Vol. 78 Tuesday, 

No. 151 August 6, 2013 

Part IV 

Department of Health and Human Services 

Centers for Medicare and Medicaid Services 

42 CFR Parts 413 and 424 

Medicare Program; Prospective Payment System and Consolidated Billing 

for Skilled Nursing Facilities for FY 2014; Rules 


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47936 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 413 and 424 

[CMS–1446–F] 

RIN 0938–AR65 

Medicare Program; Prospective 

Payment System and Consolidated 

Billing for Skilled Nursing Facilities for 

FY 2014 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule updates the 

payment rates used under the 

prospective payment system for skilled 

nursing facilities (SNFs) for fiscal year 

(FY) 2014. In addition, it revises and 

rebases the SNF market basket, revises 

and updates the labor related share, and 

makes certain technical and conforming 

revisions in the regulations text. This 

final rule also includes a policy for 

reporting the SNF market basket forecast 

error in certain limited circumstances 

and adds a new item to the Minimum 

Data Set (MDS), Version 3.0 for 

reporting the number of distinct therapy 

days. Finally, this final rule adopts a 

change to the diagnosis code used to 

determine which residents will receive 

the AIDS add-on payment, effective for 

services provided on or after the 

October 1, 2014 implementation date for 

conversion to ICD–10–CM. 

DATES: Effective Date: This final rule is 

effective on October 1, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Penny Gershman, (410) 786–6643, for 

information related to clinical issues. 

John Kane, (410) 786–0557, for 

information related to the development 

of the payment rates and case-mix 

indexes. 

Kia Sidbury, (410) 786–7816, for 

information related to the wage index. 

Bill Ullman, (410) 786–5667, for 

information related to level of care 

determinations, consolidated billing, 

and general information. 

SUPPLEMENTARY INFORMATION: 

Availability of Certain Information 

Exclusively Through the Internet on the 

CMS Web site 

The Wage Index for Urban Areas 

Based on CBSA Labor Market Areas 

(Table A) and the Wage Index Based on 

CBSA Labor Market Areas for Rural 

Areas (Table B) are published in the 

Federal Register as an Addendum to the 

annual SNF PPS rulemaking (that is, the 

SNF PPS proposed and final rules or, 

when applicable, the current update 

notice). However, as of FY 2012, a 

number of other Medicare payment 

systems adopted an approach in which 

such tables are no longer published in 

the Federal Register in this manner, and 

instead are made available exclusively 

through the Internet; see, for example, 

the FY 2012 Hospital Inpatient PPS 

(IPPS) final rule (76 FR 51476). To be 

consistent with these other Medicare 

payment systems and streamline the 

published content to focus on policy 

discussion, we proposed to use a similar 

approach for the SNF PPS as well. We 

also proposed to revise the applicable 

regulations text at § 413.345 to 

accommodate this approach, consistent 

with the wording of the corresponding 

statutory authority at section 

1888(e)(4)(H)(iii) of the Social Security 

Act (the Act). We did not receive any 

comments on this proposal. Therefore, 

as discussed in greater detail in section 

V. of this final rule, we are finalizing 

this proposal and revising the 

applicable regulations text at § 413.345 

to accommodate this approach. Under 

this approach, effective October 1, 2013, 

the individual wage index values 

displayed in Tables A and B of this rule 

will no longer be published in the 

Federal Register as part of the annual 

SNF PPS rulemaking, and instead will 

be made available exclusively through 

the Internet on CMS’s SNF PPS Web site 

at http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/WageIndex.html. Consistent 

with the provisions of section 

1888(e)(4)(H)(iii) of the Act, we will 

continue to publish in the Federal 

Register the specific ‘‘factors to be 

applied in making the area wage 

adjustment’’ (for example, the SNF 

prospective payment system’s use of the 

hospital wage index exclusive of its 

occupational mix adjustment) as part of 

our annual SNF PPS rulemaking 

process, but that document will no 

longer include a listing of the individual 

wage index values themselves, which 

will instead be made available 

exclusively through the Internet on the 

CMS Web site. 

In addition, we note that in previous 

years, each rule or update notice issued 

under the annual SNF PPS rulemaking 

cycle has included a detailed reiteration 

of the various individual legislative 

provisions that have affected the SNF 

PPS over the years, a number of which 

represented temporary measures that 

have long since expired. That 

discussion, along with detailed 

background information on various 

other aspects of the SNF PPS, will 

henceforth be made available 

exclusively on the CMS Web site as 

well, at http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/index.html. 

To assist readers in referencing 

sections contained in this document, we 

are providing the following Table of 

Contents. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of Major Provisions 

C. Summary of Cost, Transfers, and 

Benefits 

II. Background 

A. Statutory Basis and Scope 

B. Initial Transition 

C. Required Annual Rate Updates 

III. Summary of the Provisions of the FY 2014 

SNF PPS Proposed Rule 

IV. Analysis of and Responses to Public 

Comments on the FY 2014 SNF PPS 

Proposed Rule 

A. General Comments on the FY 2014 SNF 

PPS Proposed Rule 

B. SNF PPS Rate Setting Methodology and 

FY 2014 Update 

1. Federal Base Rates 

2. SNF Market Basket Update 

a. Revising and Rebasing the SNF Market 

Basket Index 

i. Effect on the Labor-Related Share of 

Revising and Rebasing the SNF Market 

Basket Index 

3. Forecast Error Adjustment 

4. Multifactor Productivity Adjustment 

a. Incorporating the Multifactor 

Productivity Adjustment in the Market 

Basket Update 

5. Market Basket Update Factor for FY 

2014 

6. Case-Mix Adjustment 

7. Wage Index Adjustment 

8. Adjusted Rate Computation Example 

C. Additional Aspects of the SNF PPS 

1. SNF Level of Care—Administrative 

Presumption 

2. Consolidated Billing 

3. Payment for SNF-Level Swing-Bed 

Services 

D. Other Issues 

1. Monitoring Impact of FY 2012 Policy 

Changes 

2. Ensuring Accuracy in Grouping to 

Rehabilitation RUG–IV Categories 

3. SNF Therapy Research Project 

V. Provisions of the Final Rule; Regulations 

Text 

VI. Collection of Information Requirements 

VII. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impacts 

4. Detailed Economic Analysis 

5. Alternatives Considered 

6. Accounting Statement 

7. Conclusion 

B. Regulatory Flexibility Act Analysis 

C. Unfunded Mandates Reform Act 

Analysis 

D. Federalism Analysis 


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Regulations Text 

Acronyms 

In addition, because of the many terms to 

which we refer by acronym in this final rule, 

we are listing these abbreviations and their 

corresponding terms in alphabetical order 

below: 

AIDS Acquired Immune Deficiency 

Syndrome 

ARD Assessment reference date 

BBA Balanced Budget Act of 1997, Pub. L. 

105–33 

BBRA Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 1999, 

Pub. L. 106–113 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act 

of 2000, Pub. L. 106–554 

CAH Critical access hospital 

CBSA Core-based statistical area 

CFR Code of Federal Regulations 

CMI Case-mix index 

CMS Centers for Medicare & Medicaid 

Services 

COT Change of therapy 

ECI Employment Cost Index 

EOT End of therapy 

EOT–R End of therapy–resumption 

FQHC Federally qualified health center 

FR Federal Register 

FY Fiscal year 

GAO Government Accountability Office 

HCPCS Healthcare Common Procedure 

Coding System 

HOMER Home office Medicare records 

IGI IHS (Information Handling Services) 

Global Insight, Inc. 

MDS Minimum data set 

MFP Multifactor productivity 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003, Pub. L. 108–173 

MSA Metropolitan statistical area 

NAICS North American Industrial 

Classification System 

NTA Non-Therapy Ancillary 

OMB Office of Management and Budget 

OMRA Other Medicare Required 

Assessment 

PPS Prospective Payment System 

RAI Resident assessment instrument 

RAVEN Resident assessment validation 

entry 

RFA Regulatory Flexibility Act, Pub. L. 96– 

354 

RHC Rural health clinic 

RIA Regulatory impact analysis 

RUG–III Resource Utilization Groups, 

Version 3 

RUG–IV Resource Utilization Groups, 

Version 4 

RUG–53 Refined 53-Group RUG–III CaseMix Classification System 

SCHIP State Children’s Health Insurance 

Program 

SNF Skilled nursing facility 

STM Staff time measurement 

STRIVE Staff time and resource intensity 

verification 

UMRA Unfunded Mandates Reform Act, 

Pub. L. 104–4 

I. Executive Summary 

A. Purpose 

This final rule updates the SNF 

prospective payment rates for FY 2014 

as required under section 1888(e)(4)(E) 

of the Act. It also responds to section 

1888(e)(4)(H) of the Act, which requires 

the Secretary to ‘‘provide for publication 

in the Federal Register’’ before the 

August 1 that precedes the start of each 

fiscal year, the unadjusted federal per 

diem rates, the case-mix classification 

system, and the factors to be applied in 

making the area wage adjustment used 

in computing the prospective payment 

rates for that fiscal year. 

B. Summary of Major Provisions 

In accordance with sections 

1888(e)(4)(E)(ii)(IV) and 1888(e)(5) of 

the Act, the federal rates in this final 

rule reflect an update to the rates that 

we published in the SNF PPS update 

notice for FY 2013 (77 FR 46214) which 

reflects the SNF market basket index, 

adjusted by the forecast error correction, 

if applicable, and the multifactor 

productivity adjustment for FY 2014. 

C. Summary of Cost, Transfers, and 

Benefits 

Provision description Total transfers 

FY 2014 SNF PPS payment rate update ........... The economic impact of this final rule is an estimated increase of $470 million in aggregate 

payments to SNFs during FY 2014. 

II. Background 

A. Statutory Basis and Scope 

As amended by section 4432 of the 

Balanced Budget Act of 1997 (BBA, Pub. 

L. 105–33, enacted on August 5, 1997), 

section 1888(e) of the Act provides for 

the implementation of a PPS for 

Medicare payment for covered SNF 

services. This methodology uses 

prospective, case-mix adjusted per diem 

payment rates applicable to all covered 

SNF services defined in section 

1888(e)(2)(A) of the Act. The SNF PPS 

is effective for cost reporting periods 

beginning on or after July 1, 1998, and 

covers all costs of furnishing covered 

SNF services (routine, ancillary, and 

capital-related costs) other than costs 

associated with approved educational 

activities and bad debts. Under section 

1888(e)(2)(A)(i) of the Act, covered SNF 

services include post-hospital extended 

care services for which benefits are 

provided under Part A, as well as those 

items and services (other than a certain 

limited number of excluded services 

described in clauses (ii), (iii), and (iv) of 

section 1888(e)(2)(A), such as physician 

services) for which payment may 

otherwise be made under Part B and 

which are furnished to Medicare 

beneficiaries who are residents in a SNF 

during a covered Part A stay. A 

comprehensive discussion of these 

provisions appears in the May 12, 1998 

interim final rule (63 FR 26252). 

B. Initial Transition 

Under sections 1888(e)(1)(A) and 

1888(e)(11) of the Act, the SNF PPS 

included an initial, three-phase 

transition that blended a facility-specific 

rate (reflecting the individual facility’s 

historical cost experience) with the 

federal case-mix adjusted rate. The 

transition extended through the 

facility’s first three cost reporting 

periods under the PPS, up to and 

including the one that began in FY 

2001. Thus, the SNF PPS is no longer 

operating under the transition, as all 

facilities have been paid at the full 

federal rate effective with cost reporting 

periods beginning in FY 2002. 

Currently, we base payments for SNFs 

entirely on the adjusted federal per 

diem rates, and we no longer include 

adjustment factors under the transition 

related to facility-specific rates for the 

upcoming FY. 

C. Required Annual Rate Updates 

Section 1888(e)(4)(E) of the Act 

requires the SNF PPS payment rates to 

be updated annually. The most recent 

annual update occurred in an update 

notice that set forth updates to the SNF 

PPS payment rates for FY 2013 (77 FR 

46214). 

Under this requirement, section 

1888(e)(4)(H) of the Act specifies that 

we provide for publication annually in 

the Federal Register of the following: 

• The unadjusted federal per diem 

rates to be applied to days of covered 

SNF services furnished during the 

upcoming FY. 

• The case-mix classification system 

to be applied with respect to these 

services during the upcoming FY. 

• The factors to be applied in making 

the area wage adjustment with respect 

to these services. 

Along with other revisions discussed 

later in this preamble, this final rule 

also provides the required annual 


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updates to the per diem payment rates 

for SNFs for FY 2014. 

III. Summary of the Provisions of the 

FY 2014 SNF PPS Proposed Rule 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26438), we proposed an 

update to the payment rates used under 

the PPS for SNFs for FY 2014. 

Additionally, we proposed to revise and 

rebase the SNF market basket, to use 

this revised and rebased SNF market 

basket to determine the SNF PPS update 

for FY 2014; to update and revise the 

labor related share; and to make certain 

technical and conforming revisions in 

the regulations text. The proposed rule 

also included a proposed policy for 

revising how we report the SNF market 

basket forecast error in certain limited 

circumstances. In addition, we proposed 

a new item to be included on the 

Minimum Data Set (MDS), Version 3.0. 

Finally, we proposed to transition to the 

ICD–10–CM diagnosis code B20 in order 

to identify those residents for whom it 

is appropriate to apply the AIDS add-on 

payment under section 511 of the MMA, 

effective upon the October 1, 2014 

implementation date for conversion to 

ICD–10–CM. 

IV. Analysis of and Responses to Public 

Comments on the FY 2014 SNF PPS 

Proposed Rule 

In response to the publication of the 

FY 2014 SNF PPS proposed rule, we 

received 20 timely public comments 

from individual providers, corporations, 

government agencies, private citizens, 

trade associations, and major 

organizations. The following are brief 

summaries of each proposed provision, 

a summary of the public comments that 

we received related to that proposal, 

and our responses to the comments. 

A. General Comments on the FY 2014 

SNF PPS Proposed Rule 

In addition to the comments we 

received on the proposed rule’s 

discussion of specific aspects of the SNF 

PPS (which we address later in this final 

rule), commenters also submitted the 

following, more general observations on 

the payment system. A discussion of 

these comments, along with our 

responses, appears below. 

Comment: We received a number of 

comments about the MDS. Commenters 

noted the complexity of the MDS 3.0, 

particularly with regard to several of the 

newer assessment types, the need to 

clarify the Resident Assessment 

Instrument (RAI) Manual, the manual 

update process, and the time required to 

become trained on the new MDS 3.0 

requirements. 

Response: We appreciate these 

concerns and we recognize that the 

MDS 3.0 is a complex assessment tool. 

We provided extensive training and 

opportunities to assist with questions 

about the MDS 3.0 both prior to and 

after its October 1, 2010 implementation 

on audio conferences, at national 

training conferences, in the form of the 

RAI Manual and subsequent 

clarification updates, and postings to 

the MDS 3.0 and SNF PPS Web sites. 

We have also provided support in 

response to oral and written inquiries, 

and issued clarification during Open 

Door Forums, RAI Manual updates, and 

through online and telephone technical 

assistance. We are committed to 

continuing training on both the MDS 3.0 

and RUG–IV systems. Additionally, as 

we receive provider input through these 

efforts, we will continue to update and 

clarify the RAI Manual to ensure that it 

continues to provide accurate 

information and guidance on CMS 

policies in a timely fashion. 

Comment: A few commenters raised 

the issue of Non-Therapy Ancillaries 

(NTAs). All of the comments we 

received on this issue supported CMS’s 

broad objective to develop a new 

method for paying for NTAs received in 

the SNF. These commenters urged CMS 

to expedite the research necessary to 

develop a new model for NTA payment 

and to implement such a model shortly 

thereafter. 

Response: We appreciate all of the 

comments on this topic and the broad 

support for our objective to address this 

issue. Furthermore, the comments we 

received provided a number of 

interesting and creative ideas for 

consideration during the research 

process. We look forward to working 

with providers and stakeholders in the 

future as we continue to research this 

possible refinement to the SNF PPS. 

B. SNF PPS Rate Setting Methodology 

and FY 2014 Update 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26441 through 26463), we 

outlined the basic methodology used to 

set the rates for the SNF PPS. We also 

discussed several proposals associated 

with our rate setting methodology, 

including proposals associated with 

revising and rebasing the SNF market 

basket for FY 2014, using the revised 

and rebased SNF market basket to 

update the SNF payment rates, and 

updating and revising the labor-related 

share, as well as a proposal associated 

with how CMS reports the SNF forecast 

error correction for a given year. Our 

discussion of the rate setting 

methodology, our proposed changes 

associated with this methodology, and 

the comments, along with our 

responses, on these proposals appear 

below. 

1. Federal Base Rates 

Under section 1888(e)(4) of the Act, 

the SNF PPS uses per diem federal 

payment rates based on mean SNF costs 

in a base year (FY 1995) updated for 

inflation to the first effective period of 

the PPS. We developed the federal 

payment rates using allowable costs 

from hospital-based and freestanding 

SNF cost reports for reporting periods 

beginning in FY 1995. The data used in 

developing the federal rates also 

incorporated a ‘‘Part B add-on,’’ which 

is an estimate of the amounts that, prior 

to the SNF PPS, would have been 

payable under Part B for covered SNF 

services furnished to individuals during 

the course of a covered Part A stay in 

a SNF. 

In developing the rates for the initial 

period, we updated costs from FY 1995 

to the first effective year of the PPS 

(which was the 15-month period 

beginning July 1, 1998) using a SNF 

market basket index, and then 

standardized for geographic variations 

in wages and for the costs of facility 

differences in case mix. In compiling 

the database used to compute the 

federal payment rates, we excluded 

those providers that received new 

provider exemptions from the routine 

cost limits, as well as costs related to 

payments for exceptions to the routine 

cost limits. Using the formula that the 

BBA prescribed, we set the federal rates 

at a level equal to the weighted mean of 

freestanding costs plus 50 percent of the 

difference between the freestanding 

mean and weighted mean of all SNF 

costs (hospital-based and freestanding) 

combined. We computed and applied 

separately the payment rates for 

facilities located in urban and rural 

areas, and adjusted the portion of the 

federal rate attributable to wage-related 

costs by a wage index to reflect 

geographic variations in wages. 

2. SNF Market Basket Update 

Section 1888(e)(5)(A) of the Act 

requires us to establish a SNF market 

basket index that reflects changes over 

time in the prices of an appropriate mix 

of goods and services included in 

covered SNF services. Accordingly, we 

have developed a SNF market basket 

index that encompasses the most 

commonly used cost categories for SNF 

routine services, ancillary services, and 

capital-related expenses. Section 

1888(e)(5)(B) of the Act defines the SNF 

market basket percentage as the 

percentage change in the SNF market 

basket index from the midpoint of the 


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previous FY to the midpoint of the 

current FY. For the federal rates set 

forth in this final rule, we use the 

percentage change in the SNF market 

basket index to compute the update 

factor for FY 2014, based on the IGI 

second quarter 2013 forecast (with 

historical data through first quarter of 

2013) of the FY 2014 percentage 

increase in the FY 2010-based SNF 

market basket for routine, ancillary, and 

capital related expenses. In the FY 2014 

SNF PPS proposed rule, the FY 2014 

SNF market basket percentage was 

based on the IGI first quarter 2013 

forecast (with historical data through 

the fourth quarter 2012) of the FY 2014 

percentage increase in the FY 2010- 

based SNF market basket index for 

routine, ancillary, and capital-related 

expenses. The final SNF market basket 

update is discussed in section IV.B.5 of 

this final rule. As discussed in sections 

IV.B of this final rule, this market basket 

percentage change is reduced by the 

forecast error correction 

(§ 413.337(d)(2)), and by the MFP 

adjustment as required by section 

1888(e)(5)(B)(ii) of the Act. 

a. Revising and Rebasing the SNF 

Market Basket Index 

In the FY 2008 SNF PPS final rule (72 

FR 43425 through 43430), we revised 

and rebased the SNF market basket, 

which included updating the base year 

from FY 1997 to FY 2004. For FY 2014, 

we proposed to rebase the market basket 

to reflect FY 2010 Medicare allowable 

total cost data (routine, ancillary, and 

capital-related) and to revise the cost 

categories, cost weights, and price 

proxies used to determine the market 

basket (78 FR 26451 through 26461). 

Specifically, we proposed to develop 

cost category weights for the FY 2010- 

based SNF market basket in two stages. 

First, we proposed to derive base 

weights for seven major categories 

(wages and salaries, employee benefits, 

contract labor, pharmaceuticals, 

professional liability insurance, capitalrelated, and a residual ‘‘all other’’) from 

the FY 2010 Medicare cost report (MCR) 

data for freestanding SNFs. Second, we 

proposed to divide the residual ‘‘all 

other’’ cost category into subcategories, 

using U.S. Department of Commerce 

Bureau of Economic Analysis’ (BEA) 

2002 Benchmark Input-Output (I–O) 

tables for the nursing home industry 

aged forward using price changes. 

Furthermore, we proposed to continue 

to use the same overall methodology as 

was used for the FY 2004-based SNF 

market basket to develop the capital 

related cost weights of the FY 2010- 

based SNF market basket. 

We proposed to include five new cost 

categories in the FY 2010-based SNF 

market basket: (1) Medical Instruments 

and Supplies; (2) Apparel; (3) 

Machinery and Equipment; (4) 

Administrative and Facilities Support 

Services; and (5) Financial Services. We 

also proposed to divide the Nonmedical 

Professional Fees cost category into 

Nonmedical Professional Fees: LaborRelated and Nonmedical Professional 

Fees: Nonlabor-Related; and to revise 

our labels for the Labor-Intensive 

Services and Nonlabor-Intensive 

Services cost categories to All Other: 

Labor-Related Services and All Other: 

Nonlabor-Related Services, respectively. 

In addition, we proposed to revise 

several price proxies, including using 

the ECI for Wages and Salaries for 

Nursing Care Facilities (NAICS 6231) to 

measure price growth of the Wages and 

Salaries cost category, and using the ECI 

for Benefits for Nursing Care Facilities 

(NAICS 6231) to measure price growth 

of the Benefits cost category. 

We refer readers to the FY 2014 SNF 

PPS proposed rule (78 FR 26450–26461) 

for a complete discussion of our 

proposals and associated rationale 

related to revising and rebasing the SNF 

market basket. We received a number of 

public comments on the proposed 

revising and rebasing of the SNF market 

basket. A discussion of these comments, 

with our responses, appears below. 

Comment: Several commenters were 

in agreement with our efforts to revise 

and rebase the SNF Market Basket. One 

commenter recommended that we forgo 

rebasing the SNF market basket index 

until cost data that adequately reflects 

recent and upcoming changes to the 

SNF cost structure are available. 

Furthermore, the commenter stated that 

the expenses reflected in the proposed 

FY 2010 base year do not account for 

system-wide and industry-wide changes 

that have occurred since FY 2010, 

which impose additional costs on SNFs. 

Specifically, they stated the following 

changes have occurred since 2010 or are 

about to occur: (1) Effective beginning 

FY 2011, CMS implemented changes to 

the reporting of therapy minutes on the 

MDS; (2) effective beginning FY 2012, 

CMS implemented a new therapyrelated assessment and reporting 

changes; and (3) significant new 

requirements and costs on SNFs as 

employers due to the implementation of 

the Affordable Care Act. 

Response: We last rebased and revised 

the SNF market basket in the FY 2008 

SNF PPS final rule (72 FR 43412, 

43425–29), reflecting a FY 2004 base 

year. In the FY 2014 SNF PPS proposed 

rule, we proposed to rebase and revise 

the SNF market basket to reflect FY 

2010 data as these were the most recent 

Medicare cost report data available; a 

decision that was supported by 

numerous commenters. We do not agree 

with the commenter’s suggestion to 

postpone the rebasing of the SNF market 

basket and continue to use a FY 2004- 

based SNF market basket, which is less 

relevant with regard to the costs faced 

by SNFs and, thus, is not as technically 

appropriate as the FY 2010-based index. 

We will actively monitor the MCR data 

to determine if the cost structure 

changes in a meaningful way as future 

years of data become available and will 

propose any appropriate revisions or 

rebasing of the SNF market basket in 

future rulemaking. 

