the supplementary medical insurance program) but furnished to Medicare beneficiaries in a SNF during a Part A covered stay. (These excluded service categories are discussed in greater detail in section V.B.2. of the May 12, 1998 interim final rule (63 FR 26295-97)).
2. Methodology Used for the Calculation of the Federal Rates
The FY 2003 rates reflect an update using the latest market basket index minus 0.5 percentage point. The FY 2003 market basket increase factor is 3.1 percentage points, and subtracting 0.5 percentage point yields an update increase of 2.6 percentage points. For a complete description of the multi-step process, see the May 12, 1998 interim final rule (63 FR 26252). We note that, in accordance with the statute, the 4 percent across-the-board increase in the adjusted Federal per diem payment rates that section 101(d) of the BBRA provided for FYs 2001 and 2002 will expire at the end of FY 2002. Similarly, section 312 of the BIPA provides that the temporary 16.66 percent increase in the nursing component of the case-mix adjusted Federal rate will end effective with services furnished on or after October 1, 2002. Further, several other provisions of the BIPA affect the payment rates for SNFs, as described in the previous section.
We used the SNF market basket index (minus 0.5 percentage point) to adjust each per diem component of the Federal rates forward to reflect cost increases occurring between the midpoint of the Federal fiscal year beginning October 1, 2001, and ending September 30, 2002, and the midpoint of the Federal fiscal year beginning October 1, 2002, and ending September 30, 2003, to which the payment rates apply. The rates are further adjusted by a wage index budget neutrality factor, described later in this section. Tables 1 and 2 reflect the updated components of the unadjusted Federal rates. Start Printed Page 49801
|Rate component||Nursing— case-mix||Therapy— case-mix||Therapy— non-case- mix||Non-case-mix|
|Per diem amount||$121.59||$91.58||$12.06||$62.05|
|Rate component||Nursing— case-mix||Therapy— case-mix||Therapy— non-case- mix||Non-case-mix|
|Per diem amount||$116.17||$105.61||$12.88||$63.20|
B. Case-Mix Refinements
Under the BBA, we must publish the SNF PPS case-mix classification methodology applicable for the next Federal FY before August 1 of each year. For the reasons discussed below, in this notice we continue to utilize the existing case-mix classification methodology that employs the 44-group RUG-III classification system.
As discussed previously in this preamble, section 101(a) of the BBRA provided for a temporary, 20 percent increase in the per diem adjusted payment rates for 15 specified RUG-III groups. This legislation specified that the 20 percent increase would be effective for SNF services furnished on or after April 1, 2000, and would continue until the later of: (1) October 1, 2000, or (2) implementation of a refined case-mix classification system under section 1888(e)(4)(G)(i) of the Act that would better account for medically complex patients.
In the SNF PPS proposed rule for FY 2001 (65 FR 19190, April 10, 2000), we proposed making an extensive, comprehensive set of refinements to the existing case-mix classification system that collectively would have significantly expanded the existing 44-group structure. However, when our subsequent validation analyses indicated that the refinements would afford only a limited degree of improvement in explaining resource utilization relative to the significant increase in complexity that they would entail, we decided not to implement them at that time (see the FY 2001 final rule, 65 FR 46773, July 31, 2000). Nevertheless, since the BBRA provision had demonstrated a Congressional interest in securing refinements to reimburse nursing homes more fairly and accurately for the care of medically complex patients, we continued to conduct research in this area.
The Congress subsequently enacted section 311(e) of the BIPA, which directed us to conduct a study of the different systems for categorizing patients in Medicare SNFs in a manner that accounts for the relative resource utilization of different patient types, and to issue a report with any appropriate recommendations to the Congress by January 1, 2005. The lengthy timeframe for conducting the study, and its broad mandate to consider various classification systems and the full range of patient types, stood in sharp contrast to the BBRA language regarding more incremental refinements to the existing case-mix classification system under section 1888(e)(4)(G)(i) of the Act, and made clear that implementing the latter type of refinements to the existing system in order to better account for medically complex patients need not await the completion of the more comprehensive changes envisioned in the BIPA. Accordingly, we considered the possibility of including such refinements as part of this year's annual update of the SNF payment rates.
However, we determined that while the research gives a sound basis for developing improvements to the SNF PPS, we need additional time to review and analyze the implications. Therefore, we have decided not to implement any case-mix refinements for FY 2003. Our decision to defer implementing any case-mix refinements for the present leaves the current classification system in place. Under the provisions of section 101(a) of the BBRA, this will result in SNFs continuing to receive an estimated $1 billion in temporary add-on payments during FY 2003.
Accordingly, the payment rates set forth in this final rule reflect the continued use of the 44-group RUG-III classification system discussed in the May 12, 1998 interim final rule (63 FR 26252). Consequently, we will also maintain the add-ons to the Federal rates for the specified RUG-III groups required by section 101(a) of the BBRA and subsequently modified by section 314 of the BIPA. The case-mix adjusted payment rates are listed separately for urban and rural SNFs in Tables 3 and 4, with the corresponding case-mix values. These tables do not reflect the add-ons to the specified RUG-III groups provided for in the BBRA, which are applied only after all other adjustments (wage and case-mix) have been made.
Meanwhile, we will continue to explore both short-term and longer-range revisions to our case-mix classification methodology. In July 2001, we awarded a contract to the Urban Institute for performance of research to aid us in making incremental refinements to the case-mix classification system under section 1888(e)(4)(G)(i) of the Act and starting the case-mix study mandated by section 311(e) of the BIPA. The results of the research in which we are currently engaged will be included in the report to the Congress that section 311(e) of the BIPA requires us to submit by January 1, 2005. As we noted in the May 10, 2001 proposed rule (66 FR 23990), this research may also support a longer term goal of developing more integrated approaches for the payment and delivery system for Medicare post acute services generally. This broader, ongoing research project will pursue several avenues in studying various case-mix classification systems. We have encouraging preliminary results from incorporating comorbidities and complications into the classification strategy, and will thoroughly explore and evaluate this and other approaches in our ongoing work.Start Printed Page 49802 Start Printed Page 49803 Start Printed Page 49804
C. Wage Index Adjustment to Federal Rates
Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the Federal rates to account for differences in area wage levels, using a wage index that we find appropriate. Since the inception of a PPS for SNFs, we have used hospital wage data in developing a wage index to be applied to SNFs. We are continuing that practice for FY 2003.
The wage index adjustment is applied to the labor-related portion of the Federal rate, which is 76.128 percent of the total rate. This percentage reflects the labor-related relative importance for FY 2003. The labor-related relative importance is calculated from the SNF market basket, and approximates the labor-related portion of the total costs after taking into account historical and projected price changes between the base year and FY 2003. The price proxies that move the different cost categories in the market basket do not necessarily change at the same rate, and the relative importance captures these changes. Accordingly, the relative importance figure more closely reflects the cost share weights for FY 2003 than the base year weights from the SNF market basket.
