Centers for Medicare & Medicaid Services (CMS), HHS.
This notice contains the final fiscal year (FY) 2011 wage indices and hospital reclassifications and other related tables which reflect changes required by or resulting from the implementation of section 102 of the Medicare and Medicaid Extenders Act of 2010. MMEA requires the extension of the expiration date for certain geographic reclassifications and special exception wage indices through September 30, 2011.
Applicability Date: The revised wage indices for section 508 and special exception providers published in this notice are applicable for discharges on or after October 1, 2010 and on or before September 30, 2011. Certain hospitals that are not section 508/special exception providers, but that are located in areas affected by section 102 of the MMEA, are also identified in this notice, and will be paid based on the revised wage index published in this notice for discharges on or after April 1, 2011 and on or before September 30, 2011.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Brian Slater, (410) 786-5229.End Further Info End Preamble Start Supplemental Information
The final rule setting forth the Medicare fiscal year (FY) 2011 hospital inpatient prospective payment systems (IPPS) for acute care hospitals and the long-term care hospital prospective payment system (LTCH PPS) (hereinafter referred to as the FY 2011 IPPS/LTCHPPS final rule) appeared in the August 16, 2010 Federal Register (75 FR 50042) and we subsequently corrected this final rule in an October 1, 2010 Federal Register notice (75 FR 60640).
On December 15, 2010, the Medicare and Medicaid Extenders Act (MMEA) of 2010 (Pub. L. 111-309) was enacted. Section 102 of the MMEA extends section 508 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) reclassifications and certain additional special exceptions through September 30, 2011. This notice addresses the provisions of the MMEA that impact the FY 2011 IPPS final wage index tables.
II. Provisions of this Notice
A. Section 508 Extension
Section 102 of the MMEA of 2010, extends through the end of FY 2011 wage index reclassifications under section 508 of the MMA and certain special exceptions (for example, those special exceptions contained in the final rule that appeared in the Federal Register (69 FR 49105 and 49107) extended under section 117 of the Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007 (Pub. L. 110-173) and further extended under section 124 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA)(Pub. L. 110-275) and section 3137(a) of the Patient Protection and Affordable Care Act (PPACA) (Pub. L. 111-148) as amended by section 10317 of the Health Care and Education Reconciliation Act of 2010 (HCERA), (Pub. L. 111-152 enacted on March 30, 2010). (These public laws are collectively known as the Affordable Care Act (ACA).)
Under section 508 of MMA, a qualifying hospital could appeal the wage index classification otherwise applicable to the hospital and apply for reclassification to another area of the State in which the hospital is located or, at the discretion of the Secretary, to an area within a contiguous State. We implemented this process through notices published in the Federal Register on January 6, 2004 (69 FR 661), and February 13, 2004 (69 FR 7340). Such reclassifications were applicable to discharges occurring during the 3-year period beginning April 1, 2004, and ending March 31, 2007. Section 106(a) of the Medicare Improvements and Extension Act, Division B of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) extended the geographic reclassifications of hospitals that were made under section 508 of the MMA. In the March 23, 2007 Federal Register (72 FR 3799), we published a notice that indicated how we were implementing section 106(a) of the MIEA-TRHCA through September 30, 2007. Section 117 of the MMSEA further extended section 508 reclassifications and certain special exceptions through September 30, 2008. On February 22, 2008 in the Federal Register (73 FR 9807), we published a notice regarding our implementation of section 117 of the MMSEA. In the October 3, 2008 Federal Register (73 FR 57888), we published a notice regarding our implementation of section 124 of MIPPA, which extended section 508 reclassifications and certain special exceptions through September 30, 2009. In the June 2, 2010 Federal Register (75 FR 31118), we explained our implementation of section 3137(a) of the ACA, as amended by section 10317 of ACA, which further extended section 508 reclassifications and certain special exceptions through the end of FY 2010.