Comment: One commenter supported 

our efforts to improve payment accuracy 

by rebasing and revising the market 

basket. However, they expressed 

concern about the accuracy of the 

Medicare SNF cost reports on which we 

rely. They stated that since payments 

are now based on the SNF PPS, and 

have for an increasing time been 

divorced from an individual facility’s 

costs, less attention has been given to 

assuring their accuracy. 

The commenter also expressed 

concern that there has not been a recent 

federal study on the accuracy of the SNF 

Medicare Cost Reports. They 

recommended that we commission a 

study of the accuracy of SNF Medicare 

cost reports and commit to revising 

applicable parts of the new market 

basket index, if the study shows that 

such changes are warranted. 

The commenter also stated that there 

may be accuracy issues with the SNF 

cost reports, as evidenced by MedPAC’s 

use of unpublished screens to select 

SNF cost reports for its analyses. 

Therefore, they recommended that we 

explain what, if any, screens, 

exclusions, or other mechanisms were 

used in the selection of the FY 2010 

SNF cost reports on which the new 

market basket weights are computed. 

Response: We appreciate the 

commenter’s concern over the accuracy 

of the Medicare cost report data. Similar 

to MedPAC, we do apply edits to the 

MCR data to remove reporting errors 

and outliers. Specifically, MCR data are 

excluded if total facility costs, total 

operating costs, Medicare general 

inpatient routine service costs, and 

Medicare payments are less than or 

equal to zero. Additionally, for each of 

the major cost weights (wages and 

salaries, employee benefits, contract 

labor, pharmaceuticals, professional 

liability insurance, capital-related 

expenses) the data are trimmed by: (1) 

Requiring that major expenses (such as 

salary costs) and total Medicare 


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allowable costs are greater than zero; 

and (2) excluding the top and bottom 5 

percent of the major cost weight (for 

example, salary costs as a percent of 

total Medicare allowable costs). These 

are the same types of edits utilized for 

the FY 2004-based SNF market basket, 

as well as other PPS market baskets 

(including but not limited to IPPS and 

HHA). We believe this trimming process 

considerably improves the accuracy of 

the data used to compute the major cost 

weights. 

In response to the commenters’ 

recommendation that we commission a 

study of the accuracy of Medicare SNF 

cost reports, we note that implementing 

such a recommendation would require 

significant resources and approval 

through OMB’s standard survey and 

auditing process (see ‘‘Standards and 

Guidelines for Statistical Surveys’’ 

http://www.whitehouse.gov/sites/ 

default/files/omb/assets/omb/inforeg/ 

statpolicy/standards_stat_surveys.pdf 

and ‘‘Guidance on Agency Survey and 

Statistical Information Collections’’ 

http://www.whitehouse.gov/sites/ 

default/files/omb/assets/omb/inforeg/ 

pmc_survey_guidance_2006.pdf). In the 

past, cost report audits have been 

conducted but were limited to specific 

fields and a small sample of providers. 

At this time, we believe this approach 

is the most efficient and appropriate 

way to identify and address cost report 

errors and to improve the accuracy of 

the MCR data used to develop the SNF 

market basket cost weights. We would 

appreciate industry representatives 

communicating to their members the 

importance of completing the cost 

reports as accurately as possible, the 

implications of misreported data, and 

the possible impacts on their future 

payments. 

Comment: One commenter was 

supportive of periodic rebasing and 

revisions to the SNF market basket, but 

recommended that we hold off on 

updating the weights and price proxies 

this year pending refinements to the 

underlying Medicare cost reports to 

correct data issues that they believe may 

bias the major cost categories weights. 

Their concerns included: 

(1) The effect of excluding cost reports 

where the Medicare General Inpatient 

Routine. Service Costs are less than or 

equal to zero. They expressed concern 

about the effect of the exclusion of 

providers whose Medicare general 

inpatient routine service costs (as 

reported on Worksheet D1 of the SNF 

MCR) are less than or equal to zero, 

noting that this edit alone is responsible 

for excluding over 4,000 Medicare cost 

reports (approximately 30 percent of all 

SNFs filing a Medicare cost report) from 

the analytic database and the 

subsequent weight calculations. They 

acknowledged that the exclusion makes 

sense on its face and that clearly 

facilities with zero or negative inpatient 

routine service costs should be 

excluded. Upon reviewing the cost 

reports, however, they asserted that the 

issue is not that inpatient routine 

service costs are zero or negative, but 

rather that the Worksheet D1 is an 

optional worksheet. They also 

encouraged CMS to examine, develop, 

and evaluate other exclusion criteria 

that target the same issue that CMS 

seeks to address with the Medicare 

inpatient routine services cost 

exclusion. 

(2) Some of the cost category 

methodology descriptions in the 

proposed rule were unclear and 

requested that CMS in both this year’s 

final rule and future proposed rules 

provide more specificity in the precise 

methodology for estimating the market 

basket cost weights using the Medicare 

cost reports. The commenter requested 

that CMS make available a detailed 

item-by-item description of the formulas 

used in the calculation of the major cost 

category weights in the final rule and 

that CMS provide the analytic databases 

used to support the major cost category 

weight calculations on the CMS Web 

site. 

(3) The commenter claims that the 

CMS methodology for wages and 

salaries (specifically the numerator for 

wages and salaries), benefits, contract 

labor, and pharmaceuticals is 

inaccurate. The commenter based this 

conclusion on their own estimates, 

which were an attempt to re-create the 

CMS methodology and were provided in 

their comments. Additionally, the 

commenter requested more information 

be provided in the final rule to ensure 

that the results and analysis are valid 

and accurate. 

Response: We disagree with the 

commenter’s recommendation to hold 

off on updating the weights and price 

proxies this year. We believe our 

methodology is technically sound and 

does not have any of the data issues that 

the commenter suggests may bias the 

major cost category weights. We are 

using the same general methodology 

used to develop the FY 2004-based SNF 

market basket, as finalized in the FY 

2008 SNF PPS final rule (72 FR 43412, 

43425–43429) . In our response below, 

we address the three main concerns 

identified by the commenter. 

The commenter suggested that we 

explore alternative edits and examine, 

develop, and evaluate other exclusion 

criteria that target the same issue that 

we seek to address with the Medicare 

inpatient services routine cost 

exclusion. However, we continue to 

believe that this edit (exclusion of 

providers whose Medicare general 

inpatient routine service costs are less 

than or equal to zero) is appropriate as 

our goal is to create a market basket that 

is representative of freestanding SNF 

providers serving Medicare patients. 

Worksheet D1 is ‘‘optional’’ to those 

provider’s filing a low Medicare 

utilization cost report (See Provider 

Reimbursement Manual, part II, Section 

110 http://www.cms.gov/Regulationsand-Guidance/Guidance/Manuals/ 

Paper-Based-Manuals-Items/ 

CMS021935.html). The cost structure of 

these providers would reflect the 

expenses required to serve 

predominately non-Medicare patients. 

Therefore, we believe excluding these 

providers is appropriate. 

Our market basket sample, which 

included approximately 10,000 

providers, represents 70 percent of all 

freestanding SNF providers that 

submitted a Medicare cost report for FY 

2010. In addition, we note that a 

sensitivity analysis that removed the 

Medicare general inpatient routine 

service cost edit had a minor impact on 

the salary cost weight of ¥0.2 

percentage point. Therefore, we believe 

the resulting cost weights are 

representative of the average across all 

SNFs serving Medicare patients, even 

though we exclude some reports. The 

final sample of SNF Medicare Cost 

Reports used to calculate the market 

basket cost weights excluded any 

providers that reported costs less than 

or equal to zero for the following 

categories: total facility costs, total 

operating costs, Medicare general 

inpatient routine service costs, and 

Medicare payments. Therefore, the final 

sample used included roughly 10,000 of 

the 14,000 providers that submitted a 

Medicare cost report for FY 2010. 

After we apply these edits, we 

calculate the cost weights as specified in 

the FY 2014 SNF PPS proposed rule (78 

FR 26451 through 26461); this method 

is further clarified below. For each of 

the major cost weights (wages and 

salaries, employee benefits, contract 

labor, pharmaceuticals, professional 

liability insurance, and capital-related 

expenses), the data are trimmed by: (1) 

Requiring that major expenses (such as 

wages and salary costs) and total 

Medicare allowable costs are greater 

than zero; and (2) excluding the top and 

bottom 5 percent of the major cost 

weight (for example, salary costs as a 

percent of total Medicare allowable 

costs). We would note that this 

trimming process is done for each cost 

weight individually. For example, 


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providers excluded from the drug cost 

weight calculation are not automatically 

excluded from the other cost weight 

calculations and trimming process. 

These are the same types of edits 

utilized for the FY 2004-based SNF 

market basket as well as other PPS 

market baskets (including but not 

limited to IPPS and HHA). We believe 

this trimming process considerably 

improves the accuracy of the data used 

to compute the major cost weights. 

For all of the cost weights, Medicare 

allowable total costs were equal to total 

expenses from Worksheet B, lines 16, 21 

through 30, 32, 33, and 48 plus 

Medicaid drug costs as defined below. 

We included estimated Medicaid drug 

costs in the pharmacy cost weight as 

well as the denominator for total 

Medicare allowable costs. This is the 

same methodology used for the FY 

2004-based SNF market basket revision 

and rebasing. During that revision and 

rebasing, commenters expressed 

concern over the exclusion of these 

Medicaid drug expenses. In response, 

we revised the market basket drug cost 

weight methodology to include these 

costs in the Medicare allowable 

methodology. We finalized this 

methodology in the FY 2008 SNF PPS 

final rule (72 FR 43425 through 43430), 

and for the same reasons set forth in that 

final rule, we believe it is appropriate to 

continue to use this methodology in the 

proposed FY 2010-based SNF market 

basket. The methodology used in the FY 

2010-based SNF market basket includes 

Medicaid drug costs in the Medicare 

allowable MCR total costs (as calculated 

using Worksheet B, lines 16, 21 through 

30, 32, 33, 48) for each of the cost 

weights prior to trimming them as 

specified above. An alternative 

methodology would be to calculate and 

trim the nondrug cost weights using 

only Medicare allowable total costs from 

Worksheet B and then adjust the 

resulting cost weights for the inclusion 

of Medicaid drug costs. We believe our 

approach is technically appropriate as it 

allows for this adjustment to be applied 

at the individual (that is, provider) 

level, which is preferable. 

Finally, we would clarify that the 

final weights of the proposed FY 2010- 

based SNF market basket are based on 

weighted means. For example, the final 

salary cost weight after trimming is 

equal to the sum of total Medicare 

allowable wages and salaries divided by 

the sum of total Medicare allowable 

costs (including Medicaid drug costs) 

where providers with larger wages and 

salary costs have a larger weight in the 

final wages and salaries cost weight. 

This methodology is consistent with the 

methodology used to calculate the FY 

2004-based SNF market basket cost 

weights and other PPS market basket 

cost weights. 

We believe the proposed rule 

included sufficient information 

regarding CMS’s methodology and the 

underlying data used for revising and 

rebasing the SNF market basket. As 

stated in the FY 2014 SNF PPS 

proposed rule, the cost category weights 

for the proposed rebased and revised 

market basket were derived using 

freestanding Skilled Nursing Facility 

Medicare Cost Reports and Bureau of 

Economic Analysis 2002 Input-Output 

data. Both databases are publicly 

available on the CMS and BEA Web 

sites, respectively. We would note that 

the databases used for the other market 

basket rebasings (such as, the hospital 

Medicare cost report data for the IPPS 

market basket) are also publicly 

available on the CMS and BEA Web 

sites, as well. 

However, in order to respond to the 

commenter’s suggestion for more 

information on the detailed 

methodology for calculating the 

proposed FY 2010-based SNF market 

basket major cost weights, we have 

provided a detailed discussion of the 

methodology, as requested. These 

clarifications should allow the 

commenter to adequately re-create the 

market basket weights so that 

discrepancies between their results and 

the proposed FY 2010-based SNF 

market basket cost weights (that they 

believed produced inaccurate results) 

can be reconciled. We believe that the 

commenter’s estimates and conclusions 

were based on a misunderstanding of 

the formulas used to calculate the major 

cost weights for the FY 2010-based SNF 

market basket, and thus we believe the 

additional clarification provided below 

should address commenter’s concerns. 

Specifically, we provide additional 

clarification on the specific Medicare 

cost report fields used to calculate the 

major cost weights: (1) The wages and 

salaries; (2) employee benefits; (3) 

contract labor; (4) pharmaceutical; (5) 

professional liability insurance; (6) 

capital; and (7) All Other ‘‘residual’’: 

(1) Wages and Salaries (before the 

allocation of contract labor): We derived 

the wages and salaries cost category 

using the FY 2010 SNF MCRs. We 

determined Medicare allowable wages 

and salaries mostly from Worksheet S– 

3, part II data. Medicare allowable 

wages and salaries are equal to total 

wages and salaries (Worksheet S3, part 

II, line 1, column 3) minus: (1) Excluded 

salaries from Worksheet S–3, part II; and 

(2) nursing facility and nonreimbursable salaries from Worksheet A, 

lines 18, 34 through 36. Specifically, we 

determined excluded salaries in three 

steps: (1) Sum of data from Worksheet 

S3, part II, lines 3–5, and 8–14; 

Worksheet A, lines 18, 31, 34–36, 51, 

and 56; (2) estimated overhead salaries 

attributable to the non-Medicare 

allowable cost centers defined as (total 

overhead salaries (Worksheet S3, Part 

III, line 14) as a percent of total salaries 

Worksheet S3, Part II, line 1, column 3) 

* excluded salaries as defined in step 

(1); (3) total excluded salaries is equal 

to the sum of (1) and (2). 

(2) Employee Benefits (before the 

allocation of contract labor): We 

determined the weight for employee 

benefits using FY 2010 SNF MCR data. 

We derived Medicare allowable benefit 

costs from Worksheet S–3, part II. 

Medicare allowable benefits are equal to 

total benefits from Worksheet S–3, part 

II, (lines 19–21) minus excluded (nonMedicare allowable) benefits. NonMedicare allowable benefits are derived 

by multiplying non-Medicare allowable 

salaries (otherwise referred to as 

excluded salaries above) times the ratio 

of total benefit costs for the SNF to the 

total wage costs for the SNF. 

(3) Contract Labor: We determined the 

weight for contract labor using 2010 

SNF MCR data. We derived Medicare 

allowable contract labor costs from 

Worksheet S–3, part II line 17 minus 

Nursing Facility (NF) contract labor 

costs, and Medicare allowable total 

costs from Worksheet B. (Worksheet S– 

3, part II line 17 includes only those 

costs attributable to services rendered in 

the SNF and/or NF for contracted direct 

patient care services, that is, nursing, 

therapeutic, rehabilitative, or diagnostic 

services furnished under contract rather 

than by employees, and management 

contract services costs, defined as those 

individuals who are working at the 

facility in the capacity of chief 

executive, chief operating officer, chief 

financial officer, or nursing 

administrator.) NF contract labor costs, 

which are not reimbursable under 

Medicare, are derived by multiplying 

total contract labor costs by the ratio of 

NF wages and salaries (Worksheet A, 

column 1, line 18), to the sum of NF and 

SNF wages and salaries (Worksheet A, 

column 1, line 16). 

(4) Pharmaceuticals: First, we 

calculated pharmaceutical costs using 

the non-salary costs from the Pharmacy 

cost center (Worksheet B, column 0, line 

11 less Worksheet A, column 1, line 11) 

and the Drugs Charged to Patients’ cost 

center (Worksheet B, column 0, line 30 

less Worksheet A, column 1, line 30), 

both found on Worksheet B of the SNF 

MCRs. Since these drug costs were 

attributable to the entire SNF and not 

limited to Medicare allowable services, 


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we adjusted the drug costs by the ratio 

of Medicare allowable pharmacy total 

costs to total pharmacy costs from 

Worksheet B, part I, column 11. 

Worksheet B, part I allocates the general 

service cost centers, which are often 

referred to as ‘‘overhead costs’’ (in 

which pharmacy costs are included) to 

the Medicare allowable and nonMedicare allowable cost centers. 

Second, for the FY 2010-based SNF 

market basket, we proposed to continue 

to adjust the drug expenses reported on 

the MCR to include an estimate of total 

Medicaid drug costs, which are not 

represented in the Medicare-allowable 

drug cost weight. Similar to the last 

rebasing, we are estimating Medicaid 

drug costs based on data representing 

dual-eligible Medicaid beneficiaries. 

Medicaid drug costs are estimated by 

multiplying Medicaid dual-eligible drug 

costs per day times the number of 

Medicaid days as reported in the 

Medicare allowable skilled nursing cost 

center in the SNF MCR. Medicaid dualeligible drug costs per day (where the 

day represents an unduplicated drug 

supply day) were estimated using a 

sample of 2010 Part D claims for those 

dual-eligible beneficiaries who had a 

Medicare SNF stay during the year. 

Medicaid dual-eligible beneficiaries 

would receive their drugs through the 

Medicare Part D benefit, which would 

work directly with the pharmacy, and 

therefore, these costs would not be 

represented in the Medicare SNF MCRs. 

A random 20 percent sample of 

Medicare Part D claims data yielded a 

Medicaid drug cost per day of $17.39. 

We note that the FY 2004-based SNF 

market basket relied on data from the 

Medicaid Statistical Information 

System, which yielded a dual-eligible 

Medicaid drug cost per day of $13.65 for 

2004. For the revised and rebased FY 

2010-based SNF market basket, we used 

Part D claims to estimate total Medicaid 

drug costs as this provides drug 

expenditure data for dual-eligible 

beneficiaries for 2010. The Medicaid 

Statistical Information system is no 

longer a comprehensive database for 

dual-eligible beneficiaries’ drug costs. 

(5) Professional Liability Insurance: 

We calculated the professional liability 

insurance costs from Worksheet S–2 of 

the MCRs as the sum of premiums, paid 

losses, and self-insurance (Worksheet S– 

2, column 1, line 45 plus Worksheet S– 

2, column 2, line 45 plus Worksheet S– 

2, column 3, line 45). 

(6) Capital-Related: We derived the 

capital-related costs using the FY 2010 

SNF MCRs. We calculated the Medicare 

allowable capital-related cost weight 

from Worksheet B, part II (Worksheet B, 

part II, column 18, line 16 plus 

Worksheet B, part II, column 18, lines 

21 to 30 plus Worksheet B, part II, 

column 18, line 32 plus Worksheet B, 

part II, column 18, line 33 plus 

Worksheet B, part II, column 18, line 48 

plus Worksheet B, part II, column 18, 

lines 52 to 54). 

(7) All Other Expenses: The ‘‘all 

other’’ cost weight is a residual, 

calculated by subtracting the major cost 

weights (wages and salaries, employee 

benefits, contract labor, 

pharmaceuticals, professional liability 

insurance, and capital-related expenses) 

from 100. As stated in the FY 2014 SNF 

proposed rule (78 FR 26451), we then 

proposed to divide the residual ‘‘all 

other’’ cost category (21.534 percent) 

into subcategories, using U.S. 

Department of Commerce Bureau of 

Economic Analysis’ (BEA) 2002 

Benchmark Input–Output (I–O) tables 

for the nursing home industry aged 

forward to FY 2014 using price changes. 

We also proposed that if more recent 

BEA Benchmark I–O data for 2007 were 

released between the proposed and final 

rule with sufficient time to incorporate 

such data into the final rule that we 

would incorporate these data, as 

appropriate, into the FY 2010-based 

SNF PPS market basket for the final 

rule, so that the SNF market basket 

reflects the most recent BEA data 

available. 

Comment: One commenter had 

questions on our methodology for the 

proposed FY 2010-based SNF market 

basket contract labor cost weight. They 

stated that the contract labor in a 

nursing facility is primarily comprised 

of agency nursing (commonly called 

nursing pool) and contracted therapy. 

They further stated that we calculate 

Allowable Contract Labor by 

multiplying total contract labor cost by 

the ratio of SNF salaries and wages to 

SNF and NF salaries and wages, which 

they indicated is reasonable to assume 

because agency nursing would provide 

services to patients in skilled units and 

in NF units. However, they asserted that 

while this allocation approach is 

reasonable for agency nursing, it is not 

appropriate for contracted therapy. They 

further stated that contract therapy costs 

relate almost exclusively to skilled 

patients and are reported as ancillary 

costs (Worksheet B Part I, lines 25–27), 

which are Medicare allowable expenses. 

They indicated that allocating these 

costs on the ratio of SNF and NF salaries 

results in a percentage of these costs 

being considered as non-allowable, 

which is inaccurate. Therefore, they 

proposed that prior to determining the 

Allowable Contract Labor using the ratio 

methodology described above, that 

contract therapy costs (which they 

calculate as Worksheet A, lines 25–27, 

column 2) be removed. Total Medicare 

allowable contract labor would be equal 

to the Allowable Contract Labor plus the 

contract therapy costs. 

Response: We appreciate the 

commenter bringing to our attention a 

potential issue with contracted therapy 

costs weight methodology. While the 

commenter has raised an issue that 

would require further analysis, our 

preliminary analysis indicates that the 

impact to the cost weight for a change 

like this would be negligible (0.001 

percentage points to the cost weight). 

Therefore, we will continue to use our 

current methodology but will conduct 

further analysis and communicate any 

findings in future rulemaking. 

Comment: One commenter suggested 

that we should provide the public with 

a meaningful opportunity to comment 

on the incorporation of more recent BEA 

Benchmark Input–Output (I–O) data 

into the FY 2014 market basket update 

before using this data as proposed. 

Response: The 2007 Benchmark I–O 

data has not been published by the BEA 

and, therefore, we will not be 

incorporating this data into the FY 

2010-based SNF market basket. The 

2007 Benchmark I–O data is expected to 

be published in December 2013. Any 

future use of this 2007 data in the SNF 

market basket will be proposed in 

rulemaking, which will provide the 

public with a meaningful opportunity to 

comment. 

Comment: Several commenters 

disagreed with our proposal in the FY 

2014 SNF PPS proposed rule (78 FR 

26458) to use the ECI for Nursing Care 

Facilities (Private Industry) (NAICS 

6231; BLS series code 

CIU2026231000000I) to measure price 

growth of the wages and salaries and 

employee benefit cost category. They 

stated that the proposed wages and 

salaries price proxy index may be too 

heavily weighted with a lower-skilled 

labor mix to be adequately 

representative of the mix of labor skills 

necessary to deliver care to Medicare 

SNF patients. In addition, they stated 

that according to the Census Bureau, 

there were 16,320 establishments 

classified in NAICS 6231 in 2007. For 

that year, 13,841 SNFs submitted cost 

reports, suggesting that approximately 

15 percent of establishments in this 

industry classification are facilities 

providing care to residents who are less 

complex and resource-intensive than 

SNF residents, especially SNF postacute care patients. These commenters 

stated that if these facilities have a lessskilled workforce whose wages and 

salaries increase at a slower rate than 

higher-skilled occupations, using the 


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ECI for NAICS 6231 as the price proxy 

for wages and salaries in the SNF 

market basket index could bias the SNF 

market basket update downward. 

Furthermore, one commenter proposed 

that we use a blended price proxy based 

on 25 percent of the ECI for wages and 

salaries for nursing and residential care 

facilities (NAICS 623) and 75 percent of 

the ECI for wages and salaries for 

hospital workers (NAICS 622). The 

commenter suggested that we collect 

data for a sample of Medicare SNFs to 

determine the appropriate weighting. 