We calculate the labor-related relative importance for FY 2003 in four steps. First, we compute the FY 2003 price index level for the total market basket and each cost category of the market basket. Second, we calculate a ratio for each cost category by dividing the FY 2003 price index level for that cost category by the total market basket price index level. Third, we determine the FY 2003 relative importance for each cost category by multiplying this ratio by the base year (FY 1997) weight. Finally, we sum the FY 2003 relative importance for each of the labor-related cost categories (wages and salaries, employee benefits, nonmedical professional fees, labor-intensive services, and capital-related expenses) to produce the FY 2003 labor-related relative importance. Tables 5 and 6 show the Federal rates by labor-related and non-labor-related components.Start Printed Page 49805 Start Printed Page 49806
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply this wage index in a manner that does not result in aggregate payments that are greater or Start Printed Page 49807lesser than would otherwise be made in the absence of the wage adjustment. In this fifth PPS year (Federal rates effective October 1, 2002), we are applying the most recent wage index using the hospital wage data, and applying an adjustment to fulfill the budget neutrality requirement. This requirement will be met by multiplying each of the components of the unadjusted Federal rates by a factor equal to the ratio of the volume weighted mean wage adjustment factor (using the wage index from the previous year) to the volume weighted mean wage adjustment factor, using the wage index for the FY beginning October 1, 2002. The same volume weights are used in both the numerator and denominator and will be derived from 1997 Medicare Provider Analysis and Review File (MEDPAR) data. The wage adjustment factor used in this calculation is defined as the labor share of the rate component multiplied by the wage index plus the non-labor share. The budget neutrality factor for this year is 0.9997.
The wage index applicable to FY 2003 can be found in Table 7 and Table 8 of this notice.
|Urban area (constituent counties or county equivalents)||Wage index|
|0040 Abilene, TX||0.7792|
|0060 Aguadilla, PR||0.4587|
|0080 Akron, OH||0.9600|
|0120 Albany, GA||1.0594|
|0160 Albany-Schenectady-Troy, NY||0.8384|
|0200 Albuquerque, NM||0.9315|
|0220 Alexandria, LA||0.7859|
|0240 Allentown-Bethlehem-Easton, PA||0.9735|
|0280 Altoona, PA||0.9225|
|0320 Amarillo, TX||0.9034|
|0380 Anchorage, AK||1.2358|
|0440 Ann Arbor, MI||1.1103|
|0450 Anniston, AL||0.8044|
|0460 Appleton-Oshkosh-Neenah, WI||0.8997|
|0470 Arecibo, PR||.0.4337|
|0480 Asheville, NC||0.9876|
|0500 Athens, GA||1.0211|
|0520 Atlanta, GA||0.9991|
|De Kalb, GA|
|0560 Atlantic City-Cape May, NJ||1.1017|
|Atlantic City, NJ|
|Cape May, NJ|
|0580 Auburn-Opelika, AL||0.8325|
|0600 Augusta-Aiken, GA-SC||1.0264|
|0640 Austin-San Marcos, TX||0.9637|
|0680 Bakersfield, CA||0.9877|
|0720 Baltimore, MD||0.9929|
|Anne Arundel, MD|
|Baltimore City, MD|
|Queen Annes, MD|
|0733 Bangor, ME||0.9664|
|0743 Barnstable-Yarmouth, MA||1.3202|
|0760 Baton Rouge, LA||0.8294|
|East Baton Rouge, LA|
|West Baton Rouge, LA|
|0840 Beaumont-Port Arthur, TX||0.8324|
|0860 Bellingham, WA||1.2282|
|0870 Benton Harbor, MI||0.8965|
|0875 Bergen-Passaic, NJ||1.2150|
|0880 Billings, MT||0.9022|
|0920 Biloxi-Gulfport-Pascagoula, MS||0.8757|
|0960 Binghamton, NY||0.8341|
|1000 Birmingham, AL||0.9222|
|St. Clair, AL|
|1010 Bismarck, ND||0.7972|
|1020 Bloomington, IN||0.8907|
|1040 Bloomington-Normal, IL||0.9109|
|1080 Boise City, ID||0.9310|
|1123 Boston-Worcester-Lawrence-Lowell-Brockton, MA-NH||1.1229|
|1125 Boulder-Longmont, CO||0.9689|
|1145 Brazoria, TX||0.8535|
|1150 Bremerton, WA||1.0944|
|1240 Brownsville-Harlingen-San Benito, TX||0.8880|
|Start Printed Page 49808|
|1260 Bryan-College Station, TX||0.8821|
|1280 Buffalo-Niagara Falls, NY||0.9365|
|1303 Burlington, VT||1.0052|
|Grand Isle, VT|
|1310 Caguas, PR||0.4371|
|San Lorenzo, PR|
|1320 Canton-Massillon, OH||0.8932|
|1350 Casper, WY||0.9690|
|1360 Cedar Rapids, IA||0.9056|
|1400 Champaign-Urbana, IL||1.0635|
|1440 Charleston-North Charleston, SC||0.9235|
|1480 Charleston, WV||0.8898|
|1520 Charlotte-Gastonia-Rock Hill, NC-SC||0.9875|
|1540 Charlottesville, VA||1.0438|
|Charlottesville City, VA|
|1560 Chattanooga, TN-GA||0.8976|
|1580 Cheyenne, WY||0.8628|
|1600 Chicago, IL||1.1044|
|De Kalb, IL|
|Du Page, IL|
|1620 Chico-Paradise, CA||0.9745|
|1640 Cincinnati, OH-KY-IN||0.9381|
|1660 Clarksville-Hopkinsville, TN-KY||0.8406|
|1680 Cleveland-Lorain-Elyria, OH||0.9670|
|1720 Colorado Springs, CO||0.9916|
|El Paso, CO|
|1740 Columbia, MO||0.8496|
|1760 Columbia, SC||0.9307|
|1800 Columbus, GA-AL||0.8374|
|1840 Columbus, OH||0.9751|
|1880 Corpus Christi, TX||0.8729|
|San Patricio, TX|
|1890 Corvallis, OR||1.1453|
|1900 Cumberland, MD-WV||0.7847|
|1920 Dallas, TX||0.9998|
|1950 Danville, VA||0.8859|
