APPENDIX D. MEDICARE REIMBURSEMENT TO HOSPITALS
                                CONTENTS
General Summary
Basic Payment System
  Transition Period
  Update Factors
  DRG Weighting Factors
  Source and Calculation of the Hospital Wage Index
  Sample Payment Calculation
Additional Payment Amounts
  Graduate Medical Education
  Disproportionate Share Hospitals
  ESRD Beneficiary Discharges
  Outliers
Payment for Capital
Payments on a Reasonable Cost Basis
  Physicians in Teaching Hospitals
  Organ Acquisition Costs
  Passthrough Payments for Hemophilia Inpatients
  Bad Debts of Medicare Beneficiaries
Special Treatment of Certain Facilities Under PPS
  Sole Community Hospitals
  Medicare Dependent Hospitals
  Referral Centers
  Hospitals in Rural Counties Treated as Urban Counties
Hospitals Excluded From the Prospective Payment System
Administration
  Prospective Payment Assessment Commission
  Administrative and Judicial Review
  Review Activities
Historical Trends in PPS Payments, Costs, and Margins
  Medicare Payments to Hospitals
  Policy Changes and PPS Operating Payments
  Distribution of PPS Hospitals, Cases, and Operating Payments
  Trends in PPS Operating Payments and Costs
  PPS Inpatient Margins
  Margins by Hospital Type
  Additional Hospital Data
References
                            GENERAL SUMMARY
    Medicare part A provides reimbursement for inpatient 
hospital care through a payment system based on prospectively 
set rates, the prospective payment system (PPS), for hospital 
cost reporting periods beginning on or after October 1, 1983. 
PPS was enacted by the Social Security amendments of 1983 
(Public Law 98-21). This appendix describes the major 
reimbursement provisions of PPS.
    Medicare payment for hospital inpatient services is made 
according to a prospective payment system, rather than a 
retrospective cost-based system. Medicare payments are made at 
predetermined, specific rates which represent the average cost, 
nationwide, of treating a Medicare patient according to his or 
her medical condition. The classification system used to group 
hospital inpatients according to their diagnoses is known as 
diagnosis-related groups (DRGs). Separate DRG rates apply 
depending on whether a hospital is located in a large urban 
area (greater than 1 million population, or 970,000 in New 
England) or other area of the country, as determined by the 
Office of Management and Budget (OMB) Metropolitan Statistical 
Area (MSA) system.
    During a 4-year transition period, a declining portion of 
the total prospective payment was based on a hospital's 
historical reasonable costs and an increasing portion was based 
on a combination of regional and national Federal DRG rates. 
Since the fifth year of the program (fiscal year 1988), 
Medicare payments have been generally determined under a 
national DRG payment methodology. Special transition provisions 
apply to hospitals located in certain geographic regions. If a 
hospital can treat a patient for less than the payment amount, 
it can keep the savings. If the treatment costs more, the 
hospital must absorb the loss. A hospital is prohibited from 
charging Medicare beneficiaries any amounts (except for 
deductibles, copayment amounts, and services not covered by 
Medicare) which represent any difference between the hospital's 
cost of providing covered care and the Medicare DRG payment 
amount.
    Certain hospital costs are excluded from the prospective 
payment system and are paid on a reasonable cost basis, subject 
to rate of increase limits. Authority is provided for States to 
establish their own all-payer hospital payment systems if they 
meet certain Federal requirements.
                          BASIC PAYMENT SYSTEM
    Unless excluded from PPS, each Medicare participating 
hospital is paid a predetermined payment rate per discharge for 
each type of patient treated. Types of patients are defined by 
the diagnosis related groups patient classification system 
which assigns each hospital inpatient to one of 495 patient 
categories (DRGs) based on the diagnosis and the type of 
treatment received (medical or surgical).
    The payment rate for each DRG is the product of two 
components: a base payment amount which applies for all DRGs, 
and a relative weighting factor for the particular DRG. The 
base payment amount is intended to represent the cost of a 
typical (average) Medicare inpatient case. The relative 
weighting factor represents the relative costliness of an 
average case in the particular DRG compared to the cost of the 
overall average Medicare case (i.e., relative to the base 
payment amount). When the DRG relative weights are each 
multiplied by the base payment amount, the result is a complete 
set of prices for all DRGs. Separate DRG rates apply to 
hospitals located in large urban or other areas (separate base 
payment amounts apply in these areas, but the DRG relative 
weighting factors are the same). In addition, the base payment 
amount (and, therefore, each DRG rate) is adjusted for area 
differences in hospital wage levels compared to the national 
average hospital wage level.
                           Transition Period
    Although the transition to prospective payment rates was 
completed in fiscal year 1988, special transition provisions 
apply to hospitals located in certain geographic regions. In a 
few regions with historically higher costs, Public Law 103-66 
(OBRA 1993) provides for the continued use of Federal amounts 
based in part on regional rates until October 1, 1996. Under 
this transition provision, known as the ``regional floor,'' the 
DRG payment rate is determined as the higher of 100 percent of 
the national amount, or 85 percent of the national amount plus 
15 percent of the regional amount.
                             Update Factors
    PPS payment rates are updated each year using an ``update 
factor.'' The annual update factor applied to increase the 
Federal base payment amounts is determined, in part, by the 
projected increase in the hospital market basket index (MBI). 
The MBI measures the cost of goods and services purchased by 
hospitals, yielding one price inflator for all hospitals in a 
given year. Table D-1 shows the categories of expense used in 
developing the index. The update factor also includes 
adjustments for increases in hospital productivity, 
technological change, and other factors that affect the level 
of operating cost per discharge. The annual update factor is 
also adjusted to include increases in average payments per case 
attributable to increases in case mix due to changes in coding 
and reporting accuracy.
    Before fiscal year 1988, the same factor was used for all 
hospitals; however, in subsequent years separate factors were 
applied to hospitals according to their locations. Separate 
update factors were set for hospitals located in large urban, 
other urban, and rural areas. Beginning October 1, 1994, the 
other urban and rural standardized amounts were equalized, so 
there are currently only two update factors for large urban and 
other areas. Table D-2 compares the hospital market basket 
increases to actual updates for the past 13 years and shows the 
increases in PPS payments per case that resulted from the 
updates and other policy changes.
    For fiscal year 1996, the market basket increase is 3.5 
percent, the average update is 1.5 percent, and the increase in 
operating payments per case is 2.5.
  TABLE D-1.--HOSPITAL PROSPECTIVE PAYMENT SYSTEM INPUT PRICE INDEX (``THE MARKET BASKET'') EXPENSE CATEGORIES AND RATES OF PRICE CHANGE, FISCAL YEARS  
                                                                         1992-97                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Base-year                       FFY percentage rates of price change                    
                       Expense category                          FFY 1987  -----------------------------------------------------------------------------
                                                               weights \1\    1992 \2\     1993 \2\     1994 \2\     1995 \2\     1996 \3\     1997 \3\ 
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Wages and salaries \4\....................................        52.22          3.7          3.1          2.9          2.7          2.9          3.3
2. Employee benefits \4\.....................................         9.50          6.2          5.8          4.2          2.7          3.0          3.4
3. Professional fees \4\.....................................         1.65          4.0          3.4          2.9          2.7          2.9          3.3
4. Energy and utilities......................................         2.37         -5.0          0.9         -3.4         -1.6         -0.5          2.3
    A. Fuel oil, coal, and other petroleum...................         0.62        -14.4         -2.4         -7.2         -0.7         -0.7          4.0
    B. Electricity...........................................         1.14          1.8          1.2         -1.0          1.1          0.0          0.5
    C. Natural gas...........................................         0.34         -1.9          9.0         -2.6        -19.2          3.1          7.5
    D. Motor gasoline........................................         0.23        -11.2         -2.6         -7.9          5.4         -6.7          0.1
    E. Water and sewerage....................................         0.04          7.1          5.9          5.2          3.5          4.2          5.1
5. Professional liability insurance..........................         1.43          4.9          2.8         -0.3         -0.3          3.2          4.1
6. All other.................................................        32.84          1.5          1.9          1.7          4.1          2.8          2.3
    A. All other products....................................        21.79          1.1          1.9          1.4          4.7          2.7          1.8
         1. Pharmaceuticals..................................         3.87          7.2          5.0          3.5          2.4          3.0          1.9
         2. Food.............................................         3.30          0.9          1.3          1.8          0.9          3.5          1.8
            a. Direct purchase...............................         2.11          0.0          1.0          1.9          0.1          3.7          0.5
            b. Contract service..............................         1.19          2.4          1.7          1.7          2.1          3.0          3.9
         3. Chemicals........................................         3.13         -4.4          1.4          0.5         15.1          0.4          1.3
         4. Medical instruments..............................         2.67          1.9          2.3          0.9          1.2          1.3          0.9
         5. Photographic supplies............................         2.62         -0.7         -0.9          0.4          0.7          3.0          3.7
         6. Rubber and plastics..............................         2.32         -0.3          0.9          0.7          5.6          1.9          0.7
         7. Paper products...................................         1.40         -2.1         -0.4         -0.2         18.1          8.9          2.3
         8. Apparel..........................................         1.14          1.6          1.9          1.6          1.6          2.5          2.4
         9. Machinery and equipment..........................         0.50          0.5          0.5          0.8          1.0          1.7          1.9
        10. Miscellaneous products...........................         0.83          0.8          1.6          0.4          1.7          2.6          1.8
    B. All other services....................................        11.05          2.4          2.0          2.2          3.0          2.9          3.1
         1. Business services \4\............................         3.85          2.4          1.5          1.7          3.2          3.5          3.5
         2. Computer services \4\............................         1.99          1.3          3.5          4.4          3.3          3.2          3.6
         3. Transportation and shipping......................         1.23          1.0          3.1          2.8          4.0          1.8          3.7
         4. Telephone........................................         0.99          1.2          0.2          1.8          0.8          1.8          2.2
         5. Blood services \4\...............................         0.59          6.5          0.2         -2.3         -1.4          2.2          1.5
         6. Postage \4\......................................         0.37          4.9          0.0          0.0          7.7          2.4          0.0
         7. All other labor intensive services \4\...........         1.23          3.4          2.1          2.3          2.8          2.8          3.0
         8. All other nonlabor intensive services............         0.80          3.0          3.0          2.6          2.8          2.7          2.9
                                                              ------------------------------------------------------------------------------------------
      Total..................................................       100.00          3.1          3.0          2.5          3.0          2.8          2.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Weights may not sum to 100.00 due to rounding.                                                                                                      
\2\ Historical data subject to change only upon revision of underlying series.                                                                          
\3\ Projected data subject to change in future forecasts.                                                                                               
\4\ Considered labor-related.                                                                                                                           
                                                                                                                                                        
Note.--FFY = Federal fiscal year.                                                                                                                       
                                                                                                                                                        
Source: Health Care Financing Administration, Office of the Actuary.                                                                                    
TABLE D-2.--COMPARISON OF INCREASE IN PPS HOSPITAL MARKET BASKET INDEX, PPS UPDATE, AND INCREASE IN PPS PAYMENTS
                                         PER CASE, FISCAL YEARS 1984-96                                         
                                                  [In percent]                                                  
----------------------------------------------------------------------------------------------------------------
                                                                                                    Increase in 
                                                                    Increase in   Average update     operating  
                           Fiscal year                             market basket        \2\        payments per 
                                                                     index \1\                       case \3\   
----------------------------------------------------------------------------------------------------------------
1984............................................................             4.9             4.7            18.5
1985............................................................             4.0             4.5            10.5
1986............................................................             4.3             0.5             3.4
1987............................................................             3.7             1.2             5.3
1988............................................................             4.7             1.5             6.0
1989............................................................             5.4             3.3             6.6
1990............................................................             5.5             4.7             6.3
1991............................................................             5.2             3.4             5.8
1992............................................................             4.4             3.0             5.2
1993............................................................             4.1             2.7             3.6
1994............................................................             4.3             2.0             3.5
1995............................................................             3.6             2.0             3.9
1996............................................................             3.5             1.5             2.5
----------------------------------------------------------------------------------------------------------------
\1\ Based on data available when final PPS rates were set.                                                      
\2\ From 1988 to 1995, there were separate updates for hospitals in large urban, other urban, and rural areas.  
  Update for 1990 adjusted to reflect 1.22 percent across-the-board reduction in DRG weights.                   
\3\ Data on PPS operating payments for 1984 through 1994 are for hospital accounting years beginning during each
  Federal fiscal year. Changes are based on cohorts of hospitals with Medicare Cost Reports in two consecutive  
  years. Increases for 1995 and 1996 estimated from current update and case-mix index trends.                   
                                                                                                                
Note.--PPS = Prospective payment system.                                                                        
                                                                                                                
Source: Prospective Payment Assessment Commission.                                                              
                         DRG Weighting Factors
    Public Law 98-21 required the Secretary to adjust the DRG 
definitions and weighting factors in fiscal year 1986 and at 
least every 4 years thereafter to reflect changes in treatment 
patterns, technology, and other factors which may change the 
relative use of hospital resources. Public Law 99-509, however, 
required the Secretary to adjust the DRG definitions and 
weighting factors each year, beginning in fiscal year 1988.
    OBRA 1989 required the Secretary to reduce the weighting 
factor for each DRG by 1.22 percent for discharges in fiscal 
year 1990. In addition, the Secretary was prohibited from 
adjusting DRG weighting factors on other than a budget neutral 
basis beginning in fiscal year 1991.
    Table D-3 shows the 20 DRGs accounting for the largest 
numbers of Medicare inpatient discharges during fiscal year 
1994. DRG relative weights appear in table D-20 at the end of 
this appendix.
           Source and Calculation of the Hospital Wage Index
    The hospital wage index is used to adjust a hospital's base 
payment amount for the wage level of the hospital's area. This 
is accomplished by multiplying the labor-related component of 
the national standardized payment amount by a wage index. The 
wage index is intended to measure the average wage level for 
hospital workers in each urban area (metropolitan statistical 
area or MSA) or rural area (non-MSA parts of States) relative 
to the national average wage level.
    TABLE D-3.--TWENTY DIAGNOSIS-RELATED GROUPS (DRGs) WITH THE MOST    
                  HOSPITAL DISCHARGES, FISCAL YEAR 1994                 
------------------------------------------------------------------------
                                                                 Average
  DRG                                                   Percent   length
number             Description              Discharges   total   of stay
                                                                  (days)
------------------------------------------------------------------------
127...  Heart failure and shock..........      703,850      6.1      6.7
89....  Simple pneumonia and pleurisy \1\      452,893      3.9      7.5
88....  Chronic obstructive pulmonary                                   
         disease.........................      363,195      3.2      6.5
14....  Specific cerebrovascular                                        
         disorders except transient                                     
         ischemic attack.................      358,914      3.1      8.2
209...  Major joint and limb reattachment                               
         procedures......................      327,286      2.8      7.6
140...  Angina pectoris..................      274,437      2.4      3.8
430...  Psychoses........................      261,268      2.2     14.4
182...  Esophagitis, gastroenteritis, and                               
         miscellaneous metabolic                                        
         disorders.......................      246,195      2.1      5.3
174...  G.I. hemorrhage \2\..............      244,085      2.1      6.0
296...  Nutritional and miscellaneous                                   
         metabolic disorders \1\.........      227,653      2.0      7.0
138...  Cardiac arrhythmia and conduction                               
         disorders \2\...................      208,736      1.8      4.9
79....  Respiratory infections and                                      
         inflammations...................      202,900      1.8     10.0
112...  Vascular procedures except major                                
         reconstruction without pump.....      184,496      1.6      4.9
416...  Septicemia.......................      184,165      1.6      8.8
462...  Rehabilitation...................      182,561      1.6     17.1
320...  Kidney and urinary tract                                        
         infections \1\..................      179,459      1.6      7.0
121...  Circulatory disorders with acute                                
         myocardial infarction and                                      
         cerebrovascular complications,                                 
         discharged alive................      166,866      1.5      8.0
148...  Major small and large bowel                                     
         procedures \2\..................      150,604      1.3     14.0
15....  Transient ischemic attack and                                   
         precerebral occlusions..........      149,011      1.3      4.9
124...  Circulatory disorders except                                    
         acute myocardial infarction,                                   
         with cardiac catheterization and                               
         complex diagnosis...............      140,679      1.2      5.2
                                          ------------------------------
  ....  Twenty leading DRGs..............    5,209,253     45.3  .......
  ....  Total, all DRGs..................   11,504,539    100.0      7.6
------------------------------------------------------------------------
\1\ Age greater than 17, with complications.                            
\2\ With complications.                                                 
                                                                        
Source: Health Care Financing Administration, Bureau of Data Management 
  and Strategy.                                                         
    The Secretary is required to update the wage index annually 
beginning October 1, 1993. The Secretary is required to base 
the update on a survey of wages and wage-related costs of 
short-term acute care hospitals. Tables D-17, D-18, and D-19, 
at the end of this appendix, give the current wage index values 
for urban areas, for all rural areas in a State, and a special 
index for hospitals that are reclassified.
    Calculation of the index begins with the area average 
hospital hourly wage. For each MSA or non-MSA area (i.e., all 
non-MSA counties in a State), total county compensation and 
total paid hours data are summed separately over all counties 
included in the area. Then aggregate hospital compensation for 
the area is divided by aggregate paid hours of hospital 
employment in the area to produce the area average hourly wage. 
The hospital wage index is calculated by dividing the average 
hourly wage for each area by the national average hourly wage 
(determined by dividing national aggregate compensation by 
national aggregate paid hours of employment).
    This procedure results in an index number, such as 0.9218 
(Asheville, North Carolina) or 1.2539 (Sacramento, California), 
for each MSA or non-MSA area in the United States. Since the 
national average wage level is represented by an index value of 
1.000, the wage index value for any area has a direct and 
simple interpretation. The value of 1.2539 for Sacramento means 
that the hourly wage rate for hospital workers is 25.39 percent 
higher in the Sacramento MSA than nationwide.
    Thus, in computing the Federal portion of the hospital 
payment rates applicable for hospitals in the Sacramento MSA, 
the labor-related component of the national large urban 
adjusted standardized payment amount ($2,741.39) is multiplied 
by 1.2539 in order to adjust for the higher level of hourly 
wage rates in this area. Similarly, the calculation of the 
labor portion of the rates for hospitals in Asheville would 
involve a reduction in the published labor-related component of 
the national adjusted standardized payment amount, to reflect 
the fact that hourly wage levels in this MSA are 7.82 percent 
lower than the national average (as indicated by the wage index 
value of 0.9218).
                       Sample Payment Calculation
    The Federal large urban and other area base payment amounts 
per discharge for fiscal year 1996 were published in the 
Federal Register on September 1, 1995 (see table D-4). The 
payment rates for most hospitals are computed using the 
national adjusted operating standardized amounts. However, 
hospitals located in regions where the regional rate (sum of 
labor and nonlabor portions) is higher than the national rate 
may use a blended rate equal to 85 percent of the national rate 
plus 15 percent of the regional rate (also known as the 
regional floor). Puerto Rico has its own adjusted operating 
standardized amounts for DRG payment purposes.
    Each payment amount is divided into a labor-related 
component and a nonlabor-related component. The sum of these 
components represents the base payment amount that would apply 
for a hospital located in an area with a wage index of 1.0 
(i.e., average wage rates for hospital workers in the area 
match the national average of hospital wage rates across all 
areas).
    The basic payment to a hospital for a case in a particular 
DRG is the applicable national (or blend of national and 
regional, if appropriate) payment amount, adjusted by the local 
wage index value and multiplied by the weighting factor for the 
DRG.
        TABLE D-4.--NATIONAL AND REGIONAL ADJUSTED STANDARDIZED AMOUNTS, LABOR/NONLABOR, FISCAL YEAR 1994       
----------------------------------------------------------------------------------------------------------------
                                                                     Large urban areas          Other areas     
                                                                 -----------------------------------------------
                                                                     Labor     Nonlabor      Labor     Nonlabor 
                                                                    related     related     related     related 
----------------------------------------------------------------------------------------------------------------
National average................................................   $2,741.39   $1,098.09   $2,697.99   $1,080.71
Regional:                                                                                                       
    New England (CT, ME, MA, NH, RI, VT)........................    2,874.14    1,151.27    2,828.62    1,133.04
    Middle Atlantic (PA, NJ, NY)................................    2,623.06    1,050.69    2,581.53    1,034.06
    South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).........    2,685.62    1,075.75    2,643.11    1,058.72
    East North Central (IL, IN, MI, OH, WI).....................    2,926.45    1,172.22    2,880.12    1,153.66
    East South Central (AL, KY, MS, TN).........................    2,537.85    1,016.56    2,497.67    1,000.47
    West North Central (IA, KS, MN, MO, NE, ND, SD).............    2,743.19    1,098.81    2,699.76    1,081.41
    West South Central (AR, LA, OK, TX).........................    2,669.98    1,069.49    2,627.71    1,052.55
    Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)...................    2,652.82    1,062.62    2,610.82    1,045.79
    Pacific (AK, CA, HI, OR, WA)................................    2,712.20    1,086.40    2,669.27    1,069.20
Puerto Rico:                                                                                                    
    National....................................................    2,714.63    1,087.37    2,714.63    1,087.37
    Puerto Rico.................................................    2,444.77      509.50    2,406.07      501.43
----------------------------------------------------------------------------------------------------------------
Source: Federal Register, 1995.                                                                                 
    For an example of a payment calculation, assume a hospital 
is located in Washington, DC. Such a hospital would be in a 
large urban area in the South Atlantic census region. As this 
is not one of the regions affected by the regional floor, 
payment is based on the large urban national standardized 
amount. First, the labor-related portion of this amount 
($2,741.39 in fiscal year 1996) is multiplied by the 
appropriate wage index (1.1075 for Washington, DC):
                 $2,741.39 &lt;greek-e&gt; 1.1075 = $3,036.09
To this total is added the nonlabor-related portion of the 
standardized amount:
                   $3,036.09 + $1,098.09 = $4,134.18
    For each discharge, this new total is then multiplied by 
the relative weight factor for the DRG to which the case has 
been assigned. These weights range from a low of 0.1922 for DRG 
382 (false labor) to a high of 16.3066 for DRG 480 (liver 
transplant). The payment rates for the sample hospital in 
fiscal year 1996 would therefore vary from a low of $794.59 
($4,134.18 &lt;greek-e&gt; 0.1922) to a high of $67,414.42 ($4,134.18 
&lt;greek-e&gt; 16.3066).
    In addition to the basic payment amount for each case, 
additional payments may be made to teaching hospitals and 
hospitals that serve a disproportionate share of low-income 
patients. Any hospital may receive additional payments for 
outliers (cases with extraordinarily high costs or a very long 
stay, relative to other cases in the DRG) and for treatment of 
beneficiaries with end-stage renal disease. Finally, certain 
hospital costs are excluded from PPS and reimbursed separately. 
The next sections of this appendix discuss additional PPS 
payments and the separate reimbursement of excluded costs.
                       ADDITIONAL PAYMENT AMOUNTS
    In addition to the DRG prospective payment rates, Medicare 
payments are made to hospitals for four additional items or 
services.
                       Graduate Medical Education
    Financing of graduate medical education, the period of 
training following medical school, is provided predominantly 
through inpatient revenues (both hospital payments and faculty 
physician fees) and a complex mix of Federal and State 
government funds. The Federal Government is the largest single 
explicit financing source for graduate medical education 
through the Medicare Program and through its support of 
residencies in Veterans Administration hospitals. Medicare 
recognizes the costs of graduate medical education under two 
mechanisms: direct medical education payments and an indirect 
medical education adjustment. In fiscal year 1995, Medicare 
paid approximately $1.8 billion in direct medical education 
payments and $4.5 billion in indirect adjustments.
Direct medical education costs
    The direct costs of approved medical education programs 
(such as the salaries of residents and teachers and other 
education costs for residents, for nurses, and for allied 
health professionals trained in provider-operated programs) are 
excluded from the prospective payment system. The direct 
medical education costs for the training of nurses and allied 
health professionals in provider-operated programs are paid for 
on a reasonable cost basis. Residency training programs for 
physicians are funded through formula payments based on each 
hospital's per resident costs.
    Medicare's payment to each hospital equals the hospital's 
cost per full-time equivalent (FTE) resident, times the 
weighted average number of FTE residents, times the percentage 
of inpatient days attributable to Medicare part A 
beneficiaries. Each hospital's per FTE resident amount is 
calculated using data from the hospital's cost reporting period 
that began in fiscal year 1984, increased by 1 percent for 
hospital cost reporting periods beginning July 1, 1985, and 
updated in subsequent cost reporting periods by the change in 
the consumer price index (CPI). The number of FTE residents is 
calculated at 100 percent after July 1, 1986, only for 
residents in their initial residency period (i.e., within the 
minimum number of years of formal training necessary to satisfy 
specialty requirements for board eligibility plus 1 year, but 
not to exceed 5 years; residents in geriatrics or preventive 
medicine are allowed 2 additional years). For residents not in 
their initial residency period, the weighing factor is 50 
percent after that date. Residents who are foreign or 
international medical graduates are not counted as FTE 
residents unless they have passed certain examinations.
    OBRA 1993 provided that the amounts paid per resident for 
the direct costs of graduate medical education would not be 
updated by the CPI for cost reporting periods beginning during 
fiscal years 1994 and 1995, except for primary care residents 
and residents in obstetrics and gynecology. Primary care 
residents are defined to include family medicine, general 
internal medicine, general pediatrics, preventive medicine, 
geriatric medicine, and osteopathic general practice. For 
fiscal year 1996, the per resident amount is updated by the 
CPI.
Indirect medical education costs
    Additional payments are made to hospitals under PPS for the 
indirect costs attributable to approved medical education 
programs. These indirect costs may be due to a variety of 
factors, including the extra demands placed on the hospital 
staff as a result of the teaching activity or additional tests 
and procedures that may be ordered by residents. Congressional 
reports on the PPS authorizing legislation indicate that the 
indirect medical education payments are also to account for 
factors not necessarily related to medical education which may 
increase costs in teaching hospitals, such as more severely ill 
patients, increased use of diagnostic testing, and higher 
staff-to-patient ratios.
    The additional payment to a hospital is based on a formula 
that provides an increase of approximately 7.7 percent in the 
Federal portion of the DRG payment for each 0.1 increase in the 
hospital's intern and resident-to-bed ratio on a curvilinear 
basis (i.e., the increase in the payment is less than 
proportional to the increase in the ratio of interns and 
residents to bed size).
                    Disproportionate Share Hospitals
    Public Law 99-272 (COBRA) provided that additional payments 
would be made to hospitals that serve a disproportionate share 
of low-income patients. The adjustment was extended several 
times until OBRA 1990 (Public Law 101-508) made it a permanent 
payment adjustment. A hospital's disproportionate patient 
percentage is defined as the hospital's total number of 
inpatient days attributable to Federal Supplemental Security 
Income (SSI) Medicare beneficiaries divided by the total number 
of Medicare patient days, plus the number of Medicaid patient 
days divided by the total patient days.
    Table D-5 shows the minimum disproportionate patient 
percentages required to qualify for the adjustment and the 
formulas for computing the adjustment effective October 1, 
1993. For discharges occurring after September 1994, hospitals 
with a disproportionate share adjustment greater than 20.2 
percent would receive a disproportionate share adjustment equal 
to 5.88 percent plus 0.825 percent of the difference between 
20.2 percent and the hospital's disproportionate share patient 
percentage.
  TABLE D-5.--CRITERIA TO QUALIFY FOR DISPROPORTIONATE SHARE ADJUSTMENT 
AND FORMULAS FOR COMPUTING ADDITIONAL PAYMENT, EFFECTIVE OCTOBER 1, 1993
------------------------------------------------------------------------
                                      Qualifying                        
                                   disproportionate    Formula or fixed 
        Type of hospital          patient percentage      percentage    
                                         (P)              adjustment    
------------------------------------------------------------------------
Urban, 100 or more beds........  15 percent.........  (P-15)(.6)        
                                                       .65+2.5.         
Urban, 100 or more beds........  20.2 percent.......  (P-20.2) .8+5.88. 
Urban, 100 or more beds........  30 percent of        35 percent.       
                                  inpatient revenue                     
                                  from State or                         
                                  local indigent                        
                                  care funds.                           
Urban, under 100 beds..........  40 percent.........  5 percent.        
Rural, over 500 beds...........  Not specified in     Same as urban, 100
                                  law; regulations     or more beds.    
                                  set threshold at                      
                                  15 percent.                           
Rural, over 100 beds...........  30 percent.........  4 percent.        
Rural, under 100 beds..........  45 percent.........  4 percent.        
Rural, sole community hospital.  30 percent.........  10 percent.       
Rural, rural referral center                                            
 and--                                                                  
    (a) not a sole community     30 percent.........  (P-30)(.6)+4.0.   
     hospital, 100 or more beds.                                        
    (b) not a sole community     45 percent.........  (P-30)(.6)+4.0.   
     hospital, under 100 beds.                                          
    (c) also a sole community    30 percent.........  Greater of 10     
     hospital.                                         percent or (P-   
                                                       30)(.6)+4.0.     
------------------------------------------------------------------------
Note.--The disproportionate patient percentage (P) is equal to the sum  
  of (a) the number of Medicare inpatient days provided to Supplemental 
  Security Income recipients divided by total Medicare patient days, and
  (b) the number of inpatient days provided to Medicaid beneficiaries   
  divided by total inpatient days.                                      
                                                                        