Response: We do not agree with the 

commenter’s suggestion to continue to 

use a blended price proxy similar to that 

used for the FY 2004-based SNF market 

basket to measure the price growth of 

wages and salaries and employee benefit 

cost category. The FY 2004-based SNF 

market basket used a blended index of 

a more general nursing home ECI for 

Nursing and Residential Facilities 

(NAICS 623, representing facilities that 

provide a mix of health and social 

services) and the ECI for wages and 

salaries of hospital workers (NAICS 622) 

as a result of the discontinuation of an 

ECI for Nursing and Personal Care 

Facilities based on the Standard 

Industrial Classification (SIC) 805. The 

blended index was proposed and 

finalized in the FY 2008 SNF PPS 

rulemaking (72 FR 25550–51 and 72 FR 

43425–29, respectively) to address the 

industry’s and CMS’s concern about the 

lack of an ECI that best represented 

Medicare-certified SNFs. After requests 

from CMS and the SNF industry, BLS 

began publishing the ECI for Nursing 

Care Facilities (6231) in 2006. Because 

BLS had just begun publishing ECI data 

for Nursing Care Facilities (NAICS 6231) 

at the time of the last SNF market 

revision and rebasing, IGI, the economic 

forecasting firm, was unable to forecast 

this price proxy at that time. 

As stated by the commenter, 

according to the 2007 Economic Census 

there were 16,320 establishments 

classified in NAICS 6231 in 2007; 

however, 15,335 establishments 

operated for the entire year (as also 

reported in the 2007 Economic Census). 

Of the 13,841 SNF providers submitting 

a Medicare cost report, 13,830 were 

open for an entire year. Therefore, 85– 

90 percent of the 2007 NAICS 6231 

establishments are likely Medicarecertified SNFs. The commenter 

proposes that we continue to use NAICS 

623 (Nursing and Residential Facilities), 

which is less representative of 

Medicare-certified SNFs since it also 

includes other types of facilities such as 

Residential care facilities, in the 

blended price proxy. 

Because we believe the ECI for 

Nursing Care Facilities (NAICS 6231) is 

representative of the SNF industry as 

discussed above, we continue to believe 

it is the most technically appropriate 

proxy for the compensation price 

inflation faced by Medicare-certified 

SNFs. As such, we believe that a 

blended price proxy is no longer 

necessary. 

After considering the comments we 

received, for the reasons discussed 

above and in the FY 2014 SNF PPS 

proposed rule, we are finalizing without 

modification our proposals as presented 

in the FY 2014 SNF PPS proposed rule 

(78 FR 26451 through 26461) to revise 

the FY 2004-based SNF market basket 

and to rebase it to reflect a base year of 

FY 2010, effective October 1, 2013. 

Table 1 presents the final revised and 

rebased FY 2010-based SNF market 

basket index. 

TABLE 1—FY 2010-BASED SNF MARKET BASKET

Cost category Weight Proposed price proxy 

Compensation ............................................................................. 62.093 

Wages and Salaries ............................................................ 50.573 ECI for Wages and Salaries for Nursing Care Facilities. 

Employee Benefits ............................................................... 11.520 ECI for Benefits for Nursing Care Facilities. 

Utilities ......................................................................................... 2.223 

Electricity .............................................................................. 1.411 PPI for Commercial Electric Power. 

Fuels, Nonhighway .............................................................. 0.667 PPI for Commercial Natural Gas. 

Water and Sewerage ........................................................... 0.145 CPI–U for Water and Sewerage Maintenance. 

Professional Liability Insurance .................................................. 1.141 CMS Hospital Professional Liability Insurance Index. 

All Other ...................................................................................... 27.183 

Other Products ..................................................................... 16.148 

Pharmaceuticals ........................................................... 7.872 PPI for Pharmaceuticals for Human Use, Prescription. 

Food, Wholesale Purchase .......................................... 3.661 PPI for Processed Foods and Feeds. 

Food, Retail Purchases ................................................ 1.190 CPI–U for Food Away From Home. 

Chemicals ..................................................................... 0.166 Blend of Chemical PPIs. 

Medical Instruments and Supplies ............................... 0.764 PPI for Medical, Surgical, and Personal Aid Devices. 

Rubber and Plastics ..................................................... 0.981 PPI for Rubber and Plastic Products. 

Paper and Printing Products ........................................ 0.838 PPI for Converted Paper and Paperboard Products. 

Apparel ......................................................................... 0.195 PPI for Apparel. 

Machinery and Equipment ............................................ 0.190 PPI for Machinery and Equipment. 

Miscellaneous Products ................................................ 0.291 PPI for Finished Goods Less Food and Energy. 

All Other Services ................................................................ 11.035 

Labor-Related Services ................................................ 6.227 

Nonmedical Professional Fees: Labor-related ...... 3.427 ECI for Total Compensation for Professional and Related Occupations. 

Administrative and Facilities Support .................... 0.497 ECI for Total Compensation for Office and Administrative Support. 

All Other: Labor-Related Services ........................ 2.303 ECI for Total Compensation for Service Occupations. 

Non Labor-Related Services ........................................ 4.808 

Nonmedical Professional Fees: Non Labor-Related.2.042 ECI for Total Compensation for Professional and Related Occupations. 

Financial Services ........................................................ 0.899 ECI for Total Compensation for Financial Activities. 

Telephone Services ...................................................... 0.572 CPI–U for Telephone Services. 

Postage ......................................................................... 0.240 CPI–U for Postage and Delivery Services. 

All Other: Nonlabor-Related Services .......................... 1.055 CPI–U for All Items Less Food and Energy. 

Capital-Related Expenses .......................................................... 7.360 

Total Depreciation ................................................................ 3.180 


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TABLE 1—FY 2010-BASED SNF MARKET BASKET—Continued 

Cost category Weight Proposed price proxy 

Building and Fixed Equipment ..................................... 2.701 BEA chained price index for nonresidential construction for 

hospitals and special care facilities—vintage weighted (25 

years). 

Movable Equipment ...................................................... 0.479 PPI for Machinery and Equipment—vintage weighted (6 

years). 

Total Interest ........................................................................ 2.096 

For-Profit SNFs ............................................................. 0.869 Average yield on municipal bonds (Bond Buyer Index 20 

bonds)—vintage weighted (22 years). 

Government and Nonprofit SNFs ................................. 1.227 Average yield on Moody’s AAA corporate bonds—vintage 

weighted (22 years). 

Other Capital-Related Expenses ......................................... 2.084 CPI–U for Rent of Primary Residence. 

Total ............................................................................................ 100.000 

i. Effect of Revising and Rebasing the 

SNF Market Basket Index on the LaborRelated Share 

We define the labor-related share 

(LRS) as those expenses that are laborintensive and vary with, or are 

influenced by, the local labor market. 

Each year, we calculate a revised laborrelated share based on the relative 

importance of labor-related cost 

categories in the input price index. In 

the FY 2014 SNF PPS proposed rule (78 

FR 26462–63), we proposed to revise 

and update the labor-related share to 

reflect the relative importance of the 

following FY 2010-based SNF market 

basket cost weights that we believe are 

labor-intensive and vary with, or are 

influenced by, the local labor market: (1) 

Wages and salaries; (2) employee 

benefits; (3) contract labor; (4) the laborrelated portion of nonmedical 

professional fees; (5) administrative and 

facilities support services; (6) all other: 

Labor-related services (previously 

referred to in the FY 2004-based SNF 

market basket as labor-intensive); and 

(7) a proportion of capital-related 

expenses. We proposed to continue to 

include a proportion of capital-related 

expenses because a portion of these 

expenses are deemed to be laborintensive and vary with, or are 

influenced by, the local labor market. 

For example, a proportion of 

construction costs for a medical 

building would be attributable to local 

construction workers’ compensation 

expenses. 

Consistent with previous SNF market 

basket revisions and rebasings, the ‘‘all 

other: labor-related services’’ cost 

category is mostly comprised of 

building maintenance and security 

services (including, but not limited to, 

commercial and industrial machinery 

and equipment repair, nonresidential 

maintenance and repair, and 

investigation and security services). 

Because these services tend to be laborintensive and are mostly performed at 

the SNF facility (and therefore, unlikely 

to be purchased in the national market), 

we believe that they meet our definition 

of labor-related services. 

The inclusion of the administrative 

and facilities support services cost 

category into the labor-related share 

remains consistent with the current 

labor-related share, since this cost 

category was previously included in the 

FY 2004-based SNF market basket laborintensive cost category. As stated in the 

FY 2014 SNF PPS proposed rule (78 FR 

26462), we proposed to establish a 

separate administrative and facilities 

support services cost category so that we 

can use the ECI for Total Compensation 

for Office and Administrative Support 

Services to reflect the specific price 

changes associated with these services. 

For the FY 2004-based SNF market 

basket, we assumed that all nonmedical 

professional services (including 

accounting and auditing services, 

engineering services, legal services, and 

management and consulting services) 

were purchased in the local labor 

market and, thus, all of their associated 

fees varied with the local labor market. 

As a result, we previously included 100 

percent of these costs in the laborrelated share. As we discussed in the FY 

2014 SNF PPS proposed rule (78 FR 

26462), in an effort to determine more 

accurately the share of nonmedical 

professional fees that should be 

included in the labor-related share, we 

surveyed SNFs regarding the proportion 

of those fees that are attributable to local 

firms and the proportion that are 

purchased from national firms. Based on 

these weighted results, we determined 

that SNFs purchase, on average, the 

following portions of contracted 

professional services inside their local 

labor market: 

• 86 percent of accounting and 

auditing services. 

• 89 percent of architectural, 

engineering services. 

• 78 percent of legal services. 

• 87 percent of management 

consulting services. 

Together, these four categories 

represent 2.672 percentage points of the 

total costs for the proposed FY 2010- 

based SNF market basket. We applied 

the percentages from this special survey 

to their respective SNF market basket 

weights to separate them into laborrelated and nonlabor-related costs. As a 

result, we are designating 2.285 of the 

2.672 total to the labor-related share, 

with the remaining 0.387 categorized as 

nonlabor-related. 

In addition to the professional 

services listed above, we also classified 

expenses under NAICS 55, Management 

of Companies and Enterprises, into the 

nonmedical professional fees cost 

category. The NAICS 55 data are mostly 

comprised of corporate, subsidiary, and 

regional managing offices, or otherwise 

referred to as home offices. Formerly, all 

of the expenses within this category 

were considered to vary with, or be 

influenced by, the local labor market, 

and thus, were included in the laborrelated share. Because many SNFs are 

not located in the same geographic area 

as their home office, we analyzed data 

from a variety of sources to determine 

what proportion of these costs should be 

appropriately included in the laborrelated share. As discussed in the FY 

2014 SNF PPS proposed rule (78 FR 

26462), we proposed a methodology to 

determine the proportion of NAICS 55 

costs that should be allocated to the 

labor-related share based on the percent 

of SNF home office compensation 

attributable to those SNFs that had 

home offices located in their respective 

labor markets. Our proposed 

methodology was based on data from 

MCRs, as well as a CMS database of 

Home Office Medicare Records 

(HOMER). Using this proposed 

methodology, we determined that 32 

percent of SNF home office 

compensation costs were for SNFs that 


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had home offices located in their 

respective local labor markets; therefore, 

we proposed to allocate 32 percent of 

NAICS 55 expenses to the labor-related 

share. We believe that this methodology 

provides a reasonable estimate of the 

NAICS 55 expenses that are 

appropriately allocated to the laborrelated share, because we primarily rely 

on data on home office compensation 

costs as provided by SNFs on Medicare 

cost reports. By combining these data 

with the specific MSAs for the SNF and 

their associated home office, we believe 

we have a reasonable estimate of the 

proportion of SNF’s home office costs 

that would be incurred in the local labor 

market. 

In the proposed FY 2010-based SNF 

market basket, NAICS 55 expenses that 

were subject to allocation based on the 

home office allocation methodology 

represent 1.833 percent of the total 

costs. Based on the home office results, 

we are apportioning 0.587 percentage 

point of the 1.833 percentage points 

figure into the labor-related share and 

designating the remaining 1.247 

percentage points as nonlabor-related. 

The Benchmark I–O data contains 

other smaller cost categories that we 

allocate fully to either nonmedical 

professional fees: labor-related or 

nonmedical professional fees: nonlaborrelated. Together, the sum of these 

smaller cost categories, the four 

nonmedical professional fees cost 

categories where survey results were 

available, and the NAICS 55 expenses 

represent all nonmedical professional 

fees, or 5.469 percent of total costs in 

the SNF market basket. Of the 5.469 

percentage points, 3.427 percentage 

points represent professional fees: laborrelated while 2.042 percentage points 

represent nonmedical professional fees: 

nonlabor-related. 

For a complete discussion of our 

proposals related to the labor-related 

share and associated rationale, we refer 

readers to the FY 2014 SNF PPS 

proposed rule (78 FR 26462–63). A 

discussion of the comments we received 

related to these proposals, with our 

responses, appears below. 

Comment: One commenter disagreed 

with our use of the professional fees 

survey to determine the labor-related 

portion of Nonmedical Professional Fees 

costs associated with accounting and 

auditing services; architectural, 

engineering services; legal services; and 

management and consulting services. 

They stated that the survey of 141 

providers only represents 0.94 percent 

of the approximately 15,000 SNFs 

nationwide. Furthermore, they 

contended that even when the services 

are purchased from ‘‘national firms,’’ 

those services are priced by national 

firms according to local market costs. 

Response: We believe a method that 

distributes these professional fees based 

on empirical research and data, and not 

on assumption, represents a technical 

improvement to the construction of the 

market basket and the estimate of the 

labor-related share. In an effort to draw 

a nationally representative sample of 

skilled nursing facilities, we used data 

on full-time equivalents (FTE’s) to 

represent the sizes of each SNF and then 

selected institutions for participation in 

the survey, across various strata (to be 

representative across Census Region and 

Urban/Rural status), based on their 

relative FTE size. That is, the greater the 

number of one’s FTEs, the greater the 

chance of being selected to participate 

in the sample from one’s specific 

stratum. 

The survey itself prompted sample 

institutions to select from multiple 

choice answers the proportions of their 

professional fees that are purchased 

from firms located outside of their 

respective local labor market. The 

multiple choice answers for each type of 

professional service included the 

following options: 0 percent of fees; 1– 

20 percent of fees; 21–40 percent of fees; 

41–60 percent of fees; 61–80 percent of 

fees; 81–99 percent of fees; and 100 

percent of fees. We chose this type of 

approach, as opposed to asking firms for 

more detailed approximations of their 

spending, in an attempt to reduce 

variability within the data. 

Responses were gathered with each 

participating institution being assigned 

a sample weight equal to the inverse of 

their selection probability (with 

adjustments for non-response bias to 

ensure the representativeness of the 

data). This type of application 

represents a very common survey 

approach and is based on valid and 

widely-accepted statistical techniques. 

We believe that this methodology of 

weighting responses allows for an 

adequate sample size to draw inferences 

for this purpose. 

We noted generally that, depending 

on the exact professional service, 

between 25 percent and 50 percent of 

the institutions indicated that they 

purchased at least some percentage of 

those services from firms beyond their 

local labor market. Given these findings, 

we developed a weighted average of the 

results to determine the final proportion 

to be excluded from the labor-related 

share for each of the four types of 

professional services surveyed. 

The following represents a 

description of the steps we used in 

developing the weighted averages to 

designate these fees as labor-related or 

nonlabor-related: 

First, for those institutions that spent 

between 1 percent and 20 percent of the 

professional services fees on firms 

located beyond their local labor 

markets, we multiplied their weighted 

count by the mid-point of that range (or 

10 percent) as those estimates tended to 

have very low variability around their 

respective point estimates. As an 

example, for Accounting and Auditing 

services, if a weighted count of 500 

SNFs responded that they paid ‘‘1 to 20 

percent’’ of their professional fees for 

these services to firms located outside of 

their local labor market, we would 

multiply 500 times 10 percent. This 

would represent our first subtotal. 

Second, for those firms that spent 

more than 20 percent of their fees on 

firms located outside of their local labor 

markets, the variance around the point 

estimates tended to be higher. As a 

result we multiplied the weighted 

number of firms by the low point within 

each multiple choice answer’s range in 

order to develop our overall weighted 

estimates. Using a similar example as 

above, if a weighted count of 300 SNFs 

responded that they paid ‘‘21 to 40 

percent’’ of their professional fees to 

firms located outside of their local labor 

market, we would multiply 300 times 21 

percent. This would be repeated for the 

other categories, as well and represent 

our next set of subtotals. 

For the last step in the calculations, 

we added the subtotals together and 

then divided by the total number of 

weighted SNFs in order to determine 

what proportion of their professional 

fees went to firms inside and outside of 

their local labor markets. 

Additionally, we disagree with the 

commenter that services purchased from 

national firms are always priced at local 

labor market cost rates. We believe, for 

example, that an accounting firm that 

employs accountants located at their 

headquarters would have a standard 

pricing structure that is developed to 

ensure that their costs of operation are 

covered, regardless of the location of 

their clients. Finally, in the absence of 

a creditable data source from the 

commenter, we do not believe it would 

be appropriate to include costs 

associated with professional services 

purchased from nationally based firms 

located beyond the SNF’s local labor 

market in the labor-related share. 

After considering the comments we 

received, for the reasons discussed 

above and in the FY 2014 SNF PPS 

proposed rule, we are finalizing our 

proposal, as presented in the FY 2014 

SNF PPS proposed rule (78 FR 26462 

through 26463), to update and revise the 


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47946 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

labor-related share effective October 1, 

2013, to reflect the relative importance 

of the following FY 2010-based SNF 

market basket cost weights that we 

believe are labor-intensive and vary 

with, or are influenced by, the local 

labor market: (1) Wages and salaries; (2) 

employee benefits; (3) contract labor; (4) 

the labor-related portion of nonmedical 

professional fees; (5) administrative and 

facilities support services; (6) all other: 

labor-related services (previously 

referred to in the FY 2004-based SNF 

market basket as labor-intensive); and 

(7) a proportion of capital-related 

expenses. Furthermore, in the FY 2014 

SNF PPS proposed rule (78 FR 26443), 

we also proposed if more recent data 

became available (for example, a more 

recent estimate of the FY 2010-based 

SNF market basket, MFP adjustment, 

and/or FY 2004-based SNF market 

basket used for the forecast error 

calculation), we would use such data, if 

appropriate, to determine the FY 2014 

SNF market basket update, FY 2014 

labor-related share relative importance, 

and MFP adjustment in the FY 2014 

SNF PPS final rule. Accordingly, Table 

2 below summarizes the revised and 

updated labor-related share for FY 2014, 

which is based on IGI’s most recent 

forecast (second quarter 2013 forecast 

with historical data through first quarter 

2013) of the rebased and revised FY 

2010-based SNF market basket, 

compared to the labor-related share that 

was used for the FY 2013 SNF PPS 

update. 

TABLE 2—FY 2013 AND FY 2014 SNF LABOR-RELATED SHARE

Relative 

importance, 

labor-related, 

FY 2013 (FY 

2004-based 

index) 

12:2 forecast 

Relative 

importance, 

labor-related, 

FY 2014 (FY 

2010-based 

index) 

13:2 forecast 

Wages and salaries 1 ............................................................................................................................................... 49.847 49.118 

Employee benefits ................................................................................................................................................... 11.532 11.423 

Nonmedical Professional fees: labor-related ........................................................................................................... 1.307 3.446 

Administrative and facilities support services .......................................................................................................... N/A 0.499 

All Other: Labor-related services 2 ........................................................................................................................... 3.364 2.287 

Capital-related (.391) ............................................................................................................................................... 2.333 2.772 

Total .................................................................................................................................................................. 68.383 69.545 

1The wages and salaries and employee benefits cost weight reflect contract labor costs. 

2Previously referred to as labor-intensive services cost category in the FY 2004-based SNF market basket. 

2. Market Basket Estimate for the FY 

2014 SNF PPS Update 

We also proposed to determine the FY 

2014 SNF market basket percentage 

under section 1888(e)(5)(B)(i) of the Act 

based on the percentage increase in the 

revised and rebased FY 2010-based SNF 

market basket (78 FR 26441). As 

discussed above, we are finalizing our 

proposal to revise and rebase the SNF 

market basket to reflect a base year of 

FY 2010. Thus, we are finalizing our 

proposal to use the FY 2010-based SNF 

market basket to determine the SNF 

market basket percentage increase for 

FY 2014. Section IV.B.5 of this final rule 

includes further discussion of the SNF 

market basket percentage increase for 

FY 2014. 

3. Forecast Error Adjustment 

As discussed in the June 10, 2003 

supplemental proposed rule (68 FR 

34768) and finalized in the August 4, 

2003, final rule (68 FR 46057 through 

46059), the regulations at 

§ 413.337(d)(2) provide for an 

adjustment to account for market basket 

forecast error. The initial adjustment for 

market basket forecast error applied to 

the update of the FY 2003 rate for FY 

2004, and took into account the 

cumulative forecast error for the period 

from FY 2000 through FY 2002, 

resulting in an increase of 3.26 percent 

to the FY 2004 update. Subsequent 

adjustments in succeeding FYs take into 

account the forecast error from the most 

recently available FY for which there is 

final data, and apply the difference 

between the forecasted and actual 

change in the market basket when the 

difference exceeds a specified threshold. 

We originally used a 0.25 percentage 

point threshold for this purpose; 

however, for the reasons specified in the 

FY 2008 SNF PPS final rule (72 FR 

43425, August 3, 2007), we adopted a 

0.5 percentage point threshold effective 

for FY 2008 and subsequent fiscal years. 

As we stated in the FY 2004 SNF PPS 

final rule that first issued the market 

basket forecast error adjustment (68 FR 

46058, August 4, 2003), the adjustment 

will ‘‘. . . reflect both upward and 

downward adjustments, as 

appropriate.’’ 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26441 through 26442), we 

discussed the forecast error for FY 2012 

(the most recently available FY for 

which there is final data), and proposed 

a new method for reporting the forecast 

error in situations where the forecast 

error calculation is equal to 0.5 

percentage point when rounded to one 

significant digit (otherwise referred to as 

a tenth of a percentage point). For FY 

2012, the estimated increase in the 

market basket index was 2.7 percentage 

points, while the actual increase was 2.2 

percentage points, resulting in the 

actual increase being 0.5 percentage 

point lower than the estimated increase. 

As the forecast error calculation in this 

instance does not permit one to 

determine definitively if the forecast 

error adjustment threshold has been 

exceeded, we proposed to report the 

forecast error to two significant digits so 

that we may determine whether the 

forecast error correction threshold has 

been exceeded and whether the forecast 

error adjustment should be applied 

under § 413.337(d)(2). This policy 

would apply only in those instances 

where the forecast error, when rounded 

to one significant digit, is 0.5 percentage 

point. Furthermore, we stated that we 

would apply the proposed policy where 

the difference between the actual and 

projected market basket is either 

positive or negative 0.5 percentage 

point. We believe this approach is 

necessary and appropriate to ensure that 

the necessity for a forecast error 

adjustment is accurately determined in 

accordance with § 413.337(d)(2). 

Therefore, we proposed that, following 

the policy outlined above, we would 

determine the forecast error for FY 2012 

to the second significant digit, or the 

hundredth of a percentage point. The 

forecasted FY 2012 SNF market basket 


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percentage change was 2.7 percent. 

When rounded to the second significant 

digit, it was 2.69 percent. This would be 

subtracted from the actual FY 2012 SNF 

market basket percentage change, 

rounded to the second significant digit, 

of 2.18 percent to yield a negative 

forecast error correction of 0.51 

percentage point. As the forecast error 

correction, when rounded to two 

significant digits, exceeds 0.5 

percentage point, a forecast error 

adjustment would be warranted under 

the policy outlined in the FY 2008 SNF 

PPS final rule (72 FR 43425) (see 

§ 413.337(d)(2)). 

We stated in the proposed rule that, 

consistent with prior applications of the 

forecast error adjustment since 

establishing the 0.5 percentage point 

threshold, and consistent with our 

applications of both the market basket 

adjustment and productivity adjustment 

described below, once we have 

determined that a forecast error 

adjustment is warranted, we will 

continue to apply the adjustment itself 

at one significant digit (otherwise 

referred to as a tenth of a percentage 

point). Therefore, the FY 2014 SNF 

market basket percentage change of 2.3 

percent would be adjusted downward 

by the forecast error correction of 0.5 

percentage point, resulting in a net SNF 

market basket increase factor of 1.8 

percent. 

We received a number of comments 

on the proposed change to how the 

forecast error is reported in these 

limited circumstances, as well as more 

general comments on the SNF forecast 

error adjustment. A discussion of these 

comments, with our responses, appears 

below. 