|Danville City, VA|
|1960 Davenport-Moline-Rock Island, IA-IL||0.8835|
|Rock Island, IL|
|2000 Dayton-Springfield, OH||0.9282|
|2020 Daytona Beach, FL||0.9071|
|2030 Decatur, AL||0.8973|
|2040 Decatur, IL||0.8055|
|2080 Denver, CO||1.0601|
|2120 Des Moines, IA||0.8791|
|2160 Detroit, MI||1.0448|
|St. Clair, MI|
|2180 Dothan, AL||0.8137|
|2190 Dover, DE||0.9356|
|2200 Dubuque, IA||0.8795|
|2240 Duluth-Superior, MN-WI||1.0368|
|St. Louis, MN|
|2281 Dutchess County, NY||1.0684|
|2290 Eau Claire, WI||0.8952|
|Eau Claire, WI|
|2320 El Paso, TX||0.9265|
|El Paso, TX|
|2330 Elkhart-Goshen, IN||0.9722|
|2335 Elmira, NY||0.8416|
|2340 Enid, OK||0.8376|
|2360 Erie, PA||0.8925|
|2400 Eugene-Springfield, OR||1.0944|
|2440 Evansville-Henderson, IN-KY||0.8177|
|2520 Fargo-Moorhead, ND-MN||0.9684|
|2560 Fayetteville, NC||0.8889|
|2580 Fayetteville-Springdale-Rogers, AR||0.8100|
|2620 Flagstaff, AZ-UT||1.0682|
|Start Printed Page 49809|
|2640 Flint, MI||1.1135|
|2650 Florence, AL||0.7792|
|2655 Florence, SC||0.8780|
|2670 Fort Collins-Loveland, CO||1.0066|
|2680 Ft. Lauderdale, FL||1.0297|
|2700 Fort Myers-Cape Coral, FL||0.9680|
|2710 Fort Pierce-Port St. Lucie, FL||0.9823|
|St. Lucie, FL|
|2720 Fort Smith, AR-OK||0.7895|
|2750 Fort Walton Beach, FL||0.9693|
|2760 Fort Wayne, IN||0.9457|
|De Kalb, IN|
|2800 Forth Worth-Arlington, TX||0.9446|
|2840 Fresno, CA||1.0169|
|2880 Gadsden, AL||0.8505|
|2900 Gainesville, FL||0.9871|
|2920 Galveston-Texas City, TX||0.9465|
|2960 Gary, IN||0.9584|
|2975 Glens Falls, NY||0.8281|
|2980 Goldsboro, NC||0.8892|
|2985 Grand Forks, ND-MN||0.8897|
|Grand Forks, ND|
|2995 Grand Junction, CO||0.9456|
|3000 Grand Rapids-Muskegon-Holland, MI||0.9525|
|3040 Great Falls, MT||0.8950|
|3060 Greeley, CO||0.9237|
|3080 Green Bay, WI||0.9502|
|3120 Greensboro-Winston-Salem-High Point, NC||0.9282|
|3150 Greenville, NC||0.9100|
|3160 Greenville-Spartanburg-Anderson, SC||0.9122|
|3180 Hagerstown, MD||0.9268|
|3200 Hamilton-Middletown, OH||0.9418|
|3240 Harrisburg-Lebanon-Carlisle, PA||0.9223|
|3283 Hartford, CT||1.1549|
|3285 Hattiesburg, MS||0.7659|
|3290 Hickory-Morganton-Lenoir, NC||0.9028|
|3320 Honolulu, HI||1.1457|
|3350 Houma, LA||0.8317|
|3360 Houston, TX||0.9892|
|Fort Bend, TX|
|3400 Huntington-Ashland, WV-KY-OH||0.9636|
|3440 Huntsville, AL||0.8903|
|3480 Indianapolis, IN||0.9717|
|3500 Iowa City, IA||0.9587|
|3520 Jackson, MI||0.9532|
|3560 Jackson, MS||0.8607|
|3580 Jackson, TN||0.9275|
|3600 Jacksonville, FL||0.9381|
|St. Johns, FL|
|3605 Jacksonville, NC||0.8239|
|3610 Jamestown, NY||0.7976|
|3620 Janesville-Beloit, WI||0.9849|
|3640 Jersey City, NJ||1.1190|
|3660 Johnson City-Kingsport-Bristol, TN-VA||0.8268|
|Bristol City, VA|
|3680 Johnstown, PA||0.8329|
|3700 Jonesboro, AR||0.7749|
|3710 Joplin, MO||0.8613|
|3720 Kalamazoo-Battle Creek, MI||1.0595|
|Van Buren, MI|
|3740 Kankakee, IL||0.8122|
|3760 Kansas City, KS-MO||0.9736|
|3800 Kenosha, WI||0.9686|
|3810 Killeen-Temple, TX||0.9570|
|Start Printed Page 49810|
|3840 Knoxville, TN||0.8970|
|3850 Kokomo, IN||0.8971|
|3870 La Crosse, WI-MN||0.9400|
|La Crosse, WI|
|3880 Lafayette, LA||0.8452|
|St. Landry, LA|
|St. Martin, LA|
|3920 Lafayette, IN||0.9278|
|3960 Lake Charles, LA||0.7965|
|3980 Lakeland-Winter Haven, FL||0.9357|
|4000 Lancaster, PA||0.9078|
|4040 Lansing-East Lansing, MI||0.9726|
|4080 Laredo, TX||0.8472|
|4100 Las Cruces, NM||0.8745|
|Dona Ana, NM|
|4120 Las Vegas, NV-AZ||1.1521|
|4150 Lawrence, KS||0.8323|
|4200 Lawton, OK||0.8315|
|4243 Lewiston-Auburn, ME||0.9179|
|4280 Lexington, KY||0.8581|
|4320 Lima, OH||0.9483|
|4360 Lincoln, NE||0.9892|
|4400 Little Rock-North Little Rock, AR||0.9097|
|4420 Longview-Marshall, TX||0.8629|
|4480 Los Angeles-Long Beach, CA||1.2001|
|Los Angeles, CA|
|4520 Louisville, KY-IN||0.9276|
|4600 Lubbock, TX||0.9646|
|4640 Lynchburg, VA||0.9219|
|Bedford City, VA|
|Lynchburg City, VA|
|4680 Macon, GA||0.9204|
|4720 Madison, WI||1.0467|
|4800 Mansfield, OH||0.8900|
|4840 Mayaguez, PR||0.4914|
|Cabo Rojo, PR|
|Sabana Grande, PR|
|San German, PR|
|4880 McAllen-Edinburg-Mission, TX||0.8428|
|4890 Medford-Ashland, OR||1.0498|
|4900 Melbourne-Titusville-Palm Bay, FL||1.0253|
|4920 Memphis, TN-AR-MS||0.8920|
|De Soto, MS|
|4940 Merced, CA||0.9742|
|5000 Miami, FL||0.9802|
|5015 Middlesex-Somerset-Hunterdon, NJ||1.1213|
|5080 Milwaukee-Waukesha, WI||0.9893|
|5120 Minneapolis-St Paul, MN-WI||1.0903|
|St. Croix, WI|
|5140 Missoula, MT||0.9157|
|5160 Mobile, AL||0.8108|
|5170 Modesto, CA||1.0498|
|5190 Monmouth-Ocean, NJ||1.0674|
|5200 Monroe, LA||0.8137|
|5240 Montgomery, AL||0.7734|
|5280 Muncie, IN||0.9284|
|5330 Myrtle Beach, SC||0.8976|
|5345 Naples, FL||0.9754|
|5360 Nashville, TN||0.9578|
|5380 Nassau-Suffolk, NY||1.3357|
|5483 New Haven-Bridgeport-Stamford-Waterbury-Danbury, CT||1.2408|
|New Haven, CT|
|5523 New London-Norwich, CT||1.1767|
|New London, CT|
|5560 New Orleans, LA||0.9046|
|St. Bernard, LA|
|St. Charles, LA|
|St. James, LA|
|St. John The Baptist, LA|
|St. Tammany, LA|