Source: Prospective Payment Assessment Commission.                      
                      ESRD Beneficiary Discharges
    Effective with cost reporting periods beginning on or after 
October 1, 1984, additional payments are made to hospitals for 
inpatient dialysis provided to end-stage renal disease (ESRD) 
beneficiaries if total discharges of such beneficiaries from 
non-ESRD related DRGs account for 10 percent or more of the 
hospital's total Medicare discharges. A hospital meeting the 
criteria is paid an additional payment for each ESRD 
beneficiary discharge based on the estimated weekly cost of 
dialysis and the average length of stay of its ESRD 
beneficiaries.
                                Outliers
    Additional amounts are paid to hospitals for atypical cases 
(known as ``outliers'') which have either extremely long length 
of stay (day outliers) or extraordinarily high costs (cost 
outliers) compared to most discharges classified in the same 
DRG. The law requires that total outlier payments to all 
hospitals covered by the system represent no less than 5 
percent and no more than 6 percent of the total estimated PPS 
payments for the fiscal year. Effective with discharges 
occurring on or after October 1, 1984, a transferring hospital 
may qualify for an additional payment for extraordinarily high-
cost cases meeting the criteria for cost outliers. Outlier 
payments are financed by an offsetting overall reduction in the 
Federal portion of the base payment amount per discharge. 
Effective October 1, 1986, Public Law 99-509 established 
separate urban and rural set-aside factors for financing 
outlier payments. The separate set-aside factors for rural and 
urban hospitals for financing outlier payments ended when the 
other urban/rural payment differential was eliminated in fiscal 
year 1995, as enacted in OBRA 1990.
    Public Law 100-203 increased payments for outlier cases 
classified in DRGs relating to patients with burns from April 
1, 1988, through September 30, 1989. This legislation also 
prohibited the Secretary from issuing any final regulations 
before September 1, 1988, which changed the method of payment 
for outlier cases (other than burn cases).
    The Secretary published new outlier rules on September 30, 
1988, effective for discharges on or after October 1, 1988. The 
new rules modified the thresholds used in determining whether a 
case is an outlier and increased the allowable payment amounts 
for cost outliers. The effect of the changes increased the 
proportion of all outlier payments going to cost outliers. 
Previously, about 85 percent of outlier payments were made for 
length-of-stay (LOS) outliers and 15 percent for cost outliers. 
Under the new rules, 60 percent of payments were made for cost 
outliers and 40 percent for LOS outliers. (Cases that meet both 
length-of-stay and cost outlier criteria are paid under the 
policy that produces the higher payment.)
    To determine the amount of additional payments for outlier 
cases, the LOS for each case in a DRG is first compared against 
the applicable LOS threshold for the category. If the LOS for a 
case exceeds the threshold, then the case qualifies as a day 
outlier. In this instance, the hospital is paid its regular 
payment rate per discharge (for this DRG), plus the Federal 
portion of a per diem amount (44 percent of the hospital's 
Federal per diem rate for the DRG) for each Medicare covered 
day above the LOS threshold.
    If the case does not qualify as a day outlier, then it may 
qualify as a cost outlier. The case will qualify for extra 
payments on this basis if the hospital's Medicare covered 
charges for the case, adjusted to operating costs (and reduced 
by its indirect teaching and disproportionate share 
adjustments, if applicable), exceed its cost outlier threshold 
for the DRG. In this instance, the hospital is paid its regular 
payment rate per discharge for the DRG, plus the Federal 
portion of 75 percent of the difference between its adjusted 
(and reduced) charges for the case and the cost outlier 
threshold.
    In October 1991, Medicare began a transition from cost-
based to prospective payment for hospital capital expenses (see 
below). In the August 30, 1991, final rule implementing this 
change, the Secretary established a unified outlier payment 
system for capital and operating costs. For day outliers, 
payments for covered days were set equal to a percentage of the 
combined per diem operating and capital payment rates for the 
DRG. For cost outliers, payments are made only if the combined 
operating and capital cost for the case exceed the cost outlier 
threshold for the DRG. As in the case of operating cost 
payments, standardized Federal capital payment amounts are 
reduced to establish a pool for outlier payments.
    OBRA 1993 legislated two changes in outlier policy that 
became effective in fiscal year 1995. First, day outliers are 
phased out over a period of 4 years. By fiscal year 1999, all 
outlier payments will be based solely on cost. Second, cost-
outlier thresholds are based on a fixed amount beyond the 
payment rate for each case so that hospitals incur the same 
loss on every case before outlier payments are applied.
                          PAYMENT FOR CAPITAL
    Until fiscal year 1992, Medicare paid a share of hospitals' 
reasonable capital-related costs, based on services used by 
beneficiaries as a proportion of total services furnished by 
the hospital. (Payments in recent years have been subject to 
fixed percentage reductions described below.) Four basic types 
of costs are allowable for Medicare reimbursement:
 1. Interest on mortgages, bonds, or other borrowing used to 
        finance capital investments or current operations. 
        Interest costs are generally offset by any interest 
        income earned by the hospital on investments;
 2. Depreciation, figured on a straight line basis, for plant 
        and equipment, but not for land;
 3. Rental payments for plant and equipment;
 4. Property taxes and insurance premiums related to capital 
        assets.
    One other type of capital cost was formerly recognized 
under Medicare, but has not been reimbursable for hospital 
services since fiscal year 1989: return on equity for investor-
owned hospitals. Return on equity payments provided a return to 
investors equivalent to what they would have earned if they had 
used their money for some other purpose.
    When the new PPS system was enacted in 1983, Congress 
excluded capital costs. However, the Secretary was instructed 
to report to Congress on methods for including capital in PPS 
and was authorized (but not required) to implement prospective 
payment for capital on or after October 1, 1986.
    The Secretary's authority to include capital in PPS was 
postponed twice. The Supplemental Appropriations Act of 1986 
(Public Law 99-349) delayed prospective capital payment until 
October 1, 1987. The Omnibus Budget Reconciliation Act of 1987 
(Public Law 100-203) delayed prospective payment until October 
1, 1991. However, the Secretary was required, not merely 
authorized, to implement a prospective system by that date. The 
system was required to provide that capital payments be made on 
a per-discharge basis, with adjustments based on each 
discharge's classification under the DRGs or some similar 
system. At the Secretary's discretion, the system could include 
adjustments to reflect variations in costs of construction or 
borrowing, exceptions (including exceptions for hospitals with 
existing obligations), and adjustments to reflect hospital 
occupancy rates.
    While prospective payment for capital has been delayed (see 
below), Congress has included in budget reconciliation 
legislation fixed percentage reductions in amounts otherwise 
payable by Medicare for capital costs. These cuts began in 
fiscal year 1987, with a 3.5-percent reduction. Medicare would 
compute its share of total costs for each hospital and then 
reduce that computed share by 3.5 percent. The percentage 
reduction increased to 7 percent for the first quarter of 
fiscal year 1988, 12 percent for the rest of that fiscal year, 
and 15 percent for fiscal year 1989 through fiscal year 1991. 
Delays in completing budget legislation have meant that there 
were brief intervals in 1987 and 1989 when no reduction was 
taken. The reductions originally applied only to capital costs 
related to inpatient care. Beginning in fiscal year 1990, 
capital payments for outpatient hospital services were also 
reduced. The reductions did not apply to certain types of rural 
hospitals defined in Medicare law, including sole community 
hospitals, essential access community hospitals, and rural 
primary care hospitals.
    The Omnibus Budget Reconciliation Act of 1990 (Public Law 
101-508) continued capital payment reductions through fiscal 
year 1995, with the reduction percentage lowered to 10 percent 
for fiscal years 1992 through 1995. Because prospective payment 
began in fiscal year 1992, the reductions are not applied 
directly to each hospital's computed capital costs. Instead, 
the Secretary is required to set payments under the new system 
(or under the new system and PPS combined) in such a way as to 
achieve an aggregate inpatient hospital capital spending 
reduction of 10 percent, as compared to what would have been 
spent under the reasonable cost system. The Omnibus Budget 
Reconciliation Act of 1993 (Public Law 103-66) extended the 10-
percent reduction in outpatient capital payment through fiscal 
year 1998.
    The administration's proposed rules for prospective payment 
for capital costs were published in the Federal Register on 
February 28, 1991. After a period for public comment, final 
rules were published on August 30, 1991. The final rule 
provides for a 10-year transition to fully prospective payment 
beginning October 1, 1991.
    Under the rule, the Secretary establishes a standard per 
case capital payment rate, based on average capital costs per 
case in fiscal year 1989 and updated for inflation and other 
factors. Through fiscal year 1995, the base rate was adjusted 
in order to meet the requirement that capital payment rates be 
set in such a way as to achieve an aggregate saving of 10 
percent relative to what would have been paid under a full cost 
system. Beginning with fiscal year 1996, that requirement 
expired. As a result, the standardized Federal and hospital-
specific payment rates increased by more than 20 percent. For 
fiscal year 1996 the standardized Federal payment rate for 
capital is $461.96 ($355.35 in Puerto Rico). Rates are adjusted 
using the DRG weights and a geographic factor based on area 
wage indices.
    Hospitals in large urban areas receive a 3-percent increase 
and hospitals in Alaska and Hawaii receive a cost of living 
adjustment. A disproportionate share adjustment is provided for 
urban hospitals with more than 100 beds. A hospital receives 
approximately a 2.1 percent point increase in capital payments 
for each 10 percent increment in its disproportionate share 
percentage.
    An adjustment is also made for the indirect costs of 
medical education. This adjustment is based on the ratio of 
residents to average daily inpatient census. Capital payments 
increase approximately 2.8 percentage points for each 10 
percent increment in the residents to average daily census 
ratio. Additional capital payments are issued for outlier 
cases.
    During a transition period that ends September 30, 2000, 
each individual hospital's capital payment rate is a blended 
rate based partly on its own historic capital costs and partly 
on the Federal rate. In fiscal year 1996, rates are 50 percent 
hospital-specific and 50 percent Federal. The hospital-specific 
portion will drop by 10 percent a year, until fully Federal 
rates take effect in fiscal year 2001.
    The Omnibus Budget Reconciliation Act of 1993 (Public Law 
103-66) reduced the Federal rate for inpatient capital expenses 
by 7.4 percent to correct for inflation forecast errors.
     The transition rules include two provisions to assist 
hospitals most disadvantaged by the shift to prospective 
payment: a ``hold harmless'' payment system and exception 
payments for certain facilities. Hospitals with base year 
capital costs above average continue to be paid on a cost basis 
for the portion of their costs related to ``old'' capital 
investments (generally assets put in use or obligated by the 
end of 1990). The rest of the hospital's capital payments are 
based on the prospective rates. For example, if 75 percent of a 
hospital's costs are for depreciation and interest on a pre-
1990 building, the hospital is paid Medicare's share of those 
costs (subject to the current 10-percent reduction). For 
``new'' capital, it receives a portion of the prospective rate 
based on the hospital's own ratio of new to total capital. In 
this case, because old capital accounts for 75 percent of 
costs, the hospital's new capital payment is 25 percent of the 
prospective rate for each case treated. This hold harmless 
payment system will continue until the end of the 10-year 
transition, or until a hospital's old capital costs drop to the 
point at which it is more advantageous for the hospital to 
shift to fully prospective payment.
    Exception payments are made to hospitals whose capital 
payments under the new system fall significantly short of their 
actual capital costs. Most hospitals are assured of receiving a 
minimum of 70 percent of costs. Specified urban hospitals with 
a disproportionate share of low-income patients receive at 
least 80 percent of costs, and rural sole community hospitals 
at least 90 percent. Computation of exception payments is 
cumulative. If a hospital received more than the minimum in 1 
year but a shortfall the next, the surplus from the first year 
would be applied before any additional payment would be made in 
the second year.
    Table D-6 shows the average capital payments per case 
received by PPS hospitals in each year since the implementation 
of PPS for inpatient operating costs in 1984. The decreases in 
average capital payments per case in 1987 and 1988 reflect the 
provision in the Omnibus Budget Reconciliation Acts of 1986 and 
1987 that reduced Medicare payments below costs. The decrease 
in 1994 reflects the provision in the Omnibus Budget 
Reconciliation Act of 1993 that corrected for previous errors 
in setting the base capital payment rates. Capital payments 
generally have stayed between 8 and 9 percent of total 
inpatient payments. The proportion of capital costs covered by 
those payments fell from 100 percent under cost-based 
reimbursement to a low of 87.4 percent in 1990. The 
implementation of capital PPS initially resulted in increased 
payment to cost ratios, but those fell as the payment rates 
were adjusted to reflect more accurate data. The elimination of 
the budget neutrality requirement in 1996, though, will likely 
push payments above costs for the first time.
 TABLE D-6.--PPS CAPITAL PAYMENTS PER CASE, SHARE OF TOTAL PPS INPATIENT
            PAYMENTS, AND RATIO OF PAYMENTS TO COSTS, 1984-94           
------------------------------------------------------------------------
                                                      In percent        
                                             ---------------------------
                                   Capital      Share of                
             Year               payments per    total PPS    Payment to 
                                    case        inpatient    cost ratio 
                                                payments                
------------------------------------------------------------------------
1984..........................          $346           8.1         100.0
1985..........................           392           8.7         100.0
1986..........................           443           9.1          99.4
1987..........................           435           9.0          97.5
1988..........................           431           8.5          90.2
1989..........................           471           8.6          88.0
1990..........................           484           8.3          87.4
1991..........................           534           8.4          87.6
1992..........................           595           9.2          96.7
1993..........................           606           9.0          91.3
1994..........................           601           8.6          91.7
------------------------------------------------------------------------
Note.--PPS = Prospective payment system. Data on PPS capital costs and  
  payments are for hospital accounting years beginning during each      
  Federal fiscal year. Hospitals in Massachusetts and New York excluded 
  from data in 1984 and 1985; hospitals in New Jersey excluded from data
  in 1984 through 1988; hospitals in Maryland excluded from data in all 
  years.                                                                
                                                                        
Source: Prospective Payment Assessment Commission analysis of Medicare  
  Cost Report data from the Health Care Financing Administration.       
    The per case capital payment amount varies widely by 
hospital group, as shown in table D-7. Urban hospitals had an 
average payment rate of $655 in 1994, for example, while rural 
hospitals received only $391 per case. Major teaching hospitals 
were paid $881 for each case, while nonteaching hospitals got 
$526. However, the share of total PPS inpatient payments, which 
include both operating and capital payments, was very similar 
for different types of hospitals. Moreover, the share of 
capital costs covered by these payments frequently was higher 
for groups with lower payment amounts. Despite urban hospitals' 
much higher average payment, that amount equalled 91.4 percent 
of their capital costs, while rural hospitals were paid 93.8 
percent of their capital costs.
 TABLE D-7.--PROSPECTIVE PAYMENT SYSTEM CAPITAL PAYMENTS PER CASE, SHARE
   OF TOTAL PPS INPATIENT PAYMENTS, AND RATIO OF PAYMENTS TO COSTS BY   
                          HOSPITAL GROUP, 1994                          
------------------------------------------------------------------------
                                                      In percent        
                                             ---------------------------
                                   Capital      Share of                
        Hospital group          payments per    total PPS    Payment to 
                                    case        inpatient    cost ratio 
                                                payments                
------------------------------------------------------------------------
All hospitals.................          $601           8.6          91.7
                                                                        
Urban.........................           655           8.6          91.4
Rural.........................           391           8.6          93.8
                                                                        
Large urban...................           697           8.5          92.4
Other urban...................           600           8.7          89.7
Rural referral................           492           8.8          91.2
Sole community................           379           8.3          99.1
Other rural...................           359           8.6          93.2
                                                                        
Major teaching................           881           7.6          94.9
Other teaching................           633           8.4          91.3
Nonteaching...................           526           9.1          90.9
                                                                        
Disproportionate share large                                            
 urban........................           750           8.2          94.1
Disproportionate share other                                            
 urban........................           610           8.5          89.5
Disproportionate share rural..           406           8.7          92.6
Nondisproportionate share.....           548           8.9          91.2
                                                                        
Teaching and disproportionate                                           
 share........................           729           8.0          92.9
Teaching only.................           641           8.4          91.4
Disproportionate share only...           557           9.0          90.8
Nonteaching                                                             
 nondisproportionate share....           504           9.3          91.0
                                                                        
Voluntary.....................           609           8.6          91.5
Proprietary...................           711           9.7          92.5
Urban government..............           607           7.7          91.5
Rural government..............           336           8.4          94.4
------------------------------------------------------------------------
Note.--PPS = Prospective payment system.                                
                                                                        