Comment: The comments received on 

this topic supported the approach 

proposed in the FY 2014 SNF PPS 

proposed rule for reporting the forecast 

error in situations where the forecast 

error calculation is equal to 0.5 

percentage point when rounded to one 

significant digit. Some commenters did, 

however, state that we should consider 

using a 0.45 percentage point threshold 

instead of the 0.5 percentage point 

threshold, where we would apply a 

forecast error adjustment when the 

forecast error exceeded 0.45 percentage 

point. According to the commenters, 

this would permit us to continue 

applying an adjustment at the one 

significant digit level without requiring 

different methods for reporting the 

forecast error in a given year. Finally, it 

was requested that we confirm that in 

cases where the threshold rounds to 

0.50 percentage point, at the two 

significant digit level, that a forecast 

error adjustment would not be applied. 

Response: We appreciate the support 

for our proposal from commenters. With 

respect to the commenters’ suggestion 

that we adopt a 0.45 percentage point 

threshold rather than the current 0.5 

percentage point threshold, we note that 

we did not propose to change the 

forecast error threshold in the FY 2014 

SNF PPS proposed rule, and thus we are 

not adopting such a change at this time. 

We proposed only to change how the 

forecast error is reported to create 

greater transparency, in those limited 

cases where the forecast error rounds to 

0.5 percentage point at the one 

significant digit level, as to whether and 

why the forecast error adjustment is or 

is not being applied in a given year. We 

continue to believe that a 0.5 percentage 

point threshold is appropriate and 

enables us to identify those instances 

where the difference between the actual 

and projected market basket becomes 

sufficiently significant to indicate that 

the historical price changes are not 

being adequately reflected. 

In response to the comment 

concerning whether, under our 

proposed policy, the forecast error 

adjustment would be applied in cases 

where the forecast error rounds to 0.50 

percentage point at the two significant 

digit level, we would not apply the 

forecast error adjustment in such a case 

as the forecast error would not exceed 

the 0.5 percentage point threshold. 

Comment: Several commenters 

suggested that we apply a cumulative 

forecast error adjustment to account for 

all of the variations in the market basket 

forecasts since FY 2003. These 

commenters stated that while the 

industry has tolerated the adjustment 

process, the lack of any cumulative 

adjustment in recent years violates the 

precedent set by CMS in 2003 when the 

last cumulative adjustment was made 

and that the cumulative adjustment in 

2003 demonstrated recognition by us of 

the cumulatively erosive effect of multiyear forecasting errors. The commenters 

recommended that we adopt a policy 

which recognizes the cumulative effect 

of multi-year market basket forecast 

errors and that an adjustment be made 

to account for the cumulative errors 

since FY 2003. 

Response: In the FY 2004 SNF PPS 

final rule, we applied a one-time, 

cumulative forecast error adjustment 

resulting in an increase of 3.26 percent 

(68 FR 46036, 46058). Since that time, 

the forecast errors have been relatively 

small and clustered near zero. As stated 

in prior rulemaking on the SNF PPS— 

including, most recently, the FY 2012 

SNF PPS final rule (76 FR 48527, 

August 8, 2011)—we believe the forecast 

error correction should be applied only 

when the degree of forecast error in any 

given year is such that the SNF base 

payment rate does not adequately reflect 

the historical price changes faced by 

SNFs. Accordingly, we continue to 

believe that the forecast error 

adjustment mechanism should 

appropriately be reserved for the type of 

major, unexpected change that initially 

gave rise to this policy, rather than the 

minor year-to-year variances that are a 

routine and inherent aspect of this type 

of statistical measurement. 

Accordingly, for the reasons 

discussed in this final rule and in the 

FY 2014 SNF PPS proposed rule (78 FR 

26441 through 26442), we are finalizing 

our proposal to report the forecast error 

to the second significant digit in only 

those instances where the forecast error 

rounds to 0.5 percentage point at one 

significant digit. Effective October 1, 

2013, we will report the forecast error to 

the second significant digit in those 

instances where the forecast error 

rounds to 0.5 percentage point at one 

significant digit, so that we may 

determine whether the forecast error 

adjustment threshold has been 

exceeded. As discussed above, once we 

have determined that a forecast error 

adjustment is warranted, we will 

continue to apply the adjustment itself 

at one significant digit (otherwise 

referred to as a tenth of a percentage 

point). 

4. Multifactor Productivity Adjustment 

Section 3401(b) of the Affordable Care 

Act (consisting of the Patient Protection 

and Affordable Care Act, Pub. L. 111– 

148, enacted on March 23, 2010, and the 

Health Care and Education 

Reconciliation Act of 2010, Pub. L. 111– 

152, enacted on March 30, 2010) 

requires that, in FY 2012 (and in 

subsequent FYs), the market basket 

percentage under the SNF payment 

system as described in section 

1888(e)(5)(B)(i) of the Act is to be 

reduced annually by the productivity 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act. Section 

1886(b)(3)(B)(xi)(II) of the Act, added by 

section 3401(a) of the Affordable Care 

Act, sets forth the definition of this 

productivity adjustment. The statute 

defines the productivity adjustment to 

be equal to ‘‘the 10-year moving average 

of changes in annual economy-wide 

private nonfarm business multi-factor 

productivity (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost-reporting period, or other annual 

period)’’ (the MFP adjustment). The 

Bureau of Labor Statistics (BLS) is the 

agency that publishes the official 

measure of private nonfarm business 


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multifactor productivity (MFP). Please 

see http://www.bls.gov/mfp to obtain the 

BLS historical published MFP data. 

The projection of MFP is currently 

produced by IGI, an economic 

forecasting firm. To generate a forecast 

of MFP, IGI replicated the MFP measure 

calculated by the BLS, using a series of 

proxy variables derived from IGI’s U.S. 

macroeconomic models. This process is 

described in greater detail in section 

III.F.3 of the FY 2012 SNF PPS final rule 

(76 FR 48527 through 48529). 

a. Incorporating the Multifactor 

Productivity Adjustment Into the 

Market Basket Update 

Section 1888(e)(5)(A) of the Act 

requires the Secretary to ‘‘establish a 

skilled nursing facility market basket 

index that reflects changes over time in 

the prices of an appropriate mix of 

goods and services included in covered 

skilled nursing facility services.’’ 

Section 1888(e)(5)(B)(ii) of the Act, 

added by section 3401(b) of the 

Affordable Care Act, requires that for FY 

2012 and each subsequent FY, after 

determining the market basket 

percentage described in section 

1888(e)(5)(B)(i) of the Act, ‘‘the 

Secretary shall reduce such percentage 

by the productivity adjustment 

described in section 

1886(b)(3)(B)(xi)(II)’’ (which we refer to 

as the multifactor productivity (MFP) 

adjustment). Section 1888(e)(5)(B)(ii) of 

the Act further states that the reduction 

of the market basket percentage by the 

MFP adjustment may result in the 

market basket percentage being less than 

zero for a FY, and may result in 

payment rates under section 1888(e) of 

the Act for a FY being less than such 

payment rates for the preceding FY. 

Thus, if the application of the MFP 

adjustment to the market basket 

percentage calculated under section 

1888(e)(5)(B)(i) of the Act results in an 

MFP-adjusted market basket percentage 

that is less than zero, then the annual 

update to the unadjusted federal per 

diem rates under section 

1888(e)(4)(E)(ii) of the Act would be 

negative, and such rates would decrease 

relative to the prior FY. 

For the FY 2014 SNF PPS update, the 

MFP adjustment is calculated as the 10- 

year moving average of changes in MFP 

for the period ending September 30, 

2014. In accordance with section 

1888(e)(5)(B)(i) of the Act and 

§ 413.337(d)(2) of the regulations, the 

SNF PPS market basket percentage for 

FY 2014 is based on IGI’s second quarter 

2013 forecast of the FY 2010-based SNF 

market basket update (which is 2.3 

percent), as adjusted by the forecast 

error adjustment (which is 0.5 percent), 

and is estimated to be 1.8 percent. In 

accordance with section 1888(e)(5)(B)(ii) 

of the Act (as added by section 3401(b) 

of the Affordable Care Act) and 

§ 413.337(d)(3), this market basket 

percentage is then reduced by the MFP 

adjustment (which is the 10-year 

moving average of changes in MFP for 

the period ending September 30, 2014) 

of 0.5 percent. In the FY 2014 SNF PPS 

proposed rule (78 FR 26443), we 

proposed that if more recent data 

became available, we would use that 

data, if appropriate, to determine the FY 

2014 MFP adjustment. The MFP 

adjustment of 0.4 percent set forth in the 

proposed rule was based on IGI’s first 

quarter 2013 forecast. The 0.5 percent 

MFP adjustment set forth in this final 

rule is based on updated IGI data (that 

is, IGI second quarter 2013 forecast). 

The resulting MFP-adjusted SNF market 

basket update is equal to 1.3 percent, or 

1.8 percent less the 0.5 percentage point 

MFP adjustment. 

5. Market Basket Update Factor for FY 

2014 

Sections 1888(e)(4)(E)(ii)(IV) and 

1888(e)(5)(i) of the Act require that SNF 

PPS unadjusted federal per diem rates 

for the previous fiscal year be adjusted 

by the market basket index percentage 

change for the fiscal year involved, in 

order to compute the unadjusted federal 

per diem rates for the current year. 

Accordingly, we determined the total 

growth from the average market basket 

index for the period of October 1, 2012 

through September 30, 2013 to the 

average market basket index for the 

period of October 1, 2013 through 

September 30, 2014. This process yields 

a market basket update factor of 2.3 

percent. As further explained in section 

IV.B.3 of this final rule, as applicable, 

we adjust the market basket update 

factor to reflect the forecast error from 

the most recently available FY for which 

there is final data and apply this 

adjustment whenever the difference 

between the forecasted and actual 

percentage change in the market basket 

exceeds a 0.5 percentage point 

threshold. Since the forecasted FY 2012 

SNF market basket percentage change 

exceeded the actual FY 2012 SNF 

market basket percentage change (FY 

2012 is the most recently available FY 

for which there is final data) by more 

than 0.5 percentage point, the FY 2014 

market basket update factor of 2.3 

percent would be adjusted downward 

by the applicable difference, in this case 

0.5 percentage points, which reduces 

the FY 2014 market basket update factor 

to 1.8 percent. In addition, for FY 2014, 

section 1888(e)(5)(B) of the Act requires 

us to reduce the market basket 

percentage by the MFP adjustment (the 

10-year moving average of changes in 

MFP for the period ending September 

30, 2014) of 0.5 percent, as described in 

section IV.B.4. of this final rule. The 

resulting MFP-adjusted SNF market 

basket update would be equal to 1.3 

percent, or 1.8 percent less 0.5 

percentage point. We used the FY 2010- 

based SNF market basket percentage, 

adjusted as described above, to adjust 

each per diem component of the federal 

rates forward to reflect the change in the 

average prices for FY 2014 from average 

prices for FY 2013. We further adjust 

the rates by a wage index budget 

neutrality factor, described later in this 

section. Tables 3 and 4 reflect the 

updated components of the unadjusted 

federal rates for FY 2014, prior to 

adjustment for case-mix. 

TABLE 3—FY 2014 UNADJUSTED FEDERAL RATE PER DIEM—URBAN

Rate component Nursing— 

case-mix 

Therapy— 

case-mix 

Therapy— 

non-case-mix Non-case-mix 

Per Diem Amount ............................................................................................ $165.81 $124.90 $16.45 $84.62 

TABLE 4—FY 2014 UNADJUSTED FEDERAL RATE PER DIEM—RURAL

Rate component Nursing— 

case-mix 

Therapy— 

case-mix 

Therapy— 

non-case-mix Non-case-mix 

Per Diem Amount ............................................................................................ $158.41 $144.01 $17.57 $86.19 


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Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47949 

6. Case-Mix Adjustment 

Under section 1888(e)(4)(G)(i) of the 

Act, the federal rate also incorporates an 

adjustment to account for case-mix, 

using a classification system that 

accounts for the relative resource 

utilization of different patient types. 

The statute specifies that the adjustment 

is to reflect both a resident classification 

system established by the Secretary to 

account for the relative resource use of 

different patient types, as well as 

resident assessment data and other data 

that the Secretary considers appropriate. 

In the May 12, 1998 interim final rule 

with comment period that initially 

implemented the SNF PPS (63 FR 

26252), we developed the RUG–III casemix classification system, which tied 

the amount of payment to resident 

resource use in combination with 

resident characteristic information. Staff 

time measurement (STM) studies 

conducted in 1990, 1995, and 1997 

provided information on resource use 

(time spent by staff members on 

residents) and resident characteristics 

that enabled us not only to establish 

RUG–III, but also to create case-mix 

indexes (CMIs). The original RUG–III 

grouper logic was based on clinical data 

collected in 1990, 1995, and 1997. As 

discussed in the FY 2010 SNF PPS 

proposed rule (74 FR 22208), we 

subsequently conducted a multi-year 

data collection and analysis under the 

Staff Time and Resource Intensity 

Verification (STRIVE) project to update 

the case-mix classification system for 

FY 2011. The resulting Resource 

Utilization Groups, Version 4 (RUG–IV) 

case-mix classification system reflected 

the data collected in 2006 through 2007 

during the STRIVE project, and the 

RUG–IV model was finalized in the FY 

2010 SNF PPS final rule (74 FR 40288) 

to take effect in FY 2011 concurrently 

with an updated new resident 

assessment instrument, version 3.0 of 

the Minimum Data Set (MDS 3.0), 

which collects the clinical data used for 

case-mix classification under RUG–IV. 

We note that case-mix classification is 

based, in part, on the beneficiary’s need 

for skilled nursing care and therapy 

services. The case-mix classification 

system uses clinical data from the MDS 

to assign a case-mix group to each 

patient that is then used to calculate a 

per diem payment under the SNF PPS. 

Further, because the MDS is used as a 

basis for payment as well as a clinical 

assessment, we have provided extensive 

training on proper coding and the time 

frames for MDS completion in the RAI 

Manual. For an MDS to be considered 

valid for use in determining payment, 

the MDS assessment must be completed 

in compliance with the instructions in 

the RAI Manual in effect at the time the 

assessment is completed. For payment 

and quality monitoring purposes, the 

RAI Manual consists of both the Manual 

instructions and the interpretive 

guidance and policy clarifications 

posted on the appropriate MDS Web site 

at http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/NursingHomeQualityInits/ 

MDS30RAIManual.html. 

Under section 1888(e)(4)(H), each 

update of the payment rates must 

include the case-mix classification 

methodology applicable for the 

upcoming FY. The payment rates set 

forth in this final rule reflect the use of 

the RUG–IV case-mix classification 

system from October 1, 2013, through 

September 30, 2014. We list the casemix adjusted RUG–IV payment rates, 

provided separately for urban and rural 

SNFs, in Tables 5 and 6 with 

corresponding case-mix values. These 

tables do not reflect the add-on for SNF 

residents with AIDS enacted by section 

511 of the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA, Pub. L. 108–173) discussed 

below, which we apply only after 

making all other adjustments (including 

the wage index and case-mix 

adjustments). 

TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN

RUG–IV Category Nursing index Therapy index Nursing component 

Therapy component Non-case mix 

therapy comp 

Non-case mix 

component Total rate 

RUX .............................. 2.67 1.87 $442.71 $233.56 ........................ $84.62 $760.89 

RUL .............................. 2.57 1.87 426.13 233.56 ........................ 84.62 744.31 

RVX .............................. 2.61 1.28 432.76 159.87 ........................ 84.62 677.25 

RVL .............................. 2.19 1.28 363.12 159.87 ........................ 84.62 607.61 

RHX .............................. 2.55 0.85 422.82 106.17 ........................ 84.62 613.61 

RHL .............................. 2.15 0.85 356.49 106.17 ........................ 84.62 547.28 

RMX ............................. 2.47 0.55 409.55 68.70 ........................ 84.62 562.87 

RML .............................. 2.19 0.55 363.12 68.70 ........................ 84.62 516.44 

RLX .............................. 2.26 0.28 374.73 34.97 ........................ 84.62 494.32 

RUC ............................. 1.56 1.87 258.66 233.56 ........................ 84.62 576.84 

RUB .............................. 1.56 1.87 258.66 233.56 ........................ 84.62 576.84 

RUA .............................. 0.99 1.87 164.15 233.56 ........................ 84.62 482.33 

RVC .............................. 1.51 1.28 250.37 159.87 ........................ 84.62 494.86 

RVB .............................. 1.11 1.28 184.05 159.87 ........................ 84.62 428.54 

RVA .............................. 1.10 1.28 182.39 159.87 ........................ 84.62 426.88 

RHC ............................. 1.45 0.85 240.42 106.17 ........................ 84.62 431.21 

RHB .............................. 1.19 0.85 197.31 106.17 ........................ 84.62 388.10 

RHA .............................. 0.91 0.85 150.89 106.17 ........................ 84.62 341.68 

RMC ............................. 1.36 0.55 225.50 68.70 ........................ 84.62 378.82 

RMB ............................. 1.22 0.55 202.29 68.70 ........................ 84.62 355.61 

RMA ............................. 0.84 0.55 139.28 68.70 ........................ 84.62 292.60 

RLB .............................. 1.50 0.28 248.72 34.97 ........................ 84.62 368.31 

RLA .............................. 0.71 0.28 117.73 34.97 ........................ 84.62 237.32 

ES3 .............................. 3.58 ........................ 593.60 ........................ 16.45 84.62 694.67 

ES2 .............................. 2.67 ........................ 442.71 ........................ 16.45 84.62 543.78 

ES1 .............................. 2.32 ........................ 384.68 ........................ 16.45 84.62 485.75 

HE2 .............................. 2.22 ........................ 368.10 ........................ 16.45 84.62 469.17 

HE1 .............................. 1.74 ........................ 288.51 ........................ 16.45 84.62 389.58 

HD2 .............................. 2.04 ........................ 338.25 ........................ 16.45 84.62 439.32 

HD1 .............................. 1.60 ........................ 265.30 ........................ 16.45 84.62 366.37 

HC2 .............................. 1.89 ........................ 313.38 ........................ 16.45 84.62 414.45 

HC1 .............................. 1.48 ........................ 245.40 ........................ 16.45 84.62 346.47 


tkelley on DSK3SPTVN1PROD with RULES3
47950 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE 5—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—URBAN—Continued 

RUG–IV Category Nursing index Therapy index Nursing component 

Therapy component Non-case mix 

therapy comp 

Non-case mix 

component Total rate 

HB2 .............................. 1.86 ........................ 308.41 ........................ 16.45 84.62 409.48 

HB1 .............................. 1.46 ........................ 242.08 ........................ 16.45 84.62 343.15 

LE2 ............................... 1.96 ........................ 324.99 ........................ 16.45 84.62 426.06 

LE1 ............................... 1.54 ........................ 255.35 ........................ 16.45 84.62 356.42 

LD2 ............................... 1.86 ........................ 308.41 ........................ 16.45 84.62 409.48 

LD1 ............................... 1.46 ........................ 242.08 ........................ 16.45 84.62 343.15 

LC2 ............................... 1.56 ........................ 258.66 ........................ 16.45 84.62 359.73 

LC1 ............................... 1.22 ........................ 202.29 ........................ 16.45 84.62 303.36 

LB2 ............................... 1.45 ........................ 240.42 ........................ 16.45 84.62 341.49 

LB1 ............................... 1.14 ........................ 189.02 ........................ 16.45 84.62 290.09 

CE2 .............................. 1.68 ........................ 278.56 ........................ 16.45 84.62 379.63 

CE1 .............................. 1.50 ........................ 248.72 ........................ 16.45 84.62 349.79 

CD2 .............................. 1.56 ........................ 258.66 ........................ 16.45 84.62 359.73 

CD1 .............................. 1.38 ........................ 228.82 ........................ 16.45 84.62 329.89 

CC2 .............................. 1.29 ........................ 213.89 ........................ 16.45 84.62 314.96 

CC1 .............................. 1.15 ........................ 190.68 ........................ 16.45 84.62 291.75 

CB2 .............................. 1.15 ........................ 190.68 ........................ 16.45 84.62 291.75 

CB1 .............................. 1.02 ........................ 169.13 ........................ 16.45 84.62 270.20 

CA2 .............................. 0.88 ........................ 145.91 ........................ 16.45 84.62 246.98 

CA1 .............................. 0.78 ........................ 129.33 ........................ 16.45 84.62 230.40 

BB2 .............................. 0.97 ........................ 160.84 ........................ 16.45 84.62 261.91 

BB1 .............................. 0.90 ........................ 149.23 ........................ 16.45 84.62 250.30 

BA2 .............................. 0.70 ........................ 116.07 ........................ 16.45 84.62 217.14 

BA1 .............................. 0.64 ........................ 106.12 ........................ 16.45 84.62 207.19 

PE2 .............................. 1.50 ........................ 248.72 ........................ 16.45 84.62 349.79 

PE1 .............................. 1.40 ........................ 232.13 ........................ 16.45 84.62 333.20 

PD2 .............................. 1.38 ........................ 228.82 ........................ 16.45 84.62 329.89 

PD1 .............................. 1.28 ........................ 212.24 ........................ 16.45 84.62 313.31 

PC2 .............................. 1.10 ........................ 182.39 ........................ 16.45 84.62 283.46 

PC1 .............................. 1.02 ........................ 169.13 ........................ 16.45 84.62 270.20 

PB2 .............................. 0.84 ........................ 139.28 ........................ 16.45 84.62 240.35 

PB1 .............................. 0.78 ........................ 129.33 ........................ 16.45 84.62 230.40 

PA2 .............................. 0.59 ........................ 97.83 ........................ 16.45 84.62 198.90 

PA1 .............................. 0.54 ........................ 89.54 ........................ 16.45 84.62 190.61 

TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL

RUG–IV Category Nursing index Therapy index Nursing component 

Therapy component Non-case mix 

therapy comp 

Non-case mix 

component Total rate 

RUX .............................. 2.67 1.87 $422.95 $269.30 ........................ $86.19 $778.44 

RUL .............................. 2.57 1.87 407.11 269.30 ........................ 86.19 762.60 

RVX .............................. 2.61 1.28 413.45 184.33 ........................ 86.19 683.97 

RVL .............................. 2.19 1.28 346.92 184.33 ........................ 86.19 617.44 

RHX .............................. 2.55 0.85 403.95 122.41 ........................ 86.19 612.55 

RHL .............................. 2.15 0.85 340.58 122.41 ........................ 86.19 549.18 

RMX ............................. 2.47 0.55 391.27 79.21 ........................ 86.19 556.67 

RML .............................. 2.19 0.55 346.92 79.21 ........................ 86.19 512.32 

RLX .............................. 2.26 0.28 358.01 40.32 ........................ 86.19 484.52 

RUC ............................. 1.56 1.87 247.12 269.30 ........................ 86.19 602.61 

RUB .............................. 1.56 1.87 247.12 269.30 ........................ 86.19 602.61 

RUA .............................. 0.99 1.87 156.83 269.30 ........................ 86.19 512.32 

RVC .............................. 1.51 1.28 239.20 184.33 ........................ 86.19 509.72 

RVB .............................. 1.11 1.28 175.84 184.33 ........................ 86.19 446.36 

RVA .............................. 1.10 1.28 174.25 184.33 ........................ 86.19 444.77 

RHC ............................. 1.45 0.85 229.69 122.41 ........................ 86.19 438.29 

RHB .............................. 1.19 0.85 188.51 122.41 ........................ 86.19 397.11 

RHA .............................. 0.91 0.85 144.15 122.41 ........................ 86.19 352.75 

RMC ............................. 1.36 0.55 215.44 79.21 ........................ 86.19 380.84 

RMB ............................. 1.22 0.55 193.26 79.21 ........................ 86.19 358.66 

RMA ............................. 0.84 0.55 133.06 79.21 ........................ 86.19 298.46 

RLB .............................. 1.50 0.28 237.62 40.32 ........................ 86.19 364.13 

RLA .............................. 0.71 0.28 112.47 40.32 ........................ 86.19 238.98 

ES3 .............................. 3.58 ........................ 567.11 ........................ 17.57 86.19 670.87 

ES2 .............................. 2.67 ........................ 422.95 ........................ 17.57 86.19 526.71 

ES1 .............................. 2.32 ........................ 367.51 ........................ 17.57 86.19 471.27 

HE2 .............................. 2.22 ........................ 351.67 ........................ 17.57 86.19 455.43 

HE1 .............................. 1.74 ........................ 275.63 ........................ 17.57 86.19 379.39 

HD2 .............................. 2.04 ........................ 323.16 ........................ 17.57 86.19 426.92 

HD1 .............................. 1.60 ........................ 253.46 ........................ 17.57 86.19 357.22 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47951 