|5600 New York, NY||1.4414|
|New York, NY|
|5640 Newark, NJ||1.1381|
|Start Printed Page 49811|
|5660 Newburgh, NY-PA||1.1387|
|5720 Norfolk-Virginia Beach-Newport News, VA-NC||0.8574|
|Chesapeake City, VA|
|Hampton City, VA|
|Isle of Wight, VA|
|James City, VA|
|Newport News City, VA|
|Norfolk City, VA|
|Poquoson City, VA|
|Portsmouth City, VA|
|Suffolk City, VA|
|Virginia Beach City VA|
|Williamsburg City, VA|
|5775 Oakland, CA||1.5072|
|Contra Costa, CA|
|5790 Ocala, FL||0.9402|
|5800 Odessa-Midland, TX||0.9397|
|5880 Oklahoma City, OK||0.8900|
|5910 Olympia, WA||1.0960|
|5920 Omaha, NE-IA||0.9978|
|5945 Orange County, CA||1.1474|
|5960 Orlando, FL||0.9640|
|5990 Owensboro, KY||0.8344|
|6015 Panama City, FL||0.8865|
|6020 Parkersburg-Marietta, WV-OH||0.8127|
|6080 Pensacola, FL||0.8610|
|Santa Rosa, FL|
|6120 Peoria-Pekin, IL||0.8739|
|6160 Philadelphia, PA-NJ||1.0713|
|6200 Phoenix-Mesa, AZ||0.9820|
|6240 Pine Bluff, AR||0.7962|
|6280 Pittsburgh, PA||0.9365|
|6323 Pittsfield, MA||1.0235|
|6340 Pocatello, ID||0.9372|
|6360 Ponce, PR||0.5169|
|Juana Diaz, PR|
|6403 Portland, ME||0.9794|
|6440 Portland-Vancouver, OR-WA||1.0667|
|6483 Providence-Warwick-Pawtucket, RI||1.0854|
|6520 Provo-Orem, UT||0.9984|
|6560 Pueblo, CO||0.8820|
|6580 Punta Gorda, FL||0.9218|
|6600 Racine, WI||0.9334|
|6640 Raleigh-Durham-Chapel Hill, NC||0.9990|
|6660 Rapid City, SD||0.8846|
|6680 Reading, PA||0.9295|
|6690 Redding, CA||1.1135|
|6720 Reno, NV||1.0648|
|6740 Richland-Kennewick-Pasco, WA||1.1491|
|6760 Richmond-Petersburg, VA||0.9477|
|Charles City County, VA|
|Colonial Heights City, VA|
|Hopewell City, VA|
|New Kent, VA|
|Petersburg City, VA|
|Prince George, VA|
|Richmond City, VA|
|6780 Riverside-San Bernardino, CA||1.1365|
|San Bernardino, CA|
|6800 Roanoke, VA||0.8614|
|Roanoke City, VA|
|Salem City, VA|
|6820 Rochester, MN||1.2139|
|6840 Rochester, NY||0.9194|
|6880 Rockford, IL||0.9625|
|6895 Rocky Mount, NC||0.9228|
|6920 Sacramento, CA||1.1500|
|El Dorado, CA|
|A6960 Saginaw-Bay City-Midland, MI||0.9650|
|6980 St. Cloud, MN||0.9700|
|7000 St. Joseph, MO||0.9544|
|7040 St. Louis, MO-IL||0.8855|
|St. Clair, IL|
|St. Charles, MO|
|St. Louis, MO|
|Start Printed Page 49812|
|St. Louis City, MO|
|Sullivan City, MO|
|7080 Salem, OR||1.0500|
|7120 Salinas, CA||1.4623|
|7160 Salt Lake City-Ogden, UT||0.9945|
|Salt Lake, UT|
|7200 San Angelo, TX||0.8374|
|Tom Green, TX|
|7240 San Antonio, TX||0.8753|
|7320 San Diego, CA||1.1131|
|San Diego, CA|
|7360 San Francisco, CA||1.4142|
|San Francisco, CA|
|San Mateo, CA|
|7400 San Jose, CA||1.4145|
|Santa Clara, CA|
|7440 San Juan-Bayamon, PR||0.4741|
|Aguas Buenas, PR|
|Los Piedras, PR|
|Rio Grande, PR|
|San Juan, PR|
|Toa Alta, PR|
|Toa Baja, PR|
|Trujillo Alto, PR|
|Vega Alta, PR|
|Vega Baja, PR|
|7460 San Luis Obispo-Atascadero-Paso Robles, CA||1.1271|
|San Luis Obispo, CA|
|7480 Santa Barbara-Santa Maria-Lompoc, CA||1.0481|
|Santa Barbara, CA|
|7485 Santa Cruz-Watsonville, CA||1.3646|
|Santa Cruz, CA|
|7490 Santa Fe, NM||1.0712|
|Los Alamos, NM|
|Santa Fe, NM|
|7500 Santa Rosa, CA||1.3046|
|7510 Sarasota-Bradenton, FL||0.9425|
|7520 Savannah, GA||0.9376|
|7560 Scranton-Wilkes-Barre—Hazleton, PA||0.8599|
|7600 Seattle-Bellevue-Everett, WA||1.1474|
|7610 Sharon, PA||0.7869|
|7620 Sheboygan, WI||0.8697|
|7640 Sherman-Denison, TX||0.9255|
|7680 Shreveport-Bossier City, LA||0.8987|
|7720 Sioux City, IA-NE||0.9046|
|7760 Sioux Falls, SD||0.9257|
|7800 South Bend, IN||0.9802|
|St. Joseph, IN|
|7840 Spokane, WA||1.0852|
|7880 Springfield, IL||0.8659|
|7920 Springfield, MO||0.8424|
|8003 Springfield, MA||1.0927|
|8050 State College, PA||0.8941|
|8080 Steubenville-Weirton, OH-WV||0.8804|
|8120 Stockton-Lodi, CA||1.0506|
|San Joaquin, CA|
|8140 Sumter, SC||0.8273|
|8160 Syracuse, NY||0.9714|
|8200 Tacoma, WA||1.0940|
|8240 Tallahassee, FL||0.8504|
|8280 Tampa-St. Petersburg-Clearwater, FL||0.9065|
|8320 Terre Haute, IN||0.8599|
|8360 Texarkana,AR-Texarkana, TX||0.8088|
|8400 Toledo, OH||0.9810|
|8440 Topeka, KS||0.9199|
|8480 Trenton, NJ||1.0432|
|8520 Tucson, AZ||0.8911|
|8560 Tulsa, OK||0.8332|
|8600 Tuscaloosa, AL||0.8130|
|8640 Tyler, TX||0.9521|
|8680 Utica-Rome, NY||0.8465|
|8720 Vallejo-Fairfield-Napa, CA||1.3354|
|8735 Ventura, CA||1.1096|
|8750 Victoria, TX||0.8756|
|8760 Vineland-Millville-Bridgeton, NJ||1.0031|
|8780 Visalia-Tulare-Porterville, CA||0.9418|
|8800 Waco, TX||0.8073|
|8840 Washington, DC-MD-VA-WV||1.0851|
|Start Printed Page 49813|
|District of Columbia, DC|
|Prince Georges, MD|
|Alexandria City, VA|
|Fairfax City, VA|
|Falls Church City, VA|
|Fredericksburg City, VA|
|King George, VA|
|Manassas City, VA|
|Manassas Park City, VA|
|Prince William, VA|
|8920 Waterloo-Cedar Falls, IA||0.8069|
|Black Hawk, IA|
|8940 Wausau, WI||0.9782|
|8960 West Palm Beach-Boca Raton, FL||0.9939|
|Palm Beach, FL|
|9000 Wheeling, OH-WV||0.7670|
|9040 Wichita, KS||0.9520|
|9080 Wichita Falls, TX||0.8498|
|9140 Williamsport, PA||0.8544|
|9160 Wilmington-Newark, DE-MD||1.1173|