Section 102 of the MMEA has extended the hospital reclassifications originally received under section 508 and certain special exceptions through September 30, 2011 (FY 2011). Furthermore, effective April 1, 2011, section 102 of the MMEA also requires that in determining the wage index applicable to hospitals that qualify for wage index reclassification, the Secretary shall remove the section 508 and special exception hospitals' wage data from the calculation of the reclassified wage index if doing so increases the reclassified wage index. If the section 508 or special exception hospital's wage index applicable for the period beginning on October 1, 2010, and ending on March 30, 2011, is lower than for the period beginning on April 1, 2011, and ending on September 30, 2011, the Secretary shall pay the hospital an additional amount that reflects the difference between the wage indices for the two periods. As a result of these changes, we have recalculated certain wage index values to account for the new legislation.
Hospitals receiving an extension of their section 508 reclassifications or special exceptions wage indices are shown in Table 9B of the Addendum to this notice. Please note we are not making reclassification decisions on behalf of hospitals in this extension as we did with the MIPPA provision. (Because MIPPA was enacted prior to the finalization of the FY 2009 rates, we were able to modify reclassifications that had not yet taken effect. In contrast, MMEA was enacted in the middle of the fiscal year, and reclassifications are already in effect). Also, as explained in this notice, in cases where we have removed section 508/special exception hospital data from the reclassification wage index (effective April 1), we have Start Printed Page 19366done so only where the labor market area includes hospitals that have 508 reclassifications/special exceptions extended, or where an extended hospital was reclassified to such area for FY 2011.
When originally implementing section 508 of the MMA, 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. We will neither require nor accept written requests for the extension required by MMEA, since that law simply provides a 1 year continuation through the end of FY 2011 for any section 508 reclassifications and special exceptions wage indices that expired September 30, 2010.
B. FY 2011 Final Wage Indices
The FY 2011 final wage index values and geographic adjustment factors (GAF) for hospitals affected by section 102 of the MMEA are included in Tables 2, 4C, and 9B of the Addendum to this notice, as well as in a Table showing the hospitals that have been removed from Table 9A. These tables also are posted on our Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/. Table 2 of the Addendum to this notice includes the final wage index values for: (1) Section 508 and special exception hospitals; and (2) other hospitals affected by the extension. Table 4C of the Addendum to this notice lists the revised final wage index and GAF values for certain hospitals that are reclassified, for hospitals that have not had their section 508 reclassifications or special exceptions extended, will be effective April 1, 2011. The revised Table 9A of the Addendum lists hospitals removed from the table due to the enactment of section 102 of MMEA. In addition, Table 9B of the Addendum to this notice lists hospitals that are section 508 and special exception providers that have been extended until September 30, 2011. Please note that some hospitals that might otherwise qualify for an extension of their section 508 reclassification or special exception have not been so extended for FY 2011, because they are receiving a higher wage index as a result of maintaining their MGCRB reclassification or due to section 10324 of the ACA which provides for a floor (of 1.0) on the area wage index for hospitals in Frontier States. Therefore, in keeping with our historic practice, these providers continue to receive the wage index published in the FY 2011 IPPS/LTCH PPS final rule, or subsequent correction notice (published on October 1, 2010), and are neither removed from Table 9A nor listed in Table 9B.
III. Collection of Information Requirements
This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).
IV. Waiver of Proposed Rulemaking and Delay of Effective Date
We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment prior to a rule taking effect in accordance with section 553(b) of the Administrative Procedure Act (APA) and section 1871 of the Act. In addition, in accordance with section 553(d) of the APA and section 1871(e)(1)(B)(i) of the Act, we ordinarily provide a 30-day delay to a substantive rule's effective date. For substantive rules that constitute major rules, in accordance with 5 U.S.C. 801, we ordinarily provide a 60-day delay in the effective date.
None of the above processes or effective date requirements apply, however, when the rule in question is interpretive, a general statement of policy, or a rule of agency organization, procedure or practice. They also do not apply when the Congress itself has created the rules that are to be applied, leaving no discretion or gaps for an agency to fill in through rulemaking.
In addition, an agency may waive notice and comment rulemaking, as well as any delay in effective date, when the agency for good cause finds that notice and public comment on the rule as well the effective date delay are impracticable, unnecessary, or contrary to the public interest. In cases where an agency finds good cause, the agency must incorporate a statement of this finding and its reasons in the rule issued.