TABLE 6—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES AND ASSOCIATED INDEXES—RURAL—Continued 

RUG–IV Category Nursing index Therapy index Nursing component 

Therapy component Non-case mix 

therapy comp 

Non-case mix 

component Total rate 

HC2 .............................. 1.89 ........................ 299.39 ........................ 17.57 86.19 403.15 

HC1 .............................. 1.48 ........................ 234.45 ........................ 17.57 86.19 338.21 

HB2 .............................. 1.86 ........................ 294.64 ........................ 17.57 86.19 398.40 

HB1 .............................. 1.46 ........................ 231.28 ........................ 17.57 86.19 335.04 

LE2 ............................... 1.96 ........................ 310.48 ........................ 17.57 86.19 414.24 

LE1 ............................... 1.54 ........................ 243.95 ........................ 17.57 86.19 347.71 

LD2 ............................... 1.86 ........................ 294.64 ........................ 17.57 86.19 398.40 

LD1 ............................... 1.46 ........................ 231.28 ........................ 17.57 86.19 335.04 

LC2 ............................... 1.56 ........................ 247.12 ........................ 17.57 86.19 350.88 

LC1 ............................... 1.22 ........................ 193.26 ........................ 17.57 86.19 297.02 

LB2 ............................... 1.45 ........................ 229.69 ........................ 17.57 86.19 333.45 

LB1 ............................... 1.14 ........................ 180.59 ........................ 17.57 86.19 284.35 

CE2 .............................. 1.68 ........................ 266.13 ........................ 17.57 86.19 369.89 

CE1 .............................. 1.50 ........................ 237.62 ........................ 17.57 86.19 341.38 

CD2 .............................. 1.56 ........................ 247.12 ........................ 17.57 86.19 350.88 

CD1 .............................. 1.38 ........................ 218.61 ........................ 17.57 86.19 322.37 

CC2 .............................. 1.29 ........................ 204.35 ........................ 17.57 86.19 308.11 

CC1 .............................. 1.15 ........................ 182.17 ........................ 17.57 86.19 285.93 

CB2 .............................. 1.15 ........................ 182.17 ........................ 17.57 86.19 285.93 

CB1 .............................. 1.02 ........................ 161.58 ........................ 17.57 86.19 265.34 

CA2 .............................. 0.88 ........................ 139.40 ........................ 17.57 86.19 243.16 

CA1 .............................. 0.78 ........................ 123.56 ........................ 17.57 86.19 227.32 

BB2 .............................. 0.97 ........................ 153.66 ........................ 17.57 86.19 257.42 

BB1 .............................. 0.90 ........................ 142.57 ........................ 17.57 86.19 246.33 

BA2 .............................. 0.70 ........................ 110.89 ........................ 17.57 86.19 214.65 

BA1 .............................. 0.64 ........................ 101.38 ........................ 17.57 86.19 205.14 

PE2 .............................. 1.50 ........................ 237.62 ........................ 17.57 86.19 341.38 

PE1 .............................. 1.40 ........................ 221.77 ........................ 17.57 86.19 325.53 

PD2 .............................. 1.38 ........................ 218.61 ........................ 17.57 86.19 322.37 

PD1 .............................. 1.28 ........................ 202.76 ........................ 17.57 86.19 306.52 

PC2 .............................. 1.10 ........................ 174.25 ........................ 17.57 86.19 278.01 

PC1 .............................. 1.02 ........................ 161.58 ........................ 17.57 86.19 265.34 

PB2 .............................. 0.84 ........................ 133.06 ........................ 17.57 86.19 236.82 

PB1 .............................. 0.78 ........................ 123.56 ........................ 17.57 86.19 227.32 

PA2 .............................. 0.59 ........................ 93.46 ........................ 17.57 86.19 197.22 

PA1 .............................. 0.54 ........................ 85.54 ........................ 17.57 86.19 189.30 

Section 511 of the MMA amended 

section 1888(e)(12) of the Act to provide 

for a temporary increase of 128 percent 

in the PPS per diem payment for SNF 

residents with Acquired Immune 

Deficiency Syndrome (AIDS) to reflect 

increased costs associated with these 

residents, effective for services 

furnished on or after October 1, 2004. 

This special add-on for SNF residents 

with AIDS is required to remain in 

effect until ‘‘. . . the Secretary certifies 

that there is an appropriate adjustment 

in the case mix . . . to compensate for 

the increased costs associated with 

[such] residents . . . .’’ The add-on for 

SNF residents with AIDS is also 

discussed in Program Transmittal #160 

(Change Request #3291), issued on April 

30, 2004, which is available online at 

www.cms.gov/transmittals/downloads/ 

r160cp.pdf. In the FY 2010 SNF PPS 

final rule (74 FR 40288) (in which we 

finalized the RUG–IV case-mix 

classification system), we did not 

address the certification of a case mix 

adjustment alternative to the add-on for 

SNF residents with AIDS, thus allowing 

the add-on payment required by section 

511 of the MMA to remain in effect. For 

the limited number of SNF residents 

that qualify for this add-on, there is a 

significant increase in payments. Using 

FY 2011 data, we identified fewer than 

4,100 SNF residents with a diagnosis 

code of 042 (Human Immunodeficiency 

Virus (HIV) Infection) who qualify for 

this add-on. For FY 2014, an urban 

facility with a resident with AIDS in 

RUG–IV group ‘‘HC2’’ would have a 

case-mix adjusted payment of $414.45 

(see Table 4) before the application of 

the add-on required by the MMA. After 

application of the add-on, an increase of 

128 percent, this urban facility would 

receive a case-mix adjusted payment of 

approximately $944.95 for this resident. 

Currently, we use the International 

Classification of Diseases, 9th revision, 

Clinical Modification (ICD–9–CM) code 

042 to identify those residents for whom 

it is appropriate to apply the AIDS addon established by section 511 of the 

MMA. In this context, we note that, in 

accordance with the requirements of the 

final rule published in the Federal 

Register on September 5, 2012 (77 FR 

54664), we will be discontinuing our 

current use of the ICD–9–CM, effective 

with the compliance date for using the 

International Classification of Diseases, 

10th revision, Clinical Modification 

(ICD–10–CM) of October 1, 2014. In the 

FY 2014 SNF PPS proposed rule (78 FR 

26444), with regard to the abovereferenced ICD–9–CM diagnosis code of 

042, we proposed to transition to the 

equivalent ICD–10–CM diagnosis code 

of B20 upon the October 1, 2014 

implementation date for conversion to 

ICD–10–CM in order to identify those 

residents for whom it is appropriate to 

apply the AIDS add-on. We invited 

public comment on this proposal. We 

received only one comment that 

included a reference to this proposal, 

and this comment simply acknowledged 

the proposal without offering any 

specific observations about it. 

Accordingly, in this final rule, we are 

finalizing this proposal without any 

modification. Therefore, effective with 

services furnished on or after October 1, 

2014, for the reasons set forth above and 

in the FY 2014 SNF PPS proposed rule 

(78 FR 26444), the AIDS add-on 

established by section 511 of the MMA 


tkelley on DSK3SPTVN1PROD with RULES3
47952 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

will apply to beneficiaries with an ICD– 

10–CM diagnosis code of B20. 

7. Wage Index Adjustment 

Section 1888(e)(4)(G)(ii) of the Act 

requires that we adjust the portion of 

the federal rates attributable to wages 

and wage-related costs for the area in 

which the facility is located compared 

to the national average of such costs 

using a wage index that we find 

appropriate. Since the implementation 

of the SNF PPS, we have used hospital 

wage data in developing a wage index 

to be applied to SNFs. In the FY 2014 

SNF PPS proposed rule (78 FR 26446 

through 26447), we proposed to 

continue that practice, as we continue to 

believe that in the absence of SNFspecific wage data, using the hospital 

inpatient wage index is appropriate and 

reasonable for the SNF PPS. As 

explained in the update notice for FY 

2005 (69 FR 45786, July 30, 2004), the 

SNF PPS does not use the hospital area 

wage index’s occupational mix 

adjustment, as this adjustment serves 

specifically to define the occupational 

categories more clearly in a hospital 

setting; moreover, the collection of the 

occupational wage data also excludes 

any wage data related to SNFs. 

Therefore, we believe that using the 

updated wage data exclusive of the 

occupational mix adjustment continues 

to be appropriate for the SNF PPS. 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26447), we also proposed to 

continue using the same methodology 

discussed in the FY 2008 SNF PPS final 

rule (72 FR 43423) to address those 

geographic areas in which there are no 

hospitals and, thus, no hospital wage 

index data on which to base the 

calculation of the FY 2014 SNF PPS 

wage index. For rural geographic areas 

that do not have hospitals and, 

therefore, lack hospital wage data on 

which to base an area wage adjustment, 

we proposed to use the average wage 

index from all contiguous CBSAs as a 

reasonable proxy. For FY 2014, there are 

no rural geographic areas that do not 

have hospitals, and thus this 

methodology will not be applied. 

Furthermore, we indicated that we 

would not apply this methodology to 

rural Puerto Rico, but instead would 

continue using the most recent wage 

index previously available for that area 

due to the distinct economic 

circumstances that exist there (for 

example, due to the close proximity to 

one another of almost all of Puerto 

Rico’s various urban and non-urban 

areas, using the methodology discussed 

in the FY 2008 final rule would produce 

a wage index for rural Puerto Rico that 

is inappropriately higher than that in 

half of its urban areas). For urban areas 

without specific hospital wage index 

data, we proposed to use the average 

wage indexes of all of the urban areas 

within the state to serve as a reasonable 

proxy for the wage index of that urban 

CBSA. For FY 2014, the only urban area 

without wage index data available is 

CBSA 25980, Hinesville-Fort Stewart, 

GA. 

In the SNF PPS final rule for FY 2006 

(70 FR 45026, August 4, 2005), we 

adopted the changes discussed in the 

OMB Bulletin No. 03–04 (June 6, 2003), 

available online at http:// 

www.whitehouse.gov/omb/bulletins/ 

b03-04.html, which announced revised 

definitions for metropolitan statistical 

areas (MSAs), and the creation of 

micropolitan statistical areas and 

combined statistical areas. In addition, 

OMB published subsequent bulletins 

regarding CBSA changes, including 

changes in CBSA numbers and titles. 

We indicated in the FY 2008 SNF PPS 

final rule (72 FR 43423), that all 

subsequent SNF PPS rules and notices 

are considered to incorporate the CBSA 

changes published in the most recent 

OMB bulletin that applies to the 

hospital wage data used to determine 

the current SNF PPS wage index. The 

OMB bulletins are available online at 

http://www.whitehouse.gov/omb/ 

bulletins/index.html. 

On February 28, 2013, OMB issued 

OMB Bulletin No. 13–01, announcing 

revisions to the delineation of 

Metropolitan Statistical Areas, 

Micropolitian Statistical Areas, and 

Combined Statistical Areas, and 

guidance on uses of the delineation of 

these areas. A copy of this bulletin may 

be obtained at http:// 

www.whitehouse.gov/sites/default/files/ 

omb/bulletins/2013/b-13-01.pdf. This 

bulletin states that it provides the 

delineations of all Metropolitan 

Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical 

Areas, Combined Statistical Areas, and 

New England City and Town Areas in 

the United States and Puerto Rico based 

on the standards published in the June 

28, 2010 Federal Register (75 FR 37246– 

37252) and Census Bureau data. 

While the revisions OMB published 

on February 28, 2013 are not as 

sweeping as the changes made when we 

adopted the CBSA geographic 

designations for FY 2006, the February 

28, 2013 bulletin does contain a number 

of significant changes. For example, 

there are new CBSAs, urban counties 

that become rural, rural counties that 

become urban, and existing CBSAs that 

are being split apart. 

The changes made by the bulletin and 

their ramifications must be extensively 

reviewed and assessed by CMS before 

using them for the SNF PPS wage index. 

Because the bulletin was not issued 

until February 28, 2013, we were unable 

to undertake such a lengthy process 

before publication of the FY 2014 

proposed rule. By the time the bulletin 

was issued, the FY 2014 SNF PPS 

proposed rule was in the advanced 

stages of development. We had already 

developed the FY 2014 proposed wage 

index based on the previous OMB 

definitions. As we stated in the FY 2014 

SNF PPS proposed rule (78 FR 26448), 

to allow for sufficient time to assess the 

new changes and their ramifications, we 

intend to propose changes to the wage 

index based on the newest CBSA 

changes in the FY 2015 SNF PPS 

proposed rule, and thus we would 

continue to use the previous OMB 

definitions (that is, those used for the 

FY 2013 SNF PPS update notice) for the 

FY 2014 SNF PPS wage index. 

A discussion of the comments that we 

received on the wage index adjustment 

to the federal rates, and our responses 

to those comments, appears below. 

Comment: Commenters recommend 

that we reconsider developing a SNFspecific wage index suggesting that 

‘‘hospital cost data may not be the most 

reliable resource when determining 

geographical differences in salary 

structure for skilled nursing facilities.’’ 

Additionally, one commenter 

recommends that this rule reflect any 

changes needed to ensure that 

adjustments more accurately reflect 

salary experiences of facilities. 

Commenters request that we provide an 

update in the final rule on its efforts and 

plans for wage index reform for the SNF 

PPS that aims to minimize fluctuations, 

match the costs of labor in the market, 

and provides for a single wage index 

policy. 

Response: Tables A and B in the 

Addendum of this final rule reflect 

updated hospital wage data used to 

develop the SNF PPS wage index 

published in the FY 2014 SNF PPS 

proposed rule (78 FR 26471 through 

26480). Consistent with our previous 

responses to these recurring comments 

(most recently published in the FY 2010 

SNF PPS final rule (74 FR 40301)), 

developing a wage index that utilizes 

data specific to SNFs would require us 

to engage in a resource-intensive audit 

process. Also, we note that section 315 

of the Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection 

Act of 2000 (BIPA) (Pub. L. 106–554, 

enacted on December 21, 2000) 

authorized us to establish a geographic 

reclassification procedure that is 

specific to SNFs, but only after 

collecting the data necessary to establish 


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a SNF wage index that is based on wage 

data from nursing homes. However, to 

date, this has proven to be unfeasible 

due to the volatility of existing SNF 

wage data and the significant amount of 

resources that would be required to 

improve the quality of that data. As 

discussed above, we continue to believe 

that in the absence of SNF-specific wage 

data, using the hospital inpatient wage 

index (without the occupational mix 

adjustment) is appropriate and 

reasonable for the SNF PPS. 

In addition, we note that we have 

engaged in research efforts relating to 

the development of an alternative 

hospital wage index for the IPPS, which 

examined the issues the commenters 

mentioned about ensuring that the wage 

index minimizes fluctuations, matches 

the costs of labor in the market, and 

provides for a single wage index policy. 

Section 3137(b) of the Affordable Care 

Act required the Secretary of Health and 

Human Services to submit to Congress 

a report that includes a plan to reform 

the hospital wage index under section 

1886 of the Act. In developing the plan, 

the Secretary was directed to take into 

account the goals for reforming such 

system set forth in the June 2007 

MedPAC report entitled ‘‘Report to 

Congress: Promoting Greater Efficiency 

in Medicare’’ (available at http:// 

www.medpac.gov/documents/ 

jun07_entirereport.pdf.), including 

establishing a new hospital 

compensation index system that: 

• Uses Bureau of Labor Statistics 

data, or other data or methodologies, to 

calculate relative wages for each 

geographic area involved; 

• Minimizes wage index adjustments 

between and within MSAs and 

Statewide rural areas; 

• Includes methods to minimize the 

volatility of wage index adjustments 

that result from implementation of 

policy, while maintaining budget 

neutrality in applying such adjustments; 

• Takes into account the effect that 

implementation of the system would 

have on health care providers and on 

each region of the country. 

• Addresses issues related to 

occupational mix, such as staffing 

practices and ratios, and any evidence 

on the effect on quality of care or patient 

safety as a result of the implementation 

of the system; and 

• Provides for a transition. 

As delegated by the Secretary, CMS 

contracted with Acumen, L.L.C. 

(Acumen) to review the June 2007 

MedPAC report and recommend a 

methodology for an improved Medicare 

wage index system. After consultation 

with relevant parties during the 

development of the plan, the Secretary 

submitted the report to Congress, which 

is available via the Internet at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

AcuteInpatientPPS/Wage-IndexReform.html. We will continue to 

monitor closely research efforts 

surrounding the development of an 

alternative hospital wage index for the 

IPPS and the potential impact or 

influence of that research on the SNF 

PPS. 

Once calculated, we apply the wage 

index adjustment to the labor-related 

portion of the federal rate, which is 

69.545 percent of the total rate. This 

percentage reflects the labor-related 

relative importance for FY 2014, using 

the FY 2010-based SNF market basket. 

Each year, we calculate a revised laborrelated share, based on the relative 

importance of labor-related cost 

categories (that is, those cost categories 

that are sensitive to local area wage 

costs) in the input price index. As 

discussed in section IV.B.2 of this final 

rule, for the FY 2014 SNF PPS update, 

we revised the labor-related share to 

reflect the relative importance of the 

revised FY 2010-based SNF market 

basket cost weights for the following 

cost categories: wages and salaries; 

employee benefits; contract labor; the 

labor-related portion of nonmedical 

professional fees; administrative and 

facilities support services; all other: 

labor-related services (previously 

referred to in the FY 2004-based SNF 

market basket as labor-intensive); and a 

proportion of capital-related expenses. 

We calculate the labor-related relative 

importance from the SNF market basket, 

and it approximates the labor-related 

portion of the total costs after taking 

into account historical and projected 

price changes between the base year, FY 

2010, and FY 2014. The price proxies 

that move the different cost categories in 

the market basket do not necessarily 

change at the same rate, and the relative 

importance captures these changes. 

Accordingly, the relative importance 

figure more closely reflects the costshare weights for FY 2014 than the baseyear weights from the SNF market 

basket. 

We calculate the labor-related relative 

importance for FY 2014 in four steps. 

First, we compute the FY 2014 price 

index level for the total market basket 

and each cost category of the market 

basket. Second, we calculate a ratio for 

each cost category by dividing the FY 

2014 price index level for that cost 

category by the total market basket price 

index level. Third, we determine the FY 

2014 relative importance for each cost 

category by multiplying this ratio by the 

base year (FY 2010) weight. Finally, we 

add the FY 2014 relative importance for 

each of the labor-related cost categories 

to produce the FY 2014 labor-related 

relative importance. Tables 7 and 8 

show the case-mix adjusted RUG–IV 

federal rates by labor-related and nonlabor-related components. Table 2 in 

section IV.B.4 provides the FY 2014 

labor-related share components based 

on the revised and rebased FY 2010- 

based SNF market basket. 

TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN SNFS BY LABOR AND NON-LABOR COMPONENT

RUG–IV category Total rate Labor 

portion 

Non-labor 

portion 

RUX ......................................................................................................................................................... $760.89 $529.16 $231.73 

RUL .......................................................................................................................................................... 744.31 517.63 226.68 

RVX .......................................................................................................................................................... 677.25 470.99 206.26 

RVL .......................................................................................................................................................... 607.61 422.56 185.05 

RHX ......................................................................................................................................................... 613.61 426.74 186.87 

RHL .......................................................................................................................................................... 547.28 380.61 166.67 

RMX ......................................................................................................................................................... 562.87 391.45 171.42 

RML ......................................................................................................................................................... 516.44 359.16 157.28 

RLX .......................................................................................................................................................... 494.32 343.77 150.55 

RUC ......................................................................................................................................................... 576.84 401.16 175.68 

RUB ......................................................................................................................................................... 576.84 401.16 175.68 

RUA ......................................................................................................................................................... 482.33 335.44 146.89 

RVC ......................................................................................................................................................... 494.86 344.15 150.71 

RVB .......................................................................................................................................................... 428.54 298.03 130.51 

RVA .......................................................................................................................................................... 426.88 296.87 130.01 


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47954 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE 7—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR URBAN SNFS BY LABOR AND NON-LABOR COMPONENT— 

Continued 

RUG–IV category Total rate Labor 

portion 

Non-labor 

portion 

RHC ......................................................................................................................................................... 431.21 299.88 131.33 

RHB ......................................................................................................................................................... 388.10 269.90 118.20 

RHA ......................................................................................................................................................... 341.68 237.62 104.06 

RMC ......................................................................................................................................................... 378.82 263.45 115.37 

RMB ......................................................................................................................................................... 355.61 247.31 108.30 

RMA ......................................................................................................................................................... 292.60 203.49 89.11 

RLB .......................................................................................................................................................... 368.31 256.14 112.17 

RLA .......................................................................................................................................................... 237.32 165.04 72.28 

ES3 .......................................................................................................................................................... 694.67 483.11 211.56 

ES2 .......................................................................................................................................................... 543.78 378.17 165.61 

ES1 .......................................................................................................................................................... 485.75 337.81 147.94 

HE2 .......................................................................................................................................................... 469.17 326.28 142.89 

HE1 .......................................................................................................................................................... 389.58 270.93 118.65 

HD2 .......................................................................................................................................................... 439.32 305.53 133.79 

HD1 .......................................................................................................................................................... 366.37 254.79 111.58 

HC2 .......................................................................................................................................................... 414.45 288.23 126.22 

HC1 .......................................................................................................................................................... 346.47 240.95 105.52 

HB2 .......................................................................................................................................................... 409.48 284.77 124.71 

HB1 .......................................................................................................................................................... 343.15 238.64 104.51 

LE2 ........................................................................................................................................................... 426.06 296.30 129.76 

LE1 ........................................................................................................................................................... 356.42 247.87 108.55 

LD2 .......................................................................................................................................................... 409.48 284.77 124.71 

LD1 .......................................................................................................................................................... 343.15 238.64 104.51 

LC2 .......................................................................................................................................................... 359.73 250.17 109.56 

LC1 .......................................................................................................................................................... 303.36 210.97 92.39 

LB2 ........................................................................................................................................................... 341.49 237.49 104.00 

LB1 ........................................................................................................................................................... 290.09 201.74 88.35 

CE2 .......................................................................................................................................................... 379.63 264.01 115.62 

CE1 .......................................................................................................................................................... 349.79 243.26 106.53 

CD2 .......................................................................................................................................................... 359.73 250.17 109.56 

CD1 .......................................................................................................................................................... 329.89 229.42 100.47 

CC2 .......................................................................................................................................................... 314.96 219.04 95.92 

CC1 .......................................................................................................................................................... 291.75 202.90 88.85 

CB2 .......................................................................................................................................................... 291.75 202.90 88.85 

CB1 .......................................................................................................................................................... 270.20 187.91 82.29 

CA2 .......................................................................................................................................................... 246.98 171.76 75.22 

CA1 .......................................................................................................................................................... 230.40 160.23 70.17 

BB2 .......................................................................................................................................................... 261.91 182.15 79.76 

BB1 .......................................................................................................................................................... 250.30 174.07 76.23 

BA2 .......................................................................................................................................................... 217.14 151.01 66.13 

BA1 .......................................................................................................................................................... 207.19 144.09 63.10 

PE2 .......................................................................................................................................................... 349.79 243.26 106.53 

PE1 .......................................................................................................................................................... 333.20 231.72 101.48 

PD2 .......................................................................................................................................................... 329.89 229.42 100.47 

PD1 .......................................................................................................................................................... 313.31 217.89 95.42 

PC2 .......................................................................................................................................................... 283.46 197.13 86.33 

PC1 .......................................................................................................................................................... 270.20 187.91 82.29 

PB2 .......................................................................................................................................................... 240.35 167.15 73.20 

