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Notice

Medicare Program; Extension of Certain Hospital Wage Index Reclassifications

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AGENCY:

Centers for Medicare & Medicaid Services (CMS) HHS.

ACTION:

Notice.

SUMMARY:

This notice announces the extension of the expiration date for certain geographic reclassifications as implemented by Division B, Title I, section 106 of the Tax Relief and Health Care Act of 2006. These geographic classifications, which affected hospitals' wage indices, were previously set to expire on March 31, 2007 and are now extended to September 30, 2007.

DATES:

Effective Date: April 1, 2007.

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FOR FURTHER INFORMATION CONTACT:

Brian Slater, for hospital inpatient prospective payment systems questions, (410) 786-5229. Chris Smith-Ritter, for hospital outpatient prospective payment systems questions, (410) 786-4636.

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SUPPLEMENTARY INFORMATION:Start Printed Page 13800

I. Background

Section 508 of Pub. L. 108-173 (hereinafter referred to as “section 508”) permitted a qualifying hospital to appeal the wage index classification otherwise applicable to the hospital and apply for reclassification to another area of the State in which the hospital was located (or, at the discretion of the Secretary, to an area within a contiguous State). Hospitals were required to submit their applications by February 15, 2004. In the February 13, 2004 Federal Register (69 FR 7340), we published a notice that described our implementation of section 508. The Congress limited the reclassifications under section 508 to a 3-year period beginning April 1, 2004 and ending March 31, 2007.

Generally, geographic reclassifications are in effect for at least one entire Federal fiscal year (October 1 to September 30). However, in the FY 2006 IPPS final rule, to coincide with the end of section 508 reclassifications on March 31, 2007, we established special procedural rules under which individual and group reclassifications could take effect for only the second half of the fiscal year, from April 1 through September 30, 2007 (70 FR 47382, August 12, 2005). Consistent with those procedural rules, for FY 2007, some hospitals or geographic areas were assigned different geographic reclassifications and wage indices for the 1st half of FY 2007 than were assigned for the 2nd half of FY 2007 (71 FR 59886). Further, in accordance to section 1886(d)(8)(D) of the Act, we apply an adjustment to the IPPS standardized amounts to ensure that the effects of geographic reclassification are budget neutral. For FY 2008, we calculated one budget neutrality adjustment that reflects the average of the adjustments required for 1st and 2nd half fiscal year reclassifications, respectively. We received only favorable comments on our policy of providing for half-year reclassifications in FY 2007.

II. Provisions of the Notice

Division B, Title I, section 106 of the Tax Relief and Health Care Act of 2006 (Pub. L. 109-432) extends any geographic reclassification that was set to expire on March 31, 2007 by 6 months until September 30, 2007. Consistent with the mid-year manner in which we originally implemented section 508 (Pub. L. 108-173) in FY 2005, we will not alter previously announced wage indices or geographic reclassifications for hospitals whose reclassifications are not extended by section 106. Such hospitals will continue to receive the wage indices and reclassifications previously announced in the October 11, 2006 IPPS Federal Register notice (71 FR 59885) (or any corrections to such notice). Also, consistent with the mid-year implementation of section 508, we have made no changes to the budget neutrality adjustments applied to the standardized amounts previously announced.

Also, as with the section 508 reclassifications, the 6-month extension applies to both hospital inpatient and outpatient department services. However, because the Congress limited the extensions available under section 106 to a 6-month period, for hospital outpatient department services and payment under OPPS, a hospital that has a geographic reclassification extended from March 31, 2007 to September 30, 2007 will revert to its previously scheduled April 1st reclassification or its home area wage index from October 1, 2007 to December 31, 2007. As discussed in the previous paragraph, the OPPS wage index received for October 1 through December 31, 2007 will not be affected by the section 106 extension.

We have instructed the Medicare Administrative Contractors (MAC) for the affected providers to continue any geographic reclassifications that were set to expire on March 31, 2007 through September 30, 2007.

