GAO-02-922R 

United States General Accounting Office

Washington, DC 20548 

B-290839 

July 11, 2002 

The Honorable Max Baucus 

Chairman 

The Honorable Chuck Grassley 

Ranking Minority Member 

Committee on Finance 

United States Senate 

The Honorable W.J. “Billy” Tauzin 

Chairman 

The Honorable John D. Dingell 

Ranking Minority Member 

Committee on Energy and Commerce 

House of Representatives 

The Honorable Bill Thomas 

Chairman 

The Honorable Charles B. Rangel 

Ranking Minority Member 

Committee on Ways and Means 

House of Representatives 

Subject: Department of Health and Human Services, Centers for Medicare and 

Medicaid Services: Medicare Program; Update to the Prospective Payment 

System for Home Health Agencies for FY 2003

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a 

major rule promulgated by the Department of Health and Human Services, Centers 

for Medicare and Medicaid Services (CMS), entitled “Medicare Program; Update to 

the Prospective Payment System for Home Health Agencies for FY 2003” (RIN: 0938-

AL16). We received the rule on July 1, 2002. It was published in the Federal Register 

as a “notice with comment period” on June 28, 2002. 67 Fed. Reg. 43616. 

The notice sets forth an update to the 60-day national episode rates and the national 

per-visit amounts under the Medicare prospective payment system for home health 

agencies. 
Page 2 GAO-02-922R 

Enclosed is our assessment of the CMS’s compliance with the procedural steps 

required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. 

Our review indicates that the CMS complied with the applicable requirements. 

If you have any questions about this report, please contact James W. Vickers, 

Assistant General Counsel, at (202) 512-8210. The official responsible for GAO 

evaluation work relating to the subject matter of the rule is William Scanlon, 

Managing Director, Health Care. Mr. Scanlon can be reached at (202) 512-7114. 

 signed 

Kathleen E. Wannisky 

Managing Associate General Counsel 

Enclosure 

cc: Ann Stallion 

Regulations Coordinator 

Department of Health and 

 Human Services 
GAO-02-922R 

ENCLOSURE 

ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE 

ISSUED BY THE 

DEPARTMENT OF HEALTH AND HUMAN SERVICES, 

CENTERS FOR MEDICARE AND MEDICAID SERVICES 

ENTITLED 

"MEDICARE PROGRAM; UPDATE TO THE PROSPECTIVE PAYMENT SYSTEM 

FOR HOME HEALTH AGENCIES FOR FY 2003" 

(RIN: 0938-AL16) 

(i) Cost-benefit analysis

CMS prepared a regulatory impact analysis of the notice and found that there will be 

an additional $320 million in fiscal year 2003 attributable to the fiscal year 2003 

market basket increase of 2.5 percent. 

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605, 

607, and 609

CMS has examined the impact of the notice on small entities and has concluded that 

there will be a significant positive economic impact. Therefore, since the increase is 

mandated by statute and is positive, CMS found it unnecessary to consider 

alternatives to lessen the impact. 

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform 

Act of 1995, 2 U.S.C. §§ 1532-1535

The notice does not contain either an intergovernmental or private sector mandate, 

as defined in title II, of more than $100 million in any one year. 

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. 

Because the annual updates are statutorily required and the methodology used has 

previously been subject to public comment, CMS has found “good cause” to forgo 

the normal notice and comment procedures found at 5 U.S.C. 553. However, 

comments will be accepted for 60 days after publication of the notice. 

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520 

The notice does not contain any information collections that are subject to review 

under the Paperwork Reduction Act. 
Page 2 GAO-02-922R 

Statutory authorization for the rule 

The notice is issued pursuant to the authority contained in the Social Security Act, as 

amended by the Balanced Budget Act of 1997 (Pub. L. 105-33); the Omnibus 

Consolidated and Emergency Supplemental Appropriations Act for FY 1999 (Pub. L. 

105-277); the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 

1999 (Pub. L. 106-113) and the Medicare, Medicaid, and SCHIP Benefits Improvement 

and Protection Act of 2000 (Pub. L. 106-554). 

Executive Order No. 12866 

The notice was reviewed by the Office of Management and Budget and found to be 

an “economically significant” regulatory action under the order. 

Executive Order No. 13132 (Federalism) 

The notice will not have a substantial direct effect of the rights, roles, and 

responsibilities of states.