Source: Prospective Payment Assessment Commission analysis of Medicare  
  Cost Report data from the Health Care Financing Administration.       
                  PAYMENTS ON A REASONABLE COST BASIS
    Costs for certain items are excluded from the prospective 
payment system and thus are not included in the prospective 
payment rates. As explained in the sections below, Medicare 
pays for its share of several costs according to the former 
reasonable cost-based system.
                    Physicians in Teaching Hospitals
    Physician services in hospitals are paid under the 
physician fee schedule. If a teaching hospital so elects, the 
direct medical and surgical services of physicians in such 
hospitals would be paid for on the basis of reasonable costs.
                        Organ Acquisition Costs
    The estimated net expenses associated with Medicare organ 
acquisition in certified transplantation centers are excluded 
from the prospective payment system and paid on a reasonable 
cost basis.
             Passthrough Payments for Hemophilia Inpatients
    OBRA 1989 excluded the cost of administering blood clotting 
factors for hemophilia inpatients from PPS, for items furnished 
from June 19, 1990, through December 19, 1991. OBRA 1993 
further extended this provision through fiscal year 1994. The 
price per unit for the blood clotting factors was set at a 
predetermined rate, in consultation with ProPAC, and the cost 
of administering the blood clotting factors was determined by 
multiplying a predetermined price per unit of blood clotting 
factor by the number of units provided to the individual.
                  Bad Debts of Medicare Beneficiaries
    An additional payment is made to hospitals for bad debts 
attributable to unpaid deductible and copayment amounts related 
to covered services received by Medicare beneficiaries.
    The Secretary is prohibited from making any change in the 
policy in effect on August 1, 1987, including changes in 
hospital documentation requirements. OBRA 1989 prohibited the 
Secretary from requiring hospitals to change their bad debt 
collection policy if a fiscal intermediary accepted the policy 
in accordance with the rules in effect as of August 1, 1987, 
for indigency determination procedures, for recordkeeping, and 
for determining whether to refer a claim to an external 
collection agency. For such facilities, the Secretary also may 
not collect from the hospital on the basis of an expectation of 
a change in the hospital's collection policy.
           SPECIAL TREATMENT OF CERTAIN FACILITIES UNDER PPS
                        Sole Community Hospitals
    Sole community hospitals (SCHs) are hospitals that, because 
of factors such as isolated location, weather conditions, 
travel conditions, or absence of other hospitals, are the sole 
source of inpatient services reasonably available in a 
geographic area, or are located more than 35 road miles from 
another hospital. In addition, the Secretary is authorized to 
designate a hospital as an SCH if, by reason of factors such as 
travel time to the nearest alternative source of appropriate 
inpatient care, location, weather conditions, travel 
conditions, or absence of other like hospitals, the Secretary 
determines that it is the sole source of inpatient hospital 
services reasonably available to individuals in a geographic 
area.
    OBRA 1989 established new payment provisions that apply to 
all SCHs for cost reporting periods beginning after April 1, 
1990. An SCH may receive the higher of the following rates as 
the basis of reimbursement: a target amount based on 100 
percent hospital-specific prospective rates based on fiscal 
year 1982 costs updated to the present; a target amount based 
on hospital-specific prospective rates based on fiscal year 
1987 costs updated to the present; or the Federal PPS rate. 
Current SCHs not meeting the criteria are allowed to continue 
to qualify for payments as an SCH.
    OBRA 1989 made permanent the provision by which an SCH may 
request additional payments if the hospital experiences a 
decrease of more than 5 percent in its total inpatient cases 
due to circumstances beyond its control. An SCH may receive 
such payments if it meets sole community hospital criteria but 
is not being paid as a sole community hospital. As of September 
1994, 647 hospitals were classified as sole community 
providers.
                      Medicare Dependent Hospitals
    OBRA 1989 created a new classification of hospitals termed 
Medicare dependent hospitals. Medicare dependent hospitals are 
hospitals that are located in a rural area, have 100 beds or 
less, are not classified as a sole community provider, and for 
which not less than 60 percent of inpatient days or discharges 
in the hospital cost reporting period that began during fiscal 
year 1987 were attributable to Medicare. These hospitals are 
reimbursed in the same fashion as sole community providers 
during cost reporting periods beginning on or after April 1, 
1990, and ending on or before March 31, 1993. As of September 
1994, there were 393 Medicare dependent hospitals. OBRA 1993 
(Public Law 103-66) extended additional payments to Medicare 
dependent hospitals through September 30, 1994, on a phase-down 
basis.
                            Referral Centers
    The Secretary is authorized to provide exceptions and 
adjustments as appropriate for regional and national referral 
centers. These centers are defined as:
 1. Rural hospitals having 275 or more beds;
 2. Hospitals having at least 50 percent of their Medicare 
        patients referred from other hospitals or from 
        physicians not on the hospital's staff, at least 60 
        percent of their Medicare patients residing more than 
        25 miles from the hospital, and at least 60 percent of 
        the services furnished to Medicare beneficiaries are 
        furnished to those who live 25 miles or more from the 
        hospital; or
 3. Rural hospitals meeting the following criteria for hospital 
        cost reporting periods beginning on or after October 1, 
        1985:
    --A case mix index equal to or greater than the median case 
            mix for all urban hospitals (the national 
            standard), or the median case mix for urban 
            hospitals located in the same census region, 
            excluding hospitals with approved teaching 
            programs. The case mix index is a measure of the 
            relative costliness of the hospital's mixture of 
            cases among the DRGs compared to the national 
            average mixture of Medicare cases;
    --A minimum of 5,000 discharges, the national discharge 
            criterion (3,000 in the case of osteopathic 
            hospitals), or the median number of discharges in 
            urban hospitals for the region in which the 
            hospital is located; and
    --At least one of the following three criteria: more than 
            50 percent of the hospital's medical staff are 
            specialists, at least 60 percent of discharges are 
            for inpatients who reside more than 25 miles from 
            the hospital, or at least 40 percent of inpatients 
            treated at the hospital have been referred either 
            from physicians not on the hospital's staff or from 
            other hospitals.
    Referral centers are paid prospective payments based on the 
applicable urban payment amount rather than the rural payment 
amount, as adjusted by the hospital's area wage index. The 
applicable amount is the ``other urban'' rate (i.e., the rate 
for urban areas with 1 million or fewer people) for all 
referral centers except those (if any) located in MSAs greater 
than 1 million.
    OBRA 1993 extended the classification through fiscal year 
1994 for those referral centers classified as of September 30, 
1992. As of September 1994, 193 hospitals were qualified as 
referral centers.
    Although referral centers loose some of the benefit of 
their classification status because of the equalization of the 
other urban and rural payment rates in fiscal year 1995, 
referral centers continue to be entitled to preferential 
consideration before the Medicare Geographic Classification 
Review Board (see below).
         Hospitals in Rural Counties Treated as Urban Counties
    Public Law 100-203 provided for the reclassification of 
rural hospitals as urban if the county in which the hospital 
was located was adjacent to two or more MSAs and met criteria 
regarding commuting patterns of its residents to the central 
counties of the adjacent MSAs.
    OBRA 1989 (Public Law 101-239) established the Medicare 
Geographic Classification Review Board to consider appeals by 
hospitals for a change in classification from rural to urban, 
or from one urban area to another urban area. The Board was 
created to determine whether a hospital should be redesignated 
to an area with which it has close proximity for purposes of 
using the other area's standardized amount, wage index, or 
both. For geographic reclassifications effective for discharges 
in fiscal year 1994, a hospital may seek reclassification to 
only one area. Urban hospitals must be no more than 15 miles 
from the area to which they seek reassignment, and rural 
hospitals must be no more than 35 miles from such an area.
    A hospital may qualify for the payment rate of another area 
if it proves that its incurred costs are comparable to those of 
hospitals in that area. To use an area's wage index, a hospital 
must demonstrate that: (1) its average hourly wage is equal to 
at least 84 percent of the average hourly wage of hospitals in 
the area to which it seeks redesignation; and (2) its average 
hourly wage weighted for occupational categories is at least 90 
percent of the average hourly wage of hospitals in the area to 
which its seeks redesignation. For geographic reclassifications 
effective for discharges in fiscal year 1994, the wage index 
guidelines were revised to specify, in addition, that a 
hospital cannot be reclassified unless its average hourly wage 
is at least 108 percent of the average hourly wage of the area 
in which it is located.
    Effective for fiscal year 1996, a hospital may not be 
reclassified for purposes of using another area's standardized 
amount if the area to which the hospital seeks reclassification 
does not have a higher standardized amount than that currently 
received by the hospital. In addition, a hospital that seeks 
reclassification for the purpose of using another area's wage 
index may apply for reclassification only to an area that has a 
higher pre-reclassified average hourly wage than that of the 
hospital's original geographic area.
    For fiscal year 1996, 407 rural hospitals (22 percent) and 
195 (7 percent) urban hospitals have been reclassified by the 
Board.
         HOSPITALS EXCLUDED FROM THE PROSPECTIVE PAYMENT SYSTEM
    The following hospitals are by law excluded from the 
prospective payment system and are paid on the basis of 
reasonable costs, subject to the Tax Equity and Fiscal 
Responsibility Act of 1982 (TEFRA) rate of increase limits: 
psychiatric hospitals, rehabilitation hospitals, psychiatric or 
rehabilitation units which are distinct parts of a hospital, 
alcohol and drug abuse hospitals and such distinct units of 
hospitals (for cost reporting periods beginning before October 
1, 1987), children's hospitals (with patients averaging under 
18 years of age), long-term hospitals (with an average 
inpatient length of stay greater than 25 days), and cancer 
hospitals (hospitals extensively involved in treatment for and 
research on cancer) classified as such before December 31, 
1990. In addition, the act provides an exemption for any 
hospital classified as a cancer hospital before December 31, 
1991, that is located in a State that has a PPS waiver under 
section 1814(b). In addition, there are special cases in which 
the prospective payment system is not applied, such as 
emergency services provided to Medicare beneficiaries in 
hospitals not participating in Medicare and Veterans' 
Administration hospital services provided to Medicare 
beneficiaries.
    OBRA 1990 increased the cost limits imposed on hospitals 
exempt from PPS. Under prior law, hospitals with costs in 
excess of the cost limits imposed by the Tax Equity and Fiscal 
Responsibility Act (TEFRA) would be reimbursed for their cost 
up to the TEFRA limit. Under OBRA 1990, hospitals with costs in 
excess of the cost limits imposed by TEFRA receive 50 percent 
of the costs that are in excess of the limit, up to a maximum 
of 110 percent of the limit. In addition, the Secretary is 
directed to develop a new prospective payment methodology for 
exempt hospitals, or to substantially modify the current 
target-rate system.
    OBRA 1993 provided for an update factor to the cost limits 
of market basket minus 1.0 percentage point for fiscal years 
1994 through 1997. Hospitals with operating costs in fiscal 
year 1990 that exceeded the target amount by more than 10 
percent are exempt from the update reduction, with partial 
reductions applied to hospitals near the threshold. Hospitals 
reimbursed under approved State cost control systems are also 
excluded from the prospective rates.
    Section 1886(c) of the Social Security Act (as added by 
TEFRA) gave the HHS Secretary discretion to reimburse hospitals 
in a State according to the State's hospital reimbursement 
control system rather than according to Medicare's 
reimbursement methods if the State requests this change and if 
HHS determines that the State system meets certain 
requirements. Currently, only Maryland has a waiver to operate 
its own system. New York has a waiver covering four counties 
participating in the Finger Lakes Area Hospital Corporation 
rural hospital payment demonstration.
    Public Laws 98-21 and 98-369 added several more 
requirements for State systems. According to final regulations 
published by HHS on April 24, 1986 (51 F.R. 15481) implementing 
these legislative changes, HHS has the discretion to allow 
Medicare hospital reimbursement to be made in accordance with a 
State reimbursement control system if the chief executive 
officer of the State requests approval of the State system, and 
provided that the State system:
 1. Applies to substantially all non-Federal acute care 
        hospitals in the State;
 2. Applies to at least 75 percent of all inpatient revenues or 
        expenses for the State;
 3. Provides assurances that payers, hospital employees and 
        patients in the State will be treated equitably under 
        its system;
 4. Provides assurances that its system will not result in 
        greater Medicare expenditures over 36-month periods;
 5. Does not preclude health maintenance organizations (HMOs) 
        or competitive medical plans (CMPs) from negotiating 
        directly with hospitals concerning payment for 
        inpatient services;
 6. Limits hospital charges to Medicare beneficiaries to 
        deductibles, coinsurance, and services for which the 
        beneficiary would not be entitled to have payment made 
        under Medicare part A; and prohibits payment under part 
        B of Medicare for nonphysician services provided to 
        hospital inpatients unless this prohibition is waived.
    Public Law 101-239 (OBRA 1989) required the Secretary's 
test of effectiveness of a State cost containment system to be 
based on the aggregate rate of increase from October 1, 1984, 
to the most recent date for which annual data are available. 
This provision also extends the waiver for the New York rural 
hospital payment demonstration.
    Special provisions apply to States that have existing 
demonstration projects approved by HCFA under section 402 of 
the Social Security amendments of 1967 or section 222(a) of the 
Social Security amendment of 1972 for the operation of State 
reimbursement control systems. HHS approval of a State's 
application to continue the operation of a system upon 
expiration of the demonstration project is mandatory if, and 
for so long as, the system meets the minimum requirements 
described in the six items listed above.
    Public Law 101-508 revised the Secretary's test of 
effectiveness of a State cost containment system to be based on 
the rate of increase in costs per hospital inpatient admission 
as compared to the rate of increase in such costs with respect 
to all hospitals between January 1, 1981, and the present. In 
addition, OBRA 1990 provided that a State no longer qualifying 
for a PPS waiver be provided with a reasonable period, not to 
exceed 2 years, for transition from the State system to the 
national payment system, and required restoration of the waiver 
if the State returned to compliance during the transition 
period.
                             ADMINISTRATION
               Prospective Payment Assessment Commission
    The Prospective Payment Assessment Commission (ProPAC) is a 
commission composed of 17 independent experts charged with 
advising the Congress on PPS and Medicare payment policies. The 
Commission must report to Congress by March 1 of each year its 
recommendation of an update factor for PPS payment rates and 
for other changes in reimbursement policy (see Prospective 
Payment Assessment Commission, 1996a).
    The Secretary is required to submit to Congress 
recommendations that take into account ProPAC's 
recommendations, and include a written explanation of those 
recommendations that differ from those of the Commission.
    By June 1 of each year, ProPAC also submits a report to 
Congress which provides background information on trends in 
health care delivery and financing, including the impact of the 
prospective payment system on providers and beneficiaries (see 
Prospective Payment Assessment Commission, 1996b).
                   Administrative and Judicial Review
    Administrative and judicial appeals are allowed under 
procedures and authorities already established under the 
Medicare Program. However, the law precludes administrative and 
judicial review of: (1) the ``budget neutrality'' adjustment 
(see above), and (2) the DRG payment amounts, including the 
establishment of DRGs, the methodology for classifying 
discharges within DRGs, and the DRG weighting factors.
                           Review Activities
    Public Law 97-248, the Tax Equity and Fiscal Responsibility 
Act of 1982 (known as TEFRA), replaced the existing 
Professional Standards Review Organization (PSRO) Program with 
the Utilization and Quality Control Peer Review Program. The 
Secretary of the Department of Health and Human Services was 
required to enter into performance-based contracts with 
physician-sponsored or physician-access organizations known as 
Peer Review Organizations (PROs). As a condition of receiving 
payments under the prospective payment system, hospitals are 
required to enter into an agreement with a PRO under which the 
PRO reviews the validity of diagnostic and procedural 
information provided by the hospitals; the completeness, 
adequacy and quality of care provided; and the appropriateness 
of admissions patterns, discharges, lengths of stay, transfers, 
and services furnished in outlier cases.
    Since 1982, the statute governing the PRO Program has been 
amended numerous times, and as of October 1996 the PROs will be 
operating under the fifth ``scope of work.'' For a more 
detailed discussion of PROs, see section 5.
         HISTORICAL TRENDS IN PPS PAYMENTS, COSTS, AND MARGINS
                     Medicare Payments to Hospitals
    In fiscal year 1996, hospitals will be paid an estimated 
$115.9 billion for Medicare-covered services, as shown in table 
D-8. The largest share of this amount, $69.1 billion, will be 
for PPS inpatient operating costs. The Medicare Program will 
provide about 90 percent of these payments and the other 10 
percent will come from beneficiaries for deductibles and 
coinsurance. PPS hospitals will also receive some $8.8 billion 
in capital payments. Another $12.5 billion will be paid for 
operating and capital costs related to services provided in 
PPS-excluded facilities, which include psychiatric and 
rehabilitation hospitals and distinct-part units as well as 
long-term and children's hospitals. Payments for Medicare-
covered hospital outpatient services will be $23.2 billion, 
with almost 40 percent coming from beneficiaries. Hospitals 
will also receive $2.3 billion for the direct costs of training 
programs, including those for interns and residents and for 
nursing and allied health personnel.
TABLE D-8.--TOTAL MEDICARE PAYMENTS TO HOSPITALS BY PAYMENT TYPE, FISCAL
                                YEAR 1996                               
------------------------------------------------------------------------
                                                                 Amount 
                       Payment category                           (in   
                                                               billions)
------------------------------------------------------------------------
PPS operating................................................      $69.1
    Medicare Program.........................................       62.4
    Beneficiary deductibles and copayments...................        6.7
                                                                        
PPS capital..................................................        8.8
                                                                        
Non-PPS operating............................................       11.5
    Medicare Program.........................................       10.4
    Beneficiary deductibles and copayments...................        1.1
                                                                        
Non-PPS capital..............................................        1.0
                                                                        
Outpatient...................................................       23.2
    Medicare Program.........................................       14.0
    Beneficiary deductibles and copayments \1\...............        9.2
                                                                        
Direct medical education.....................................        2.3
    Interns and residents....................................        2.0
    Nursing and allied health................................        0.3
                                                              ----------
        Total................................................      115.9
------------------------------------------------------------------------
\1\ Estimate based on Prospective Payment Assessment Commission analysis
  of data from the Health Care Financing Administration.                
                                                                        
Source: Prospetive Payment Assessment Commission analysis of            
  Congressional Budget Office March 1996 estimates.                     
               Policy Changes and PPS Operating Payments
    Since the implementation of PPS, the distribution of 
Medicare payments to hospitals has changed. Some redistribution 
has resulted from changes in hospital behavior, but much of it 
is attributable to policy decisions. These include the 
transition to national average payment rates, reductions in 
teaching hospital payments, the addition of a disproportionate 
share adjustment and increases in the size of that adjustment 
for many hospitals, and larger update factors for rural 
hospitals in recent years.
    The PPS update factor and other policy decisions 
implemented between fiscal years 1984 and 1995 increased per-
case PPS operating payment rates by 34.3 percent, as shown in 
table D-9. These policy decisions have redistributed PPS 
payments to rural hospitals, particularly to sole community 
hospitals. Small rural hospitals have been helped much more 
than large hospitals in any location, while urban hospitals 
with fewer than 100 beds have received relatively little 
benefit from payment policy changes. On a regional basis, the 
hospitals in New England have been helped most by policy 
changes while those in the Middle Atlantic region gained the 
least.
 TABLE D-9.--CUMULATIVE EFFECTS OF PPS UPDATE FACTORS AND OTHER PAYMENT 
   POLICY CHANGES ON PER-CASE PPS PAYMENTS BY HOSPITAL GROUP, 1984-95   
                              [In percent]                              
------------------------------------------------------------------------
                                               Cumulative    Total case-
                                 Cumulative     case-mix       mix and  
        Hospital group           PPS policy       index        policy   
                                   effect     increase \1\     effect   
------------------------------------------------------------------------
All hospitals.................          34.3          29.0          73.3
Urban.........................          29.2          30.9          69.1
Rural.........................          54.6          18.7          83.4
Large urban...................          29.6          30.0          68.5
Other urban...................          29.0          32.0          70.2
Rural referral................          38.4          24.7          72.5
Sole community................          69.8          14.5          94.4
Other rural...................          56.5          15.5          80.8
Major teaching................          22.5          36.5          67.2
Other teaching................          27.5          32.6          69.0
Nonteaching...................          38.9          24.9          73.4
Disproportionate share large                                            
 urban........................          33.9          31.6          76.2
Disproportionate share other                                            
 urban........................          32.7          32.1          75.3
Disproportionate share rural..          56.8          19.9          88.0
Nondisproportionate share.....          32.7          27.4          69.1
Teaching and disproportionate                                           
 share........................          29.4          34.3          73.8
Teaching only.................          23.3          32.6          63.5
Disproportionate share only...          42.1          25.9          78.9
Nonteaching                                                             
 nondisproportionate share....          36.4          24.1          69.3
Urban &lt;100 beds...............          27.3          18.3          50.6
Urban 100-199 beds............          33.4          24.3          65.9
Urban 200-299 beds............          28.0          29.3          65.4
Urban 300-399 beds............          29.5          32.5          71.5
Urban 400-499 beds............          26.0          34.4          69.2
Urban 500+ beds...............          24.2          36.1          69.1
Rural &lt;50 beds................          61.6           9.0          76.1
Rural 50-99 beds..............          58.7          15.7          83.6
Rural 100-149 beds............          54.5          19.6          84.8
Rural 150-199 beds............          45.0          20.6          74.9
Rural 200+ beds...............          38.6          26.6          75.5
New England...................          40.7          22.3          72.1
Middle Atlantic...............          24.4          27.5          58.6
South Atlantic................          37.5          31.2          80.4
East North Central............          27.4          28.4          63.6
East South Central............          37.0          30.1          78.2
West North Central............          37.7          28.9          77.5
West South Central............          36.5          32.6          81.0
Mountain......................          31.7          29.3          70.3
Pacific.......................          38.8          27.4          76.9
Voluntary.....................          32.4          28.7          70.4
Proprietary...................          34.2          34.7          80.7
Urban government..............          34.0          29.4          73.5
Rural government..............          57.8          14.7          81.0
------------------------------------------------------------------------
\1\ Case-mix index changes by hospital group for fiscal years 1994 and  
  1995 estimated based on historical trends.                            
                                                                        
Note.--PPS = Prospective payment system. Hospitals in Massachusetts and 
  New York excluded from data in 1984 and 1985; hospitals in New Jersey 
  excluded from data in 1984 through 1988; hospitals in Maryland        
  excluded from data in all years.                                      
                                                                        
Source: Estimates based on Prospective Payment Assessment Commission    
  analysis of data from the Health Care Financing Administration.       
    The Medicare case-mix index (CMI) reflects the mix of each 
hospital's cases across DRGs. Because hospitals are paid on 
this basis, an increase in the CMI results in a proportional 
increase in PPS payments. CMI changes have, in some instances, 
partially offset the intended effects of policy decisions. For 
example, case mix change has shifted payments toward urban 
hospitals and large hospitals.
    Over the last 10 years, the combined effects of update 
factors, policy decisions, and CMI growth increased per case 
PPS operating payments by 73.3 percent across all hospitals. 
Overall, rural hospitals, especially sole community hospitals, 
reaped the greatest gains from these changes, while small urban 
hospitals and those in the Middle Atlantic region received the 
smallest cumulative increases in their payments.
      Distribution of PPS Hospitals, Cases, and Operating Payments
    Table D-10 shows PPS operating payment estimates for fiscal 
year 1996. The distribution of payments varies widely across 
hospital groups. For example, although 56 percent of all PPS 
hospitals are located in urban areas, these hospitals account 
for 80 percent of all PPS discharges and receive 87 percent of 
all PPS operating payments. By contrast, rural hospitals 
account for 44 percent of PPS hospitals, but only 20 percent of 
PPS discharges and 13 percent of PPS operating payments.
    The indirect medical education (IME) adjustment is intended 
to recognize hospitals' indirect costs of operating approved 
graduate medical education programs. The disproportionate share 
(DSH) adjustment is intended to compensate hospitals that treat 
large proportions of low-income patients. Almost all IME and 
DSH payments go to hospitals located in urban areas. In fiscal 
year 1996, urban hospitals will receive 99 percent of IME 
payments and 95 percent of DSH payments.
    Outlier payments are intended to protect hospitals from the 
risk of financial losses due to cases with exceptionally long 
stays or high costs. Large urban hospitals and teaching 
hospitals and those located in the Middle Atlantic region 
receive the highest proportion of outlier payments. Small urban 
hospitals and all rural hospitals receive the lowest percentage 
of outlier payments.
    For all PPS hospitals, the basic DRG payment is estimated 
to account for 83 percent of fiscal year 1996 PPS operating 
payments. IME, DSH, and outlier payments are expected to 
account for 17 percent of the total, or about $11.7 billion. 
Rural hospitals receive only 6 percent of their total PPS 
operating payments through these provisions, while urban 
hospitals count on these mechanisms for 18 percent of their PPS 
operating payments. This is because teaching and 
disproportionate share hospitals are much more likely to be 
located in cities and urban hospitals are much more likely to 
treat more complex cases that become outliers.
               Trends in PPS Operating Payments and Costs
    The increase in PPS operating payments per case has 
differed from the update factor in every year, as shown in 
table D-11. In the first 2 years of prospective payment, 
payments per discharge rose sharply, by 18.5 percent and 10.5 
percent, respectively. This is attributable to two factors: 
overestimation of the base year hospital costs upon which the 
initial PPS rates were set due to the use of unaudited Medicare 
Cost Reports, and a large increase in the aggregate CMI in the 
early years because of more emphasis on accurate DRG coding and 
complete documentation of the medical record.
    From 1986 through 1994, payments per case grew at an annual 
rate of 5.0 percent. After an increase of 3.4 percent in the 
third year of PPS, per case operating payments rose by at least 
5 percent in each of the following 6 years, as a result of 
large increases in both the PPS market basket index and the 
aggregate Medicare case-mix index. In 1993 and 1994, the CMI 
grew more slowly and the PPS update was lower, resulting in the 
smallest 2-year increase in payments per case since the 
beginning of PPS. Despite this better control over payment 
rates in recent years, chart D-1 indicates that the increase in 
operating payments per case during the first 13 years of PPS is 
almost three times as great as the cumulative value of the 
annual update factor.
            TABLE D-10.--DISTRIBUTION OF PPS HOSPITALS AND DISCHARGES AND ESTIMATED FISCAL YEAR 1996 PPS OPERATING PAYMENTS BY HOSPITAL GROUP           
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           PPS operating payments (in billions)         
                                                           Number of    Percent of   Percent of --------------------------------------------------------
                     Hospital group                           PPS          PPS          PPS                                  Indirect                   
                                                           hospitals    discharges   operating      Total       Outlier      medical    Disproportionate
                                                                                      payments                              education    share hospitals
--------------------------------------------------------------------------------------------------------------------------------------------------------
All hospitals...........................................        5,153          100          100        $69.1         $3.1         $4.3              $4.3
Urban...................................................        2,893           80           87         60.2          2.9          4.2               4.0
Rural...................................................        2,260           20           13          8.9          0.2          0.1               0.2
Large urban.............................................        1,618           46           54         37.3          1.8          3.2               2.6
Other urban.............................................        1,275           34           33         22.9          1.1          1.0               1.4
Rural referral..........................................          139            4            3          2.2          0.1          0.1               0.1
Sole community..........................................          636            4            3          1.7        (\1\)        (\1\)             (\1\)
Other rural.............................................        1,485           12            7          4.9          0.1        (\1\)               0.1
Major teaching..........................................          246           11           19         13.0          0.6          2.8               1.4
Other teaching..........................................          815           32           34         23.7          1.1          1.4               1.4
Nonteaching.............................................        4,092           57           47         32.4          1.3          0.0               1.5
Disproportionate share large urban......................          796           24           32         21.8          1.0          2.4               2.6
Disproportionate share other urban......................          674           21           22         15.3          0.7          0.8               1.4
Disproportionate share rural............................          487            6            4          2.9          0.1        (\1\)               0.2
Nondisproportionate share...............................        3,196           48           42         29.1          1.3          1.0               0.0
Teaching and disproportionate share.....................          674           27           36         25.0          1.2          3.2               2.8
Teaching only...........................................          387           16           17         11.7          0.6          1.0               0.0
Disproportionate share only.............................        1,283           24           22         15.0          0.6          0.0               1.5
Nonteaching nondisproportionate share...................        2,809           33           25         17.3          0.7          0.0               0.0
Urban &lt;100 beds.........................................          738            5            3          2.3          0.1        (\1\)             (\1\)
Urban 100-199 beds......................................          907           17           16         10.9          0.4          0.2               0.8
Urban 200-299 beds......................................          586           20           20         14.1          0.6          0.5               0.8
Urban 300-399 beds......................................          323           15           17         11.7          0.6          0.7               0.8
Urban 400-499 beds......................................          161            9           11          7.6          0.4          0.8               0.6
Urban 500+ beds.........................................          178           14           20         13.5          0.7          1.9               1.1
Rural &lt;50 beds..........................................        1,177            4            2          1.4        (\1\)        (\1\)             (\1\)
Rural 50-99 beds........................................          664            6            4          2.5          0.1        (\1\)             (\1\)
Rural 100-149 beds......................................          226            4            3          1.8        (\1\)        (\1\)               0.1
Rural 150-199 beds......................................          108            3            2          1.3        (\1\)        (\1\)             (\1\)
Rural 200+ beds.........................................           85            3            3          1.8          0.1          0.1               0.1
New England.............................................          217            6            6          4.3          0.1          0.5               0.1
Middle Atlantic.........................................          525           17           20         13.6          0.8          1.4               0.9
South Atlantic..........................................          735           18           17         11.6          0.5          0.5               0.8
East North Central......................................          795           18           17         11.9          0.5          0.9               0.5
East South Central......................................          442            8            7          4.7          0.2          0.1               0.3
West North Central......................................          725            8            7          4.8          0.2          0.3               0.1
West South Central......................................          741           10           10          6.6          0.3          0.2               0.5
Mountain................................................          346            4            4          2.7          0.1          0.1               0.1
Pacific.................................................          627           11           13          8.9          0.3          0.4               0.8
Voluntary...............................................        3,018           75           76         52.7          2.4          3.4               2.8
Proprietary.............................................          706           11           10          7.1          0.3          0.1               0.5
Urban government........................................          416            8           10          6.8          0.3          0.7               0.9
Rural government........................................          953            6            4          2.5          0.1        (\1\)               0.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $0.05 billion.                                                                                                                            
                                                                                                                                                        
Note.--PPS = Prospective payment system. PPS payments estimated using rules in effect on October 1, 1995. Excludes hospitals in Maryland.               
                                                                                                                                                        