PB1 .......................................................................................................................................................... 230.40 160.23 70.17 

PA2 .......................................................................................................................................................... 198.90 138.33 60.57 

PA1 .......................................................................................................................................................... 190.61 132.56 58.05 

TABLE 8—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL SNFS BY LABOR AND NON-LABOR COMPONENT

RUG–IV category Total 

rate 

Labor 

portion 

Non-labor 

portion 

RUX ......................................................................................................................................................... $778.44 $541.37 $237.07 

RUL .......................................................................................................................................................... 762.60 530.35 232.25 

RVX .......................................................................................................................................................... 683.97 475.67 208.30 

RVL .......................................................................................................................................................... 617.44 429.40 188.04 

RHX ......................................................................................................................................................... 612.55 426.00 186.55 

RHL .......................................................................................................................................................... 549.18 381.93 167.25 

RMX ......................................................................................................................................................... 556.67 387.14 169.53 

RML ......................................................................................................................................................... 512.32 356.29 156.03 

RLX .......................................................................................................................................................... 484.52 336.96 147.56 

RUC ......................................................................................................................................................... 602.61 419.09 183.52 

RUB ......................................................................................................................................................... 602.61 419.09 183.52 

RUA ......................................................................................................................................................... 512.32 356.29 156.03 


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TABLE 8—RUG–IV CASE-MIX ADJUSTED FEDERAL RATES FOR RURAL SNFS BY LABOR AND NON-LABOR COMPONENT— 

Continued 

RUG–IV category Total 

rate 

Labor 

portion 

Non-labor 

portion 

RVC ......................................................................................................................................................... 509.72 354.48 155.24 

RVB .......................................................................................................................................................... 446.36 310.42 135.94 

RVA .......................................................................................................................................................... 444.77 309.32 135.45 

RHC ......................................................................................................................................................... 438.29 304.81 133.48 

RHB ......................................................................................................................................................... 397.11 276.17 120.94 

RHA ......................................................................................................................................................... 352.75 245.32 107.43 

RMC ......................................................................................................................................................... 380.84 264.86 115.98 

RMB ......................................................................................................................................................... 358.66 249.43 109.23 

RMA ......................................................................................................................................................... 298.46 207.56 90.90 

RLB .......................................................................................................................................................... 364.13 253.23 110.90 

RLA .......................................................................................................................................................... 238.98 166.20 72.78 

ES3 .......................................................................................................................................................... 670.87 466.56 204.31 

ES2 .......................................................................................................................................................... 526.71 366.30 160.41 

ES1 .......................................................................................................................................................... 471.27 327.74 143.53 

HE2 .......................................................................................................................................................... 455.43 316.73 138.70 

HE1 .......................................................................................................................................................... 379.39 263.85 115.54 

HD2 .......................................................................................................................................................... 426.92 296.90 130.02 

HD1 .......................................................................................................................................................... 357.22 248.43 108.79 

HC2 .......................................................................................................................................................... 403.15 280.37 122.78 

HC1 .......................................................................................................................................................... 338.21 235.21 103.00 

HB2 .......................................................................................................................................................... 398.40 277.07 121.33 

HB1 .......................................................................................................................................................... 335.04 233.00 102.04 

LE2 ........................................................................................................................................................... 414.24 288.08 126.16 

LE1 ........................................................................................................................................................... 347.71 241.81 105.90 

LD2 .......................................................................................................................................................... 398.40 277.07 121.33 

LD1 .......................................................................................................................................................... 335.04 233.00 102.04 

LC2 .......................................................................................................................................................... 350.88 244.02 106.86 

LC1 .......................................................................................................................................................... 297.02 206.56 90.46 

LB2 ........................................................................................................................................................... 333.45 231.90 101.55 

LB1 ........................................................................................................................................................... 284.35 197.75 86.60 

CE2 .......................................................................................................................................................... 369.89 257.24 112.65 

CE1 .......................................................................................................................................................... 341.38 237.41 103.97 

CD2 .......................................................................................................................................................... 350.88 244.02 106.86 

CD1 .......................................................................................................................................................... 322.37 224.19 98.18 

CC2 .......................................................................................................................................................... 308.11 214.28 93.83 

CC1 .......................................................................................................................................................... 285.93 198.85 87.08 

CB2 .......................................................................................................................................................... 285.93 198.85 87.08 

CB1 .......................................................................................................................................................... 265.34 184.53 80.81 

CA2 .......................................................................................................................................................... 243.16 169.11 74.05 

CA1 .......................................................................................................................................................... 227.32 158.09 69.23 

BB2 .......................................................................................................................................................... 257.42 179.02 78.40 

BB1 .......................................................................................................................................................... 246.33 171.31 75.02 

BA2 .......................................................................................................................................................... 214.65 149.28 65.37 

BA1 .......................................................................................................................................................... 205.14 142.66 62.48 

PE2 .......................................................................................................................................................... 341.38 237.41 103.97 

PE1 .......................................................................................................................................................... 325.53 226.39 99.14 

PD2 .......................................................................................................................................................... 322.37 224.19 98.18 

PD1 .......................................................................................................................................................... 306.52 213.17 93.35 

PC2 .......................................................................................................................................................... 278.01 193.34 84.67 

PC1 .......................................................................................................................................................... 265.34 184.53 80.81 

PB2 .......................................................................................................................................................... 236.82 164.70 72.12 

PB1 .......................................................................................................................................................... 227.32 158.09 69.23 

PA2 .......................................................................................................................................................... 197.22 137.16 60.06 

PA1 .......................................................................................................................................................... 189.30 131.65 57.65 

Section 1888(e)(4)(G)(ii) of the Act 

also requires that we apply this wage 

index adjustment in a manner that does 

not result in aggregate payments under 

the SNF PPS that are greater or less than 

would otherwise be made in the absence 

of the wage adjustment. For FY 2014 

(federal rates effective October 1, 2013), 

we apply an adjustment to fulfill the 

budget neutrality requirement. We meet 

this requirement by multiplying each of 

the components of the unadjusted 

federal rates by a budget neutrality 

factor equal to the ratio of the weighted 

average wage adjustment factor for FY 

2013 to the weighted average wage 

adjustment factor for FY 2014. For this 

calculation, we use the same 2012 

claims utilization data for both the 

numerator and denominator of this 

ratio. We define the wage adjustment 

factor used in this calculation as the 

labor share of the rate component 

multiplied by the wage index plus the 

non-labor share of the rate component. 

The budget neutrality factor for FY 2014 

is 1.0006. The wage index applicable to 

FY 2014 is set forth in Tables A and B, 

which appear in the Addendum of this 

final rule, and is also available on the 

CMS Web site at http://cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/WageIndex.html. 


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After consideration of the comments 

we received, for the reasons discussed 

in this final rule and in the FY 2014 

SNF PPS proposed rule, we are 

finalizing the wage index adjustment 

and related policies as proposed in the 

FY 2014 SNF PPS proposed rule (78 FR 

24446 through 26449) without 

modification. 

8. Adjusted Rate Computation Example 

Using the hypothetical SNF XYZ 

described below, Table 9 shows the 

adjustments made to the federal per 

diem rates to compute the provider’s 

actual per diem PPS payment under the 

described scenario. We derive the Labor 

and Non-labor columns from Table 7. 

As illustrated in Table 9, SNF XYZ’s 

total PPS payment would equal 

$41,718.20. 

TABLE 9—ADJUSTED RATE COMPUTATION EXAMPLE SNF XYZ: LOCATED IN CEDAR RAPIDS, IA (URBAN CBSA 16300), 

WAGE INDEX: 0.8964 

RUG–IV group Labor Wage index Adjusted 

labor Non-labor Adjusted rate 

Percent 

adjustment 

Medicare 

days Payment 

RVX .................................. $470.99 0.8964 $422.20 $206.26 $628.46 $628.46 14 $8,798.44 

ES2 .................................. 378.17 0.8964 338.99 165.61 504.60 504.60 30 15,138.00 

RHA .................................. 237.62 0.8964 213.00 104.06 317.06 317.06 16 5,072.96 

CC2 * ................................ 219.04 0.8964 196.35 95.92 292.27 666.38 10 6,663.80 

BA2 .................................. 151.01 0.8964 135.37 66.13 201.50 201.50 30 6,045.00 

100 41,718.20 

* Reflects a 128 percent adjustment from section 511 of the MMA. 

C. Additional Aspects of the SNF PPS 

1. SNF Level of Care—Administrative 

Presumption 

The establishment of the SNF PPS did 

not change the fundamental 

requirements for SNF coverage under 

Medicare. However, because the casemix classification reflects the 

beneficiary’s need for skilled nursing 

care and therapy, we have attempted, 

where possible, to coordinate claims 

review procedures with the existing 

resident assessment process and casemix classification system discussed in 

section IV.B of this final rule. This 

approach includes an administrative 

presumption that utilizes a beneficiary’s 

initial classification in one of the upper 

52 RUGs of the 66-group RUG–IV casemix classification system to assist in 

making certain SNF level of care 

determinations. 

In accordance with section 

1888(e)(4)(H)(ii) of the Act and the 

regulations at § 413.345, we include in 

each update of the federal payment rates 

in the Federal Register the designation 

of those specific RUGs under the 

classification system that represent the 

required SNF level of care for Medicare 

coverage, as provided in § 409.30. As set 

forth in the FY 2011 SNF PPS update 

notice (75 FR 42910), this designation 

reflects an administrative presumption 

under the 66-group RUG–IV system that 

beneficiaries who are correctly assigned 

to one of the upper 52 RUG–IV groups 

on the initial 5-day, Medicare-required 

assessment are automatically classified 

as meeting the SNF level of care 

definition up to and including the 

assessment reference date on the 5-day 

Medicare-required assessment. 

A beneficiary assigned to any of the 

lower 14 RUG–IV groups is not 

automatically classified as either 

meeting or not meeting the SNF level of 

care definition, but instead receives an 

individual level of care determination 

using the existing administrative 

criteria. This presumption recognizes 

the strong likelihood that beneficiaries 

assigned to one of the upper 52 RUG– 

IV groups during the immediate posthospital period require a covered level 

of care, which would be less likely for 

those beneficiaries assigned to one of 

the lower 14 RUG–IV groups. 

In the July 30, 1999 final rule (64 FR 

41670), we indicated that we would 

announce any changes to the guidelines 

for Medicare level of care 

determinations related to modifications 

in the case-mix classification structure. 

In this final rule, we continue to 

designate the upper 52 RUG–IV groups 

for purposes of this administrative 

presumption, consisting of all groups 

encompassed by the following RUG–IV 

categories: 

• Rehabilitation plus Extensive 

Services; 

• Ultra High Rehabilitation; 

• Very High Rehabilitation; 

• High Rehabilitation; 

• Medium Rehabilitation; 

• Low Rehabilitation; 

• Extensive Services; 

• Special Care High; 

• Special Care Low; and, 

• Clinically Complex. 

However, we note that this 

administrative presumption policy does 

not supersede the SNF’s responsibility 

to ensure that its decisions relating to 

level of care are appropriate and timely, 

including a review to confirm that the 

services prompting the beneficiary’s 

assignment to one of the upper 52 RUG– 

IV groups (which, in turn, serves to 

trigger the administrative presumption) 

are themselves medically necessary. As 

we explained in the FY 2000 SNF PPS 

final rule (64 FR 41667), the 

administrative presumption: 

. . . is itself rebuttable in those individual 

cases in which the services actually received 

by the resident do not meet the basic 

statutory criterion of being reasonable and 

necessary to diagnose or treat a beneficiary’s 

condition (according to section 1862(a)(1) of 

the Act). Accordingly, the presumption 

would not apply, for example, in those 

situations in which a resident’s assignment to 

one of the upper . . . groups is itself based 

on the receipt of services that are 

subsequently determined to be not 

reasonable and necessary. 

Moreover, we want to stress the 

importance of careful monitoring for 

changes in each patient’s condition to 

determine the continuing need for Part 

A SNF benefits after the assessment 

reference date of the 5-day assessment. 

2. Consolidated Billing 

Sections 1842(b)(6)(E) and 1862(a)(18) 

of the Act (as added by section 4432(b) 

of the BBA) require a SNF to submit 

consolidated Medicare bills to its fiscal 

intermediary or Medicare 

Administrative Contractor for almost all 

of the services that its residents receive 

during the course of a covered Part A 

stay. In addition, section 1862(a)(18) 

places the responsibility with the SNF 

for billing Medicare for physical 

therapy, occupational therapy, and 

speech-language pathology services that 

the resident receives during a 

noncovered stay. Section 1888(e)(2)(A) 

of the Act excludes a certain limited 

number of services from the 

consolidated billing provision 

(primarily those services furnished by 

physicians and certain other types of 

practitioners), which remain separately 


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billable under Part B when furnished to 

a SNF’s Part A resident. These excluded 

service categories are discussed in 

greater detail in section V.B.2 of the 

May 12, 1998 interim final rule (63 FR 

26295 through 26297). 

We note that section 103 of the 

Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 

1999 (BBRA, Pub. L. 106–113, enacted 

on November 29, 1999) amended 

section 1888(e)(2)(A) of the Act by 

further excluding a number of 

individual ‘‘high-cost, low probability’’ 

services, identified by Healthcare 

Common Procedure Coding System 

(HCPCS) codes, within several broader 

categories (chemotherapy items, 

chemotherapy administration services, 

radioisotope services, and customized 

prosthetic devices) that otherwise 

remained subject to this provision. We 

discuss this BBRA amendment in 

greater detail in the FY 2001 SNF PPS 

proposed and final rules (65 FR 19231 

through 19232, April 10, 2000, and 65 

FR 46790 through 46795, July 31, 2000), 

as well as in Program Memorandum 

AB–00–18 (Change Request #1070), 

issued March 2000, which is available 

online at www.cms.gov/transmittals/ 

downloads/ab001860.pdf. 

As explained in the FY 2001 SNF PPS 

proposed rule (65 FR 19232), the 

amendments enacted in section 103 of 

the BBRA not only identified for 

exclusion from this provision a number 

of particular service codes within four 

specified categories (that is, 

chemotherapy items, chemotherapy 

administration services, radioisotope 

services, and customized prosthetic 

devices), but also gave the Secretary 

‘‘. . . the authority to designate 

additional, individual services for 

exclusion within each of the specified 

service categories.’’ In the FY 2001 SNF 

PPS proposed rule, we also noted that 

the BBRA Conference report (H.R. Rep. 

No. 106–479 at 854 (1999) (Conf. Rep.)) 

characterizes the individual services 

that this legislation targets for exclusion 

as ‘‘. . . high-cost, low probability 

events that could have devastating 

financial impacts because their costs far 

exceed the payment [SNFs] receive 

under the prospective payment system 

. . . .’’ According to the conferees, 

section 103(a) of the BBRA ‘‘is an 

attempt to exclude from the PPS certain 

services and costly items that are 

provided infrequently in SNFs . . . .’’ 

By contrast, we noted that the Congress 

declined to designate for exclusion any 

of the remaining services within those 

four categories (thus, leaving all of those 

services subject to SNF consolidated 

billing), because they are relatively 

inexpensive and are furnished routinely 

in SNFs. 

As we further explained in the FY 

2001 SNF PPS final rule (65 FR 46790), 

and as our longstanding policy, any 

additional service codes that we might 

designate for exclusion under our 

discretionary authority must meet the 

same statutory criteria used in 

identifying the original codes excluded 

from consolidated billing under section 

103(a) of the BBRA: The code must fall 

within one of the four service categories 

specified in the BBRA, and the code 

also must meet the same standards of 

high cost and low probability in the 

SNF setting, as discussed in the BBRA 

Conference report. Accordingly, we 

characterized this statutory authority to 

identify additional service codes for 

exclusion ‘‘. . . as essentially affording 

the flexibility to revise the list of 

excluded codes in response to changes 

of major significance that may occur 

over time (for example, the development 

of new medical technologies or other 

advances in the state of medical 

practice)’’ (65 FR 46791). In the FY 2014 

SNF PPS proposed rule (78 FR 26449– 

26450), we specifically invited public 

comments identifying HCPCS codes in 

any of these four service categories 

(chemotherapy items, chemotherapy 

administration services, radioisotope 

services, and customized prosthetic 

devices) representing recent medical 

advances that might meet our criteria for 

exclusion from SNF consolidated 

billing. A discussion of the public 

comments received on this topic, along 

with our responses, appears below. 

Comment: One commenter suggested 

that we should categorically exclude all 

chemotherapy and radiation therapy 

services from consolidated billing. 

Another commenter reiterated a 

recommendation that commenters had 

repeatedly urged us to adopt in previous 

years, to expand the existing exclusion 

for certain high-intensity outpatient 

hospital services (such as radiation 

therapy) to encompass services 

furnished in other, nonhospital settings. 

Response: With respect to 

chemotherapy services, we have noted 

repeatedly in prior rulemaking on the 

SNF PPS—including, most recently, the 

FY 2012 SNF PPS final rule (76 FR 

48532 through 48533, August 8, 2011)— 

that in creating a statutory carve-out for 

chemotherapy and certain other 

designated types of services, the BBRA 

. . . did not categorically exclude all such 

services from SNF consolidated billing. 

Instead, the legislation specifically identified 

individual excluded services within 

designated categories, by Healthcare 

Common Procedure Coding System (HCPCS) 

code. The BBRA’s Conference Report 

explained that this legislation specifically 

targeted those ‘high-cost, low probability’ 

items and services that ‘. . . are not typically 

administered in a SNF, or are exceptionally 

expensive, or are given as infusions, thus 

requiring special staff expertise to 

administer’ (H.R. Conf. Rep. No. 106–479 at 

854). By contrast, other types of services 

within those categories that ‘. . . are 

relatively inexpensive and are administered 

routinely in SNFs’ remain subject to SNF 

consolidated billing under this legislation. 

Radiation therapy, by contrast, is not 

one of the service categories designated 

for exclusion under the BBRA 

legislation, but instead is encompassed 

within the administrative exclusion for 

certain types of exceptionally intensive 

outpatient services under the 

regulations at § 411.15(p)(3)(iii). As 

such, all types of radiation therapy 

services are, in fact, already excluded 

from consolidated billing, but only 

when furnished in the hospital or CAH 

setting. In response to the recurring calls 

for expanding this exclusion to 

encompass services furnished in 

freestanding (nonhospital/CAH) 

settings, we have repeatedly noted— 

most recently, in the FY 2012 SNF PPS 

final rule (76 FR 48532, August 8, 

2011)—that the existing law does not 

provide us with the authority to ‘‘. . . 

establish a categorical exclusion for 

these services that would apply 

irrespective of the setting in which they 

are furnished.’’ In addition, as we 

initially noted in the FY 2009 SNF PPS 

final rule (73 FR 46436, August 8, 2008) 

and then reiterated in a number of 

subsequent final rules, the repeated 

calls to expand the administrative 

exclusion for high-intensity outpatient 

services in this manner would appear to 

reflect 

. . . a continued misunderstanding of the 

underlying purpose of this provision. As we 

have consistently noted in response to 

comments on this issue in previous years 

. . . and as also explained in Medicare 

Learning Network (MLN) Matters article 

SE0432 . . . the rationale for establishing 

this exclusion was to address those types of 

services that are so far beyond the normal 

scope of SNF care that they require the 

intensity of the hospital setting in order to be 

furnished safely and effectively. 

Moreover, we note that when the 

Congress enacted the consolidated 

billing exclusion for certain RHC and 

FQHC services in section 410 of the 

MMA, the accompanying legislative 

history’s description of present law 

acknowledged that the existing 

exclusions for exceptionally intensive 

outpatient services are specifically 

limited to ‘. . . certain outpatient 

services from a Medicare-participating 

hospital or critical access hospital . . .’ 

(emphasis added). (See the House Ways 


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and Means Committee Report (H. Rep. 

No. 108–178, Part 2 at 209), and the 

Conference Report (H. Conf. Rep. No. 

108–391 at 641)). Therefore, these 

services are excluded from SNF 

consolidated billing only when 

furnished in the outpatient hospital or 

CAH setting, and not when furnished in 

other, freestanding (non-hospital or nonCAH) settings. 

Comment: One commenter cited the 

longstanding chemotherapy exclusion 

for Rituximab (Rituxan, HCPCS code 

J9310), which it characterized as a ‘‘noncancer chemotherapy . . . drug used to 

treat rheumatoid arthritis’’ (emphasis 

added), and presented this as a 

precedent for expanding this exclusion 

to encompass a number of other drugs 

that are not used in the treatment of 

cancer. The commenter asserted that in 

the absence of such an exclusion, 

suppliers of these drugs who do not 

have ‘‘an executed contract in place 

with the SNF prior to administration’’ 

would be ‘‘forced to absorb the 

significant cost of the drug or biologic.’’ 

Response: We note that the 

description of Rituximab as a ‘‘noncancer’’ chemotherapy drug is not 

entirely accurate, and requires a more 

detailed discussion. As explained on 

MedlinePlus, the Web site of the 

National Institutes of Health’s U.S. 

National Library of Medicine (http:// 

www.nlm.nih.gov/medlineplus/ 

druginfo/meds/a607038.html), 

Rituximab is used alone or with other 

medications to treat certain types of nonHodgkin’s lymphoma (NHL; a type of cancer 

that begins in a type of white blood cells that 

normally fights infection). Rituximab is also 

used with another medication to treat the 

symptoms of rheumatoid arthritis (RA; a 

condition in which the body attacks its own 

joints, causing pain, swelling, and loss of 

function) in people who have already been 

treated with a certain type of medication 

called a tumor necrosis factor (TNF) 

inhibitor. 

Thus, while it is true that this drug is 

approved for use in treating certain noncancer conditions such as rheumatoid 

arthritis, it is actually approved for use 

in treating cancer as well, and it is this 

latter application that represents the 

basis for its exclusion from consolidated 

billing as a chemotherapy drug. In this 

context, we note that when an otherwise 

excluded chemotherapy drug is 

prescribed for a use that does not 

involve treating cancer, the drug would 

not qualify as an excluded 

‘‘chemotherapy’’ drug in that instance. 

This is consistent with the discussion of 

the chemotherapy exclusion in the FY 

2010 SNF PPS final rule (74 FR 40354), 

which notes that this exclusion does not 

encompass drugs that ‘‘are not anticancer drugs,’’ as well as in the FY 2012 

SNF PPS final rule (76 FR 48531), 

which similarly notes that this 

exclusion does not extend to drugs that 

‘‘are actually used to treat diseases other 

than cancer’’ (emphasis added). 

Moreover, the commenter appears to be 

concerned that the absence of an 

executed contract would serve to 

absolve the SNF of its liability to pay 

the supplier for a bundled service. We 

note that this is not the case. In MLN 

Matters article #MM3592 (available 

online at http://www.cms.gov/Outreachand-Education/Medicare-LearningNetwork-MLN/MLNMattersArticles/ 

downloads/MM3592.pdf), while 

emphasizing the importance of written 

agreements between SNFs and their 

suppliers, we clearly specify that an 

arrangement between a SNF and its 

supplier ‘‘is validated not by the 

presence of specific supporting written 

documentation but rather by their actual 

compliance with the requirements 

governing such ‘arrangements’,’’ and 

that ‘‘the absence of an agreement with 

its supplier (written or not) does not 

relieve the SNF of its responsibility to 

pay suppliers for services ‘bundled’ in 

the SNF PPS payment from Medicare.’’ 

Comment: Some commenters 

advocated the exclusion of other types 

of services that do not fall within the 

categories identified in the BBRA. We 

received a comment requesting that 

DIFICID® (fidaxomicin) be excluded 

from consolidated billing. DIFICID® is 

an orally administered tablet that is 

used specifically for treating severe 

cases of diarrhea associated with certain 

potentially life-threatening infections of 

the gastrointestinal tract. The 

commenter noted this drug’s potential 

to reduce the recurrence of such 

infections (along with associated 

hospitalizations and physician office 

visits), and to improve patient quality of 

life. The commenter cited as precedents 

the existing authority for excluding 

certain ‘‘high-cost, low probability’’ 

services under the BBRA, as well as the 

separate payment made for certain drugs 

under the heading of screening and 

preventive services, as discussed in 

MLN Matters Special Edition article 

#SE0436 (available online at http:// 

www.cms.gov/Outreach-and-Education/ 

Medicare-Learning-Network-MLN/ 

MLNMattersArticles/downloads/ 

SE0436.pdf). The commenter then urged 

the creation of a similar exclusion for 

DIFICID® on public policy grounds, 

expressing concern that the continued 

inclusion of DIFICID® within the SNF 

PPS bundle might prompt SNFs to opt 

for alternate treatments that are less 

expensive, but also less efficacious. 