The policies being publicized in this notice do not constitute agency rulemaking. Rather, the Congress, in the MMEA, has already required that the agency make these changes, and we are simply notifying the public of certain required revisions to wage index values that are effective either October 1, 2010 (or for certain affected non-508 hospitals April 1, 2011). As this notice merely informs the public of these required modifications to the wage index values under the IPPS, it is not a rule and does not require any notice and comment rulemaking. To the extent any of the policies articulated in this notice constitute interpretations of the Congress's requirements or procedures that will be used to implement the Congress's directive; they are interpretive rules, general statements of policy, and/or rules of agency procedure or practice, which are not subject to notice-and-comment rulemaking or a delayed effective date.
However, to the extent that notice and comment rulemaking or a delay in effective date or both would otherwise apply, we find good cause to waive such requirements. Specifically, we find it unnecessary to undertake notice and comment rulemaking in this instance as this notice does not propose to make any substantive changes to IPPS policies or methodologies already in effect as a matter of law, but simply applies rate adjustments required by MMEA to these existing policies and methodologies. Therefore, we would be unable to change any of the policies governing the IPPS for FY 2011 in response to public comment on this notice. Finally, even if any of the policies could be subject to change, as many of the changes outlined in this notice have already taken effect or must take effect within a very short period of time after enactment of the MMEA (that is, by April 1, 2011—approximately 3 months after enactment), it would also be impracticable to undertake notice and comment rulemaking. For these reasons, we also find that a waiver of any delay in effective date, if it were otherwise applicable, is necessary to comply with the requirements of the MMEA. Therefore, we find good cause to waive notice and comment procedures as well as any delay in effective date, if such procedures or delays are required at all.
V. Regulatory Impact Analysis
We have examined the impacts of this notice as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits Start Printed Page 19367(including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. A regulatory impact analysis (RIA) must be prepared for regulatory actions with economically significant effects ($100 million or more in any 1 year). This notice has been designated an “economically” significant regulatory action, under section 3(f)(1) of Executive Order 12866. Therefore, although we do not consider this notice to constitute a substantive rule, we have prepared a RIA, that to the best of our ability, presents the costs and benefits of this notice. In accordance with Executive Order 12866, the notice has been reviewed by the Office of Management and Budget.
The RFA requires agencies to analyze options for regulatory relief of small businesses, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small government jurisdictions. We estimate that most hospitals and most other providers and suppliers are small entities as that term is used in the RFA. The great majority of hospitals and most other health care providers and suppliers are small entities, either by being nonprofit organizations or by meeting the SBA definition of a small business (having revenues of less than $7.5 to $34.5 million in any 1 year). (For details on the latest standard for health care providers, we refer readers to page 33 of the Table of Small Business Size Standards at the Small Business Administration's Web site at http://www.sba.gov/services/contractingopportunities/sizestandardstopics/tableofsize/index.html.) For purposes of the RFA, all hospitals and other providers and suppliers are considered to be small entities. Individuals and States are not included in the definition of a small entity. We believe that this notice will have a significant impact on small entities. Because we acknowledge that many of the affected entities are small entities, the analysis discussed in this section would fulfill any requirement for a final regulatory flexibility analysis.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. With the exception of hospitals located in certain New England counties, for purposes of section 1102(b) of the Act, we now define a small rural hospital as a hospital that is located outside of an urban area and has fewer than 100 beds. Section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21) designated hospitals in certain New England counties as belonging to the adjacent urban area. Thus, for purposes of the IPPS, we continue to classify these hospitals as urban hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2011, that threshold is approximately $136 million. This notice will not mandate any requirements for State, local, or Tribal governments, nor will it affect private sector costs. 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. This notice will not have a substantial effect on State and local governments.