Source: Estimates based on Prospective Payment Assessment Commission analysis of data from the Health Care Financing Administration and Congressional   
  Budget Office March 1996 Medicare baseline estimates.                                                                                                 
                     TABLE D-11.--ANNUAL CHANGE IN PPS OPERATING COSTS AND PAYMENTS, 1984-94                    
                                                  [In percent]                                                  
----------------------------------------------------------------------------------------------------------------
                                                           PPS costs and payments                               
                                     ------------------------------------------------------------------ Consumer
              Year \1\                                      Operating  Operating   Market                 price 
                                      Operating  Operating  costs per   payments   basket     Update      index 
                                        costs     payments     case     per case    index   factor \2\          
----------------------------------------------------------------------------------------------------------------
1984................................       -4.6       11.0        1.8       18.5       4.9        4.7        4.1
1985................................        4.7        4.2       11.0       10.5       3.9        4.5        3.7
1986................................        5.6       -0.5        9.7        3.4       3.9        0.5        2.5
1987................................        7.4        3.9        8.9        5.3       3.5        1.2        2.9
1988................................        9.8        6.7        9.0        6.0       4.7        1.5        4.1
1989................................       10.4        7.7        9.3        6.6       5.5        3.3        4.7
1990................................       10.5        8.2        8.6        6.3       4.6        4.7        5.0
1991................................        9.0        8.0        6.9        5.8       4.3        3.4        5.1
1992................................        7.0        7.3        4.9        5.2       3.1        3.0        3.0
1993................................        3.5        5.9        1.3        3.6       3.0        2.7        3.1
1994................................        0.3        5.2       -1.3        3.5       2.4        2.0        2.6
----------------------------------------------------------------------------------------------------------------
\1\ Data on PPS operating costs and payments are for hospital accounting years beginning during each Federal    
  fiscal year. Data on the market basket and update factor are for the corresponding Federal fiscal year.       
\2\ Update factor for 1990 adjusted for 1.22 percent across-the-board reduction in diagnosis-related group      
  weights.                                                                                                      
                                                                                                                
Note.--PPS = Prospective payment system. Changes based on cohorts of hospitals with Medicare Cost Reports in two
  consecutive years. Hospitals in Massachusetts and New York excluded from data in 1984 and 1985; hospitals in  
  New Jersey excluded from data in 1984 through 1988; hospitals in Maryland excluded from data in all years.    
                                                                                                                
Source: Prospective Payment Assessment Commission analysis of Medicare Cost Report data from the Health Care    
  Financing Administration.                                                                                     
 CHART D-1. CUMULATIVE INCREASES IN PPS MARKET BASKET, UPDATE FACTOR, 
  AND PAYMENTS AND COSTS PER CASE, FIRST 13 YEARS OF PPS (IN PERCENT)
&lt;GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT&gt;
    * Costs and payments are estimated for 1995 and 1996.
    Source: Prospective Payment Assessment Commission analysis 
of Medicare Cost Report data from the Health Care Financing 
Administration.
    Following an increase of only 1.8 percent in the first year 
of PPS, PPS operating costs per discharge rose by about 10 
percent per year during the second and third years, and about 9 
percent from 1987 through 1990. However, the 6.9-percent growth 
in operating costs per case in 1991 was the smallest since the 
first year of PPS, and the rise of 1.3 percent in 1993 was 
below general inflation. Costs actually decreased by 1.3 
percent in 1994.
    Cost growth experience has not been uniform across 
hospitals, as shown in table D-12. Through 1990, urban and 
rural hospitals had about the same rate of increase. In the 
first year, both groups reacted to prospective payment by 
holding their cost growth far below the rates prevailing before 
PPS, while annual cost increases in the following 6 years were 
much higher for both groups. From 1991 through 1994, however, 
urban hospitals held their cost growth to 2.7 percent annually, 
while rural hospital costs rose at a 3.9-percent rate.
    The recent low rate of cost growth among hospitals in large 
urban areas may reflect the fact that the most rapid changes in 
the health care system appear to be occurring in the largest 
cities. From 1991 through 1994, these hospitals' costs per 
discharge rose at a rate 1.0 percentage points below that for 
other urban hospitals and 1.5 percentage points below that for 
rural hospitals.
    The pattern of cost increases also varies substantially by 
ownership. In the first year of PPS, when hospitals perceived 
potential pressure to control costs, proprietary facilities had 
by far the smallest increase--only about one-fourth as great as 
any of the other groups. Once this pressure lessened, costs 
increased sharply through the seventh year for all groups, 
including the proprietaries. However, from the eighth year on, 
proprietary hospitals reined in their costs to a far greater 
extent than the other groups.
                         PPS Inpatient Margins
    The PPS inpatient margin compares combined Medicare 
operating and capital payments with the corresponding costs. In 
1994, the aggregate PPS margin rose for the third consecutive 
year to 4.7 percent, as shown in table D-13. This contrasts 
with a declining trend through the first 8 years of prospective 
payment, during which the margin fell to a low of -2.5 percent. 
The turnaround is attributable to the sharp slowdown in 
hospital cost growth. If current trends continue, the aggregate 
PPS inpatient margin for 1996 would rise to 8.8 percent. This 
would be the highest PPS inpatient margin since 1985.
    Table D-14 shows that, even in 1994, almost half of all PPS 
hospitals have negative PPS inpatient margins. The PPS margin, 
however, does not represent the bottom line for the hospital 
industry. The total margin, which includes expenses and 
revenues related to Medicare and other inpatient and outpatient 
care as well as other facility activities, increased steadily 
from the early 1970s to the early 1980s, peaking in 1984. In 
subsequent years--as Medicare tightened its control over 
inpatient payment rate increases--the total margin began to 
fall. In the late 1980s, however, this decline leveled off at 
3.3 percent, and by 1991 the total margin had risen to 4.3 
percent. It remained steady through 1993, and then increased to 
4.8 percent in 1994, the highest level since 1986 and above 
levels experienced before PPS began.
  TABLE D-12.--ANNUAL RATE OF CHANGE IN PPS OPERATING COSTS PER CASE BY 
                   HOSPITAL GROUP AND PERIOD, 1984-94                   
                              [In percent]                              
------------------------------------------------------------------------
                                                       Period           
                                           -----------------------------
              Hospital group                            1985      1991  
                                              1984     through   through
                                                        1990      1994  
------------------------------------------------------------------------
All hospitals.............................       1.8       9.4       2.9
Urban.....................................       1.7       9.3       2.7
Rural.....................................       1.6       9.1       3.9
Large urban...............................       0.6       9.1       2.3
Other urban...............................       3.2       9.7       3.4
Rural referral............................       1.7      10.0       3.9
Sole community............................       2.1       8.3       3.7
Other rural...............................       1.3       8.9       3.9
Major teaching............................       1.4       9.2       2.7
Other teaching............................       1.3       9.2       2.8
Nonteaching...............................       2.0       9.4       2.9
Disproportionate share large urban........      -0.3       9.0       2.2
Disproportionate share other urban........       3.3       9.8       3.7
Disproportionate share rural..............       1.2       9.6       4.2
Nondisproportionate share.................       2.4       9.5       2.8
Teaching and disproportionate share.......       0.6       9.1       2.8
Teaching only.............................       2.8       9.4       2.9
Disproportionate share only...............       1.8       9.5       3.0
Nonteaching nondisproportionate share.....       2.0       9.4       2.7
Voluntary.................................       1.8       9.2       3.0
Proprietary...............................       0.5      10.0       1.0
Urban government..........................       2.4       9.5       3.1
Rural government..........................       1.8       9.2       4.4
------------------------------------------------------------------------
Note.--PPS = Prospective payment system. Data on PPS operating costs and
  payments are for hospital accounting years beginning during each      
  Federal fiscal year. Changes based on cohorts of hospitals with       
  Medicare Cost Reports in two consecutive years. Hospitals in          
  Massachusetts and New York excluded from data in 1984 and 1985;       
  hospitals in New Jersey excluded from data in 1984 through 1988;      
  hospitals in Maryland excluded from data in all years.                
                                                                        
Source: Prospective Payment Assessment Commission analysis of Medicare  
  Cost Report data from the Health Care Financing Administration.       
                        Margins by Hospital Type
    PPS inpatient margins vary by hospital group. The margin 
for urban hospitals was 14.3 percent in the first year--
exceeding that for rural hospitals by 6.6 percentage points. 
Beginning in fiscal year 1986, the Congress enacted a series of 
policy changes designed to increase payment for rural 
hospitals. By 1988, although the difference between the two 
groups had decreased to 4.6 percentage points, rural hospitals 
had negative margins while urban ones were still receiving 
payments that exceeded their costs. The disparity narrowed to 
0.4 percentage points by 1992 year, but widened in the 
following 2 years, as urban hospitals constrained their costs 
more than rural hospitals.
    Major teaching hospitals still have the highest aggregate 
inpatient margin of any hospital group. Moreover, the 
difference in the margins for major teaching and nonteaching 
hospitals has expanded. For major teaching hospitals, the 
inpatient margin fell from 18.1 percent in the first year of 
PPS to a low of 7.1 percent in 1990, while the drop for other 
teaching and nonteaching hospitals was much sharper. By 1994, 
all three groups had higher margins, with the largest increase 
seen in the major teaching group. Their margin was 15.6 
percent--10.8 percentage points higher than for other teaching 
hospitals and 15.2 percentage points higher than for the 
nonteaching group. These differences had been 3.3 percentage 
points and 6.9 percentage points, respectively, in the first 
PPS year.
    The trend in inpatient margins by ownership category also 
reflects changes in payment policy and degree of success in 
controlling costs. In the first year, voluntary, proprietary, 
and urban government hospitals all had inpatient margins 
between 13 and 14 percent, while rural government hospitals 
lagged behind. In 1990, the inpatient margin for the 
proprietary group, which had fallen by more than 18 percentage 
points since the beginning of PPS to -5.4 percent, was the 
lowest of the four groups. However, as these hospitals held 
down their cost growth, their margin increased by 14 percentage 
points, to 8.7 percent in 1994.
                        Additional Hospital Data
    Table D-15 displays summary characteristics of hospitals 
participating in the Medicare prospective payment system. These 
data are derived from PPS payment simulations by CBO. Table D-
16 provides historical trends in factors affecting PPS rates 
and average payments per case, based on data and estimates 
provided by HCFA's Office of the Actuary.
                                 TABLE D-13.--PPS INPATIENT (OPERATING PLUS CAPITAL) MARGINS BY HOSPITAL GROUP, 1984-94                                 
                                                                      [In percent]                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Hospital group                            1984    1985    1986    1987    1988    1989    1990    1991    1992    1993    1994 
--------------------------------------------------------------------------------------------------------------------------------------------------------
All hospitals...................................................    13.3    12.7     8.6     5.7     2.7     0.1    -1.6    -2.5    -1.2     0.2     4.7
Urban...........................................................    14.3    13.6     9.6     6.6     3.3     0.6    -1.3    -2.3    -1.2     0.4     5.4
Rural...........................................................     7.7     7.3     2.2     0.2    -1.3    -2.9    -3.8    -3.8    -1.6    -1.0     0.6
Large urban.....................................................    15.0    13.5     9.8     6.6     3.0     0.4    -0.8    -1.5     0.1     1.9     7.3
Other urban.....................................................    13.4    13.7     9.3     6.6     3.6     0.9    -2.0    -3.5    -3.2    -1.9     2.3
Rural referral..................................................     9.5    12.4     7.9     5.5     3.3     0.5    -1.1    -1.5     1.4     0.6     3.1
Sole community..................................................     8.2     6.5     2.0     0.4    -1.3    -2.6    -1.0    -0.6     2.8     4.4     5.5
Other rural.....................................................     7.0     5.9     0.1    -2.0    -3.2    -4.4    -5.8    -5.9    -4.4    -3.8    -2.5
Major teaching..................................................    18.1    18.1    14.9    12.5    10.3     7.2     7.1     7.5     8.8    10.1    15.6
Other teaching..................................................    14.8    14.6    10.4     7.2     3.8     1.5    -0.9    -2.1    -1.3     0.3     4.8
Nonteaching.....................................................    11.2    10.0     5.2     2.5    -0.7    -3.3    -5.2    -6.4    -5.0    -3.7     0.4
Disproportionate share large urban..............................    15.4    13.7    10.3     8.1     5.7     3.4     3.1     2.9     4.8     7.1    12.8
Disproportionate share other urban..............................    13.4    14.3    10.1     7.9     5.2     2.5     0.1    -1.3    -1.1     0.3     4.4
Disproportionate share rural....................................     8.3     8.7     3.4     0.9    -0.2    -2.4    -3.3    -2.9    -1.2    -1.4     0.7
Nondisproportionate share.......................................    12.4    11.6     7.1     3.5    -0.5    -3.1    -5.6    -6.8    -5.6    -4.6    -0.6
Teaching and disproportionate share.............................    15.9    15.6    12.1    10.0     7.8     5.3     4.3     3.8     4.8     6.6    11.7
Teaching only...................................................    15.3    15.6    11.3     6.7     1.9    -0.7    -3.5    -4.2    -3.2    -2.3     2.0
Disproportionate share only.....................................    11.5    10.7     6.0     3.6     0.9    -1.6    -3.1    -4.0    -2.4    -0.8     3.5
Nonteaching nondisproportionate share...........................    10.9     9.4     4.5     1.5    -2.0    -4.6    -6.9    -8.5    -7.2    -6.2    -2.2
Voluntary.......................................................    13.8    13.4     9.4     6.4     3.1     0.7    -1.4    -2.5    -1.4    -0.1     4.1
Proprietary.....................................................    13.0    11.2     6.6     3.7     0.0    -3.7    -5.4    -4.3    -1.9     1.0     8.7
Urban government................................................    13.0    12.7     8.1     6.2     4.9     1.9     2.2     1.1     1.9     3.7     9.4
Rural government................................................     6.6     4.9    -0.8    -2.6    -2.7    -4.1    -4.5    -4.7    -2.9    -2.8    -2.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--PPS = Prospective payment system. Data on PPS operating and capital costs and payments are for hospital accounting years beginning during each   
  Federal fiscal year. Hospitals in Massachusetts and New York excluded from data in 1984 and 1985; hospitals in New Jersey excluded from data in 1984  
  through 1988; hospitals in Maryland excluded from data in all years.                                                                                  
                                                                                                                                                        
Source: Prospective Payment Assessment Commission analysis of Medicare Cost Report data from the Health Care Financing Administration.                  
           TABLE D-14.--DISTRIBUTION OF PPS INPATIENT (OPERATING PLUS CAPITAL) MARGINS AND PERCENT OF HOSPITALS WITH NEGATIVE MARGIN, 1984-94           
                                                                      [In Percent]                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Year                                                      
            Percentile \1\            ------------------------------------------------------------------------------------------------------------------
                                        1984    1985      1986       1987       1988       1989       1990       1991       1992       1993       1994  
--------------------------------------------------------------------------------------------------------------------------------------------------------
10th.................................    -6.1    -8.7      -16.0      -19.4      -23.5      -25.4      -26.5      -27.0      -27.2      -25.2      -23.1
25th.................................     3.0     1.2       -4.4       -7.1      -10.1      -12.3      -13.8      -15.5      -14.6      -13.0      -10.2
Median...............................    10.3     9.1        4.5        2.5        0.4       -1.8       -3.4       -4.6       -2.9       -1.3        1.2
75th.................................    16.2    15.9       11.7       10.3        9.2        7.7        6.5        5.7        7.5        9.0       12.0
90th.................................    21.4    22.1       18.0       17.3       17.4       16.1       15.5       14.9       16.6       19.0       22.5
Percent with negative PPS inpatient                                                                                                                     
 margin..............................    18.3    22.1       35.6       42.5       48.7       55.1       59.3       61.6       57.7       53.3       46.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Table entries are the margins of hospitals at the 10th percentile, 25th percentile, median, 75th percentile, and 90th percentile.                   
                                                                                                                                                        
Note.--PPS = Prospective payment system. Data on PPS operating and capital costs and payments are for hospital accounting years beginning during each   
  Federal fiscal year. Hospitals in Massachusetts and New York excluded from data in 1984 and 1985; hospitals in New Jersey excluded from data in 1984  
  through 1988; hospitals in Maryland excluded from data in all years.                                                                                  
                                                                                                                                                        
Source: Prospective Payment Assessment Commission analysis of Medicare Cost Report data from the Health Care Financing Administration.                  
                                        TABLE D-15.--SUMMARY CHARACTERISTICS OF PPS HOSPITALS, BY HOSPITAL GROUP                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Estimated                      Estimated                   Estimated PPS  
                                                             Number of         Medicare         Average    average case  Average wage   payment (dollars
                      Hospital group                       hospitals \1\      discharges       number of    mix (1997)   index (1996)   per case, 1997) 
                                                                          (thousands, 1997)   beds (1995)       \2\           \3\             \4\       
--------------------------------------------------------------------------------------------------------------------------------------------------------
All......................................................          5,248             10,318           148          1.49          0.99              7,000
Urban....................................................          2,947              8,293           211          1.54          1.02              7,550
Rural....................................................          2,301              2,025            67          1.24          0.82              4,710
Large MSA \5\............................................          1,644              4,786           227          1.54          1.09              8,120
Other urban..............................................          1,303              3,507           190          1.54          0.93              6,770
Rural referral...........................................            129                382           185          1.41          0.84              5,610
Rural sole community \6\.................................            640                426            54          1.20          0.82              5,190
Other rural..............................................          1,532              1,218            63          1.20          0.82              4,270
Major teaching \7\.......................................            251              1,166           437          1.71          1.11             12,050
Other teaching...........................................            821              3,276           279          1.57          0.99              7,540
Nonteaching..............................................          4,176              5,876           105          1.36          0.94              5,690
Disproportionate share: \8\                                                                                                                             
    Large MSA............................................            844              2,603           272          1.56          1.10              9,180
    Other urban..........................................            711              2,275           265          1.56          0.92              7,170
    Rural................................................            588                714            94          1.25          0.81              4,880
Nondisproportionate share................................          3,105              4,725           105          1.43          0.97              6,030
Urban, 50 or fewer beds..................................            349                121            33          1.17          0.98              4,850
Urban, 51-100 beds.......................................            444                402            76          1.27          0.98              5,190
Urban, 101-200 beds......................................            903              1,745           145          1.39          1.02              6,390
Urban, 201-400 beds......................................            914              3,668           281          1.53          1.01              7,270
Urban, 401 or more beds..................................            337              2,358           558          1.69          1.04              9,390
Rural, 50 or fewer beds..................................          1,245                416            32          1.09          0.80              3,930
Rural, 51-100 beds.......................................            644                611            72          1.19          0.81              4,410
Rural, 101-200 beds......................................            327                664           137          1.28          0.83              4,930
Rural, 201 or more beds..................................             85                334           276          1.42          0.85              5,820
New England..............................................            217                578           167          1.48          1.15              7,800
Middle Atlantic..........................................            520              1,756           252          1.48          1.11              8,090
South Atlantic...........................................            740              1,813           175          1.51          0.92              6,650
East North Central.......................................            803              1,819           165          1.48          0.97              6,770
East South Central.......................................            443                860           139          1.43          0.83              5,720
West North Central.......................................            722                800            89          1.50          0.89              6,200
West South Central.......................................            748              1,075           121          1.49          0.87              6,350
Mountain.................................................            367                429            93          1.51          0.96              6,780
Pacific..................................................            635              1,090           140          1.53          1.21              8,450
Puerto Rico..............................................             53                 99           153          1.32          0.46              2,760
Government, Urban \9\....................................            430                843           200          1.54          0.99              8,430
Government, Rural........................................            987                601            53          1.17          0.79              4,340
Voluntary, Urban.........................................          1,912              6,450           234          1.54          1.03              7,580
Voluntary, Rural.........................................          1,112              1,209            78          1.27          0.83              4,890
Proprietary, Urban.......................................            543                984           154          1.49          0.97              6,630
Proprietary, Rural.......................................            183                213            82          1.27          0.84              4,770
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Number of hospitals for which data were available.                                                                                                  
\2\ Weighted by case-mix-adjusted PPS payments.                                                                                                         
\3\ Weighted by wage-index-adjusted PPS payments.                                                                                                       
\4\ Incurred payments (including copayments) divided by the number of Medicare discharges.                                                              
\5\ Hospitals located in metropolitan statistical areas with more than 1 million people or New England County metropolitan areas with more than 970,000 
  people.                                                                                                                                               
\6\ Sole community hospitals that are also rural referral centers are included in the rural referral category.                                          
\7\ Teaching hospitals for which the ratio of the number of full-time-equivalent interns and residents to the number of beds is 0.25 or larger.         
\8\ Hospitals that receive a disproportionate share adjustment for treating a relatively high proportion of low-income patients.                        
\9\ Ownership type was not available for 82 hospitals.                                                                                                  
                                                                                                                                                        
Note.--PPS = Prospective payment system. Years refer to Federal fiscal years. Urban and rural categories are based on hospitals' geographic locations.  
                                                                                                                                                        
Source: Congressional Budget Office estimates based on data from the Health Care Financing Administration.                                              
                         TABLE D-16.--TRENDS IN FACTORS AFFECTING PPS RATES AND AVERAGE PAYMENTS PER CASE, FISCAL YEARS 1983-97                         
                                                         [Percentage change from previous year]                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year--                                                    
       Rate impact factor        -----------------------------------------------------------------------------------------------------------------------
                                   1983    1984    1985    1986    1987    1988    1989    1990    1991    1992    1993    1994    1995    1996    1997 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market basket index \1\.........     5.5     4.9     4.1     2.9     3.2     4.7     5.4     5.5     5.2  \2\ 4.                                        
                                                                                                               4  \3\ 4.                                
                                                                                                                       1     4.3  \4\ 3.                
                                                                                                                                       6     3.5     3.6
Annual update factor \5\........  ......  ......  ......  ......  ......     1.7    3.33    5.71    2.83    2.90    2.75    2.11    2.00    1.84    3.10
Case mix index \6\..............  ......  ......     3.1     2.5     2.1     3.2     2.5    0.85     2.5     1.5    0.85    0.85    1.00    1.00    1.00
Average payments per discharge                                                                                                                          
 \7\............................    10.2    10.8    15.0     8.0     3.6     5.0    10.1     8.4     5.0     7.3     5.3     4.8     8.3     4.7     5.2
Average payments per beneficiary                                                                                                                        
 \7\............................    11.4     7.8     6.6     1.5    -0.3     3.9     8.5     8.0     4.1     8.2     5.8     5.8     6.0     6.0     6.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimates as published in the Federal Register for fiscal year 1983-96; fiscal year 1997 President's Budget assumptions shown for fiscal year 1997. 
\2\ 4.7 for hospitals excluded from the prospective payment system.                                                                                     
\3\ 4.2 for hospitals excluded from the prospective payment system.                                                                                     
\4\ 3.7 for hospitals excluded from the prospective payment system.                                                                                     
\5\ Estimates as published in the Federal Register for fiscal years 1989-96; fiscal year 1997 President's Budget assumptions used for fiscal year 1997. 
\6\ Estimates based on historical data for fiscal years 1985-96; fiscal year 1997 President's Budget assumptions shown for fiscal years 1996-97.        
\7\ Estimates based historical data and fiscal year 1997 President's Budget assumptions; estimates for fiscal years 1989 and 1990 include the effect of 
  provisions of the Medicare Catastrophic Coverage Act of 1988.                                                                                         
                                                                                                                                                        
Note.--PPS = Prospective payment system.                                                                                                                
                                                                                                                                                        