Response: As we have consistently 

stated (most recently, in the FY 2012 

SNF PPS final rule (76 FR 48530, 

August 8, 2011)), the BBRA authorizes 

us to identify additional services for 

exclusion only within those particular 

service categories—chemotherapy items; 

chemotherapy administration services; 

radioisotope services; and, customized 

prosthetic devices—that it has 

designated for this purpose, and does 

not give us the authority simply to carve 

out additional categories of services 

beyond those specified in the law on 

‘‘public policy grounds.’’ Accordingly, 

as DIFICID® does not fall within one of 

the specific service categories 

designated for this purpose in the 

statute itself, we are unable to exclude 

it from consolidated billing under this 

authority. Further, we note that while 

the cited MLN Matters article does 

indeed discuss certain drugs that are 

separately covered under Medicare Part 

B or Part D when furnished to Part A 

SNF residents, those particular drugs 

are vaccines that are preventive rather 

than therapeutic in nature and, as such, 

are by definition outside the scope of 

the Part A SNF benefit (see Pub. L. 100– 

04, ch.6, § 20.4); by contrast, therapeutic 

drugs such as DIFICID® would fall 

within the scope of SNF coverage under 

Part A. Regarding the commenter’s 

concern that the continued inclusion of 

DIFICID® within the SNF PPS bundle 

could affect the extent to which SNFs 

may be inclined to consider its use, we 

note that while bundling provides 

incentives for SNFs to be efficient in the 

provision of care, SNFs are still required 

to provide ‘‘the necessary care and 

services to attain or maintain the highest 

practicable physical, mental, and 

psychosocial well-being’’ of each 

resident in accordance with the 

resident’s assessment and plan of care 

(§ 483.25). 

Comment: One commenter reiterated 

a number of recommendations that 

commenters had urged us to adopt in 

previous years. These included 

expanding the existing chemotherapy 

exclusion to encompass related drugs 

that are commonly administered in 

conjunction with chemotherapy to 

ameliorate the side effects of the 

chemotherapy drugs, and excluding 

additional categories of services beyond 

those specified in the BBRA, such as 

positron emission tomography (PET) 

scans. 

Response: Regarding the exclusion of 

chemotherapy-related drugs, we have 

noted repeatedly in this and previous 

final rules—most recently, the FY 2012 

SNF PPS final rule (76 FR 48532, 

August 8, 2011)—that the BBRA 

authorizes us to identify additional 


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service codes for exclusion only within 

those particular service categories 

(chemotherapy items; chemotherapy 

administration services; radioisotope 

services; and, customized prosthetic 

devices) that it has designated for this 

purpose, and does not give us the 

authority to exclude other services 

which, though they may be related, fall 

outside of the specified service 

categories themselves. Thus, while antiemetics (anti-nausea drugs), for 

example, are commonly administered in 

conjunction with chemotherapy, they 

are not inherently chemotherapeutic in 

nature (that is, they do not actively 

destroy cancer cells) and, consequently, 

do not fall within the excluded 

chemotherapy category designated in 

the BBRA. Regarding the exclusion of 

PET scans, we noted in the FY 2012 

SNF PPS final rule that ‘‘. . . we 

decline to add to the exclusion list those 

services submitted by commenters that 

have already been considered and not 

excluded in previous years based on 

their being outside the particular service 

categories that the statute authorizes for 

exclusion’’ (76 FR 48531, August 8, 

2011). Such services would include PET 

scans, as discussed previously in the FY 

2006 SNF PPS final rule (70 FR 45049, 

August 4, 2005). 

Comment: One commenter 

recommended that the surgical 

debridement procedures represented by 

HCPCS codes 11040 through 11044 be 

excluded from consolidated billing. 

Response: We note that debridement 

codes 11040 (skin, partial thickness) 

and 11041 (skin, full thickness) were 

discontinued as of December 2010. The 

remaining debridement codes that the 

commenter cited—11042 (skin, and 

subcutaneous tissue), 11043 (skin, 

subcutaneous tissue, and muscle), and 

11044 (skin, subcutaneous tissue, 

muscle, and bone)—are listed correctly 

in Carrier/A/B MAC File 1 as physician 

services that are excluded from 

consolidated billing. However, these 

same three codes (along with the two 

discontinued ones) currently appear 

erroneously in Major Category I.F of the 

FI/A/B MAC Annual Update as 

included (that is, bundled) ambulatory 

surgery codes. Accordingly, we will 

make the appropriate corrections to the 

FI/A/B MAC Annual Update to ensure 

that it no longer lists these codes 

incorrectly as ambulatory surgery 

inclusions. 

Comment: One commenter suggested 

that, rather than relying solely on 

feedback through the public comment 

process on possible exclusions from 

consolidated billing, CMS should 

convene an official expert group to 

review the codes and make formal 

recommendations. 

Response: In the FY 2010 SNF PPS 

final rule (74 FR 40354, August 11, 

2009), we noted that the Congress gave 

specific direction regarding the review 

of consolidated billing codes that it 

envisioned: In the BBRA Conference 

Report (H.R. Rep. No. 106–479 at 854 

(1999) (Conf. Rep.)), it specified that the 

GAO was to conduct a special, one-time 

comprehensive review of the existing 

code set, and it then conferred on the 

Secretary the authority ‘‘. . . to review 

periodically and modify, as needed, the 

list of excluded services.’’ However, as 

we explained in the FY 2002 SNF PPS 

final rule (66 FR 39588, July 31, 2001), 

this ongoing review function must be 

considered within the context of the 

overall process in which it takes place: 

. . . we do not view making additions to the 

list of excluded services as a part of a process 

of continual expansion to encompass an everbroadening array of excluded services. 

Further, . . . the fundamental purpose of the 

consolidated billing provision . . . is to make 

the SNF responsible for billing Medicare for 

essentially all of its residents’ services, other 

than those identified in a small number of 

narrow and specifically delimited statutory 

exclusions (emphasis added). 

Thus, the purpose of this ongoing 

review is not to devise new and 

increasingly expansive rationales for the 

unbundling of services, but rather, 

simply to ensure that services which 

meet the already-established criteria for 

exclusion are not overlooked. We 

believe that our longstanding practice of 

periodically inviting input through the 

public comment process (which is 

already open to any interested parties 

who may wish to provide the benefit of 

their expertise in this area) is both 

appropriate and sufficient to achieve 

this objective. 

3. Payment for SNF-Level Swing-Bed 

Services 

Section 1883 of the Act permits 

certain small, rural hospitals to enter 

into a Medicare swing-bed agreement, 

under which the hospital can use its 

beds to provide either acute- or SNFlevel care, as needed. For critical access 

hospitals (CAHs), Medicare pays on a 

reasonable cost basis under Part A for 

SNF-level services furnished under a 

swing-bed agreement. However, in 

accordance with section 1888(e)(7) of 

the Act, these SNF-level services when 

furnished by non-CAH rural hospitals 

are paid under the SNF PPS, effective 

with cost reporting periods beginning 

on or after July 1, 2002. As explained in 

the FY 2002 SNF PPS final rule (66 FR 

39562), this effective date is consistent 

with the statutory provision to integrate 

swing-bed rural hospitals into the SNF 

PPS by the end of the transition period, 

June 30, 2002. 

Accordingly, all non-CAH swing-bed 

rural hospitals are being paid under the 

SNF PPS. Therefore, all rates and wage 

indexes outlined in earlier sections of 

this final rule for the SNF PPS also 

apply to all non-CAH swing-bed rural 

hospitals. A complete discussion of 

assessment schedules, the MDS, and the 

transmission software (RAVEN–SB for 

Swing Beds) appears in the FY 2002 

final rule (66 FR 39562) and in the FY 

2010 final rule (74 FR 40288). As 

finalized in the FY 2010 SNF PPS final 

rule (74 FR 40356–57), effective October 

1, 2010, non-CAH swing-bed rural 

hospitals are required to complete an 

MDS 3.0 swing-bed assessment, which 

is limited to the required demographic, 

payment, and quality items. The latest 

changes in the MDS for swing-bed rural 

hospitals appear on the SNF PPS Web 

site at http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/index.html. We received no 

comments on this aspect of the 

proposed rule. 

D. Other Issues 

1. Monitoring Impact of FY 2012 Policy 

Changes 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26463 through 26465), we 

discussed our monitoring efforts 

associated with impacts of certain 

policy changes finalized in the FY 2012 

SNF PPS final rule (76 FR 48486). 

Specifically, we have been monitoring 

the impact of the following changes: 

• Recalibration of the FY 2011 SNF 

parity adjustment to align overall 

payments under RUG–IV with those 

under RUG–III. 

• Allocation of group therapy time to 

pay more appropriately for group 

therapy services based on resource 

utilization and cost. 

• Implementation of changes to the 

MDS 3.0 patient assessment instrument, 

most notably the introduction of the 

Change-of-Therapy (COT) Other 

Medicare Required Assessment 

(OMRA). 

We have posted quarterly memos to 

the SNF PPS Web site which highlight 

some of the trends we have observed 

over a given time period. These memos 

may be accessed through the SNF PPS 

Web site at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/SNFPPS/Downloads/SNF_

Monitoring.zip. In the FY 2014 SNF PPS 

proposed rule (78 FR 26465), we stated 

that based on the data reviewed thus far, 

we have found no evidence of possible 

negative impacts on SNF providers cited 


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in the comments in the FY 2012 SNF 

PPS final rule (see 76 FR 48497–98, 

48537), particularly references to a 

‘‘double hit’’ from the combined impact 

of the recalibration of the FY 2011 SNF 

parity adjustment and the FY 2012 

policy changes. Therefore, we stated 

that while we will continue our SNF 

monitoring efforts, we will post 

information to the aforementioned Web 

site only as appropriate. 

A discussion of the comments we 

received on these efforts, with our 

responses, appears below. 

Comment: One commenter stated that 

they appreciate the transparency 

demonstrated by releasing the quarterly 

findings memos and urged us to 

continue this practice into the future. 

Response: We appreciate the support 

for our efforts to provide this data on the 

FY 2012 policy changes. As stated in the 

FY 2014 SNF PPS proposed rule (78 FR 

26465), this level of analysis was being 

conducted to determine if any evidence 

existed of possible negative impacts on 

SNF providers cited in the comments in 

the FY 2012 SNF PPS final rule (76 FR 

48497–48498, 48537), particularly 

references to a ‘‘double hit’’ from the 

combined impact of the recalibration of 

the FY 2011 SNF parity adjustment and 

the FY 2012 policy changes (for 

example, allocation of group therapy 

and introduction of the COT OMRA). 

Based on the data we have examined so 

far, there is no evidence of such 

negative impacts—overall case mix has 

not been affected significantly and 

providers appear to have adjusted their 

internal processes and care planning 

activities well to accommodate the FY 

2012 policy changes. Given these 

findings, we do not regard the 

continued publishing of quarterly 

memos, in the absence of some marked 

finding, as still being necessary at this 

point. Therefore, as stated in the FY 

2014 SNF PPS proposed rule (78 FR 

26465), we will continue our SNF 

monitoring efforts but will henceforth 

only post information regarding our 

monitoring activities discussed above to 

the SNF PPS Web site as appropriate. 

Comment: One commenter asked that 

we reevaluate the potential negative 

impacts of implementing the COT 

OMRA; specifically, that the COT 

OMRA is unnecessarily burdensome 

and inflexible. This commenter 

requested that we consider ways to 

make the COT OMRA more flexible for 

providers. 

Response: As noted in the FY 2012 

SNF PPS final rule (76 FR 48518), the 

COT OMRA was implemented because 

the then-existing range of PPS 

assessments did not give providers 

adequate opportunity to report changes 

in the resident’s therapy services that 

occur outside the observation window 

which, as always, should be based on 

medical evidence. Since implementing 

the COT OMRA, we have continued to 

monitor its utilization and determine if 

any negative impacts have resulted for 

facilities and/or SNF residents. Our 

monitoring efforts have revealed, as 

demonstrated in Table 21 of the FY 

2014 SNF PPS proposed rule (78 FR 

26465), that the COT OMRA comprises 

just 11 percent of all assessments 

completed for SNF residents. As such, 

based on the limited number of COT 

OMRAs being completed, we do not 

believe that the COT OMRA represents 

a significant burden for providers. 

With respect to the flexibility of the 

assessment, the limited number of COT 

OMRAs might also be the result of the 

flexibility in completing the COT 

OMRA afforded in the MDS RAI Manual 

(for example, the flexibility discussed in 

Chapter 2 of the MDS RAI Manual, 

whereby the COT observation period for 

a resident is reset if a scheduled or 

unscheduled assessment is completed 

on or prior to day 7 of the COT 

observation period). Additionally, as the 

COT OMRA may be used to report 

either an increase or decrease in therapy 

services relative to the resident’s 

previous therapy RUG classification, the 

COT OMRA has helped ensure greater 

accuracy of SNF payments and ensure 

that providers are appropriately 

reimbursed for the level of care 

delivered to their residents. Therefore, 

while we will continue to monitor for 

potential negative impacts associated 

with the FY 2012 policy changes, as 

noted above, we have not yet found any 

evidence of such an adverse impact. 

2. Ensuring Accuracy in Grouping to 

Rehabilitation RUG–IV Categories 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26465–26466), we clarified 

that our classification criteria for the 

Rehabilitation RUG categories require 

that the resident receive the requisite 

number of distinct calendar days of 

therapy to be classified into the 

Rehabilitation RUG category, and 

focused particularly on issues related to 

classification into the Medium and Low 

Rehabilitation categories. We explained 

that in requiring distinct calendar days 

of therapy, our classification criteria are 

consistent with the SNF level of care 

requirement under § 409.31(b)(1), which 

provides that skilled services must be 

needed and received on a daily basis, 

and § 409.34(a)(2),which specifies that 

the ‘‘daily basis’’ criterion can be met by 

skilled rehabilitation services that are 

needed and provided at least 5 days per 

week. However, we explained in the FY 

2014 SNF PPS proposed rule (78 FR 

26465–66) that the MDS item set 

currently does not contain an item that 

permits SNFs to report the total number 

of distinct calendar days of therapy 

provided by all rehabilitation 

disciplines. Instead, the MDS item set 

requires the SNF to record, separately 

by each therapy discipline, the number 

of days therapy was received during the 

7-day look-back period, without 

distinguishing between distinct 

calendar days. As we explained in the 

FY 2014 SNF PPS proposed rule, 

currently, the RUG grouper adds these 

days together which results in some 

residents being classified into the 

Medium and Low Rehabilitation RUG 

categories when they do not actually 

meet our classification criteria. Thus, 

we proposed to add an item to the MDS 

3.0 item set (item O0420) which would 

permit SNF providers to code the total 

number of distinct calendar days that 

the resident received therapy services 

across all rehabilitation disciplines 

during the assessment look-back period 

to ensure that residents are classified 

into the correct Rehabilitation RUG in 

accordance with our existing 

classification criteria. We stated that 

effective October 1, 2013, facilities 

would be required to record under this 

item the number of distinct calendar 

days of therapy provided by all the 

rehabilitation disciplines over the 7-day 

look-back period for the current 

assessment, which would be used to 

classify the resident into the correct 

Rehabilitation RUG category. A 

discussion of the comments we received 

on this proposal, and our responses, 

appear below. 

Comment: Many commenters 

supported the proposal to add a new 

item to the MDS 3.0 to capture distinct 

therapy days and agreed that patients 

should be appropriately categorized into 

the applicable RUG category to ensure 

accurate payment. Several commenters 

appeared to be under the impression 

that this proposal will change the policy 

on how many days of therapy are 

required in order to group to specific 

rehabilitation RUG categories. 

Furthermore, some commenters stated 

that we did not provide any clinical 

basis for this addition to the MDS 3.0, 

and that therapist judgment should be 

the deciding factor for scheduling 

therapy services to best meet the 

residents’ needs. 

Response: We appreciate that many 

commenters supported the proposal to 

add item O0420 to the MDS 3.0 to 

capture distinct therapy days and to pay 

more accurately for therapy services. We 

emphasize that we did not propose to 

add item O0420 as a result of a change 


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in policy; instead, we proposed to add 

this item to enable us to implement our 

existing policy more accurately. As 

explained in the FY 2014 SNF PPS 

proposed rule (78 FR 26465 through 

26466), throughout all iterations of the 

SNF PPS from 1998 until the present 

time, in order to qualify for the Medium 

Rehabilitation (Medium Rehab) RUG 

category, a resident must receive at least 

150 minutes of therapy per week (a 

seven-day time period) and 5 days of 

any combination of the three 

rehabilitation disciplines (physical 

therapy, occupational therapy, or 

speech-language pathology). The policy 

has always been that the term ‘‘days’’ in 

this context denotes distinct calendar 

days of therapy. Similarly, for the Low, 

High, Very High, and Ultra High 

Rehabilitation RUG categories, the 

policy has always been that distinct 

calendar days of therapy are required to 

classify into these RUG categories (for 

example, for the Low Rehabilitation 

category, 3 distinct calendar days of 

therapy are required). Thus, in the 

proposed rule, we clarified that our 

classification criteria for the 

Rehabilitation RUG categories require 

that the resident receive the requisite 

number of distinct calendar days of 

therapy to be classified into the 

Rehabilitation RUG category. However, 

there has not been a way until now to 

record on the MDS 3.0 the number of 

distinct calendar days of therapy 

provided across all rehabilitation 

disciplines in order to ensure accurate 

calculation of these days in the RUG 

grouper software. It is true that our 

proposed change to the MDS 3.0 item 

set will require an additional item for 

reporting of therapy services; however, 

this change solely addresses the manner 

of reporting (and not the manner of 

providing) these services. We agree that 

licensed therapists are to use their 

clinical judgment to treat the patients in 

the most appropriate manner, and to 

maintain professional standards while 

providing all necessary services. 

Providers are not required to change 

clinical practice patterns based on this 

additional reporting requirement; rather, 

they could continue to provide therapy 

as they always have and would use the 

new item to report more accurately the 

days on which they provided therapy 

services, in order to ensure that the 

patient is assigned to the correct RUG. 

In addition, we note that under 

section 1814(a)(2)(B) of the Act, one of 

the basic elements of the SNF level of 

care (which constitutes a precondition 

for SNF coverage under Part A) is that 

a beneficiary must need and receive 

skilled care on a daily basis. Under an 

exception in the regulations at 

§ 409.34(a)(2), when skilled 

rehabilitation services are not available 

7 days a week, they can still be 

considered furnished on a ‘‘daily basis’’ 

when needed and provided at least 5 

days a week. However, it is important to 

note that merely scheduling therapy 

services on 5 distinct calendar days 

during the week would be insufficient 

to satisfy this requirement unless the 

beneficiary also has an actual clinical 

need for the services to be scheduled in 

this manner. As noted in § 30.6 of the 

Medicare Benefit Policy Manual, 

Chapter 8: 

It is not sufficient for the scheduling of 

therapy sessions to be arranged so that some 

therapy is furnished each day, unless the 

patient’s medical needs indicate that daily 

therapy is required. For example, if physical 

therapy is furnished on 3 days each week and 

occupational therapy is furnished on 2 other 

days each week, the ‘‘daily basis’’ 

requirement would be satisfied only if there 

is a valid medical reason why both cannot be 

furnished on the same day. The basic issue 

here is not whether the services are needed, 

but when they are needed. Unless there is a 

legitimate medical need for scheduling a 

therapy session each day, the ‘‘daily basis’’ 

requirement for SNF coverage would not be 

met. 

Accordingly, we do not expect that 

the addition of this MDS item, which is 

intended to facilitate more accurate 

reporting, will result in any changes in 

clinical practice patterns, as SNFs 

should already be appropriately 

providing skilled rehabilitation services 

on a daily basis only in those instances 

where the beneficiary has an actual 

need for therapy to be furnished on at 

least 5 distinct calendar days during the 

week. 

Comment: Some commenters stated 

that the proposal to add item O0420 to 

the MDS 3.0 would have a significant 

impact on the ability of residents to 

qualify for a rehabilitation RUG for the 

5-day PPS assessment because the 

Assessment Reference Date (ARD) for 

the 5-day PPS assessment must be set 

for no later than Day 8 of the stay. They 

expressed concern that residents who 

miss therapy for clinical or scheduling 

reasons are not being appropriately 

classified into rehabilitation RUG 

categories. Additionally, these 

commenters explained that it is difficult 

to provide therapy to a resident for 5 

distinct days over a 7-day period and 

this challenge correlates to residents 

being placed in non-rehabilitation 

RUGs. They suggested that CMS does 

not adequately reimburse for 

rehabilitation services that are delivered 

beyond the minimum number of 

minutes required for a specific RUG 

category and that this amounts to 

unpaid therapy services provided to 

residents. 

Additionally, these commenters 

stated that this proposal will result in 

greater burden for providers; for 

example, requiring scheduling changes 

for therapists, requiring therapists to 

work on weekends, evenings, and 

holidays, and requiring part-time 

therapists to work on full-time 

schedules. They explained that the need 

for two different therapy disciplines 

does not change, irrespective of whether 

these therapies are received on distinct 

days or on the same days. Some 

commenters requested that we 

implement an ‘‘exceptions’’ policy to 

account for missed or rescheduled 

therapy sessions beyond provider 

control which result in different 

therapies being provided on the same 

day. 

Finally, several commenters 

expressed concern related to a possible 

conflict between the proposal to add 

item O0420 to the MDS item set to 

capture more appropriately the distinct 

days of therapy provided and 

instructions from CMS in recent 

guidance which clarified the term 

‘‘daily skilled services defined’’ (CMS 

Transmittal 161, October 26, 2012) 

which states, ‘‘A patient whose 

inpatient stay is based solely on the 

need for skilled rehabilitation services 

would meet the ‘‘daily basis’’ 

requirement when they need and 

receive those services on at least 5 days 

a week. (If therapy services are provided 

less than 5 days a week, the ‘‘daily’’ 

requirement would not be met.) This 

requirement should not be applied so 

strictly that it would not be met merely 

because there is an isolated break of a 

day or two during which no skilled 

rehabilitation services are furnished and 

discharge from the facility would not be 

practical.’’ For the above reasons, 

several commenters suggested we 

postpone the proposed addition to the 

MDS 3.0 of item O0420 requiring that 

facilities report the number of distinct 

calendar days of therapy and carefully 

review the impact of the change as 

discussed in these comments. 

Response: We do not agree with the 

commenters’ assertion that the proposal 

to add item O0420 to the MDS 3.0 item 

set will make it more difficult to classify 

residents into rehabilitation RUGs 

during the 5-day PPS assessment period 

because the ARD must be set for no later 

than Day 8 of the stay. As we discussed 

in the FY 2014 SNF PPS proposed rule 

(78 FR 26465–66) and in this final rule, 

the addition of this item was not 

proposed as a result of a change in 

policy. Our policy has always been that 

distinct calendar days of therapy are 


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required to classify into a Rehabilitation 

RUG. The new MDS item was proposed 

to provide for more accurate reporting 

and calculation of these therapy days, 

and to ensure that patients are 

appropriately classified into 

Rehabilitation RUG categories in 

accordance with our existing 

classification policy. Furthermore, given 

that residents currently classify on the 

5-day PPS assessment for Rehabilitation 

RUGs which require 5 calendar days of 

therapy (Medium, High, Very High, or 

Ultra High), it appears that providers are 

clearly able to provide the necessary 

therapy time within the first days of the 

SNF stay regardless of this new item. 

More generally, if facilities are having 

difficulty meeting the daily skilled 

needs of the residents in their care, then 

this might indicate a need for the 

facility to revisit its admissions policies 

and determine if the facility is accepting 

such patients only when it can 

appropriately meet their care needs. 