As described in section I of this Notice, for FY 2007, we allowed some reclassifications to take effect for only half of the fiscal year, and we calculated separate wage indices for the first and second halves of the year for the areas affected by such reclassifications. Hospitals receiving a section 508 reclassification receive the wage index for reclassified hospitals, when such a wage index applies. Because there may be two separate wage indices for hospitals for the first and second halves of the year, a small number of hospitals whose reclassifications are being extended under section 106 will receive the April 1-September 30, 2007 wage index (that is, the wage index value for the second half of the year). Thus, even if these hospitals are reclassified to the same area as in the first half of the year, the hospitals may see a change in their wage indices (see Tables 4A-2, 4B-2, and 4C-2 further corrected on January 5, 2007 (72 FR 569) and March xx, 2007 (72 FR XXX) for a listing of areas where the wage index is changing between the 1st and 2nd half of the fiscal year). We believe such a change is appropriate given section 106's focus on extending the actual geographic reclassification, and not the specific wage index assignment, for the additional 6 months.

When applying section 508, we required each hospital to submit a request in writing by February 15, 2004, to the Medicare Geographic Classification Review Board (MGCRB), with a copy to CMS. CMS will neither require nor accept written requests for the extension required by section 106, since that section simply provides a 6-month continuation for any reclassification set to expire March 31, 2007. Thus, for example, hospitals that were not reclassified under section 508 should not send written requests to the MGCRB requesting section 106 extensions.

Providers affected by section 106 are listed below:

Provider No.Wage index 4/1/2007- 9/30/2007
0101500.8371
0200081.2183
0504941.4116
0505491.4116
0600751.0877
0700011.2730
0700051.2730
0700101.3113
0700161.2730
0700171.2730
0700191.2730
0700221.2730
0700281.3113
0700311.2730
0700361.2930
0700391.2730
1600400.8708
1600640.9701
1600670.8708
1601100.8708
2200461.1343
2300031.0797
2300041.0797
2300131.0602
2300191.0602
2300201.0440
2300241.0440
2300291.0602
2300361.0602
2300381.0797
2300531.0440
2300591.0797
2300661.0797
2300711.0602
2300721.0797
2300891.0440
2300971.0797
2301041.0440
2301061.0797
2301191.0440
2301301.0602
2301351.0440
2301461.0440
2301511.0602
2301651.0440
2301741.0797
2301761.0440
2302071.0602
2302231.0602
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2302361.0797
2302541.0602
2302691.0602
2302701.0440
2302731.0440
2302771.0602
2500020.8461
2501220.8461
2700230.8956
2700320.8956
2700570.8956
3100211.3113
3100281.3113
3100511.3113
3100601.3113
3101151.3113
3101201.3113
3300491.3113
3301061.4779
3301261.3113
3301351.3113
3302051.3113
3302091.2730
3302641.2730
3400020.9413
3500020.8367
3500030.8367
3500060.8367
3500100.8367
3500140.8367
3500150.8367
3500170.8367
3500300.8367
3800901.1162
3900010.9990
3900030.9990
390045*0.9990
3900540.9942
3900720.9990
3900950.9990
3901190.9990
3901370.9990
3901690.9990
3901850.9942
3901920.9990
3902370.9990
3902700.9942
4300050.8708
4300150.9238
4300480.9238
4300600.9238
4300640.9238
4300770.9238
4300910.9238
4500100.8794
4500721.0094
4505911.0094
4700031.1343
4900010.8600
5300151.0060
* This hospital is assigned a wage index value under a special exceptions policy (69 FR 49105).

III. Regulatory Impact Statement

We have examined the impact of this notice using the requirements of Executive Order 12866 (September 1993, Regulatory Planning and Review), and Executive Order 13132.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This notice implements a statutory provision that would increase payments to hospitals by less than $100 million and is therefore not a major rule.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Again, although we do not consider this notice to be a rule subject to notice and comment rulemaking, we note that this notice does not impose any costs on State or local governments. Therefore, the requirements of Executive Order 13132 would not be applicable.

Section 106 of the Tax Relief and Health Care Act of 2006 extends any geographic reclassification that was set to expire on March 31, 2007 by six months until September 30, 2007. We estimate the impact of this provision will be to increase payments to hospitals by $80 million.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.

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Authority: Section 106 of Public Law 109-432.

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(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program)

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Dated: March 8, 2007.

Leslie V. Norwalk,

Acting Administrator, Centers for Medicare & Medicaid Services.

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[FR Doc. E7-5298 Filed 3-22-07; 8:45 am]

BILLING CODE 4120-01-P