Source: Health Care Financing Administration, Office of the Actuary.                                                                                    
        TABLE D-17.--WAGE INDEX FOR URBAN AREAS, FISCAL YEAR 1996       
------------------------------------------------------------------------
  Urban area (constituent counties or county equivalents)     Wage index
------------------------------------------------------------------------
Abilene, TX (Taylor, TX)...................................       0.8546
Aguadilla, PR (Aquada, PR, Aguadilla, PR, Moca, PR)........       0.4744
Akron, OH (Portage, OH, Summit, OH)........................       0.9578
Albany, GA (Dougherty, GA, Lee, GA)........................       0.8608
Albany-Schenectady-Troy, NY (Albany, NY, Montgomery, NY,                
 Rensselaer, NY, Saratoga, NY, Schenectady, NY, Schoharie,              
 NY).......................................................       0.8818
Albuquerque, NM (Bernalillo, NM, Sandoval, NM, Valencia,                
 NM).......................................................       0.9542
Alexandria, LA (Rapides, LA)...............................       0.8010
Allentown-Bethlehem-Easton, PA (Carbon, PA, Lehigh, PA,                 
 Northampton, PA)..........................................       1.0198
Altoona, PA (Blair, PA)....................................       0.9007
Amarillo, TX (Potter, TX, Randall, TX).....................       0.8759
Anchorage, AK (Anchorage, AK)..............................       1.3373
Ann Arbor, MI (Lenawee, MI, Livingston, MI, Washtenaw, MI).       1.2116
Anniston, AL (Calhourn, AL)................................       0.8158
Appleton-Oshkosh-Neenah, WI (Calumet, WI, Outagami, WI,                 
 Winnebago, WI)............................................       0.8844
Arecibo, PR (Arecibo, PR, Camuy, PR, Hatillo, PR)..........       0.4498
Asheville, NC (Buncombie, NC, Madison, NC).................       0.9218
Athens, GA (Clarke, GA, Madison, GA, Oconee, GA)...........       0.9097
Atlanta, GA (Barrow, GA, Bartow, GA, Carroll, GA, Cherokee,             
 GA, Clayton, GA, Cobb, GA, Coweta, GA, DeKalb, GA,                     
 Douglas, GA, Fayette, GA, Forsyth, GA, Fulton, GA,                     
 Gwinnett, GA, Henry, GA, Newton, GA, Paulding, GA,                     
 Pickens, GA, Rockdale, GA, Spalding, GA, Walton, GA)......       1.0069
Atlantic City-Cape May, NJ (Atlantic City, NJ, Cape May,                
 NJ).......................................................       1.0935
Augusta-Aiken, GA-SC (Columbia, GA, McDuffie, GA, Richmond,             
 GA, Aiken, SC, Edgefield, SC).............................       0.8955
Austin-San Marcos, TX (Bastrop, TX, Caldwell, TX, Hays, TX,             
 Travis, TX, Williamson, TX)...............................       0.9255
Bakersfield, CA (Kern, CA).................................       1.0502
Baltimore, MD (Anne Arundel, MD, Baltimore, MD, Baltimore               
 City, MD, Carroll, MD, Harford, MD, Howard, MD, Queen                  
 Annes, MD)................................................       0.9866
Bangor, ME (Penobscot, ME).................................       0.9360
Barnstable-Yarmouth, MA (Barnstable, MA)...................       1.3457
Baton Rouge, LA (Ascension, LA, East Baton Rouge, LA,                   
 Livingston, LA, West Baton Rouge, LA).....................       0.8670
Beaumont-Port Arthur, TX (Hardin, TX, Jefferson, TX,                    
 Orange, TX)...............................................       0.8603
Bellingham, WA (Whatcom, WA)...............................       1.2681
Benton Harbor, MI (Berrien, MI)............................       0.8304
Bergen-Passaic, NJ (Bergen, NJ, Passaic, NJ)...............       1.1474
Billings, MT (Yellowstone, MT).............................       0.8705
Biloxi-Gulfport-Pascagoula, MS (Hancock, MS, Harrison, MS,              
 Jackson, MS)..............................................       0.8448
Binghamtom, NY (Broome, NY, Tioga, NY).....................       0.9005
Birmingham, AL (Blount, AL, Jefferson, AL, St. Clair, AL,               
 Shelby, AL)...............................................       0.9144
Bismark, ND (Burleigh, ND, Morton, ND).....................       0.8299
Bloomington, IN (Monroe, IN)...............................       0.8429
Bloomington-Normal, IL (McLean, IL)........................       0.8740
Boise City, ID (Ada, ID, Canyon, ID).......................       0.9150
Boston-Brockton-Nashua, MA-NH (Bristol, MA, Essex, MA,                  
 Middlesex, MA, Norfolk, MA, Pymouth, MA, Suffolk, MA,                  
 Worcester, MA, Hillsborough, NH, Merrimack, NH,                        
 Rockingham, NH, Strafford, NH)............................       1.1685
Boulder-Longmont, CO (Boulder, CO).........................       0.9780
Brazoria, TX (Brazoria, TX)................................       0.8584
Bremerton, WA (Kitsap, WA).................................       1.0295
Brownsville-Harlingen-San Benito, TX (Cameron, TX).........       0.8650
Bryan-College Station, TX (Brazos, TX).....................       0.8987
Buffalo-Niagara Falls, NY (Erie, NY, Niagara, NY)..........       0.9186
Burlington, VT (Chittenden, VT, Franklin, VT, Grand Isle,               
 VT).......................................................       0.9252
Caguas, PR (Caguas, PR, Cayey, PR, Cidra, PR, Gurabo, PR,               
 San Lorenzo, PR)..........................................       0.4706
Canton, OH (Carroll, OH, Stark, OH)........................       0.8749
Casper, WY (Natrona, WY)...................................       0.8662
Cedar Rapids, IA (Linn, IA)................................       0.8359
Champaign-Urbana, IL (Champaign, IL).......................       0.8867
Charleston-North Charleston, SC (Berkeley, SC, Charleston,              
 SC, Dorchester, SC).......................................       0.8930
Charleston, WV (Kanawha, WV, Putnam, WV)...................       0.9498
Charlotte-Gastonia-Rock Hill, NC-SC (Cabarrus, NC, Gaston,              
 NC, Lincoln, NC, Mecklenburg, NC, Rowan, NC, Union, NC,                
 York, SC).................................................       0.9668
Charlottesville, VA (Albemarle, VA, Charlottesville City,               
 VA, Fluvanna, VA, Greene, VA).............................       0.9179
Chattanooga, TN-GA (Catoosa, GA, Dade, GA, Walker, GA,                  
 Hamilton, TN, Marion, TN).................................       0.9129
Cheyenne, WY (Laramie, WY).................................       0.7935
Chicago, IL (Cook, IL, DeKalb, IL, Du Page, IL, Grundy, IL,             
 Kane, IL, Kendall, IL, Lake, IL, McHenry, IL, Will, IL)...       1.0632
Chico-Paradise, CA (Butte, CA).............................       1.0531
Cincinnati, OH-KY-IN (Dearborn, IN, Ohio, IN, Boone, KY,                
 Campbell, KY, Gallatin, KY, Grant, KY, Kenton, KY,                     
 Pendleton, KY, Brown, OH, Clermont, OH, Hamilton, OH,                  
 Warren, OH)...............................................       0.9418
Clarksville-Hopkinsville, TN-KY (Christian, KY, Montgomery,             
 TN).......................................................       0.7542
Cleveland-Lorain-Elyria, OH (Ashtabula, OH, Cuyahoga, OH,               
 Geauga, OH, Lake, OH, Lorain, OH, Medina, OH).............       0.9835
Colorado Springs, CO (El Paso, CO).........................       0.9294
Columbia, MO (Boone, MO)...................................       0.9461
Columbia, SC (Lexington, SC, Richland, SC).................       0.9033
Columbus, GA-AL (Russel, AL, Chattanoochee, GA, Harris, GA,             
 Muscogee GA)..............................................       0.7756
Columbus, OH (Delaware, OH, Fairfield, OH, Franklin, OH,                
 Licking, OH, Madison, OH, Pickaway, OH)...................       0.9734
Corpus Christi, TX (Nueces, TX, San Patricio, TX)..........       0.8941
Cumberland, MD-WV (Allegany, MD, Mineral, WV)..............       0.8372
Dallas, TX (Collin, TX, Dallas, TX, Denton, TX, Ellis, TX,              
 Henderson, TX, Hunt, TX, Kaufman, TX, Rockwall, TX).......       0.9804
Danville, VA (Danville City, VA, Pittsylvania, VA).........       0.8465
Davenport-Rock Island--Moline, IA-IL (Scott, IA, Henry, IL,             
 Rock Island, IL)..........................................       0.8347
Dayton-Springfield, OH (Clark, OH, Greene, OH, Miami, OH,               
 Montgomery, OH)...........................................       0.9428
Daytona Beach, FL (Flagler, FL, Volusia, FL)...............       0.8902
Decatur, AL (Lawrence, AL, Morgan, AL).....................       0.8180
Decatur, IL (Macon, IL)....................................       0.7790
Denver, CO (Adams, CO, Arapahoe, CO, Denver, CO, Douglas,               
 CO, Jefferson, CO)........................................       1.0447
Des Moines, IA (Dallas, IA, Polk, IA, Warren, IA)..........       0.8792
Detroit, MI (Lapeer, MI, Macomb, MI, Monroe, MI, Oakland,               
 MI, St. Clair, MI, Wayne, MI).............................       1.0834
Dothan, AL (Dale, AL, Houston, AL).........................       0.7751
Dover, DE (Kent, DE).......................................       0.8960
Dubuque, IA (Dubuque, IA)..................................       0.8054
Duluth-Superior, MN-WI (St. Louis, MN, Douglas, WI)........       0.9660
Dutchess, County, NY (Dutchess, NY)........................       1.0697
Eau Claire, WI (Chippewa, WI, Eau Claire, WI)..............       0.8660
El Paso, TX (El Paso, TX)..................................       0.9266
Elkhart-Goshen, IN (Elkhart, IN)...........................       0.8806
Elmira, NY (Chemung, NY)...................................       0.8460
Enid, OK (Garfield, OK)....................................       0.8170
Erie, PA (Erie, PA)........................................       0.9196
Eugene-Springfield, OR (Lane, OR)..........................       1.1184
Evansville, IN-KY (Posey, IN, Vanderburgh, IN, Warrick, IN,             
 Henderson, KY)............................................       0.8899
Fargo-Moorhead, ND-MN (Clay, MN, Cass, ND).................       0.8912
Fayetteville, NC (Cumberland, NC)..........................       0.8843
Fayetteville-Springdale-Rogers, AR (Benton, AR, Washington,             
 AR).......................................................       0.7090
Flagstaff, AZ-UT (Coconino, AZ, Kane, UT)..................       0.8619
Flint, MI (Genessee, MI)...................................       1.0738
Florence, AL (Colbert, AL, Lauderdale, AL).................       0.7970
Florence, SC (Florence, SC)................................       0.8537
Fort Collins-Loveland, CO (Larimer, CO)....................       1.0595
Fort Lauderdale, FL (Broward, FL)..........................       1.0952
Fort Myers-Cape Coral, FL (Lee, FL)........................       0.9666
Fort Pierce-Port St. Lucie, FL (Martin, FL, St. Lucie, FL).       1.0401
Fort Smith, AR-OK (Crawford, AR, Sebastian, AR, Sequoyah,               
 OK).......................................................       0.7608
Fort Walton Beach, FL (Okaloosa, FL).......................       0.8705
Fort Wayne, IN (Adams, IN, Allen, IN, De Kalb, IN,                      
 Huntington, IN, Wells, IN, Whitley, IN)...................       0.8691
Fort Worth-Arlington, TX (Hood, TX, Johnson, TX, Parker,                
 TX, Tarrant, TX)..........................................       1.0052
Fresno, CA (Fresno, CA, Madera, CA)........................       1.0522
Gadsden, AL (Etowah, AL)...................................       0.8568
Gainesville, FL (Alachua, FL)..............................       0.9007
Galveston-Texas City, TX (Galveston, TX)...................       1.0304
Gary, IN (Lake, IN, Porter, IN)............................       0.9452
Glens Falls, NY (Warren, NY, Washington, NY)...............       0.9276
Goldsboro, NC (Wayne, NC)..................................       0.8165
Grand Forks, ND-MN (Polk, MN, Grand Forks, ND).............       0.8983
Grand Junction, CO (Mesa, CO)..............................       0.7988
Grand Rapids-Muskegon-Holland, MI (Allegan, MI, Kent, MI,               
 Muskegon, MI, Ottawa, MI).................................       1.0055
Great Falls, MT (Cascade, MT)..............................       0.9039
Greeley, CO (Weld, CO).....................................       0.9146
Green Bay, WI (Brown, WI)..................................       0.9190
Greensboro-Winston-Salem-High Point, NC (Alamance, NC,                  
 Davidson, NC, Davie, NC, Forsyth, NC, Guilford, NC,                    
 Randolph, NC Stokes, NC, Yadkin, NC)......................       0.9160
Greenville, NC (Pitt, NC)..................................       0.9102
Greenville-Spartanburg-Andersen, SC (Anderson, SC,                      
 Cherokee, SC, Greenville, SC, Pickens, SC, Spartanburg,                
 SC).......................................................       0.9047
Hagerstown, MD (Washington, MD)............................       0.9074
Hamilton-Middletown, OH (Butler, OH).......................       0.8782
Harrisburg-Lebanon-Carlisle, PA (Cumberland, PA, Dauphin,               
 PA, Lebanon, PA, Perry, PA)...............................       0.9972
Hartford, CT (Hartford, CT, Litchfield, CT, Middlesex, CT,              
 Tolland, CT)..............................................       1,2391
Hattiesburg, MS (Forrest, MS, Lamar, MS)...................       0.7245
Hickory-Morganton, NC (Alexander, NC, Burke, NC, Caldwell,              
 NC, Catawba, NC)..........................................       0.7983
Honolulu, HI (Honolulu, HI)................................       1.1212
Houma, LA (Lafourche, LA, Terrebonne, LA)..................       0.7596
Houston, TX (Chambers, TX, Fort Bend, TX, Harris, TX,                   
 Liberty, TX, Montgomery, TX, Waller, TX)..................       0.9874
Huntington-Ashland, WV-KY-OH (Boyd, KY, Carter, KY,                     
 Greenup, KY, Lawrence, OH, Cabell, WV, Wayne, WV).........       0.8997
Huntsville, AL (Limestone, AL, Madison, AL)................       0.8113
Indianapolis, IN (Boone, IN, Hamilton, IN, Hancock, IN,                 
 Hendrick, IN, Johnson, IN, Madison, IN, Marion, IN,                    
 Morgan, IN, Shelby, IN)...................................       0.9757
Iowa City, IA (Johnson, IA)................................       0.9371
Jackson, MI (Jackson, MI)..................................       0.9132
Jackson, MS (Hinds, MS, Madison, MS, Rankin, MS)...........       0.7642
Jackson, TN (Madison, TN)..................................       0.8511
Jacksonville, FL (Clay, FL, Duval, FL, Nassau, FL, St.                  
 Johns, FL)................................................       0.8953
Jacksonville, NC (Onslow, NC)..............................       0.6926
Jamestown, NY (Chautaqua, NY)..............................       0.7535
Janesville-Beloit, WI (Rock, WI)...........................       0.8786
Jersey City, NJ (Hudson, NJ)...............................       1.1039
Johnson City-Kingsport-Bristol, TN-VA (Carter, TN, Hawkins,             
 TN, Sullivan, TN, Unicoi, TN, Washington, TN, Bristol                  
 City, VA, Scott, VA, Washington, VA)......................       0.8769
Johnstown, PA (Cambria, PA, Somerset, PA)..................       0.8521
Joplin, MO (Jasper, MO, Newton, MO)........................       0.7923
Kalamazoo-Battlecreek, MI (Calhoun, MI, Kalamazoo, MI, Van              
 Buren, MI)................................................       1.0657
Kankakee, IL (Kankakee, IL)................................       0.9114
Kansas City, KS-MO (Johnson, KS, Leavenworth, KS, Miami,                
 KS, Wyandotte, KS, Cass, MO, Clay, MO, Clinton, MO,                    
 Jackson, MO, Lafayette, MO, Platte, MO, Ray, MO)..........       0.9351
Kenosha, WI (Kenosha, WI)..................................       0.8872
Killeen-Temple, TX (Bell, TX, Coryell, TX).................       1.0526
Knoxville, TN (Anderson, TN, Blount, TN, Knox, TN, Loudon,              
 TN, Sevier, TN, Union, TN)................................       0.8518
Kokomo, IN (Howard, IN, Tipton, IN)........................       0.8834
La Crosse, WI-MN (Houston, MN, La Crosse, WI)..............       0.8519
LaFayette, LA (Acadia, LA, Lafayette, LA, St. Landry, LA,               
 St. Martin, LA)...........................................       0.8498
LaFayette, IN (Clinton, IN, Tippecanoe, IN)................       0.8328
Lake Charles, LA (Calcasieu, LA)...........................       0.8094
Lakeland-Winter Haven, FL (Polk, FL).......................       0.8668
Lancaster, PA (Lancaster, PA)..............................       0.9569
Lansing-East Lansing, MI (Clinton, MI, Eaton, MI, Ingham,               
 MI).......................................................       1.0105
Laredo, TX (Webb, TX)......................................       0.6750
Las Cruses, NM (Dona Ana, NM)..............................       0.8861
Las Vegas, NV-AZ (Mohave, AZ, Clark, NV, Nye, NV)..........       1.0934
Lawrence, KS (Douglas, KS).................................       0.8549
Lawton, OK (Comanche, OK)..................................       0.8594
Lewiston-Auburn, ME (Androscoggin, ME).....................       0.9433
Lexington, KY (Bourbon, KY, Clark, KY, Fayett, KY,                      
 Jessamine, KY, Madison, KY, Scott, KY, Woodford, KY)......       0.8348
Lima, OH (Allen, OH, Auglaize, OH).........................       0.8863
Lincoln, NE (Lancaster, NE)................................       0.9093
Little Rock-North Little Rock, AR (Faulkner, AR, Lonoke,                
 AR, Pulaski, AR, Saline, AR)..............................       0.8527
Longview-Marshall, TX (Gregg, TX, Harrison, TX, Upshur, TX)       0.8653
Los Angeles-Long Beach, CA (Los Angeles, CA)...............       1.2461
Louisville, KY-IN (Clark, IN, Floyd, IN, Harrison, IN,                  
 Scott, IN, Bullitt, KY, Jefferson, KY, Oldham, KY)........       0.9327
Lubbock, TX (Lubbock, TX)..................................       0.8443
Lynchburg, VA (Amherst, VA, Bedford City, VA, Bedford, VA,              
 Campbell, VA, Lynchburg City, VA).........................       0.8205
Macon, GA (Bibb, GA, Houston, GA, Jones, GA, Peach, GA,                 
 Twiggs, GA)...............................................       0.8991
Madison, WI (Dane, WI).....................................       1.0055
Mansfield, OH (Crawford, OH, Richfield, OH)................       0.8373
Mayaguez, PR (Anasco, PR, Cabo Rojo, PR, Hormigueros, PR,               
 Mayaguez, PR, Sabana Grande, PR, San German, PR)..........       0.4644
McAllen-Edinburg-Mission, TX (Hidalgo, TX).................       0.8669
Medford-Ashland, OR (Jackson, OR...........................       1.0162
Melbourne-Titusville-Palm Bay, FL (Brevard, FL)............       0.9323
Memphis, TN-AR-MS (Crittenden, AR, De Soto, MS, Fayette,                
 TN, Shelby, TN, Tipton, TN)...............................       0.8399
Merced, CA (Merced, CA)....................................       1.0877
Miami, FL (Dade, FL).......................................       0.9552
Middlesex-Somerset-Hunterdon, NJ (Hunterdon, NJ, Middlexes,             
 NJ, Somerset, NJ).........................................       1.0583
Milwaukee, WI (Milwaukee, WI, Ozaukee, WI, Washington, WI,              
 Waukesha, WI).............................................       0.9498
Minneapolis-St Paul, MN-WI (Anoka, MN, Carver, MN, Chisago,             
 MN, Dakota, MN, Hennepin, MN, Isanti, MN, Ramsey, MN,                  
 Scott, MN, Sherburne, MN, Washington, MN, Wright, MN,                  
 Pierce, WI, St. Croix, WI)................................       1.0744
Mobile, AL (Baldwin, AL, Mobile, AL).......................       0.7706
Modesto, CA (Stanislaus, CA)...............................       1.0658
Monmouth-Ocean, NJ (Monmouth, NJ, Ocean, NJ)...............       1.0562
Monroe, LA (Ouachita, LA)..................................       0.7948
Montgomery, AL (Autauga, AL, Elmore, AL, Montgomery, AL)...       0.7901
Muncie, IN (Delaware, IN)..................................       0.9125
Myrtle Beach, SC (Horry, SC)...............................       0.7961
Naples, FL (Collier, FL)...................................       0.9871
Nashville, TN (Cheatham, TN, Davidson, TN, Dickson, TN,                 
 Robertson, TN, Rutherford, TN, Summer, TN, Williamson, TN,             
 Wilson, TN)...............................................       0.9266
Nassau-Suffolk, NY (Nassau, NY, Suffolk, NY)...............       1.3128
New Haven-Bridgeport-Stamford-Danbury-Waterbury, CT                     
 (Fairfield, CT, New Haven, CT)............................       1.2534
New London-Norwich, CT (New London, CT)....................       1.2088
New Orleans, LA (Jefferson, LA, Orleans, LA, Plaquemines,               
 LA, St. Bernard, LA, St. Charles, LA, St. James, LA, St                
 John the Baptist, LA, St. Tammany, LA)....................       0.9454
New York, NY (Bronx, NY, Kings, NY, New York, NY, Putnam,               
 NY, Queens, NY, Richmond, NY, Rockland, NY, Westchester,               
 NY).......................................................       1.3852
Newark, NJ (Essex, NJ, Morris, NJ, Sussex, NJ, Union, NJ,               
 Warren, NJ)...............................................       1.1241
Newburgh, NY-PA (Orange, NY, Pike, PA).....................       1.0619
Norfolk-Virginia Beach-Newport News, VA-NC (Currituck, NC,              
 Chesapeake City, VA, Gloucester, VA, Hampton City, VA,                 
 Isle of Wight, VA, James City, VA, Mathews, VA, Newport                
 News City, VA, Norfolk City, VA, Poquoson City, VA,                    
 Portsmouth City, VA, Suffolk City, VA, Virginia Beach                  
 City, VA Williamsburg City, VA, York, VA).................       0.8411
Oakland, CA (Alameda, CA, Corita, CA)......................       1.5203
Ocala, FL (Marion, FL).....................................       0.8942
Odessa-Midland, TX (Ector, TX, Midland, TX)................       0.8753
Oklahoma City, OK (Canadian, OK, Cleveland, OK, Logan, OK,              
 McClain, OK, Oklahoma, OK, Pottawatomie, OK)..............       0.8358
Olympia, WA (Thurston, WA).................................       1.1109
Omaha, NE-IA (Pottawattamie, IA, Cass, NE, Douglas, NE,                 
 Sarpy, NE, Washington, NE)................................       0.9794
Orange County, CA (Orange, CA).............................       1.2299
Orlando, FL, (Lake, FL, Orange, FL, Osceola, FL, Seminole,              
 FL).......................................................       0.9515
Owensboro, KY (Daviess, KY)................................       0.7498
Panama City, FL (Bay, FL)..................................       0.8182
Parkersburg-Marietta, WV-OH (Washington, OH, Wood, WV).....       0.7751
Pensacola, FL (Escambia, FL, Santa Rosa, FL)...............       0.8183
Peoria-Pekin, IL (Peoria, IL, Tazewell, IL, Woodford, IL)..       0.8619
Philadelphia, PA-NJ (Burlington, NJ, Camden, NJ,                        
 Gloucester, NJ, Salem, NJ, Bucks, PA, Chester, PA,                     
 Delaware, PA, Montgomery, PA, Philadelphia, PA)...........       1.1098
Phoenix-Mesa, AZ (Maricopa, AZ, Pinal, AZ).................       0.9808
Pine Bluff, AR (Jefferson, AR).............................       0.7985
Pittsburgh, PA (Allegheny, PA, Beaver, PA, Butler, PA,                  
 Fayette, PA, Washington, PA, Westmoreland, PA)............       0.9743
Pittsfield, MA (Berkshire, MA).............................       1.0838
Ponce, PR (Guayanilla, PR, Juana Diaz, PR, Penuelas, PR,                
 Ponce, PR, Villalba, PR, Yauco, PR).......................       0.4780
Portland, ME (Cumberland, ME, Sagadahoc, ME, York, ME).....       0.9744
Portland-Vancouver, OR-WA (Clackamas, OR, Columbia, OR,                 
 Multnomah, OR, Washington, OR, Yamhill, OR, Clark, WA)....       1.1248
Providence-Warwick, RI (Bristol, RI, Kent, RI, Newport, RI,             
 Providence, RI, Washington, RI)...........................       1.1027
Provo-Orem, UT (Utah, UT)..................................       0.9843
Pueblo, CO (Pueblo, CO)....................................       0.8508
Punta Gorda, FL (Charlotte, FL)............................       0.8806
Racine, WI (Racine, WI)....................................       0.8704
Raleigh-Durham-Chapel Hill, NC (Chatham, NC, Durham, NC,                
 Franklin, NC, Johnston, NC, Orange, NC, Wake, NC).........       0.9539
Rapid City, SD (Pennington, SD)............................       0.8267
Reading, PA (Berks, PA)....................................       0.9570
Redding, CA (Shasta, CA)...................................       1.1796
Reno, NV (Washoe, NV)......................................       1,1087
Richland-Kennewick-Pasco, WA (Benton, WA, Franklin, WA)....       1,0011
Richmond-Petersburg, VA (Charles City County, VA,                       
 Chesterfield, VA, Colonial Heights City, VA, Dinwiddie,                
 VA, Goochland, VA, Hanover, VA, Henrico, VA, Hopewell                  
 City, VA, New Kent, VA, Petersburg City, VA, Powhatan, VA,             
 Prince George, VA, Richmond City, VA).....................       0.9055
Riverside-San Bernardino, CA (Riverside, CA, San                        
 Bernardino, CA)...........................................       1.1489
Roanoke, VA (Botetourt, VA, Roanoke, VA, Roanoke City, VA,              
 Salem City, VA)...........................................       0.8570
Rochester, MN (Olmstead, MN)...............................       1.0545
Rochester, NY (Genesee, NY, Livingston, NY, Monroe, NY,                 
 Ontario, NY, Orleans, NY, Wayne, NY)......................       0.9585
Rockford, IL (Boone, IL, Ogle, IL, Winnebago, IL)..........       0.8872
Rocky Mount, NC (Edgecombe, NC, Nash, NC)..................       0.8836
Sacramento, CA (El Dorado, CA, Placer, CA, Sacramento, CA).       1,2539
Saginaw-Bay City-Midland, MI (Bay, MI, Midland, MI,                     
 Saginaw, MI)..............................................       0.9489
St. Cloud, MN (Benton, MN, Stearns, MN)....................       0.9549
St. Joseph, MO (Andrews, MO, Buchanan, MO).................       0.8457
St. Louis, MO-IL (Clinton, IL, Jersey, IL, Madison, IL,                 
 Monroe, IL, St. Clair, IL, Franklin, MO, Jefferson, MO,                
 Lincoln, MO, St. Charles, MO, St. Louis, MO, St. Louis                 
 City, MO, Warren, MO).....................................       0.8880
Salem, OR (Marion, OR, Polk, OR)...........................       0.9575
Salinas, CA (Monterey, CA).................................       1.4263
Salt Lake City-Ogden, UT (Davis, UT, Salt Lake, UT, Weber,              
 UT).......................................................       0.9681
San Angelo, TX (Tom Green, TX).............................       0.7777
San Antonio, TX (Bexar, TX, Comal, TX, Guadalupe, TX,                   
 Wilson, TX)...............................................       0.8414
San Diego, CA (San Diego, CA)..............................       1.1856
San Francisco, CA (Marin, CA, San Francisco, CA San Mateo,              
 CA).......................................................       1.4288
San Jose, CA (Santa Clara, CA).............................       1.4455
San Juan-Bayamon, PR (Aguas Buenas, PR, Barceloneta, PR,                
 Bayamon, PR, Canovanas, PR, Carolina, PR, Catano, PR,                  
 Ceiba, PR, Comerio, PR, Corozal, PR, Dorado, PR, Fajardo,              
 PR, Florida, PR, Guaynabo, PR, Humacao, PR, Juncos, PR,                
 Los Piedras, PR, Loiza, PR, Luguillo, PR, Manati, PR,                  
 Naranjito, PR, Rio Grande, PR, San Juan, PR, Toa Alta, PR,             
 Toa Baja, PR, Trujillo Alto, PR, Vega Alta, PR, Vega Baja,             
 PR, Yabucoa, PR)..........................................       0.4514
San Luis Obispo-Atascadero-Pasa Robles, CA (San Luis                    
 Obispo, CA)...............................................       1.1405
Santa Barbara-Santa Maria-Lompoc, CA (Santa Barbara, CA)...       1.1136
Santa Cruz-Watsonville, CA (Santa Cruz, CA)................       1.3944
Santa Fe, NM (Los Alamos, NM, Santa Fe, NM)................       1.1108
Santa Rosa, CA (Sonoma, CA)................................       1.2693
Sarasota-Bradenton, FL (Manatee, FL, Sarasota, FL).........       0.9824
Savannah, GA (Bryan, GA, Chatham, GA, Effingham, GA).......       0.8968
Scranton-Wilkes Barre-Hazleton, PA (Columbia, PA,                       
 Lackawanna, PA, Luzerne, PA, Wyoming, PA).................       0.8724
Seattle-Bellevue-Everett, WA (Island, WA, King, WA,                     
 Snohomish, WA)............................................       1.1307
Sharon, PA (Mercer, PA)....................................       0.9093
Sheboygan, WI (Sheboygan, WI)..............................       0.7981
Sherman-Denison, TX (Grayson, TX)..........................       0.8780
Shreveport-Bossier City, LA (Bossier, LA, Caddo, LA,                    
 Webster, LA)..............................................       0.9007
Sioux City, IA-NE (Woodbury, IA, Dakota, NE)...............       0.8436
Sioux Falls, SD (Lincoln, SD, Minnehaha, SD)...............       0.8761
South Bend, IN (St. Joseph, IN)............................       0.9475
Spokane, WA (Spokane, WA)..................................       1.0377
Springfield, IL (Menard, IL, Sangamon, IL).................       0.8940
Springfield, MO (Christian, MO, Greene, MO, Webster, MO)...       0.7896
Springfield, MA (Hampden, MA, Hampshire, MA)...............       1.0517
State College, PA (Centre, PA).............................       1.0162
Steubenville-Weirton, OH-WV (Jefferson, OH, Brook, WV,                  
 Hancock, WV)..............................................       0.8455
Stockton-Lodi, CA (San Joaquin, CA)........................       1.1672
Sumter, SC (Sumter, SC)....................................       0.8344
Syracuse, NY (Cayuga, NY, Madison, NY, Onondaga, NY,                    
 Oswego, NY)...............................................       0.9531
Tacoma, WA (Pierce, WA)....................................       1.0828
Tallahassee, FL (Gadsden, FL, Leon, FL)....................       0.8321
Tampa-St. Petersburg-Clearwater, FL (Hernando, FL,                      
 Hillsborough, FL, Pasco, FL, Pinellas, FL)................       0.9311
Terre-Haute, IN (Clay, IN, Vermillion, IN, Vigo, IN).......       0.8672
Texarkana, AK-Texarkana, TX (Miller, AR, Bowie, TX)........       0.8257
Toledo, OH (Fulton, OH, Lucas, OH, Wood, OH)...............       1.0330
Topeka, KS (Shawnee, KS)...................................       0.9735
Trenton, NJ (Mercer, NJ)...................................       1.0033
Tucson, AZ (Pima, AZ)......................................       0.9291
Tulsa, OK (Creek, OK, Osage, OK, Rogers, OK, Tulsa, OK,                 
 Wagoner, OK)..............................................       0.8245
Tuscaloosa, AL (Tuscaloosa, AL)............................       0.8090
Tyler, TX (Smith, TX)......................................       0.9430
Utica-Rome, NY (Herkimer, NY, Oneida, NY)..................       0.8514
Vallejo-Fairfield-Napa, CA (Napa, CA, Solano, CA)..........       1.3040
Ventura, CA (Ventura, CA)..................................       1.2330
Victoria, TX (Victoria, TX)................................       0.8435
Vineland-Millville-Bridgeton, NJ (Cumberland, NJ)..........       0.9966
Visalia-Tulare-Porterville, CA (Tulare, CA)................       1.0446
Waco, TX (McLennan, TX)....................................       0.7898
Washington, DC-MD-VA-WV (District of Columbia, DC, Calvert,             
 MD, Charles, MD, Frederick, MD, Montgomery, MD, Prince                 
 Georges, MD, Alexandria City, VA, Arlington, VA, Clarke,               
 VA, Culpepper, VA, Fairfax, VA, Fairfax City, VA, Falls                
 Church City, VA, Fauquier, VA, Fredericksburg City, VA,                
 King George, VA, Loudoun, VA, Manassas City, VA, Manassas              
 Park City, VA, Prince William, VA, Spotsylvania, VA,                   
 Stafford, VA, Warren, VA, Berkeley, WV, Jefferson, WV)....       1.1075
Waterloo-Cedar Falls, IA (Black Hawk, IA)..................       0.8638
Wausau, WI (Marathon, WI)..................................       1.0034
West Palm Beach-Boca Raton, FL (Palm Beach, FL)............       1.0096
Wheeling, OH-WV (Belmont, OH, Marshall, WV, Ohio, WV)......       0.7518
Wichita, KS (Butler, KS, Harvey, KS, Segwick, KS)..........       0.9562
Wichita Falls, TX (Archer, TX, Wichita, TX)................       0.7763
Williamsport, PA (Lycoming, PA)............................       0.8508
Wilmington-Newark, DE-MD (New Castle, DE, Cecil, MD).......       1.1539
Wilmington, NC (New Hanover, NC, Brunswick, NC)............       0.9299
Yakima, WA (Yakima, WA)....................................       0.9951
Yolo, CA (Yolo, CA)........................................       1.1615
York, PA (York, PA)........................................       0.9165
Youngstown-Warren, OH (Columbiana, OH, Mahoning, OH,                    
 Trumbull, OH).............................................       0.9555
Yuba City, CA (Sutter, CA, Yuba, CA).......................       1.0611
Yuma, AZ (Yuma, AZ)........................................       0.9769
------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission.                      
        TABLE D-18.--WAGE INDEX FOR RURAL AREAS, FISCAL YEAR 1996       
------------------------------------------------------------------------
            State               Wage index       State        Wage index
------------------------------------------------------------------------
Alabama......................       0.7183  Nebraska.......       0.7219
Alaska.......................       1.2034  Nevada.........       0.8788
Arizona......................       0.7995  New Hampshire..       1.0013
Arkansas.....................       0.6901  New Mexico.....       0.8329
California...................       1.0096  New Jersey.....        (\1\)
Colorado.....................       0.7988  New York.......       0.8647
Connecticut..................       1.3117  North Carolina.       0.7983
Delaware.....................       0.9019  North Dakota...       0.7265
Florida......................       0.8668  Ohio...........       0.8286
Georgia......................       0.7721  Oklahoma.......       0.6985
Hawaii.......................       0.9847  Oregon.........       0.9486
Idaho........................       0.8378  Pennsylvania...       0.8521
Illinois.....................       0.7497  Puerto Rico....       0.4326
Indiana......................       0.8067  Rhode Island...        (\1\)
Iowa.........................       0.7352  South Carolina.       0.7738
Kansas.......................       0.7229  South Dakota...       0.6987
Kentucky.....................       0.7660  Tennessee......       0.7409
Louisiana....................       0.7275  Texas..........       0.7302
Maine........................       0.8425  Utah...........       0.8652
Maryland.....................       0.8463  Vermont........       0.9043
Massachusetts................       1.0577  Virginia.......       0.7801
Michigan.....................       0.8744  Washington.....       0.9775
Minnesota....................       0.8129  West Virginia..       0.8069
Mississippi..................       0.6697  Wisconsin......       0.8391
Missouri.....................       0.7187  Wyoming........       0.8013
Montana......................      0.8091                               
------------------------------------------------------------------------
\1\ All counties within this State are classified as urban.             
                                                                        