|New Castle, DE|
|9200 Wilmington, NC||0.9640|
|New Hanover, NC|
|9260 Yakima, WA||1.0569|
|9270 Yolo, CA||0.9434|
|9280 York, PA||0.9026|
|9320 Youngstown-Warren, OH||0.9358|
|9340 Yuba City, CA||1.0276|
|9360 Yuma, AZ||0.8589|
|Rural area||Wage index|
|* All counties within the State are classified urban.|
D. Updates to the Federal Rates
In accordance with section 1888(e)(4)(E) of the Act and section 311 of the BIPA, the payment rates listed here reflect an update equal to the SNF market basket minus 0.5 percentage points, which equals 2.6 percentage points. We will continue to publish the rates, wage index, and case-mix classification methodology in the Federal Register before August 1 preceding the start of each succeeding fiscal year.
E. Relationship of RUG-III Classification System to Existing Skilled Nursing Facility Level-of-Care Criteria
As discussed in § 413.345, we include in each update of the Federal payment rates in the Federal Register the designation of those specific RUGs under the classification system that represent the required SNF level of care, as provided in § 409.30. This designation reflects an administrative presumption under the current 44-group RUG-III classification system that beneficiaries who are correctly assigned to one of the upper 26 RUG-III groups in the initial 5-day, Medicare-required assessment are automatically classified as meeting the SNF level of care definition up to that point.
Those beneficiaries assigned to any of the lower 18 groups are not automatically classified as either meeting or not meeting the definition, but instead receive an individual level of care determination using the existing administrative criteria. This presumption recognizes the strong likelihood that beneficiaries assigned to one of the upper 26 groups during the immediate post-hospital period require a covered level of care, which would be significantly less likely for those beneficiaries assigned to one of the lower 18 groups.
In this notice, we are continuing the existing designation of the upper 26 RUG-III groups for purposes of this administrative presumption, consisting of the following RUG-III classifications: all groups within the Ultra High Rehabilitation category; all groups within the Very High Rehabilitation category; all groups within the High Rehabilitation category; all groups within the Medium Rehabilitation category; all groups within the Low Rehabilitation category; all groups within the Extensive Services category; all groups within the Special Care category; and, all groups within the Clinically Complex category.
F. Initial Three-Year Transition Period
As noted previously, the rates that we are announcing in this notice are for the fifth year of the SNF PPS. As a result, the PPS is no longer operating under the initial three-year transition period from facility-specific to Federal rates and, therefore, payment now equals 100 percent of the adjusted Federal per diem rate. Start Printed Page 49814
G. Example of Computation of Adjusted PPS Rates and SNF Payment
Using the XYZ SNF described in Table 9, the following shows the adjustments made to the Federal per diem rate to compute the provider's actual per diem PPS payment. XYZ's 12-month cost reporting period begins October 1, 2002. XYZ's total PPS payment would equal $19,460. The Labor and Non-labor columns are derived from Table 5. The 4 percent adjustment to the Federal rates enacted in section 101(d) of the BBRA and the 16.66 percent adjustment to the nursing component of the Federal rates enacted in section 312 of the BIPA are no longer in effect for FY 2003, and, thus, are not reflected in the table. However, the adjustments for certain specified RUG-III groups enacted in section 101(a) of the BBRA (as amended by section 314 of the BIPA) remain in effect, and are reflected in the table.
|RUG group||Labor||Wage index||Adj. labor||Non-labor||Adj. rate||Percent adjustment||Medicare days||Payment|
|1 Reflects a 6.7 percent adjustment from section 314 of the BIPA.|
|2 Reflects a 20 percent adjustment from section 101(a) of the BBRA.|
III. The Skilled Nursing Facility Market Basket Index
Section 1888(e)(5)(A) of the Act requires us to establish a SNF market basket index (input price index) that reflects changes over time in the prices of an appropriate mix of goods and services included in the SNF PPS. This notice incorporates the latest available projections of the SNF market basket index. We have developed a SNF market basket index that encompasses the most commonly used cost categories for SNF routine services, ancillary services, and capital-related expenses. In the July 31, 2001 Federal Register (66 FR 39562), we included a complete discussion on the rebasing of the SNF market basket to FY 1997. There are 21 separate cost categories and respective price proxies. These cost categories were illustrated in Tables 10.A, 10.B, and Appendix A, along with other relevant information, in the July 31, 2001 Federal Register.