Although this notice merely reflects the implementation of provisions of the MMEA and does not constitute a substantive rule, we are nevertheless preparing this impact analysis in the interest of ensuring that the impacts of these changes are fully understood. The following analysis, in conjunction with the remainder of this document, demonstrates that this notice is consistent with the regulatory philosophy and principles identified in Executive Order 12866 and 13563, the RFA, and section 1102(b) of the Act. The notice will positively affect payments to a substantial number of small rural hospitals, as well as other classes of hospitals, and the effects on some hospitals may be significant. The impact analysis, which shows the effect on all payments to hospitals, is shown in Table I of this notice.
B. Statement of Need
This notice is necessary to update the final fiscal year (FY) 2011 wage indices and hospital reclassifications and other related tables to reflect changes required by or resulting from the implementation of section 102 of the MMEA. MMEA requires the extension of the expiration date for certain geographic reclassifications and special exception wage indices through September 30, 2011. We note that the changes in this notice are already in effect with changes made to PRICER and announced through a Joint Signature Memorandum.
C. Overall Impact
The FY 2011 IPPS final rule included an impact analysis for the changes to the IPPS included in that rule. This notice updates those impacts to the IPPS operating payment system as to reflect certain changes required by the MMEA. Because provisions in the MMEA were not budget neutral, the overall estimates for hospitals have changed from our estimate that was published in the FY 2011 IPPS final rule (75 FR 50042). We estimate that the changes in the FY 2011 IPPS final rule, in conjunction with the final IPPS rates and wage index included in this notice, will result in an approximate $279 million decrease in total operating payments relative to FY 2010. In the FY 2011 IPPS final rule (75 FR 50042), we had projected that total operating payments would decrease by $440 million relative to FY 2010. However, the changes in this notice will increase operating payments by $162 million relative to what was projected in the FY 2011 IPPS final rule, resulting in a net decrease of $279 million in total operating payments. Capital payments are estimated to increase by an additional $13.6 million in FY 2011 as a result of the changes in this notice.
D. Anticipated Effects
In Table I, we provide an impact analysis for changes to the IPPS operating payments in FY 2011 as a result of the changes required by the MMEA. The table categorizes hospitals by various geographic and special payment consideration groups to illustrate the varying impacts on different types of hospitals. The first row of Table I shows the overall impact on the 3,472 acute care hospitals included in the analysis. The impact analysis reflects the change in estimated operating payments in FY 2011 due to the provisions in the MMEA relative to estimated FY 2011 operating payments published in the FY 2011 IPPS final rule (75 FR 50042). Overall, all hospitals will experience an estimated 0.2 percent increase in operating payments in FY 2011 due to the provisions in MMEA compared to the previous estimates of operating payments in FY 2011 published in the FY 2011 IPPS final rule. Because the provisions in the MMEA were not budget neutral, all hospitals, depending on whether they were affected by the provisions in the MMEA, will either experience no Start Printed Page 19368change or an increase in IPPS operating payments in FY 2011 in this notice relative to the previously published estimates. As such, hospitals located in urban areas will experience a 0.2 percent increase in payments while hospitals located in rural areas will not experience any change in payments in FY 2011 due to the provisions in this notice as compared to the estimated payments provided in the FY 2011 IPPS final rule. Among the hospitals that are subject to the changes in this notice, hospitals will experience a net effect increase in payments ranging from 0.1 percent to 0.4 percent where urban Middle Atlantic hospitals, urban East North Central hospitals and urban reclassified hospitals are expected to experience the largest net increase in operating payments of 0.4 percent in FY 2011.