Source: Health Care Financing Administration.                           
TABLE D-19.--WAGE INDEX FOR HOSPITALS THAT ARE RECLASSIFIED, FISCAL YEAR
                                  1996                                  
------------------------------------------------------------------------
                    Area reclassified to                      Wage index
------------------------------------------------------------------------
Abilene, TX................................................       0.8546
Albuquerque, NM............................................       0.9542
Alexandria, LA.............................................       0.8010
Allentown-Bethlehem-Easton, PA.............................       1.0198
Amarillo, TX...............................................       0.8759
Anchorage, AK..............................................       1.3373
Asheville, NC..............................................       0.9218
Atlanta, GA................................................       1.0069
Augusta-Aiken, GA-SC.......................................       0.8955
Baton Rouge, LA............................................       0.8670
Benton Harbor, MI..........................................       0.8304
Bergen-Passaic, NJ.........................................       1.1329
Biloxi-Gulfport-Pascagoula, MS.............................       0.8448
Birmingham, AL.............................................       0.9144
Bismarck, ND...............................................       0.8172
Boise City, ID.............................................       0.9150
Boston-Brockton-Nashua, MA-NH..............................       1.1685
Brazoria, TX...............................................       0.7724
Casper, WY.................................................       0.8662
Champaign-Urbana, IL.......................................       0.8664
Charleston-North Charleston, SC............................       0.8930
Charleston, WV.............................................       0.9317
Charlotte-Gastonia-Rock Hill, NC...........................       0.9668
Charlottesville, VA........................................       0.9030
Chattanooga, TN-GA.........................................       0.9015
Chicago, IL................................................       1.0511
Cincinnati, OH-KY-IN.......................................       0.9418
Cleveland-Lorain-Elyria, OH................................       0.9835
Columbia, MO...............................................       0.9151
Columbus, GA-AL............................................       0.7756
Columbus, OH...............................................       0.9734
Dallas, TX.................................................       0.9804
Davenport-Moline-Rock Island, IA-IL........................       0.8347
Dayton-Springfield, OH.....................................       0.9428
Denver, CO.................................................       1.0447
Des Moines, IA.............................................       0.8684
Detroit, MI................................................       1.0834
Duluth-Superior, MN-WI.....................................       0.9660
Dutchess County NY.........................................       1.0546
Eau Claire, WI.............................................       0.8660
Elkart-Goshen, IN..........................................       0.8806
Eugene-Springfield, OR.....................................       1.1184
Fargo-Moorhead, ND-MN......................................       0.8912
Fayetteville, NC...........................................       0.8504
Flint, MI..................................................       1.0738
Florence, AL...............................................       0.7970
Florence, SC...............................................       0.8537
Fort Lauderdale, FL........................................       1.0952
Fort Pierce-Port St. Lucie, FL.............................       1.0069
Fort Smith, AR-OK..........................................       0.7608
Fort Walton Beach, FL......................................       0.8705
Fort Worth-Arlington, TX...................................       1.0052
Gadsden, AL................................................       0.8568
Grand Forks, ND-MN.........................................       0.8983
Great Falls, MT............................................       0.9039
Greeley, CO................................................       0.8993
Green Bay, WI..............................................       0.9190
Greenville-Spartanburg-Anderson............................       0.9047
Harrisburg-Lebanon-Carlisle, PA............................       0.9972
Hartford, CT...............................................       1.2228
Honolulu, HI...............................................       1.1212
Houston, TX................................................       0.9874
Huntington-Ashland, WV-KY-OH...............................       0.8997
Huntsville, AL.............................................       0.7948
Indianapolis, IN...........................................       0.9647
Jackson, MS................................................       0.7642
Jacksonville, FL...........................................       0.8953
Johnson City-Kingsport-Bristol, TN.........................       0.8769
Joplin, MO.................................................       0.7923
Kalamazoo-Battle Creek, MI.................................       1.0449
Kansas City, MO-KS.........................................       0.9351
Knoxville, TN..............................................       0.8518
Lafayette, LA..............................................       0.8498
Lansing-East Lansing, MI...................................       1.0105
Las Vegas, NV-AZ...........................................       1.0934
Lexington, KY..............................................       0.8348
Lima, OH...................................................       0.8863
Lincoln, NE................................................       0.8885
Little Rock-North Little Rock,.............................       0.8527
Longview-Marshall, TX......................................       0.8479
Los Angeles-Long Beach, CA.................................       1.2461
Louisville, KY-IN..........................................       0.9327
Lubbock, TX................................................       0.8443
Madison, WI................................................       1.0055
Mansfield, OH..............................................       0.8373
Medford-Ashland, OR........................................       1.0162
Memphis, TN-AR-MS..........................................       0.8292
Middlesex-Somerset-Hunterdon, NJ...........................       1.0355
Milwaukee-Waukesha, WI.....................................       0.9498
Minneapolis-St.Paul, MN-WI.................................       1.0744
Modesto, CA................................................       1.0658
Monroe, LA.................................................       0.7948
Montgomery, AL.............................................       0.7901
Nashville, TN..............................................       0.9266
New London-Norwich, CT.....................................       1.2088
New Orleans, LA............................................       0.9454
New York-Newark, NY-NJ-PA..................................       1.3852
Newark, NJ.................................................       1.1241
Newburgh, NY-PA............................................       1.0619
Oakland, CA................................................       1.5203
Odessa-Midland, TX.........................................       0.8753
Oklahoma City, OK..........................................       0.8358
Omaha, NE-IA...............................................       0.9794
Orange County, CA..........................................       1.5593
Peoria-Pekin, IL...........................................       0.8619
Philadelphia, PA-NJ........................................       1.1098
Pittsburgh, PA.............................................       0.9743
Portland, ME...............................................       0.9744
Portland-Vancouver, OR-WA..................................       1.1248
Provo-Orem, UT.............................................       0.9646
Raleigh-Durham-Chapel Hill, NC.............................       0.9539
Rapid City, SD.............................................       0.8267
Richland-Kennewick-Pasco, WA...............................       0.9768
Roanoke, VA................................................       0.8570
Rochester, MN..............................................       1.0545
Rockford, IL...............................................       0.8872
Rock Mount, NC.............................................       0.8836
Sacramento, CA.............................................       1.2539
Saginaw-Bay City-Midland, MI...............................       0.9489
St. Cloud, MN..............................................       0.9549
St. Louis, MO-IL...........................................       0.8880
Salem, OR..................................................       0.9575
Salinas, CA................................................       1.4141
Salt Lake City-Ogden, UT...................................       0.9681
San Diego, CA..............................................       1.1856
San Francisco, CA..........................................       1.4288
San Jose, CA...............................................       1.4455
Santa Rosa, CA.............................................       1.2574
Sarasota-Bradenton, FL.....................................       0.9824
Savannah, GA...............................................       0.8968
Seattle-Bellevue-Everett, WA...............................       1.1307
Sharon, PA.................................................       0.9093
Sherman-Denison, TX........................................        08436
Sioux Falls, SD............................................       0.8761
South Bend, IN.............................................       0.9475
Springfield, IL............................................       0.8836
Springfield, MO............................................       0.7896
Stockton-Lodi, CA..........................................       1.1672
Syracuse, NY...............................................       0.9531
Tampa-St. Petersburg-Clearwater, FL........................       0.9311
Texarkana, TX-Texarkana, AR................................       0.8257
Topeka, KS.................................................       0.9401
Trenton, NJ................................................       1.2599
Tucson, AZ.................................................       0.9291
Tulsa, OK..................................................       0.8245
Tyler, TX..................................................       0.9164
Ventura, CA................................................       1.2330
Victoria, TX...............................................       0.8435
Waco, TX...................................................       0.7898
Washington, DC-MD-VA-WV....................................       1.1075
Waterloo-Cedar Falls, IA...................................       0.8638
Wausau, WI.................................................       0.9679
Wichita, KS................................................       0.9309
Abilene, TX................................................       0.8546
Rural Alabama..............................................       0.7183
Rural Arkansas.............................................       0.6901
Rural Florida..............................................       0.8668
Rural Kentucky.............................................       0.7660
Rural Louisiana............................................       0.7275
Rural Michigan.............................................       0.8744
Rural Minnesota............................................       0.8129
Rural Missouri.............................................       0.7187
Rural New Hampshire........................................       1.0013
Rural North Carolina.......................................       0.7983
Rural Virginia.............................................       0.7801
Rural West Virginia........................................       0.8069
Rural Wyoming..............................................       0.8013
------------------------------------------------------------------------
Source: Health Care Financing Administration.                           
               TABLE D-20.--DIAGNOSIS-RELATED GROUPS RELATIVE WEIGHTS, FISCAL YEARS 1995 AND 1996               
----------------------------------------------------------------------------------------------------------------
                                                                                  Relative weight               
     DRG        MDC            Type                       Title              ------------------------   Percent 
                                                                                 1995        1996       change  
----------------------------------------------------------------------------------------------------------------
1                  1  SURG                   Craniotomy age &gt;17 except for        3.1565      3.0932        -2.0
                                              trauma.                                                           
2                  1  SURG                   Craniotomy for trauma age &gt;17..      3.0968      3.0095        -2.8
3                  1  SURG \1\               Craniotomy age 0-17............      3.0398      1.8848       -38.0
4                  1  SURG                   Spinal procedures..............      2.3292      2.3296         0.0
5                  1  SURG                   Extracranial vascular                1.5601      1.5798         1.3
                                              procedures.                                                       
6                  1  SURG                   Carpal tunnel release..........      0.6339      0.8124        28.2
7                  1  SURG                   Periph and Cranial nerve and         2.5005      2.6017         4.0
                                              other nerv syst proc with CC.                                     
8                  1  SURG                   Periph and cranial nerve and         0.9185      1.1794        28.4
                                              other nerv syst proc w/o CC.                                      
9                  1  MED                    Spinal disorders and injuries..      1.2553      1.3047         3.9
10                 1  MED                    Nervous system neoplasms with        1.2618      1.2299        -2.5
                                              CC.                                                               
11                 1  MED                    Nervous system neoplasms w/o CC      0.7734      0.8000         3.4
12                 1  MED                    Degenerative nervous system          0.9574      0.9891         3.3
                                              disorders.                                                        
13                 1  MED                    Multiple sclerosis and               0.7813      0.7858         0.6
                                              cerebellar ataxia.                                                
14                 1  MED                    Specific cerebrovascular             1.1956      1.2065         0.9
                                              disorders except TIA.                                             
15                 1  MED                    Transient ischemic attack and        0.6909      0.7227         4.6
                                              precerebral occlusions.                                           
16                 1  MED                    Nonspecific cerebrovascular          1.0488      1.0639         1.4
                                              disorders with CC.                                                
17                 1  MED                    Nonspecific cerebrovascular          0.6195      0.6026        -2.7
                                              disorders w/o CC.                                                 
18                 1  MED                    Cranial and peripheral nerve         0.9126      0.9242         1.3
                                              disorders with CC.                                                
19                 1  MED                    Cranial and peripheral nerve         0.5925      0.5990         1.1
                                              disorders w/o CC.                                                 
20                 1  MED                    Nervous system infection except      2.0828      2.1157         1.6
                                              viral meningitis.                                                 
21                 1  MED                    Viral meningitis...............      1.4342      1.5350         7.0
22                 1  MED                    Hypertensive encephalopathy....      0.7806      0.8127         4.1
23                 1  MED                    Nontraumatic stupor and coma...      0.8004      0.8090         1.1
24                 1  MED                    Seizure and headache age &gt;17         0.9647      0.9908         2.7
                                              with CC.                                                          
25                 1  MED                    Seizure and headache age &gt;17 w/      0.5515      0.5681         3.0
                                              o CC.                                                             
26                 1  MED                    Seizure and headache age 0-17..      0.6270      0.8993        43.4
27                 1  MED                    Traumatic stupor and coma, coma      1.3457      1.3476         0.1
                                              &gt;1 HR.                                                            
28                 1  MED                    Traumatic stupor and coma, coma      1.2170      1.2001        -1.4
                                              &lt;1 HR age &gt;17 with CC.                                            
29                 1  MED                    Traumatic stupor and coma, coma      0.6200      0.6217         0.3
                                              &lt;1 HR age &gt;17 w/o CC.                                             
30                 1  MED \1\                Traumatic stupor and coma, coma      0.3687      0.3187       -13.6
                                              &lt;1 HR age 0-17.                                                   
31                 1  MED                    Concussion age &gt;17 with CC.....      0.7627      0.7934         4.0
32                 1  MED                    Concussion age &gt;17 w/o CC......      0.4635      0.4819         4.0
33                 1  MED \1\                Concussion age 0-17............      0.2559      0.2003       -21.7
34                 1  MED                    Other disorders of nervous           1.0862      1.0569        -2.7
                                              system with CC.                                                   
35                 1  MED                    Other disorders of nervous           0.5866      0.5914         0.8
                                              system, w/o CC.                                                   
36                 2  SURG                   Retinal procedures.............      0.5989      0.5930        -1.0
37                 2  SURG                   Orbital procedures.............      0.8089      0.8821         9.0
38                 2  SURG                   Primary iris procedures........      0.4005      0.4243         5.9
39                 2  SURG                   Lens procedures with or without      0.5055      0.5036        -0.4
                                              vitrectomy.                                                       
40                 2  SURG                   Extraocular procedures except        0.6241      0.7000        12.2
                                              orbit age &gt;17.                                                    
41                 2  SURG                   Extraocular procedures except        0.3810      0.3244       -14.9
                                              orbit age 0-17.                                                   
42                 2  SURG                   Introcular procedures except         0.5687      0.5615        -1.3
                                              retina, iris and lens.                                            
43                 2  MED                    Hyphema........................      0.3400      0.3665         7.8
44                 2  MED                    Acute major eye infections.....      0.5755      0.6150         6.9
45                 2  MED                    Neurological eye disorders.....      0.6211      0.6460         4.0
46                 2  MED                    Other disorders of the eye age       0.7553      0.7593         0.5
                                              &gt;17 with CC.                                                      
47                 2  MED                    Other disorders of the eye age       0.4331      0.4539         4.8
                                              &gt;17 w/o CC.                                                       
48                 2  MED                    Other disorders of the eye age       0.4186      0.2859       -31.7
                                              0-17.                                                             
49                 3  SURG                   Major head and neck procedures.      1.7106      1.7701         3.5
50                 3  SURG                   Sialoadenectomy................      0.7131      0.7522         5.5
51                 3  SURG                   Salivary gland procedures            0.6838      0.7325         7.1
                                              except sialoadenectomy.                                           
52                 3  SURG                   Cleft lip and palate repair....      0.9152      0.8492        -7.2
53                 3  SURG                   Sinus and mastoid procedures         0.8647      0.9392         8.6
                                              age &gt;17.                                                          
54                 3  SURG                   Sinus and mastoid procedures         0.7176      0.4634       -35.4
                                              age 0-17.                                                         
55                 3  SURG                   Miscellaneous ear, nose, mouth       0.6455      0.7238        12.1
                                              and throat procedures.                                            
56                 3  SURG                   Rhinoplasty....................      0.7684      0.8195         6.7
57                 3  SURG                   T&amp;A proc, except tonsillectomy       1.0174      1.0450         2.7
                                              and/or adenoidectomy only age                                     
                                              &gt;17.                                                              
58                 3  SURG                   T&amp;A proc, except tonsillectomy       0.3227      0.2631       -18.5
                                              and/or adeniodectomy only age                                     
                                              0-17.                                                             
59                 3  SURG                   Tonsillectomy and/or                 0.4602      0.5963        29.6
                                              adenoidectomy only, age &gt;17.                                      
60                 3  SURG                   Tonsillectomy and/or                 0.2724      0.2004       -26.4
                                              adenoidectomy only, age 0-17.                                     
61                 3  SURG                   Myringotomy w tube insertion         1.0019      1.2221        22.0
                                              age &gt;17.                                                          
62                 3  SURG                   Myringotomy w tube insertion         0.3217      0.2837       -11.8
                                              age 0-17.                                                         
63                 3  SURG                   Other ear, nose, mouth and           1.1047      1.1462         3.8
                                              throat O.R. procedures.                                           
64                 3  MED                    Ear, nose, mouth and throat          1.1419      1.1887         4.1
                                              malignancy.                                                       
65                 3  MED                    Dysequilibrium.................      0.5067      0.5162         1.9
66                 3  MED                    Epistaxis......................      0.5076      0.5306         4.5
67                 3  MED                    Epiglottitis...................      0.8381      0.8060        -3.8
68                 3  MED                    Otitis media and uri age &gt;17         0.7100      0.7094        -0.1
                                              with CC.                                                          
69                 3  MED                    Otitis media and uri age &gt;17 w/      0.5133      0.5270         2.7
                                              o CC.                                                             
70                 3  MED                    Otitis media and uri age 0-17..      0.5812      0.3129       -46.2
71                 3  MED                    Laryngotracheitis..............      0.6508      0.7206        10.7
72                 3  MED                    Nasal trauma and deformity.....      0.6160      0.6419         4.2
73                 3  MED                    Other ear, nose, mouth and           0.7616      0.7730         1.5
                                              throat diagnoses age &gt;17.                                         
74                 3  MED \1\                Other ear, nose, mouth and           0.3571      0.3223        -9.7
                                              throat diagnoses age 0-17.                                        
75                 4  SURG                   Major chest procedures.........      3.0551      3.1034         1.6
76                 4  SURG                   Other resp system O.R.               2.5126      2.5601         1.9
                                              procedures with CC.                                               
77                 4  SURG                   Other resp system O.R.               1.0630      1.1219         5.5
                                              procedures w/o CC.                                                
78                 4  MED                    Pulmonary embolism.............      1.4211      1.4136        -0.5
79                 4  MED                    Respiratory infections and           1.6955      1.6625        -1.9
                                              inflammations age 17 with CC.                                     
80                 4  MED                    Respiratory infections and           0.9259      0.9508         2.7
                                              inflammations age 17 w/o CC.                                      
81                 4  MED                    Respiratory infections and           1.4323      0.9558       -33.3
                                              inflammations age 0-17.                                           
82                 4  MED                    Respiratory neoplasms..........      1.3237      1.3166        -0.5
83                 4  MED                    Major chest trauma with CC.....      0.9530      0.9557         0.3
84                 4  MED                    Major chest trauma w/o CC......      0.4996      0.5002         0.1
85                 4  MED                    Pleural effusion with CC.......      1.1890      1.1917         0.2
86                 4  MED                    Pleural effusion w/o CC........      0.6753      0.6848         1.4
87                 4  MED                    Pulmonary edema and respiratory      1.3306      1.3589         2.1
                                              failure.                                                          
88                 4  MED                    Chronic obstructive pulmonary        1.0053      1.0018        -0.3
                                              disease.                                                          
89                 4  MED                    Simple pneumonia and pleurisy        1.1317      1.1211        -0.9
                                              age &gt;17 with CC.                                                  
90                 4  MED                    Simple pneumonia and pleurisy        0.6924      0.6996         1.0
                                              age &gt;17 w/o CC.                                                   
91                 4  MED                    Simple pneumonia and pleurisy        0.6834      0.8366        22.4
                                              age 0-17.                                                         
92                 4  MED                    Interstitial lung diseases with      1.2084      1.2000        -0.7
                                              CC.                                                               
93                 4  MED                    Interstitial lung disease w/o        0.7700      0.7550        -1.9
                                              CC.                                                               
94                 4  MED                    Pneumothorax with CC...........      1.2427      1.2378        -0.4
95                 4  MED                    Pneumothorax w/o CC............      0.6146      0.6242         1.6
96                 4  MED                    Bronchitis and asthma age &gt;17        0.8488      0.8390        -1.2
                                              with CC.                                                          
97                 4  MED                    Bronchitis and asthma age &gt;17 w/     0.6122      0.6089        -0.5
                                              o CC.                                                             
98                 4  MED                    Bronchitis and asthma age 0-17.      0.5356      0.6696        25.0
99                 4  MED                    Respiratory signs and symptoms       0.7019      0.6959        -0.9
                                              with CC.                                                          
100                4  MED                    Respiratory signs and symptoms       0.5051      0.5034        -0.3
                                              w/o CC.                                                           
101                4  MED                    Other respiratory system             0.9055      0.9120         0.7
                                              diagnoses w CC.                                                   
102                4  MED                    Other respiratory system             0.5339      0.5595         4.8
                                              diagnoses w/o CC.                                                 
103                5  SURG                   Heart transplant...............     13.5495     13.8273         2.1
104                5  SURG                   Cardiac valve procedures with        7.6076      7.3143        -3.9
                                              cardiac cath.                                                     
105                5  SURG                   Cardiac valve procedures w/o         5.7656      5.6310        -2.3
                                              cardiac cath.                                                     
106                5  SURG                   Coronary bypass with cardiac         5.6683      5.6187        -0.9
                                              cath.                                                             
107                5  SURG                   Coronary bypass w/o cardiac          4.1974      4.1803        -0.4
                                              cath.                                                             
108                5  SURG                   Other cardiothoracic procedures      6.1081      5.9455       -2.77
109            .....  .....................  no longer valid................  ..........  ..........  ..........
110                5  SURG                   Major cardiovascular procedures      4.0796      4.1308         1.3
                                              with CC.                                                          
111                5  SURG                   Major cardiovascular procedures      2.3024      2.2584        -1.9
                                              w/o CC.                                                           
112                5  SURG                   Percutaneous cardiovascular          1.9881      1.9922         0.2
                                              procedures.                                                       
113                5  SURG                   Amputation for circ system           2.7765      2.7536        -0.8
                                              disorders except upper limb                                       
                                              and toe.                                                          
114                5  SURG                   Upper limb and toe amputaion         1.5385      1.5383         0.0
                                              for circ system disorders.                                        
115                5  SURG                   Perm cardiac pacemaker implant       3.5936      3.5513        -1.2
                                              with ami, Heart failure or                                        
                                              shock.                                                            
116                5  SURG                   Oth perm cardiac pacemaker           2.4514      2.3949        -2.3
                                              implant or aicd lead or                                           
                                              generator proc.                                                   
117                5  SURG                   Cardiac pacemaker revision           1.1671      1.1454        -1.9
                                              except device replacement.                                        
118                5  SURG                   Cardiac pacemaker device             1.5582      1.5260        -2.1
                                              replacement.                                                      
119                5  SURG                   Vein ligation and stripping....      0.9949      1.1247        13.0
120                5  SURG                   Other circulatory system O.R.        1.9616      1.9531        -0.4
                                              procedures.                                                       
121                5  MED                    Circulatory disorders with ami       1.6022      1.6459         2.7
                                              and c.v. comp disch alive.                                        
122                5  MED                    Circulatory disorders with ami       1.1292      1.1614         2.9
                                              w/o c.v. comp disch alive.                                        
123                5  MED                    Circulatory disorders with ami,      1.4286      1.4370         0.6
                                              expired.                                                          
124                5  MED                    Circulatory disorders except         1.2657      1.2933         2.2
                                              ami, with card cath and                                           
                                              complex diag.                                                     
125                5  MED                    Circulatory disorders except         0.8451      0.8767         3.7
                                              ami, with card cath w/o                                           
                                              complex diag.                                                     
126                5  MED                    Acute and subacute endocarditis      2.7724      2.6049        -6.0
127                5  MED                    Heart failure and shock........      1.0239      1.0302         0.6
128                5  MED                    Deep vein thrombophlebitis.....      0.7820      0.7929         1.4
129                5  MED                    Cardiac arrest, unexplained....      1.1308      1.1376         0.6
130                5  MED                    Peripheral vascular disorders        0.9177      0.9384         2.3
                                              with CC.                                                          
131                5  MED                    Peripheral vascular disorders w/     0.5889      0.6002         1.9
                                              o CC.                                                             
132                5  MED                    Atherosclerosis with CC........      0.7296      0.6861        -6.0
133                5  MED                    Atherosclerosis w/o CC.........      0.5348      0.5347         0.0
134                5  MED                    Hypertension...................      0.5761      0.5800         0.7
135                5  MED                    Cardiac congenital and valvular      0.8507      0.8988         5.7
                                              disorders age 17 with CC.                                         
136                5  MED                    Cardiac congenital and valvular      0.5600      0.5789         3.4
                                              disorders age 17 w/o CC.                                          
137                5  MED \1\                Cardiac congenital and valvular      0.6578      0.7866        19.6
                                              disorders age 0-17.                                               
138                5  MED                    Cardiac arrhythmia and               0.7964      0.8049         1.1
                                              conduction disorders with CC.                                     
139                5  MED                    Cardiac arrhythmia and               0.4939      0.4945         0.1
                                              conduction disorders w/o CC.                                      
140                5  MED                    Angina pectoris................      0.6258      0.6312         0.9
141                5  MED                    Syncope and collapse with CC...      0.7025      0.7149         1.8
142                5  MED                    Syncope and collapse w/o CC....      0.5174      0.5216         0.8
143                5  MED                    Chest pain.....................      0.5169      0.5159        -0.2
144                5  MED                    Other circulatory system             1.0580      1.0689         1.0
                                              diagnoses with CC.                                                
145                5  MED                    Other circulatory system             0.6155      0.6204         0.8
                                              diagnoses w/o CC.                                                 
146                6  SURG                   Rectal resection with CC.......      2.5367      2.5898         2.1
147                6  SURG                   Rectal resection w/o CC........      1.5469      1.5368        -0.7
148                6  SURG                   Major small and large bowel          3.2220      3.3264         3.2
                                              procedures with CC.                                               
149                6  SURG                   Major small and large bowel          1.5022      1.5654         4.2
                                              procedures w/o CC.                                                
150                6  SURG                   Peritoneal adhesiolysis with CC      2.5652      2.6561         3.5
151                6  SURG                   Peritoneal adhesiolysis w/o CC.      1.1814      1.2606         6.7
152                6  SURG                   Minor small and large bowel          1.7829      1.8860         5.8
                                              procedures with CC.                                               
153                6  SURG                   Minor small and large bowel          1.1151      1.1257         1.0
                                              procedures w/o CC.                                                
154                6  SURG                   Stomach, esophageal and              4.1740      4.2102         0.9
                                              duodenal procedures age &gt;17                                       
                                              with CC.                                                          
155                6  SURG                   Stomach, esophageal and              1.3898      1.3885        -0.1
                                              duodenal procedures age &gt;17 w/                                    
                                              o CC.                                                             
156                6  SURG \1\               Stomach, esophageal and              0.8732      0.8101        -7.2
                                              duodenal procedures age 0-17.                                     
157                6  SURG                   Anal and stomal procedures with      1.0320      1.1048         7.1
                                              CC.                                                               
158                6  SURG                   Anal and stomal procedures w/o       0.5445      0.5789         6.3
                                              CC.                                                               
159                6  SURG                   Hernia procedures except             1.1066      1.1707         5.8
                                              inguinal and femoral age &gt;17                                      
                                              with CC.                                                          
160                6  SURG                   Hernia procedures except             0.6574      0.6746         2.6
                                              inguinal and femoral age &gt;17 w/                                   
                                              o CC.                                                             
161                6  SURG                   Inguinal and femoral hernia          0.9053      0.9554         5.5
                                              procedures age &gt;17 with CC.                                       
162                6  SURG                   Inguinal and femoral hernia          0.5156      0.5365         4.1
                                              procedures age &gt;17 w/o CC.                                        
163                6  SURG                   Hernia procedures age 0-17.....      0.7275      0.7578         4.2
164                6  SURG                   Appendectomy with complicated        2.1645      2.2374         3.4
                                              principal diag with CC.                                           
165                6  SURG                   Appendectomy with complicated        1.1976      1.2365         3.2
                                              principal diag w/o CC.                                            
166                6  SURG                   Appendectomy w/o complicated         1.3465      1.3695         1.7
                                              principal diag with CC.                                           
167                6  SURG                   Appendectomy w/o complicated         0.7828      0.7892         0.8
                                              principal diag w/o CC.                                            
168                3  SURG                   Mouth procedures with CC.......      1.0856      1.1761         8.3
169                3  SURG                   Mouth procedures w/o CC........      0.6149      0.6434         4.6
170                6  SURG                   Other digestive system O.R.          2.7813      2.7116        -2.5
                                              procedures with CC.                                               
171                6  SURG                   Other digestive system O.R.          1.0638      1.1628         9.3
                                              procedures w/o CC.                                                
172                6  MED                    Digestive malignancy with CC...      1.2990      1.2898        -0.7
173                6  MED                    Digestive malignancy w/o CC....      0.6262      0.6569         4.9
174                6  MED                    G.I. Hemorrhage with CC........      0.9726      0.9880         1.6
175                6  MED                    G.I. Hemorrhage w/o CC.........      0.5359      0.5457         1.8
176                6  MED                    Complicated peptic ulcer.......      1.0436      1.0563         1.2
177                6  MED                    Uncomplicated peptic ulcer with      0.8062      0.8270         2.6
                                              CC.                                                               
178                6  MED                    Uncomplicated peptic ulcer w/o       0.5807      0.5990         3.2
                                              CC.                                                               
179                6  MED                    Inflammatory bowel disease.....      1.1143      1.0993        -1.3
180                6  MED                    G.I. obstruction with CC.......      0.9139      0.9240         1.1
181                6  MED                    G.I. obstruction w/o CC........      0.4975      0.5231         5.1
182                6  MED                    Esophagitis, gastroent and misc      0.7685      0.7794         1.4
                                              digest disorders age &gt;17 with                                     
                                              CC.                                                               
183                6  MED                    Esophagitis, gastroent and misc      0.5356      0.5480         2.3
                                              digest disorders age &gt;17 w/o                                      
                                              CC.                                                               
184                6  MED                    Esophagitis, gastroent and misc      0.4240      0.3910        -7.8
                                              digest disorders age 0-17.                                        
185                3  MED                    Dental and oral dis except           0.8312      0.8892         7.0
                                              extractions and restorations,                                     
                                              age &gt;17.                                                          
186                3  MED \1\                Dental and oral dis except           0.4282      0.3088       -27.9
                                              extractions and restorations,                                     
                                              age 0-17.                                                         
187                3  MED                    Dental extractions and               0.6350      0.6473         1.9
                                              restorations.                                                     
188                6  MED                    Other digestive system               1.0201      1.0458         2.5
                                              diagnoses age &gt;17 with CC.                                        
189                6  MED                    Other digestive system               0.5027      0.5438         8.2
                                              diagnoses age &gt;17 w/o CC.                                         
190                6  MED                    Other digestive system               0.6707      1.2379        84.6
                                              diagnoses age 0-17.                                               
191                7  SURG                   Pancreas, liver and shunt            4.4176      4.4495         0.7
                                              procedures with CC.                                               
192                7  SURG                   Pancreas, liver and shunt            1.7609      1.7103        -2.9
                                              procedures w/o CC.                                                
193                7  SURG                   Biliary tract proc except only       3.1497      3.2131         2.0
                                              cholecyst with or w/o C.D.E.                                      
                                              with CC.                                                          
194                7  SURG                   Biliary tract proc except only       1.6562      1.6937         2.3
                                              cholecyst with or w/o C.D.E. w/                                   
                                              o CC.                                                             
195                7  SURG                   Cholecystectomy with C.D.E.          2.4576      2.6147         6.4
                                              with CC.                                                          
196                7  SURG                   Cholecystectomy with C.D.E. w/o      1.4861      1.5695         5.6
                                              CC.                                                               
197                7  SURG                   Cholecystectomy except by            2.0796      2.2034         6.0
                                              laparoscope w/o C.D.E. with CC.                                   
198                7  SURG                   Cholecystectomy except by            1.0930      1.1355         3.9
                                              laparoscope w/o C.D.E. w/o CC.                                    
199                7  SURG                   Hepatobiliary diagnostic             2.3603      2.3309        -1.2
                                              procedure for malignancy.                                         
200                7  SURG                   Hepatobiliary diagnostic             2.9698      3.0158         1.5
                                              procedure for nonmalignancy.                                      
201                7  SURG                   Other hepatobiliary or pancreas      3.2322      3.2951         1.9
                                              O.R. procedures.                                                  
202                7  MED                    Cirrhosis and alcoholic              1.3087      1.3177         0.7
                                              hepatitis.                                                        
203                7  MED                    Malignancy of hepatobiliary          1.2384      1.2187        -1.6
                                              system or pancreas.                                               
204                7  MED                    Disorders of pancreas except         1.1376      1.2020         5.7
                                              malignancy.                                                       
205                7  MED                    Disorders of liver except            1.2284      1.2276        -0.1
                                              malig, cirr, alc hepa with CC.                                    
206                7  MED                    Disorders of liver except            0.6220      0.6801         9.3
                                              malig, cirr, alc hepa w/o CC.                                     
207                7  MED                    Disorders of the biliary tract       1.0063      1.0287         2.2
                                              with CC.                                                          
208                7  MED                    Disorders of the biliary tract       0.5661      0.5943         5.0
                                              w/o CC.                                                           
209                8  SURG                   Major joint and limb                 2.3173      2.2707        -2.0
                                              reattachment procedures of                                        
                                              lower extremity.                                                  
210                8  SURG                   Hip and femur procedures except      1.8427      1.8616         1.0
                                              major joint age &gt;17 with CC.                                      
211                8  SURG                   Hip and femur procedures except      1.2990      1.2893        -0.7
                                              major joint age &gt;17 w/o CC.                                       
212                8  SURG                   Hip and femur procedures except      0.9084      1.1296        24.4
                                              major joint age 0-17.                                             
213                8  SURG                   Amputation for musculoskeletal       1.7234      1.7196        -0.2
                                              system and conn tissue                                            
                                              disorders.                                                        
214                8  SURG                   Back and neck procedures with        1.9237      1.9184        -0.3
                                              CC.                                                               
215                8  SURG                   Back and neck procedures w/o CC      1.0977      1.0924        -0.5
216                8  SURG                   Biopsies of musculoskeletal          2.1046      2.1075         0.1
                                              system and connective tissue.                                     
217                8  SURG                   WND debrid and skin graft            3.0084      2.8975        -3.7
                                              except hand, for muscskelet                                       
                                              and conn tiss dis.                                                
218                8  SURG                   Lower extrem and humer proc          1.4028      1.4231         1.4
                                              except hip, foot, femur age                                       
                                              &gt;17 with CC.                                                      
219                8  SURG                   Lower extrem and humer proc          0.9132      0.9179         0.5
                                              except hip, foot, femur age                                       
                                              &gt;17 w/o CC.                                                       
220                8  SURG                   Lower extrem and humer proc          0.9626      0.5611       -41.7
                                              except hip, foot, femur age 0-                                    
                                              17.                                                               
221                8  SURG                   Knee procedures with CC........      1.7911      1.8463         3.1