Each year, we calculate a revised labor-related share based on the relative importance of labor-related cost categories in the input price index. Table 10 summarizes the updated labor-related share for FY 2003. The forecasted rates of growth used to compute the SNF market basket percentage described in section II.D of this notice are shown in Table 11.
|Cost category||Relative importance|
|FY 2003||FY 2002|
|Wages and salaries||54.796||54.185|
|Nonmedical professional fees||2.652||2.667|
|Fiscal years beginning October 1||Total 1|
|1 Skilled Nursing Facility Total Cost market Basket.|
|Source: (Table 10) Standard & Poor's DRI HCC, 2nd QTR.|
|Source: (Table 11) Global Insights Inc., DRI-WEFA, 2nd Qtr, 2002.|
|Released by CMS, OACT, National Health Statistics Group.|
A. Use of the Skilled Nursing Facility Market Basket Percentage
Section 1888(e)(5)(B) of the Act defines the SNF market basket percentage as the percentage change in the SNF market basket index, as described in the previous section, from the average of the prior fiscal year to the average of the current fiscal year. For the Federal rates established in this notice, the percentage increase in the SNF market basket index is used to compute the update factor occurring between FY 2002 and FY 2003. We used the 2nd quarter 2002 forecasted percentage increases of the FY 1997 rebased SNF market basket index for routine, ancillary, and capital-related expenses, described in the previous section, to compute the update factors. Finally, we no longer compute update factors to adjust a facility-specific portion of the SNF PPS rates, because the three-year transition period from facility-specific to full Federal rates that started with cost reporting periods beginning in July of 1998 has expired.
B. Federal Rate Update Factor
Section 1888(e)(4)(E)(ii)(III) of the Act requires that the update factor used to establish the FY 2003 Federal rates be at a level equal to the market basket percentage change minus 0.5 percentage point. Accordingly, to establish the update factor, we determined the total growth from the average market basket level for the period of October 1, 2001 through September 30, 2002 to the average market basket level for the period of October 1, 2002 through September 30, 2003. Using this process, the update factor for FY 2003 SNF Federal rates is 2.6 percentage points (3.1 percentage points minus 0.5 percentage point).
We used this revised update factor to compute the Federal portion of the SNF PPS rate shown in Tables 1 and 2. Start Printed Page 49815
IV. Consolidated Billing
As established by section 4432(b) of the BBA, the consolidated billing requirement places with the SNF the Medicare billing responsibility for virtually all of the services that the SNF's residents receive, except for a small number of services that the statute specifically identifies as being excluded from this provision. Section 103 of the BBRA amended this provision by further excluding a number of individual services, identified by Healthcare Common Procedure Coding System (HCPCS) code, within several broader categories that otherwise remained subject to the provision. Section 313 of the BIPA further amended this provision by repealing its Part B aspect; that is, its applicability to services furnished to a resident during a SNF stay that Medicare does not cover. (However, physical, occupational, and speech-language therapy remain subject to consolidated billing, regardless of whether the resident who receives these services is in a covered Part A stay.) In the final rule that we published in the July 31, 2001 Federal Register (66 FR 39562), we revised the consolidated billing regulations to reflect the most recent (the BIPA) amendments. To date, the Congress has enacted no further legislation affecting this provision. Accordingly, we do not include any revisions to the consolidated billing regulations in this notice.
V. Application of the SNF PPS to SNF Services Furnished by Swing-Bed Hospitals
In the July 31, 2001 final rule (66 FR 39562), we announced the conversion of swing-bed hospitals to the SNF PPS, effective with the start of the provider's first cost reporting period beginning on or after July 1, 2002. We selected this date consistent with the statutory provision to integrate swing-bed hospitals into the SNF PPS by the end of the SNF transition period, June 30, 2002.
We note that the necessary training materials and support structures were developed to assist swing-bed hospitals affected by this change. The new 2-page customized Minimum Data Set (MDS) for Swing-Bed Hospitals (SB-MDS) has been approved for use by OMB, and is posted on our web site at http://www.cms.hhs.gov/providers/snfpps/snfpps_swing-bed.asp. The MDS data collection and transmission software, RAVEN-SB, was customized to reflect the use of the new 2-page form and is now in use.
Swing-bed hospitals must submit MDS assessments on the same schedule as SNFs (the 5th, 14th, 30th, 60th, and 90th covered day of the admission). Since the average swing-bed length of stay is only 9 days, most swing-bed hospitals will, on the average, only need to complete and transmit one MDS record per stay. The transmission requirements are similar to those used by SNFs, and swing-bed hospitals have been notified of the program requirements for establishing dial-in capability to transmit the SB-MDS records. The swing-bed transmission system was customized to permit direct transmission to the swing-bed data repository, and swing-bed hospitals have a dedicated Help Desk to assist them with transmission and technical support issues.
As part of the implementation effort, we have evaluated MDS policies and procedures applicable to SNFs to ensure their applicability to swing-bed hospitals. In most cases, swing-bed hospitals and SNFs follow the same procedures. However, whenever possible, we streamlined those procedures to reflect the operational needs of the swing-bed hospitals. For example, SNFs are required to transmit their MDS records within 31 days of completion, which allows for completion of Resident Assessment Protocols (RAPs), data editing, and care planning. The system edits developed for the SB-MDS reflect the shorter lengths of stay and the inapplicability of the MDS RAPs and care planning components to swing-bed hospitals, and require transmission within 14 days of completion. Finally, we developed and distributed detailed training materials on MDS preparation, transmission, and claims processing. These materials are posted on our web site and updated regularly as new information becomes available. Swing-bed hospitals may check the SNF PPS web site at http://www.cms.hhs.gov/providers/snfpps/snfpps_swing-bed.asp and http://www.cms.hhs.gov/medlearn/sbmds.asp to receive the latest information.
VI. Collection of Information Requirements
The current Medicare assessment requirements are based on section 4432(a) of the Balanced Budget Act of 1997 (BBA), which amended section 1888(e) of the Social Security Act (the Act) to mandate implementation of a Medicare prospective payment system for SNFs. This section of the Act requires annual adjustments to the PPS rates based on geographic variation and SNF case-mix, and prescribes the methodology for updating the rates in future years.
The PPS case-mix adjustments are derived from the clinical information collected by providers about Medicare Part A covered beneficiaries during their SNF stays, using the minimum data set (MDS). As a result of a mandate contained in the nursing home reform legislation in the Omnibus Budget Reconciliation Act of 1987 (OBRA ‘87), a uniform MDS was required as a part of the comprehensive resident assessment for all certified long-term care facilities. The provisions of OBRA ‘87 require that certified long-term care facilities collect information concerning all residents to support care planning activities. Comprehensive assessments, using the MDS, are required at admission (no later than 14 days following admission), annually, and upon a significant change in a resident’s condition. In addition, quarterly reviews of each resident are required. A shorter version of the MDS has been developed for these quarterly assessments.
