**GAO-02-1014R**                      Aug 12, 2002                  

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## Highlights

GAO reviewed the Department of Health and Human Services, Centers for Medicare and Medicaid Services' (CMS) new rule on the Prospective Payment System and consolidated billing for skilled nursing facilities. GAO found that the rule would (1) set forth the updates under the prospective payment system for skilled nursing facilities for fiscal year 2003 and (2) that CMS complied with applicable requirements in promulgating the rule.

##  Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicare Program; Prospective Payment System and Consolidated Billing for Skilled NursingFacilities--Update; Notice, GAO-02-1014R, August 12, 2002

B-291041August 12, 2002The Honorable Max Baucus     Chairman     The Honorable Chuck Grassley     Ranking Minority Member     Committee on Finance     United States SenateThe 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 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; Prospective Payment System and    Consolidated Billing for Skilled Nursing Facilities--Update; NoticePursuant 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; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities--Update;    Notice (CMS-1202-N).  We received the notice on July 31, 2002.  It was published in the Federal Register as a notice on July 31, 2002.  67 Fed. Reg. 49798.     The notice sets forth the updates under the prospective payment system for skilled nursing facilities (SNFs) for fiscal year 2003.  The annual updates are required by section 1888(e) of the    Social Security Act, as amended by Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999, and the Medicare, Medicaid, and SCHIP Benefits    Improvement and Protection Act of 2000, related to Medicare payments and consolidated billing for SNFs.     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 notice.  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     Enclosurecc: Ann Stallion     Regulations Coordinator     Department of Health and       Human Services            ENCLOSURE     ANALYSIS UNDER 5 U.S.C.  801(a)(1)(B)(i)-(iv) OF A MAJOR RULE     ISSUED BY     DEPARTMENT OF HEALTH AND HUMAN SERVICES,     CENTERS FOR MEDICARE AND MEDICAID SERVICES     ENTITLED     "MEDICARE PROGRAM; PROSPECTIVE PAYMENT SYSTEM     AND CONSOLIDATED BILLING FOR SKILLED     NURSING FACILITIES--UPDATE; NOTICE"     (CMS-1202-N)(i) Cost-benefit analysis     CMS has estimated the budgetary impact of the final rule to result in an increase in payments to skilled nursing facilities of approximately $400 million in fiscal year 2003.(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C.  603-605, 607, and 609     CMS has certified that the notice will not have a significant economic impact on a substantial number of small entities.(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 etseq.     CMS found good cause under 5 U.S.C. 553 to issue the notice without prior public comment as the statute requires annual updates to the rates, the methodologies used to update the    rates have been previously subject to public comment, and the notice applies the previously established methodologies.     Paperwork Reduction Act, 44 U.S.C.  3501-3520     The notice does not contain any information collections that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act.     Statutory authorization for the rule     The notice is issued pursuant to the authority contained in section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)).     Executive Order No. 12866     The notice was reviewed by the OMB and found to be an economically significant regulatory action.     Executive Order No. 13132 (Federalism)     CMS found that the notice does not contain federalism implications sufficient to warrant the preparation of a Federalism Assessment.

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