222                8  SURG                   Knee procedures w/o CC.........      0.9852      0.9747        -1.1
223                8  SURG                   Major shoulder/elbow proc, or        0.8162      0.8364         2.5
                                              other upper extremity proc                                        
                                              with CC.                                                          
224                8  SURG                   Shoulder, elbow or forearm           0.6932      0.6983         0.7
                                              proc, exc major joint proc, w/                                    
                                              o CC.                                                             
225                8  SURG                   Foot procedures................      0.9006      0.9504         5.5
226                8  SURG                   Soft tissue procedures with CC.      1.3381      1.3656         2.1
227                8  SURG                   Soft tissue procedures w/o CC..      0.6999      0.7273         3.9
228                8  SURG                   Major thumb or joint proc, or        0.8409      0.9315        10.8
                                              oth hand or wrist proc with CC.                                   
229                8  SURG                   Hand or wrist proc, except           0.5964      0.5965         0.0
                                              major joint proc, w/o CC.                                         
230                8  SURG                   Local excision and removal of        0.9145      1.0399        13.7
                                              int fix devices of hip and                                        
                                              femur.                                                            
231                8  SURG                   Local excision and removal of        1.1275      1.2131         7.6
                                              int fix devices except hip and                                    
                                              femur.                                                            
232                8  SURG                   Arthroscopy....................      1.1560      1.0578        -8.5
233                8  SURG                   Other musculoskelet sys and          1.9051      1.9275         1.2
                                              conn tiss O.R. proc w/o CC.                                       
234                8  SURG                   Other musculoskelet sys and          0.9529      1.0039         5.4
                                              conn tiss O.R. proc w/o CC.                                       
235                8  MED                    Fractures of femur.............      0.8964      0.8501        -5.2
236                8  MED                    Fractures of hip and pelvis....      0.7772      0.7818         0.6
237                8  MED                    Sprains, strains and                 0.5535      0.5711         3.2
                                              dislocations of hip, pelvis                                       
                                              and thigh.                                                        
238                8  MED                    Osteomyelitis..................      1.4939      1.4356        -3.9
239                8  MED                    Pathological fractures and           1.0338      1.0219        -1.2
                                              musculoskeletal and conn tiss                                     
                                              malignancy.                                                       
240                8  MED                    Connective tissue disorders          1.1889      1.1900         0.1
                                              with CC.                                                          
241                8  MED                    Connective tissue disorders w/o      0.5835      0.5986         2.6
                                              CC.                                                               
242                8  MED                    Septic arthritis...............      1.1440      1.1295        -1.3
243                8  MED                    Medical back problems..........      0.7122      0.7248         1.8
244                8  MED                    Bone diseases and specific           0.7346      0.7446         1.4
                                              arthropathies with CC.                                            
245                8  MED                    Bone disease and specific            0.4813      0.5050         4.9
                                              arthropathies w/o CC.                                             
246                8  MED                    Nonspecific arthropathies......      0.5529      0.5646         2.1
247                8  MED                    Signs and symptoms of                0.5532      0.5534         0.0
                                              musculoskeletal system and                                        
                                              conn tissue.                                                      
248                8  MED                    Tendonitis, myositis and             0.7117      0.7275         2.2
                                              bursitis.                                                         
249                8  MED                    Aftercare, musculoskeletal           0.6486      0.6558         1.1
                                              system and connective tissue.                                     
250                8  MED                    FX, sprn, strn and disl of           0.6950      0.7193         3.5
                                              forearm, hand, foot age &gt;17                                       
                                              with CC.                                                          
251                8  MED                    FX, sprn, strn and disl of           0.4510      0.4423        -1.9
                                              forearm, hand, foot age &gt;17 w/                                    
                                              o CC.                                                             
252                8  MED                    FX, sprn, strn and disl of           0.3642      0.2438       -33.1
                                              forearm, hand, foot age 0-17.                                     
253                8  MED                    FX, sprn, strn and disl of           0.7617      0.7637         0.3
                                              uparm, lowleg ex foot age &gt;17                                     
                                              with CC.                                                          
254                8  MED                    FX, sprn, strn, and disl of          0.4324      0.4365         0.9
                                              uparm, lowleg ex foot age &gt;17                                     
                                              w/o CC.                                                           
255                8  MED                    FX, sprn, strn and disl of           0.4831      0.2838       -41.3
                                              uparm, lowleg ex foot age 0-17.                                   
256                8  MED                    Other musculoskeletal system         0.6397      0.6419         0.3
                                              and connective tissue                                             
                                              diagnoses.                                                        
257                9  SURG                   Total mastectomy for malignancy      0.8843      0.8997         1.7
                                              with CC.                                                          
258                9  SURG                   Total mastectomy for malignancy      0.6989      0.6965        -0.3
                                              w/o CC.                                                           
259                9  SURG                   Subtotal mastectomy for              0.8291      0.8765         5.7
                                              malignancy with CC.                                               
260                9  SURG                   Subtotal mastectomy for              0.5840      0.5749        -1.6
                                              malignancy w/o CC.                                                
261                9  SURG                   Breast proc for nonmalignancy        0.7432      0.8080         8.7
                                              except biopsy and local                                           
                                              excision.                                                         
262                9  SURG                   Breast biopsy and local              0.6491      0.7115         9.6
                                              excision for nonmalignancy.                                       
263                9  SURG                   Skin graft and/or debrid for         2.3540      2.2344        -5.1
                                              skn ulcer or cellulitis with                                      
                                              CC.                                                               
264                9  SURG                   Skin graft and/or debrid for         1.1663      1.1633        -0.3
                                              skin ulcer or cellulitis w/o                                      
                                              CC.                                                               
265                9  SURG                   Skin graft and/or debrid except      1.3953      1.4131         1.3
                                              skin ulcer or cellulitis with                                     
                                              CC.                                                               
266                9  SURG                   Skin graft and/or debrid except      0.7358      0.7451         1.3
                                              for skin ulcer or cellulitis w/                                   
                                              o CC.                                                             
267                9  SURG                   Perianal and pilonidal               0.6935      0.8022        15.7
                                              procedures.                                                       
268                9  SURG                   Skin, subcutaneous tissue and        0.8356      0.9068         8.5
                                              breast plastic procedures.                                        
269                9  SURG                   Other skin, subcut tiss and          1.7025      1.6495        -3.1
                                              breast proc with CC.                                              
270                9  SURG                   Other skin, subcut tiss and          0.6610      0.6796         2.8
                                              breast proc w/o CC.                                               
271                9  MED                    Skin ulcers....................      1.1343      1.1157        -1.6
272                9  MED                    Major skin disorders with CC...      1.0072      1.0208         1.4
273                9  MED                    Major skin disorders w/o CC....      0.6339      0.6403         1.0
274                9  MED                    Malignant breast disorders with      1.1084      1.0741        -3.1
                                              CC.                                                               
275                9  MED                    Malignant breast disorders w/o       0.5132      0.4845        -5.6
                                              CC.                                                               
276                9  MED                    Nonmalignant breast disorders..      0.6137      0.6418         4.6
277                9  MED                    Cellulitis age &gt;17 with CC.....      0.8804      0.8703        -1.1
278                9  MED                    Cellulitis age &gt;17 w/o CC......      0.5850      0.5822        -0.5
279                9  MED                    Cellulitis age 0-17............      0.6708      0.7070         5.4
280                9  MED                    Trauma to the skin subcut tiss       0.6729      0.6847         1.8
                                              &amp; breast age &gt;17 with CC.                                         
281                9  MED                    Trauma to the skin subcut tiss       0.4344      0.4523         4.1
                                              &amp; breast age &gt;17 w/o CC.                                          
282                9  MED                    Trauma to the skin subcut tiss       0.3566      0.2467       -30.8
                                              &amp; breast age 0-17.                                                
283                9  MED                    Minor skin disorders with CC...      0.7155      0.7171         0.2
284                9  MED                    Minor skin disorders w/o CC....      0.4342      0.4307        -0.8
285               10  SURG                   Amputat of lower limb for            2.5270      2.3880        -5.5
                                              endocrine, nutrit and metabol                                     
                                              disorders.                                                        
286               10  SURG                   Adrenal and pituitary                2.2621      2.3163         2.4
                                              procedures.                                                       
287               10  SURG                   Skin grafts and wound debrid         2.1035      2.1126         0.4
                                              for endoc, nutrit and metab                                       
                                              disorders.                                                        
288               10  SURG                   O.R. procedures for obesity....      1.9030      2.0397         7.2
289               10  SURG                   Parathyroid procedures.........      1.0063      1.0385         3.2
290               10  SURG                   Thyroid procedures.............      0.7931      0.8537         7.6
291               10  SURG                   Thyroglossal procedures........      0.5102      0.4657        -8.7
292               10  SURG                   Other endocrine, nutrit and          2.7197      2.6301        -3.3
                                              metab. O.R. proc with CC.                                         
293               10  SURG                   Other endocrine, nutrit and          1.1604      1.1866         2.3
                                              metab. O.R. proc w/o CC.                                          
294               10  MED                    Diabetes age &gt;35...............      0.7463      0.7579         1.6
295               10  MED                    Diabetes age 0-35..............      0.7433      0.7634         2.7
296               10  MED                    Nutritional and misc metabolic       0.9179      0.9166        -0.1
                                              disorders age &gt;17 with CC.                                        
297               10  MED                    Nutritional and misc metabolic       0.5305      0.5353         0.9
                                              disorders age &gt;17 w/o CC.                                         
298               10  MED                    Nutritional and misc metabolic       0.5421      0.4756       -12.3
                                              disorders age age 0-17.                                           
299               10  MED                    Inborn errors of metabolism....      0.8118      0.9790        20.6
300               10  MED                    Endocrine disorders with CC....      1.0982      1.0919        -0.6
301               10  MED                    Endocrine disorders w/o CC.....      0.6003      0.6181         3.0
302               11  SURG                   Kidney transplant..............      4.1394      4.1370        -0.1
303               11  SURG                   Kidney, ureter and major             2.5739      2.6171         1.7
                                              bladder procedures for                                            
                                              neoplasm.                                                         
304               11  SURG                   Kidney, ureter and major             2.3313      2.3715         1.7
                                              bladder procedures for                                            
                                              nonneopl with CC.                                                 
305               11  SURG                   Kidney, ureter and major             1.1366      1.1600         2.1
                                              bladder procedures for                                            
                                              nonneopl w/o CC.                                                  
306               11  SURG                   Prostatectomy w CC.............      1.2101      1.2441         2.8
307               11  SURG                   Prostatectomy w/o CC...........      0.6619      0.6639         0.3
308               11  SURG                   Minor bladder procedures with        1.4465      1.4848         2.6
                                              CC.                                                               
309               11  SURG                   Minor bladder procedures w/o CC      0.7971      0.8061         1.1
310               11  SURG                   Transurethral procedures with        0.9159      0.9694         5.8
                                              CC.                                                               
311               11  SURG                   Transurethral procedures w/o CC      0.5395      0.5486         1.7
312               11  SURG                   Urethral procedures, age &gt;17         0.8458      0.8891         5.1
                                              with CC.                                                          
313               11  SURG                   Urethral procedures, age &gt;17 w/      0.4774      0.5008         4.9
                                              o CC.                                                             
314               11  SURG                   Urethral procedures, age 0-17..      0.4503      0.4756         5.6
315               11  SURG                   Other kidney and urinary tract       2.0323      2.0612         1.4
                                              O.R. procedures.                                                  
316               11  MED                    Renal failure..................      1.2840      1.2996         1.2
317               11  MED                    Admit for renal dialysis.......      0.5149      0.6556        27.3
318               11  MED                    Kidney and urinary tract             1.1196      1.1007        -1.7
                                              neoplasms with CC.                                                
319               11  MED                    Kidney and urinary tract             0.5530      0.5432        -1.8
                                              neoplasms w/o CC.                                                 
320               11  MED                    Kidney and urinary tract             0.9451      0.9320        -1.4
                                              infections age 17W CC.                                            
321               11  MED                    Kidney and urinary tract             0.6109      0.6104        -0.1
                                              infections age &gt;17 w/o CC.                                        
322               11  MED                    Kidney and urinary tract             0.5464      0.6651        21.7
                                              infections age 0-17.                                              
323               11  MED                    Urinary stones with CC, and/or       0.7221      0.7281         0.8
                                              ESW lithotripsy.                                                  
324               11  MED                    Urinary stones w/o CC..........      0.3872      0.3992         3.1
325               11  MED                    Kidney and urinary tract signs       0.6476      0.6436        -0.6
                                              and symptoms age &gt;17 with CC.                                     
326               11  MED                    Kidney and urinary tract signs       0.4186      0.4233         1.1
                                              and symptoms age &gt;17 w/o CC.                                      
327               11  MED                    Kidney and urinary tract signs       0.7222      0.2302       -68.1
                                              and symptoms age 0-17.                                            
328               11  MED                    Urethral stricture age &gt;17 with      0.6732      0.6672        -0.9
                                              CC.                                                               
329               11  MED                    Urethral stricture age &gt;17 w/o       0.4291      0.4233        -1.4
                                              CC.                                                               
330               11  MED                    Urethral stricture age 0-17....      0.2903      0.3063         5.5
331               11  MED                    Other kidney and urinary tract       0.9943      1.0122         1.8
                                              diagnoses age &gt;17 with CC.                                        
332               11  MED                    Other kidney and urinary tract       0.6019      0.6176         2.6
                                              diagnoses age &gt;17 w/o CC.                                         
333               11  MED                    Other kidney and urinary tract       1.0377      0.8701       -16.2
                                              diagnoses age 0-17.                                               
334               12  SURG                   Major male pelvic procedures         1.7172      1.6948        -1.3
                                              with CC.                                                          
335               12  SURG                   Major male pelvic procedures w/      1.3447      1.3044        -3.0
                                              o CC.                                                             
336               12  SURG                   Transurethral prostatectomy          0.8523      0.8802         3.3
                                              with CC.                                                          
337               12  SURG                   Transurethral prostatectomy w/o      0.6130      0.6128         0.0
                                              CC.                                                               
338               12  SURG                   Testes procedures, for               0.9738      1.0260         5.4
                                              malignancy.                                                       
339               12  SURG                   Testes procedures,                   0.8265      0.9330        1.29
                                              nonmalignancy age &gt;17.                                            
340               12  SURG                   Testes procedures,                   0.4516      0.2723       -39.7
                                              nonmalignancy age 0-17.                                           
341               12  SURG                   Penis procedures...............      1.0192      1.0699         5.0
342               12  SURG                   Circumcision age 17............      0.6689      0.7360        10.0
343               12  SURG \1\               Circumcision age 0-17..........      0.3945      0.1479       -62.5
344               12  SURG                   Other male reproductive system       0.9941      1.0209         2.7
                                              O.R. procedures for malignancy.                                   
345               12  SURG                   Other male reproductive system       0.7521      0.8435        12.2
                                              O.R. proc except for                                              
                                              malignancy.                                                       
346               12  MED                    Malignancy, male reproductive        0.9598      0.9626         0.3
                                              system, with CC.                                                  
347               12  MED                    Malignancy, male reproductive        0.4899      0.4853         0.9
                                              system, w/o CC.                                                   
348               12  MED                    Benign prostatic hypertrophy         0.6724      0.7106         5.7
                                              with CC.                                                          
349               12  MED                    Benign prostatic hypertrophy w/      0.4094      0.4241         3.6
                                              o CC.                                                             
350               12  MED                    Inflammation of the male             0.6787      0.6810         0.3
                                              reproductive system.                                              
351               12  MED \1\                Sterilization, male............      0.3472      0.2271       -34.6
352               12  MED                    Other male reproductive system       0.5807      0.5932  ..........
                                              diagnoses.                                                        
353               13  SURG                   Pelvic evisceration, radical         1.8865      1.9483         3.3
                                              hysterectomy and radical                                          
                                              vulvectomy.                                                       
354               13  SURG                   Uterine, adnexa proc for             1.3747      1.4609         6.3
                                              nonovarian/adnexal malig with                                     
                                              CC.                                                               
355               13  SURG                   Uterine, adnexa proc for             0.8773      0.8881         1.2
                                              nonovarian/adnexal malig w/o                                      
                                              CC.                                                               
356               13  SURG                   Female reproductive system           0.7162      0.7323         2.2
                                              reconstructive procedures.                                        
357               13  SURG                   Uterine and adnexa proc for          2.2834      2.3679         3.7
                                              ovarian or adnexal malignancy.                                    
358               13  SURG                   Uterine and adnexa proc for          1.1018      1.1458         4.0
                                              nonmalignancy with CC.                                            
359               13  SURG                   Uterine and adnexa proc for          0.7987      0.8072         1.1
                                              nonmalignancy w/o CC.                                             
360               13  SURG                   Vagina, cervix and vulva             0.8186      0.8739         6.8
                                              procedures.                                                       
361               13  SURG                   Laparoscopy and incisional           1.1047      1.1984         8.5
                                              tubal interrruption.                                              
362               13  SURG \1\               Endoscopic tubal interruption..      0.5189      0.2902       -44.1
363               13  SURG                   D&amp;C, conization and radio-           0.6470      0.6881         6.4
                                              implant for malignancy.                                           
364               13  SURG                   D&amp;C, conization except for           0.6239      0.6667         6.9
                                              malignancy.                                                       
365               13  SURG                   Other female reproductive            1.7127      1.7739         3.6
                                              system O.R. procedures.                                           
366               13  MED                    Malignancy, female reproductive      1.2111      1.1405        -5.8
                                              system with CC.                                                   
367               13  MED                    Malignancy, female reproductive      0.4486      0.5179        15.4
                                              system w/o CC.                                                    
368               13  MED                    Infections, female reproductive      0.9704      0.9841         1.4
                                              system.                                                           
369               13  MED                    Menstrual and other female           0.5095      0.5130         0.7
                                              reproductive system disorders.                                    
370               14  SURG                   Cesarean section with CC.......      0.8976      0.9573         6.7
371               14  SURG                   Cesarean section w/o CC........      0.6340      0.6531         3.0
372               14  MED                    Vaginal delivery with                0.4902      0.5558        13.4
                                              complicating diagnoses.                                           
373               14  MED                    Vaginal delivery w/o                 0.3387      0.3446         1.7
                                              complicating diagnoses.                                           
374               14  SURG                   Vaginal delivery with                0.6152      0.6721         9.2
                                              sterilization and diagnoses                                       
                                              and/or D&amp;C.                                                       
375               14  SURG                   Vaginal Delivery with O.R. proc      0.7101      0.6587        -7.2
                                              except steril and/or D&amp;C.                                         
376               14  MED                    Postpartum and post abortion         0.3513      0.4418        25.8
                                              diagnoses w/o O.R. procedure.                                     
377               14  SURG                   Postpartum and post abortion         0.9762      0.8181       -16.2
                                              diagnosis with O.R. procedure.                                    
378               14  MED                    Ectopic pregnancy..............      0.7052      0.7409         5.1
379               14  MED                    Threatened abortion............      0.3204      0.3962        23.7
380               14  MED                    Abortion w/o D&amp;C...............      0.3481      0.3742         7.5
381               14  SURG                   Abortion with D&amp;C, aspiration        0.4063      0.4673        15.0
                                              curettage or hysterotomy.                                         
382               14  MED                    False labor....................      0.1856      0.1922         3.6
383               14  MED                    Other antepartum diagnoses with      0.4060      0.4587        13.0
                                              medical complications.                                            
384               14  MED                    Other antepartum diagnosis w/o       0.2909      0.2818        -3.1
                                              medical complications.                                            
385               15  (\1\)                  Neonates, died or transferred        1.2741      1.3219         3.8
                                              to another acute care facility.                                   
386               15  (\1\)                  Extreme immaturity or                3.7999      4.3591        14.7
                                              respiratory distress syndrome,                                    
                                              neonate.                                                          
387               15  (\1\)                  Prematurity with major problems      1.9028      2.9772        56.5
388               15  (\1\)                  Prematurity w/o major problems.      1.2053      1.7964        49.0
389               15  .....................  Full term neonate with major                                       
                                              problems......................      1.2972      2.3785        83.4
390               15  .....................  Neonate with other significant                                     
                                              problems......................      0.5385      0.6218        15.5
391               15  (\1\)                  Normal newborn.................      0.2311      0.1465       -36.6
392               16  SURG                   Splenectomy age &gt;17............      3.2021      3.1908        -0.4
393               16  SURG \1\               Splenectomy age 0-17...........      1.5839      1.2949       -18.2
394               16  SURG                   Other O.R. procedures of the         1.5713      1.6252         3.4
                                              blood and blood forming organs.                                   
395               16  MED                    Red blood cell disorders age         0.8118      0/8359         3.0
                                              &gt;17.                                                              
396               16  MED                    Red blood cell disorders age 0-      0.2859      0.5980       109.2
                                              17.                                                               
397               16  MED                    Coagulation disorders..........      1.2490      1.2825         2.7
398               16  MED                    Reticuloendothelial and              1.2139      1.2360         1.8
                                              immunity disorders with CC.                                       
399               16  MED                    Reticuloendothelial and              0.6723      0.6934         3.1
                                              immunity disorders w/o CC.                                        
400               17  SURG                   Lymphoma and leukemia with           2.5674      2.6034         1.4
                                              major O.R. procedure.                                             
401               17  SURG                   Lymphoma and nonacute leukemia       2.4043      2.4533         2.0
                                              with other O.R. proc with CC.                                     
402               17  SURG                   Lymphoma and nonacute leukemia       0.9212      0.9428         2.3
                                              with other O.R. proc w/o CC.                                      
403               17  MED                    Lymphoma and nonacute leukemia       1.6956      1.6823        -0.8
                                              with CC.                                                          
404               17  MED                    Lymphoma and nonacute leukemia       0.7571      0.8140         7.5
                                              w/o CC.                                                           
405               17  (\1\)                  Acute leukemia w/o major O.R.        1.0840      1.8358        69.4
                                              procedure age 0-17.                                               
406               17  SURG                   Myeloprolif disord or poorly         2.6496      2.6558         0.2
                                              diff neopl with maj O.R. proc                                     
                                              with CC.                                                          
407               17  SURG                   Myeloprolif disord or poorly         1.1262      1.1626         3.2
                                              diff neopl with maj O.R. proc                                     
                                              w/o CC.                                                           
408               17  SURG                   Myeloprolif disord or poorly         1.5586      1.6840         8.0
                                              diff neopl with other O.R.                                        
                                              proc.                                                             
409               17  MED                    Radiotherapy...................      0.9785      0.9475        -3.2
410               17  MED                    Chemotherapy w/o acute leukemia      0.6749      0.7172         6.3
                                              as secondary diagnosis.                                           
411               17  MED                    History of malignancy w/o            0.4476      0.5015        12.0
                                              endoscopy.                                                        
412               17  MED                    History of malignancy W              0.4515      0.4530         0.3
                                              endoscopy.                                                        
413               17  MED                    Other myeloprolif dis or poorly      1.3595      1.3422        -1.3
                                              diff neopl diag with CC.                                          
414               17  MED                    Other myeloprolif dis or poorly      0.6704      0.7285         8.7
                                              diff neopl diag w/o CC.                                           
415               18  SURG                   O.R. procedure for infectious        3.5136      3.4769        -1.0
                                              and parasitic diseases.                                           
416               18  MED                    Septicemia age &gt;17.............      1.4927      1.4770        -1.1
417               18  MED                    Septicemia age 0-17............      1.4250      0.8764       -38.5
418               18  MED                    Postoperative and post-              0.9628      0.9777         1.5
                                              traumatic infections.                                             
419               18  MED                    Fever of unknown origin age &gt;17      0.9293      0.9223        -0.8
                                              with CC.                                                          
420               18  MED                    Fever of unknown origin age &gt;17      0.6368      0.6258        -1.7
                                              w/o CC.                                                           
421               18  MED                    Viral illness age &gt;17..........      0.6868      0.6982         1.7
422               18  MED                    Viral illness and fever of           0.5859      0.5446        -7.0
                                              unknown origin age 0-17.                                          
423               18  MED                    Other infectious and parasitic       1.5846      1.5828        -0.1
                                              diseases diagnoses.                                               
424               19  SURG                   O.R. procedure with principal        2.5573      2.4543        -4.0
                                              diagnoses of mental illness.                                      
425               19  MED                    Acute adjust react and               0.7079      0.7129         0.7
                                              disturbances of psychosocial                                      
                                              dysfunction.                                                      
426               19  MED                    Depressive neuroses............      0.5960      0.5949        -0.2
427               19  MED                    Neuroses except depressive.....      0.5969      0.5794        -2.9
428               19  MED                    Disorders of personality and         0.7521      0.6847        -9.0
                                              impulse control.                                                  
429               19  MED                    Organic disturbances and mental      0.9269      0.9537         2.9
                                              retardation.                                                      
430               19  MED                    Psychoses......................      0.8980      0.8670        -3.5
431               19  MED                    Childhood mental disorders.....      0.6316      0.6362         0.7
432               19  MED                    Other mental disorder diagnoses      0.7538      0.7018        -6.9
433               20  .....................  Alcohol/drug abuse or                                              
                                              dependence, left AMA..........      0.3356      0.3080        -8.2
434               20  .....................  Alc/drug abuse or depend, detox                                    
                                              or oth sympt treat with CC....      0.7235      0.7373         1.9
435               20  .....................  Alc/drug abuse or depend, detox                                    
                                              or oth sympt treat w/o CC.....      0.4372      0.4249        -2.8
436               20  .....................  Alc/drug dependence with                                           
                                              rehabilitation therapy........      0.9156      0.8384        -8.4
437               20  .....................  Alc/drug dependence, combined                                      
                                              rehab and detox therapy.......      0.9021      0.7972       -11.6
438            .....  .....................  No longer valid................  ..........  ..........  ..........
439               21  SURG                   Skin grafts for injuries.......      1.3295      1.6599        24.9
440               21  SURG                   Wound debridements for injuries      1.7495      1.7792         1.7
441               21  SURG                   Hand procedures for injuries...      0.7840      0.8785        12.1
442               21  SURG                   Other O.R. procedures for            2.0135      2.0836         3.5
                                              injuries with CC.                                                 
443               21  SURG                   Other O.R. procedures for            0.7547      0.8130         7.7
                                              injuries w/o CC.                                                  
444               21  MED                    Traumatic injury age &gt;17 with        0.7399      0.7290        -1.5
                                              CC.                                                               
445               21  MED                    Traumatic injury age &gt;17 w/o CC      0.4640      0.4664         0.5
446               21  MED \1\                Traumatic injury age 0-17......      0.4995      0.2846       -43.0
447               21  MED                    Allergic reactions age &gt;17.....      0.4676      0.4976         6.4
448               21  MED                    Allergic reactions age 0-17....      0.3614      0.0896       -75.2
449               21  MED                    Poisoning and toxic effects of       0.7801      0.7886         1.1
                                              drugs age &gt;17 with CC.                                            
450               21  MED                    Poisoning and toxic effects of       0.4188      0.4329         3.9
                                              drugs age &gt;17 w/o CC.                                             
451               21  MED                    Poisoning and toxic effects of       1.0341      0.2527       -75.6
                                              drugs age 0-17.                                                   
452               21  MED                    Complications of treatment with      0.8577      0.9127         6.4
                                              CC.                                                               
453               21  MED                    Complications of treatment w/o       0.4355      0.4752         9.1
                                              CC.                                                               
454               21  MED                    Other injury, poisoning and          0.8864      0.8906         0.5
                                              toxic effect diag with CC.                                        
455               21  MED                    Other injury, poisoning and          0.4379      0.4689         7.1
                                              toxic effect diag w/o CC.                                         
456               22  .....................  Burns, transferred to another        2.1721      1.9410       -10.6
                                              acute care facility.                                              
457               22  MED                    Extensive burns w/o O.R.             1.6307      1.5849        -2.8
                                              procedure.                                                        
458               22  SURG                   Nonextensive burns with skin         3.5089      3.4645        -1.3
                                              graft.                                                            
459               22  SURG                   Nonextensive burns with wound        1.7543      1.9398        10.6
                                              debridement or other O.R. proc.                                   
460               22  MED                    Nonextensive burns w/o O.R.          1.0023      0.9369        -6.5
                                              procedure.                                                        
461               23  SURG                   O.R. proc with diagnoses of          0.9432      1.0104         7.1
                                              other contact with health                                         
                                              services.                                                         
462               23  MED                    Rehabilitation.................      1.6623      1.4731       -11.4
463               23  MED                    Signs and symptoms with CC.....      0.7170      0.7416         3.4
464               23  MED                    Signs and symptoms w/o CC......      0.4740      0.4972         4.9
465               23  MED                    Aftercare w/ history of              0.4464      0.4362        -2.3
                                              malignancy as secondary                                           
                                              diagnosis.                                                        
466               23  MED                    Aftercare w/o history of             0.5319      0.5601         5.3
                                              malignancy as secondary                                           
                                              diagnosis.                                                        
467               23  MED                    Other factors influencing            0.3722      0.4291        15.3
                                              health status.                                                    
468            .....  .....................  Extensive O.R. procedure             3.5769      3.5391        -1.1
                                              unrelated to principal                                            
                                              diagnosis.                                                        
469            .....  .....................  Principal diagnosis invalid as                                     
                                              discharge diagnosis...........  ..........  ..........  ..........
470            .....  .....................  Ungroupable....................  ..........  ..........  ..........
471                8  SURG                   Bilateral or multiple major          3.7499      3.6458        -2.8
                                              joint proces of lower                                             
                                              extremity.                                                        
472               22  SURG                   Extensive burns with O.R.           11.6375     10.6993        -8.1
                                              procedure.                                                        
473               17  .....................  Acute leukemia w/o major O.R.        3.6120      3.4797        -3.7
                                              procedure age &gt;17.                                                
474            .....  .....................  No longer valid................  ..........  ..........  ..........
475                4  MED                    Prespiratory system diagnosis        3.7005      3.7015         0.0
                                              with ventilator support.                                          
476            .....  SURG                   Prostatic O.R. procedure             2.2327      2.2703         1.7
                                              unrelated to principal                                            
                                              diagnosis.                                                        
477            .....  SURG                   Nonextensive O.R. procedure          1.5221      1.5682         3.0
                                              unrelated to principal                                            
                                              diagnosis.                                                        
478                5  SURG                   Other vascular procedures with       2.2227      2.2709         2.2
                                              CC.                                                               
479                5  SURG                   Other vascular procedures w/o        1.3503      1.3864         2.7
                                              CC.                                                               
480            .....  SURG                   Liver transplant...............     18.2581     16.3066       -10.7
481            .....  SURG                   Bone marrow transplant.........     15.3076     11.6796       -23.7
482            .....  SURG                   Tracheostomy for face, mouth         3.6730      3.6620        -0.3
                                              and neck diagnoses.                                               
483            .....  SURG                   Tracheostomy except for face,       16.8772     16.1090        -4.6
                                              mouth and neck diagnoses.                                         
484               24  SURG                   Craniotomy for multiple              5.9807      5.4488        -8.9
                                              significant trauma.                                               
485               24  SURG                   Limb reattachment, hip and           3.1540      3.2610         3.4
                                              femur proc for multiple                                           
                                              significant TR.                                                   
486               24  SURG                   Other O.R. procedures for            4.9514      4.8763        -1.5
                                              multiple significant trauma.                                      
487               24  MED                    Other multiple significant           1.9336      1.9932         3.1
                                              trauma.                                                           
488               25  SURG                   HIV with extensive O.R.              4.3854      4.2177        -3.8
                                              procedure.                                                        
489               25  MED                    HIV with major related               1.8158      1.7856        -1.7
                                              condition.                                                        
490               25  MED                    HIV with or w/o other related        1.0630      1.0476        -1.4
                                              condition.                                                        
491                8  SURG                   Major joint and limb                 1.6235      1.6088        -0.9
                                              reattachment procedures of                                        
                                              upper extremity.                                                  
492               17  MED                    Chemotherapy with acute              3.6804      4.1529        12.8
                                              leukemia as secondary                                             
                                              diagnosis.                                                        
493                7  SURG                   Laparoscopic cholecystectomy w/      1.5813      1.6501         4.4
                                              o C.D.E. with CC.                                                 
494                7  SURG                   Laparoscopic cholecystectomy w/      0.8462      0.8769         3.6
                                              o C.D.E. w/o CC.                                                  
495            .....  SURG                   Lung transplant................     12.8346      9.5678      -25.5 
----------------------------------------------------------------------------------------------------------------
\1\ Medicare data for low-volume DRGs have been supplemented by data for non-Medicare patients from 19 States.  
\2\ DRGs 469 and 470 contain cases that could not be assigned to valid DRGs.                                    
                                                                                                                