|Number of hospitals||Percent net effect of all changes for FY 2011|
|By Geographic Location:|
|Large urban areas||1362||0.2|
|Other urban areas||1132||0.2|
|Bed Size (Urban):|
|500 or more beds||197||0.2|
|Bed Size (Rural):|
|200 or more beds||46||0|
|Urban by Region:|
|East North Central||403||0.4|
|East South Central||155||0|
|West North Central||167||0|
|West South Central||336||0|
|Rural by Region:|
|East North Central||121||0|
|East South Central||176||0|
|West North Central||100||0.1|
|West South Central||219||0|
|By Payment Classification:|
|Large urban areas||1404||0.2|
|Other urban areas||1147||0.2|
|Fewer than 100 residents||805||0.2|
|100 or more residents||238||0.3|
|100 or more beds||1531||0.2|
|Less than 100 beds||356||0.1|
|100 or more beds||30||0.2|
|Less than 100 beds||141||0.2|
|Urban teaching and DSH:|
|Start Printed Page 19369|
|Both teaching and DSH||818||0.2|
|Teaching and no DSH||161||0.3|
|No teaching and DSH||1069||0|
|No teaching and no DSH||503||0.2|
|Special Hospital Types:|
|SCH and RRC||117||0|
|MDH and RRC||13||0|
|Type of Ownership:|
|Medicare Utilization as a Percent of Inpatient Days:|
|FY 2011 Reclassifications by the Medicare Geographic Classification Review Board:|
|All Reclassified Hospitals||773||0.3|
|Urban Hospitals Reclassified||442||0.4|
|Urban Nonreclassified Hospitals, FY 2011||2022||0.1|
|All Rural Hospitals Reclassified FY 2011||331||0|
|Rural Nonreclassified Hospitals FY 2011||585||0.1|
|All Section 401 Reclassified Hospitals:||37||0|
|Other Reclassified Hospitals (Section 1886(d)(8)(B))||63||0|
|Cardiac Specialty Hospitals||19||0|
E. Alternatives Considered
This notice provides descriptions of the statutory provisions that are addressed and identifies policies for implementing these provisions. Due to the prescriptive nature of the statutory provisions, no alternatives were considered.
F. Accounting Statement and Table
1. Acute Care Hospitals
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table II, we have prepared an accounting statement showing the classification of expenditures associated with the provisions of this notice as they relate to acute care hospitals. This table provides our best estimate of the change in Medicare payments to providers as a result of the changes to the IPPS presented in this notice. All expenditures are classified as transfers from the Federal government to Medicare providers. As previously discussed, relative to what was projected in the FY 2011 IPPS final rule, the changes in this notice will increase FY 2011 operating payments by $162 million and capital payments by $14 million. Thus, the total increase in Federal expenditures for FY 2011 is approximately $176 million.
|Annualized Monetized Transfers||$176 million|
|From Whom to Whom||Federal Government to IPPS Medicare Providers|
(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program)Start Signature
Dated: March 3, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: April 1, 2011.
Secretary, Department of Health and Human Services.
This addendum includes tables referred to throughout the notice which contain data relating to the final FY 2010 wage indices and the hospital reclassifications and payment amounts for operating costs discussed in section II. of this notice.
|CMS certification No.||Revised FY 2011 wage index|
|Start Printed Page 19370|
|* These hospitals are assigned a wage index value under a special exceptions policy (see the FY 2005 IPPS final rule, 69 FR 49105).|
|** This hospital has been assigned a wage index under a special exceptions policy (see the FY 2007 IPPS final rule, 71 FR 48070).|
|CMS certification No.||Revised FY 2011 wage index|
|CBSA code||Area||State||Revised wage index||Revised GAF|
|11460||Ann Arbor, MI||MI||1.0057||1.0039|
|Start Printed Page 19371|
|35644||New York-White Plains-Wayne, CT||CT||1.2867||1.1884|
|35644||New York-White Plains-Wayne, NJ||NJ||1.2867||1.1884|
|35644||New York-White Plains-Wayne, NY||NY||1.2867||1.1884|
The following providers have been removed from Table 9A published in the FY 2011 IPPS/LTCH final rule (or in the October 1, 2010 correction notice to that final rule) due to the implementation of section 102 of the MMEA:
|CCN||Geographic CBSA||Reclassified CBSA||LUGAR|
|CCN||Note||Geographic CBSA||Wage index CBSA section 508 reclassification||Own wage index|
|Start Printed Page 19373|
|* These hospitals are assigned a wage index value under a special exceptions policy (see FY 2005 IPPS final rule, 69 FR 49105).|
|** This hospital has been assigned a wage index under a special exceptions policy (see FY 2007 IPPS final rule, 71 FR 48070).|
[FR Doc. 2011-8209 Filed 4-6-11; 8:45 am]
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