With implementation of the SNF PPS, providers were required to perform MDS assessments of all beneficiaries in Medicare Part A covered stays on days 5, 14, 30, 60, and 90 of their Medicare covered stays. The assessments required for the SNF PPS are in addition to those required by the OBRA ‘87, although there is often overlap in the timing of the required assessments so that one assessment may be used to satisfy both the OBRA ‘87 and SNF PPS requirements. The time required to complete the full version of the MDS is estimated to be 90 minutes. Beginning July 1, 2002, a shorter version of the MDS, the Medicare PPS Assessment Form (MPAF), became available for use to satisfy Medicare assessment requirements. We announced the option of using this shorter version in the Federal Register (67 FR 38128, May 31, 2002). Performance of this version of the assessment is estimated to require only 45 minutes of staff time.
When a Medicare SNF PPS assessment is due at the same time as an OBRA-required assessment (for example, a 14-day Medicare SNF PPS assessment combined with an initial admission assessment) providers must meet the more stringent of the two sets of requirements. Thus, the provider must perform an MDS that includes all of the MPAF items plus any additional items required by the clinical assessment, in order to meet both sets of standards. If the OBRA (or State) requirements call for a full MDS, the full MDS may be submitted to satisfy the Medicare SNF PPS requirements. When a full MDS assessment is required to Start Printed Page 49816fulfill the dual requirements of a Medicare SNF PPS and OBRA, completion time is estimated to be 90 minutes.
The total burden of the full MDS, which includes all administrative time, as well as the time actually required by the assessment process, is estimated to be 5,696,218 hours annually. The extent to which the MPAF will be utilized is not known, so time saving associated with its use is not factored into this estimate.
Swing-beds began transitioning into the Medicare SNF PPS on July 1, 2002 and are required to complete a modified version of the MDS, the MDS-SB, which collects only the information needed to calculate the RUG-III classifications for case-mix adjustment. The MDS-SB is the only version of the MDS that is acceptable for use in Medicare SNF PPS swing-bed facilities. There are no OBRA '87 requirements for swing-bed providers. Completion of each MDS-SB assessment is estimated to require 30 minutes. The total burden, including the amount of time required for the actual assessment process as well as administrative time, is estimated to be 132,360 hours per year across all swing-bed providers.
These information collection requirements are currently approved by OMB through December 31, 2002 under OMB numbers 0938-0739 for SNFs and 0938-0872 for swing-bed facilities. We are not proposing any changes to these requirements in this notice.
VII. Regulatory Impact Analysis
We have examined the impacts of this notice as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, (the Act) the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more annually). This notice is major, as defined in Title 5, United States Code, section 804(2), because we estimate the impact of the update will be to increase payments to SNFs by approximately $400 million. The update set forth in this notice applies to payments in FY 2003. Accordingly, the analysis that follows describes the impact of this one year only. In accordance with the requirements of the Act, we will publish a notice for each subsequent FY that will provide for an update to the payment rates and include an associated impact analysis.
The UMRA also requires (in section 202) that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure in any year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million or more. This notice will have no consequential effect on State, local, or tribal governments. We believe the private sector cost of this notice falls below these thresholds as well. Because this notice does not impose unfunded mandates, as defined by section 202 of UMRA, we have not prepared an assessment.
Executive Order 13132 (effective November 2, 1999) establishes certain requirements that an agency must meet when it promulgates regulations that impose substantial direct compliance costs on State and local governments, preempt State law, or otherwise have Federalism implications. As stated above, this notice will have no consequential effect on State and local governments.
The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and governmental agencies. Most SNFs and most other providers and suppliers are small entities, either by virtue of their nonprofit status or by having revenues of $11.5 million or less annually. For purposes of the RFA, all States and tribal governments are not considered to be small entities, nor are intermediaries or carriers. Individuals and States are not included in the definition of a small entity.
This notice updates the SNF PPS rates and wage index published in the July 31, 2001 final rule (66 FR 39562), thereby increasing aggregate payments by an estimated $400 million. Although, as illustrated in Table 12, the simultaneous expiration of several temporary payment increases established under recent legislation results in a net decrease in aggregate Medicare payments in FY 2003, these decreases are not a result of this notice, but rather, are specifically mandated in the legislation. Because Medicare is a relatively minor payer for nursing home care (approximately 9 percent of patient days compared to 65 percent for Medicaid), we do not expect that the 2.6 percent rate increase and wage index update will have a significant impact upon small entities overall. We note that some individual providers may experience larger increases (or even decreases) in payments than others due to changes in payments that result from updating the wage index. However, we do not expect these changes to affect small entities disproportionately. Accordingly, we certify that this notice will not have a significant impact on small entities.
In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. Because the payment rates set forth in this notice also affect rural hospital swing-bed services, we believe that this notice will have an impact on small rural hospitals (this impact is discussed later in this section). However, because this incremental increase in payments for Medicare swing-bed services is relatively minor in comparison to overall rural hospital revenues, this notice will not have a significant impact on the overall operations of these small rural hospitals.
Section 1888(e) of the Act establishes the SNF PPS for the payment of Medicare SNF services for cost reporting periods beginning on or after July 1, 1998. This section specifies that the base year cost data to be used for computing the RUG-III payment rates must be from FY 1995 (October 1, 1994, through September 30, 1995.) In accordance with the statute, we also incorporated a number of elements into the SNF PPS, such as case-mix classification methodology, the MDS assessment schedule, a market basket index, a wage index, and the urban and rural distinction used in the development or adjustment of the Federal rates.
This notice sets forth updates of the SNF PPS rates contained in the July 31, 2001 final rule (66 FR 39562). Table 12 presents the projected effects of the changes in the SNF PPS from FY 2002 to FY 2003, as well as statutory changes effective for FY 2002 and FY 2003. In so doing, we estimate the effects of each change by estimating payments while holding all other payment variables constant. We use the best data available, Start Printed Page 49817but we do not attempt to predict behavioral responses to these changes, and we do not make adjustments for future changes in such variables as days or case-mix.
This analysis incorporates the latest estimates of growth in service use and payments under the Medicare SNF benefit, based on the latest available Medicare claims data and MDS 2.0 assessment data from 1999. We note that certain events may combine to limit the scope or accuracy of our impact analysis, because such an analysis is future-oriented and, thus, very susceptible to forecasting errors due to other changes in the forecasted impact time period. Some examples of such possible events are newly legislated general Medicare program funding changes by the Congress, or changes specifically related to SNFs. In addition, changes to the Medicare program may continue to be made as a result of the BBA, the BBRA, the BIPA, or new statutory provisions. Although these changes may not be specific to SNF PPS, the nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon SNFs.
B. Impact of the Notice
The purpose of this notice is not to initiate significant policy changes with regard to the SNF PPS; rather, it is to provide an update to the rates for FY 2003. As mentioned previously, we have decided not to implement any case-mix refinements for FY 2003. Our decision to defer implementing any case-mix refinements for the present leaves the current classification system in place. Under the provisions of section 101(a) of the BBRA, this will result in SNFs continuing to receive an estimated $1 billion in temporary add-on payments during FY 2003.