Note.--Abbreviations are as follows:                                                                            
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
aicd = automatic             D&amp;C = dilation &amp; curettage   gastroent =                 nutrit = nutritional      
 implantable cardioverter    debrid = debridement          gastroenteritis            OR = operating room       
 defibrillator               detox = detoxification       G.I. = gastrointestinal     proc = procedures         
alc hepa = alcoholic         diag. = diagnosis            HIV = human                 sprn = sprain             
 hepatitis                   diff = differentiated         immunodeficiency virus     strn = strain             
AMA = against medical        digest = digestive           HR = hour                   subcut = subcutaneous     
 advice                      dis = diseases               humer = humerus             surg = surgical           
ami = anterior myocardial    disch = discharge            int = internal              syst = system             
 infarction                  disl = dislocation           lowleg = lower leg          T&amp;A = tonsillectomy and/or
amputat = amputation         disord = disorder            malig = malignancy           adenoidectomy            
cath = catheterization       endoc = endocrine            MDC = major diagnostic      TIA = transient ischemic  
CC = complication or         ESW = extracorporeal shock    category                    attack                   
 comorbidity                  wave                        med = medical               TR = trauma               
C.D.E. = common duct         extrem = extremity           metabol = metabolic         uparm = upper arm         
 exploration                 fix = fixation               muscskelet =                WND = wound               
cholecyst = cholecystectomy  FX = fracture                 musculoskeletal                                      
circ = circulatory                                        myeloprolif =                                         
cirr = cirrhosis                                           myeloproliferative                                   
comp = complication                                       neopl = neoplasm                                      
conn = connective                                         nonneopl = nonneoplasm                                
c.v. = cardiovascular                                                                                           
                                                                                                                
Source: Health Care Financing Administration.                                                                   
                               REFERENCES
Prospective Payment Assessment Commission. (1996a, March). 
        Report and recommendations to the Secretary. 
        Washington, DC: Author.
Prospective Payment Assessment Commission. (1996b, June). 
        Medicare prospective payment and the American health 
        care system. Washington, DC: Author.
Federal Register. (1995, September 1). Medicare program; 
        Changes to the hospital inpatient prospective payment 
        systems and fiscal year 1996 rates, 60 (170), pp. 
        45865-66.