In updating the rates for FY 2003, we made a number of standard annual revisions and clarifications mentioned elsewhere in this notice (for example, the update to the wage and market basket indexes used for adjusting the Federal rates). These revisions will increase payments to SNFs by approximately $400 million.
In addition to the update, section 101(d)(1) of the BBRA and section 312 of the BIPA, providing for temporary adjustments to the SNF PPS payment rates, will expire by statute, on October 1, 2002. These temporary adjustments together account for an estimated $1.4 billion dollars per year in payments to the nursing home industry. The expiration of these temporary add-ons results in a net decrease in payments for SNFs in FY 2003.
The aggregate decrease in payments associated with this notice is estimated to be $1 billion. There are three areas of change that produce this net decrease in payment for facilities:
- Section 312 of the BIPA temporarily increases the nursing component of the Federal rates payments by 16.66 percent. This provision results in $900 million in payments per year. The provision expires by statute on October 1, 2002.
- Section 101(d)(1) of the BBRA temporarily increases payments for all RUG-III groups by 4 percent, and prohibits the increases from being built into the base Federal rates. This provision results in $500 million in payments per year. The provision expires by statute on October 1, 2002.
- The annual update in payments from FY 2002 levels to FY 2003 levels, resulting in a $400 million increase in payments per year. The total change in Federal payments includes all of the previously noted changes in addition to the effect of the annual update to the rates and is illustrated in Table 12.
Table 12 only illustrates the impact of the changes on SNFs; it does not apply to swing-bed hospital units. A discussion of the impact on those providers follows.
In developing the impact analysis, we were able to increase significantly the number of facilities included in the data. With the end of the transition period, there is no longer a need to calculate facility-specific rates using 1995 cost report information to estimate current SNF payments. This has allowed us to expand the data base to all SNFs submitting claims in FY 2001 (the latest available data) in estimating the impact of annual updates.
The impacts are shown in Table 12. The breakdown of the various categories of data in the table is as follows:
The first column shows the breakdown of all SNFs by urban or rural status, hospital-based or freestanding status, and census region.
The first row of figures in the first column describes the estimated effects of the various changes on all facilities. The next six rows show the effects on facilities split by hospital-based, freestanding, urban, and rural categories. The next twenty rows show the effects on urban versus rural status by census region. The final four rows show the effects on facilities by ownership type.
The second column in the table shows the number of facilities in the impact database.
The third column shows the projected effect of eliminating the 16.66 percent add-on to the nursing portion of the Federal rate mandated by the BIPA. As expected, this results in a decrease in payments for all facilities; however, as seen in the table, the varying effect results in a distributional impact. In addition, since this increase only applies to the nursing portion of the payment rate, the effect on total expenditures is less than 16.66 percent.
The fourth column of the table shows the effect of the annual update to the wage index. The total impact of this change is zero percent; however, there are distributional effects of the change.
The fifth column of the table shows the effect of all of the changes on the FY 2003 payments. Section 101(d) of the BBRA increases payments for all RUG-III groups by 4 percent and is the same for all types of facilities. This temporary add-on expires October 1, 2002, and is reflected in the total column. This includes all of the previous changes, the expiration of the 4 percent add-on to the Federal rates, and the increase to this year's payment rates by the market basket rate less 0.5 percentage point, or 2.6 percentage points. The market basket increase of 2.6 percentage points is also constant for all providers and, though not shown individually, is included in the total column. It is projected that aggregate payments will decrease by 9.1 percent in total, assuming facilities do not change their care delivery and billing practices in response.
As can be seen from this table, the combined effects of all of the changes vary by specific types of providers and by location. For example, freestanding facilities experience payment decreases, while the decrease for hospital-based and rural providers is less significant. Start Printed Page 49818
|Number of facilities||Eliminate add-on to nursing rates (Percent)||Wage index change (Percent)||Total FY 2003 change* (Percent)|
|Urban by region:|
|East North Central||1,823||−7.3||0.0||−8.7|
|East South Central||410||−7.4||−0.3||−9.1|
|West North Central||662||−7.5||0.3||−8.6|
|West South Central||847||−7.4||0.6||−8.2|
|Rural by region:|
|East North Central||845||−7.1||0.3||−8.2|
|East South Central||479||−7.2||1.0||−7.7|
|West North Central||1,045||−7.4||0.8||−8.1|
|West South Central||605||−7.1||0.8||−7.8|
|*Column 5 includes the effects of reducing payments by 4 percent across all providers (resulting from the expiration of section 101(d) of the BBRA, effective October 1, 2002) and shows the effect of the market basket update that increases payment by 2.6 percent across all providers.|
D. Impact on Swing-Bed Providers
In the July 31, 2001 final rule (66 FR 39562), we projected payments for swing-bed providers under the SNF PPS by first using the MEDPAR analog to assign 1999 claims records to a RUGIII group, then applying FY 2002 payment rates to calculate annual estimated payments.
For the purpose of this notice, we have used the MEDPAR analog classification, and estimated current SNF PPS reimbursement as if the swing-bed providers were fully phased into the SNF PPS in FY 2002. Then, using the same MEDPAR analog classifications, we applied the FY 2003 changes for a fully phased-in swing-bed population. We estimate that the overall impact on swing-bed facilities will be a decrease in payments of approximately 9 percent, or $22 million.
We anticipate that the actual overall impact of the elimination of the rate add-ons will be approximately equal to the 8.5 percent rate decrease projected for rural hospital-based SNFs.
E. Other Options Considered
As discussed in section II.B of this notice, we determined that while the research on case-mix refinements gives a sound basis for developing case-mix refinements in the SNF PPS, we need additional time to review and analyze the implications. Therefore, we have decided not to implement any case-mix refinements for FY 2003. We are proceeding with our research to evaluate both incremental and long-range comprehensive changes in the case-mix classification system.
Finally, in accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.
We have reviewed this notice under the threshold criteria of Executive Order 13132, Federalism, and we have determined that it does not significantly affect the rights, roles, and responsibilities of States.
IX. Waiver of Proposed Rulemaking
We ordinarily publish a proposed notice in the Federal Register to provide a period for public comment before the provisions of a notice such as this take effect. We can waive this procedure, however, if we find good cause that a notice and comment period procedure is impracticable, unnecessary, or contrary to the public interest and we incorporate a statement of finding and its reasons in the notice issued.
We believe it is unnecessary to undertake a proposed notice with comment period as the statute requires annual updates to the SNF PPS rates, the methodologies used to update the rates have been previously subject to public comment, and this notice reflects the application of previously established methodologies. Therefore, for good cause, we waive prior notice and comment procedures.Start Signature
(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare-Hospital Insurance Program; and No. 93.774, Medicare-Supplementary Medical Insurance Program).Start Printed Page 49819
Dated: June 14, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: July 11, 2002.
Tommy G. Thompson,
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