Furthermore, with regard to the 

comments that it is difficult to provide 

therapy to a resident for 5 distinct days 

over a 7-day period, we would note that, 

based on the monitoring reports we 

have published to the SNF PPS Web site 

(http://cms.gov/Medicare/Medicare-Feefor-Service-Payment/SNFPPS/ 

Spotlight.html), in FY 2012, 84.3 

percent of the days billed to Medicare 

Part A were billed at one of the upper 

three rehabilitation RUG categories 

(Ultra-High, Very-High, and High) 

which require that 1 discipline provide 

at least 5 days of therapy. This is a 

longstanding requirement that appeared 

in the applicable instructions at least as 

far back as 2006, as noted on page 3–216 

of the MDS RAI Manual, Version 2.0: 

If orders are received for more than one 

therapy discipline, enter the number of days 

at least one therapy service is performed. For 

example, if PT is provided on MWF, and OT 

is provided on MWF, the MDS should be 

coded as 3 days, not 6 days. 

Accordingly, since multiple therapy 

disciplines furnished on the same 

calendar day would still comprise only 

a single calendar day’s worth of therapy, 

this means that those residents being 

classified into one of these RUG 

categories must have received at least 

one therapy discipline on 5 distinct 

calendar days during the look-back 

period for the assessment. Therefore, 

given that 84.3 percent of patient days 

are billed at one of these upper three 

rehabilitation RUG categories, the vast 

majority of SNF residents should be 

currently receiving at least 5 distinct 

calendar days of therapy per week. If 

this is the standard of practice that 

exists within the SNF industry 

currently, as evidenced by the current 

billing and care delivery patterns, we do 

not agree with the comment that it is 

difficult for SNFs to provide therapy to 

their residents for 5 distinct days over 

a 7-day period. Again, the new MDS 

item is not being added as a result of 

any change in policy, but simply to 

provide for more accurate reporting of 

therapy days so we can ensure that 

patients are appropriately classified into 

Rehabilitation RUGs in accordance with 

our current classification criteria. 

In addition, commenters suggested 

that CMS does not adequately reimburse 

for rehabilitation services that are 

delivered beyond the minimum number 

of minutes required for a specific RUG 

category. We recognize that residents 

who do not meet the minimum 

qualifying minutes/days of therapy 

services may not be placed into 

Rehabilitation RUGs. However, we do 

not consider this a flaw of the SNF PPS 

RUG–IV system, as some commenters 

have suggested. The RUG–IV system 

was designed so that RUG payment 

levels are based on an average amount 

of minutes of therapy provided, not the 

minimum threshold of minutes for each 

RUG category. The original RUG–III 

grouper logic was based on clinical data 

collected in 1990, 1995, and 1997. As 

discussed in the SNF PPS proposed rule 

for FY 2010 (74 FR 22208, May 12, 

2009), we subsequently conducted a 

multi-year data collection and analysis 

under the Staff Time and Resource 

Intensity Verification (STRIVE) project 

to update the case-mix classification 

system for FY 2011. The resulting RUG– 

IV case-mix classification system 

reflected the data collected in 2006 and 

2007 during the STRIVE project, and 

was finalized in the FY 2010 SNF PPS 

final rule (74 FR 40288, August 11, 

2009) for implementation in FY 2011. In 

the FY 2010 SNF PPS proposed rule (74 

FR 22208, 22223–25) and final rule (74 

FR 40288, 40319–21, we explained the 

process of calculating therapy time to 

determine RUG payment levels. As part 

of this explanation, we discussed how 

we adjusted the therapy time for the 

calculations: ‘‘We give the maximum 

credit possible for any day that therapy 

time was recorded for 15 or more 

minutes to avoid underestimating the 

actual amounts of therapy furnished to 

patients’’ (74 FR 22225). Therapy 

reimbursement for each RUG is based 

on the average utilization between the 

thresholds, so those at the minimum 

thresholds are, in fact, being adequately 

paid relative to the average resource 

amount used to determine the 

reimbursement level. Moreover, the 

majority of MDS assessments submitted 

to CMS show that the number of therapy 

minutes provided to beneficiaries 

cluster at the minimum threshold 

amount necessary to qualify for a given 

RUG group. This would suggest that, for 

the majority of billed therapy days, the 

resource intensity used to determine the 

reimbursement for that RUG group is 

greater than the resource intensity of the 

therapy provided to the resident. 

Therefore, we do not agree that the 

system allows for a significant amount 

of unpaid therapy provided to SNF 

residents. 

In addition, we do not agree with the 

assertion that adding item O0420 to the 

MDS 3.0 item set will result in greater 

burden to the providers. As discussed 

previously, this item is not being added 

as a result of a change in policy. 

Facilities should not change practice 

patterns merely because of the 

additional item for reporting therapy. 

Until now, facilities have been 

calculating the days of therapy that each 

discipline provided to a specific 

resident. The new item will require the 

providers to use the exact same clinical 

information found on daily notes or 

therapy logs to count the days that 

therapy was provided to a patient; 

however, instead of counting each 

discipline’s days separately they will 

now have to count each distinct 

calendar day that any therapy was 

provided. We agree that the need for 

different therapy disciplines does not 

change regardless of whether these 

therapies are provided on the same or 

distinct calendar days. However, as 

explained previously, the ‘‘daily basis’’ 

requirement for Part A SNF coverage 

can be met only when therapy is not 

merely scheduled but is actually needed 

and provided on each of 5 distinct 

calendar days during the week. In 

addition, the design of the SNF PPS 

RUG–IV system requires very specific 

calculation of therapy minutes and days 

in order to place patients most 

appropriately into the correct case-mix 

classification. Therefore, we do not 

believe it would be appropriate to 

establish an ‘‘exceptions’’ policy to 

allow for counting of different therapies 

on the same day when residents 

experience missed or rescheduled 

therapy sessions beyond provider 

control. 

Finally, with respect to the comments 

raising the issue of a potential conflict 

between the proposed MDS item and 

the daily basis discussion in Transmittal 

161, we would note that the particular 

language being cited was not, in fact, 

introduced by this transmittal. Rather, it 

has long appeared in the manual 

instructions and was also discussed as 


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far back as the FY 2000 SNF PPS final 

rule (64 FR 41670, July 30, 1999): 

* * * Some comments reflected certain 

longstanding misconceptions regarding the 

SNF level of care definition, in terms of a 

beneficiary’s need for and receipt of skilled 

services on a daily basis which, as a practical 

matter, can be furnished only in an SNF on 

an inpatient basis. One recurring 

misconception with regard to the ‘‘daily 

basis’’ requirement (which some of the 

commenters expressed as well) is that 

Medicare coverage guidelines provide for 

specific breaks in skilled therapy services for 

the observance of a prescribed list of national 

holidays. Another longstanding 

misconception shared by some commenters 

is that the cessation of therapy for so much 

as a single day due, for example, to the 

beneficiary’s temporary illness or fatigue, 

would mandate an automatic discontinuance 

of coverage * * * As explained below, these 

interpretations of Medicare SNF coverage 

requirements are incorrect. 

[T]he requirement for daily skilled services 

should not be applied so strictly that it 

would not be met merely because there is a 

brief, isolated absence from the facility in a 

situation where discharge from the facility 

would not be practical * * * [W]ith regard 

to the ‘‘daily basis’’ requirement, the 

Medicare program does not specify in 

regulations or guidelines an official list of 

holidays or other specific occasions that a 

facility may observe as breaks in 

rehabilitation services, but recognizes that 

the resident’s own condition dictates the 

amount of service that is appropriate. 

Accordingly, the facility itself must judge 

whether a brief, temporary pause in the 

delivery of therapy services would adversely 

affect the resident’s condition (emphasis 

added). 

Similarly, section 409.34(b) states that 

a ‘‘. . . break of one or two days in the 

furnishing of rehabilitation services will 

not preclude coverage if discharge 

would not be practical for the one or 

two days during which, for instance, the 

physician has suspended the therapy 

sessions because the patient exhibited 

extreme fatigue.’’ We note that the 

references in the manual (see Pub. L. 

100–02, ch. 8, § 30.6) and the 

regulations in this context to an isolated 

break in therapy denote a situation in 

which such a lapse represents a rare 

exception rather than a regular or 

frequent occurrence. Accordingly, the 

policy reflected in the above-cited 

manual, rule preamble, and regulation is 

intended to indicate that such a lapse 

would not necessarily result in 

discontinuing coverage that is already 

ongoing. 

While coverage may continue where 

there is a brief, isolated break in therapy 

as discussed above, the patient’s RUG 

classification and the level of payment 

are still based on the number of days 

and minutes of therapy provided to the 

patient as reported on the MDS 3.0, and 

the new MDS item will ensure that 

these days are calculated correctly. 

Thus, we do not believe that the 

addition of the new MDS item presents 

a conflict with existing coverage policy 

as set forth in the manual, as they 

address separate issues. The manual and 

regulatory provisions cited above 

provide that in certain exceptional 

circumstances coverage of a SNF stay 

will not necessarily be discontinued 

because of a brief, isolated break in 

therapy; and the new MDS item 

provides the information necessary 

(total number of days that therapy was 

provided during the look-back period) 

to enable us to determine the 

appropriate RUG classification and 

payment for that SNF stay. We believe 

that this MDS item, by permitting more 

accurate reporting of therapy days, 

enables us to ensure that residents are 

appropriately classified into 

Rehabilitation RUG categories in 

accordance with our existing 

classification criteria. In addition, we 

note that if a resident’s stay is also based 

on receipt of non-rehabilitation related 

skilled services (for example, ventilator 

care) in combination with rehabilitation 

services (which we believe to 

characterize the majority of SNF stays), 

then such non-rehabilitation care would 

also constitute care provided toward 

meeting the daily basis requirement. 

Therefore, the new MDS item would not 

appear to present a conflict with the 

daily basis requirement discussed in 

Transmittal 161, but instead permits 

providers to report the precise number 

of distinct calendar days their residents 

receive therapy during the assessment 

observation period. Furthermore, 

because this new MDS item allows for 

more accurate reporting and thus more 

accurate RUG classification and 

payment, we do not see any reason to 

postpone the addition of the item to 

MDS 3.0 item set. 

Comment: Some commenters 

expressed concern over the practical 

implementation of adding item O0420 

to the MDS 3.0 item set. They stated that 

October 1, 2013 is too soon for software 

vendors to incorporate the new 

reporting requirement into SNF and 

therapy software systems and to 

program, test, and implement the 

changes. Additionally, although the 

commenters appreciated that CMS 

released draft programming 

specifications, they criticized the 

accompanying warning which stated 

that this version of the specifications 

should be considered provisional and 

subject to change until the final 

specifications are published. They 

stated that the timeframe between CMS 

issuing the final rule and the effective 

date of October 1, 2013 does not give the 

software vendors and facilities that are 

already overburdened with the 

implementation of electronic health 

records sufficient time to make these 

changes. 

Response: We appreciate the concern 

that commenters expressed about 

implementing the additional reporting 

requirement for the MDS 3.0. We 

recognize the need for software vendors 

to program, test, and implement the 

changes that will need to be made. 

However, we remind commenters that 

CMS offers j-RAVEN, which is a free 

software option that allows facilities to 

collect and maintain facility, patient, 

and assessment information for 

subsequent submission to the 

appropriate data repository. This 

software will be available and ready for 

the implementation of the new MDS 3.0 

reporting requirement and facilities that 

contract with alternative software 

vendors may choose to utilize the CMSprovided software until the vendorcreated software is ready for 

implementation. With regard to the draft 

specifications, CMS released these 

specifications at the same time as we 

released the proposed rule. Software 

vendors had the ability to begin 

planning for any potential programming 

requirements with the release of draft 

specifications. We believe that software 

vendors should be structuring projects 

in a manner that is responsive to 

potentially changing requirements. 

Accordingly, for the reasons specified 

in this final rule and in the FY 2014 

SNF PPS proposed rule (78 FR 26465– 

26466), we are finalizing our proposal to 

add an item to the MDS item set (Item 

O0420) effective October 1, 2013, which 

will capture the number of distinct 

calendar days that the resident received 

therapy services during the assessment 

look-back period across all 

rehabilitation disciplines. As proposed, 

effective October 1, 2013, facilities will 

be required to record under this item the 

number of distinct calendar days of 

therapy provided by all rehabilitation 

disciplines over the 7-day look-back 

period for the current assessment, 

which will be used to classify the 

resident into the correct Rehabilitation 

RUG category. 

3. SNF Therapy Research Project 

In the FY 2014 SNF PPS proposed 

rule (78 FR 26466), we discussed our 

current research efforts associated with 

SNF payments for therapy services. As 

stated in the FY 2014 SNF PPS 

proposed rule (78 FR 26466), we 

contracted with Acumen, LLC and the 

Brookings Institution to identify 


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potential alternatives to the existing 

methodology used to pay for therapy 

services received under the SNF PPS. A 

discussion of the comments on this 

topic, with our responses, appears 

below. 

Comment: All of the comments we 

received on this work supported CMS’s 

broad objective to develop a new 

methodology for paying for therapy 

services received in the SNF. These 

commenters urged CMS to expedite the 

research necessary to develop a new 

therapy payment model, with one 

commenter stating that CMS should be 

prepared to implement a new system by 

FY 2015. A few commenters stated that 

CMS should seek input from 

stakeholders on how best to revise the 

current therapy payment model. 

Response: We appreciate the broad 

support for this research initiative and 

understand well the importance and 

urgency of completing this work in both 

a timely and efficient manner. We also 

recognize the importance of seeking 

input from stakeholders on how best to 

revise the current therapy payment 

model, which is why we had created the 

therapy research email box at 

SNFTherapyPayments@cms.hhs.gov. 

Stakeholders can send input on a 

revised therapy payment model at any 

time. 

In terms of the timeframe for 

completing this work and implementing 

a new payment model, we believe it 

would be premature to speculate on 

when a new model will be ready to be 

implemented. As many of the comments 

on this issue indicate, it is very 

important to ensure that any change to 

the current therapy payment model 

addresses any concerns with the 

existing model and provides sufficient 

time for providers to understand and 

prepare for implementation of such a 

model. 

V. Provisions of the Final Rule; 

Regulations Text 

In this final rule, in addition to 

accomplishing the required annual 

update of the SNF PPS payment rates 

and finalizing the other policies 

discussed above, we are also finalizing 

certain revisions to the regulations text. 

One of these revisions relates to the 

regulations dealing with SNF level of 

care certifications and recertifications. 

In the calendar year (CY) 2011 Medicare 

Physician Fee Schedule (MPFS) final 

rule with comment period (75 FR 73387, 

73602, 73626–73627), we revised the 

regulations at § 424.20(e)(2) to 

implement section 3108 of the 

Affordable Care Act, which amended 

section 1814(a)(2) of the Act by adding 

physician assistants to the provision 

authorizing nurse practitioners and 

clinical nurse specialists to sign SNF 

level of care certifications and 

recertifications. However, as we stated 

in the FY 2014 SNF PPS proposed rule, 

we inadvertently neglected to make a 

conforming change in the regulations 

text at § 424.11(e)(4). Therefore, we 

proposed to make a minor technical 

correction in the regulations text at 

§ 424.11(e)(4) regarding the types of 

practitioners (in addition to physicians) 

who can sign the required SNF level of 

care certification and recertifications. 

The correction consisted of a 

conforming change to reflect that 

physician assistants ‘‘as defined in 

section 1861(aa)(5) of the Act’’ are now 

authorized to perform this function, in 

accordance with section 1814(a)(2) of 

the Act (as amended by section 3108 of 

the Affordable Care Act) and the 

implementing regulations at 

§ 424.20(e)(2). We received no 

comments on this proposal and, 

therefore, are finalizing this provision 

essentially as proposed. However, we 

are revising the statutory citation of the 

physician assistant definition to read 

‘‘section 1861(aa)(5)(A) of the Act’’ in 

order to provide greater clarity and 

specificity as to the precise location of 

this definition in the statute. In 

addition, we inadvertently neglected to 

make a similar conforming technical 

change in the second paragraph of 

§ 424.10(a), which describes the general 

purpose of this subpart of the 

regulations, and describes the types of 

practitioners (in addition to physicians) 

permitted under section 1814(a)(2) of 

the Act to certify and recertify the need 

for post-hospital extended care services. 

Thus, in this final rule, we also are 

making a similar minor technical 

correction to the regulations text at 

§ 424.10(a) so that it accurately reflects 

that physician assistants are now 

permitted under section 1814(a)(2) of 

the Act to certify and recertify the need 

for post-hospital extended care services 

and so that it conforms with the 

regulations text at § 424.20(e)(2) and 

§ 424.11(e)(4) (as revised in this rule). 

Additionally, in the FY 2014 SNF PPS 

proposed rule (78 FR 26438), we 

proposed to make the wage index tables 

available exclusively through the 

Internet on CMS’s SNF PPS Web site at 

http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

SNFPPS/WageIndex.html. In order to 

accommodate this approach, we also 

proposed to revise the phrase ‘‘wage 

index’’ that currently appears in the 

second sentence of § 413.345 to read 

‘‘factors to be applied in making the area 

wage adjustment,’’ consistent with the 

wording of the corresponding statutory 

authority at section 1888(e)(4)(H)(iii) of 

the Act. We received no comments on 

this proposal, and therefore, are 

finalizing this provision as proposed. 

VI. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA), we are required to 

provide 30-day notice in the Federal 

Register and solicit public comment 

before a collection of information 

requirement is submitted to OMB for 

review and approval. In order to 

evaluate fairly whether an information 

collection should be approved by OMB, 

section 3506(c)(2)(A) of the PRA 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

In the May 6, 2013 proposed rule (78 

FR 26437) we solicited public comment 

on each of the section 3506(c)(2)(A)- 

required issues for the following 

information collection requirements 

(ICRs). We did not receive any 

comments. 

ICRs Regarding Nursing Home and 

Swing Bed PPS Item Sets 

Under sections 4204(b) and 4214(d) of 

the Omnibus Budget Reconciliation Act 

of 1987 (OBRA 1987, Pub. L. 100–203 

enacted on December 22, 1987), the 

submission and retention of resident 

assessment data for purposes of carrying 

out OBRA 1987 are not subject to the 

PRA. While certain data items that are 

collected under the SNF resident 

assessment instrument (or MDS 3.0) fall 

under the OBRA 1987 exemption, MDS 

3.0’s PPS-related item sets are outside 

the scope of OBRA 1987 and require 

PRA consideration. 

As discussed in section IV.D.2 of this 

rule, we are finalizing our proposal to 

add Item O0420 to the MDS 3.0 form to 

capture the number of distinct calendar 

days a SNF resident has received 

therapy across all rehabilitation 

disciplines in a seven-day look-back 

period. The item would not be added as 

a result of any change in statute or 

policy; rather, it would be added to 

ensure that our existing Rehabilitation 

RUG classification policies are properly 

implemented as intended. We do not 

believe this action will cause any 


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measureable adjustments to our burden 

estimates. 

While we are not revising the form’s 

burden estimates, we are revising OCN 

0938–1140 (CMS–10387) by adding item 

O0420 to the Nursing Home and Swing 

Bed PPS Item Sets. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of the proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

[CMS–1446–F] by fax: (202) 395–6974 

or by email: 

OIRA_submission@omb.eop.gov. 

VII. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We have examined the impacts of this 

final rule as required by Executive 

Order 12866 on Regulatory Planning 

and Review (September 30, 1993), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA, 

March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated an economically 

significant rule, under section 3(f)(1) of 

Executive Order 12866, and thus a 

major rule under the Congressional 

Review Act. Also, the rule has been 

reviewed by OMB. 

2. Statement of Need 

This final rule updates the SNF 

prospective payment rates for FY 2014 

as required under section 1888(e)(4)(E) 

of the Act. It also responds to section 

1888(e)(4)(H) of the Act, which requires 

the Secretary to ‘‘provide for publication 

in the Federal Register’’ before the 

August 1 that precedes the start of each 

fiscal year, of the unadjusted federal per 

diem rates, the case-mix classification 

system, and the factors to be applied in 

making the area wage adjustment. As 

these statutory provisions prescribe a 

detailed methodology for calculating 

and disseminating payment rates under 

the SNF PPS, we do not have the 

discretion to adopt an alternative 

approach. 

3. Overall Impacts 

This final rule sets forth the updates 

of the SNF PPS rates contained in the 

update notice for FY 2013 (77 FR 

46214). Based on the above, we estimate 

that the aggregate impact would be an 

increase of $470 million in payments to 

SNFs, resulting from the SNF market 

basket update to the payment rates, as 

adjusted by the forecast error correction 

and MFP adjustment. The impact 

analysis of this final rule represents the 

projected effects of the changes in the 

SNF PPS from FY 2013 to FY 2014. 

Although the best data available are 

utilized, there is no attempt to predict 

behavioral responses to these changes, 

or to make adjustments for future 

changes in such variables as days or 

case-mix. 

Certain events may occur to limit the 

scope or accuracy of our impact 

analysis, as this analysis is futureoriented and, thus, very susceptible to 

forecasting errors due to certain events 

that may occur within the assessed 

impact time period. Some examples of 

possible events may include legislated 

general Medicare program funding 

changes by the Congress, or changes 

specifically related to SNFs. In addition, 

changes to the Medicare program may 

continue to be made as a result of 

previously-enacted legislation, or new 

statutory provisions. Although these 

changes may not be specific to the SNF 

PPS, the nature of the Medicare program 

is such that the changes may interact 

and, thus, the complexity of the 

interaction of these changes could make 

it difficult to predict accurately the full 

scope of the impact upon SNFs. 

In accordance with sections 

1888(e)(4)(E) and 1888(e)(5) of the Act, 

we update the FY 2013 payment rates 

by a factor equal to the market basket 

index percentage change adjusted by the 

forecast error for FY 2012, the latest FY 

for which final data are available, and 

the MFP adjustment to determine the 

payment rates for FY 2014. As discussed 

previously, for FY 2012 and each 

subsequent FY, as required by section 

1888(e)(5)(B) of the Act as amended by 

section 3401(b) of the Affordable Care 

Act, the market basket percentage is 

reduced by the MFP adjustment. The 

special AIDS add-on established by 

section 511 of the MMA remains in 

effect until ‘‘. . . such date as the 

Secretary certifies that there is an 

appropriate adjustment in the case 

mix . . . .’’ We have not provided a 

separate impact analysis for the MMA 

provision. Our latest estimates indicate 

that there are fewer than 4,100 

beneficiaries who qualify for the add-on 

payment for SNF residents with AIDS. 

The impact to Medicare is included in 

the ‘‘total’’ column of Table 10. In 

updating the SNF PPS rates for FY 2014, 

we made a number of standard annual 

revisions and clarifications mentioned 

elsewhere in this final rule (for example, 

the update to the wage and market 

basket indexes used for adjusting the 

federal rates). 

The annual update set forth in this 

final rule applies to SNF payments in 

FY 2014. Accordingly, the analysis that 

follows only describes the impact of this 

single year. In accordance with the 

requirements of the Act, we will publish 

a notice or rule in the Federal Register 

for each subsequent FY that will 

provide for an update to the SNF 

payment rates and include an associated 

impact analysis. 

4. Detailed Economic Analysis 

The FY 2014 SNF PPS impacts appear 

in Table 10. Using the most recently 

available data, in this case FY 2012, we 

apply the current FY 2013 wage index 

and labor-related share value to the 

number of payment days to simulate FY 

2013 payments. Then, using the same 

FY 2012 data, we apply the FY 2014 

wage index and labor-related share 

value to simulate FY 2014 payments. 

We tabulate the resulting payments 

according to the classifications in Table 

10, for example, facility type, 

geographic region, facility ownership, 

and compare the difference between 

current and FY 2014 payments to 

determine the overall impact. The 

breakdown of the various categories of 

data in the table follows. 

The first column shows the 

breakdown of all SNFs by urban or rural 

status, hospital-based or freestanding 

status, census region, and ownership. 

The first row of figures describes the 

estimated effects of the various changes 

on all facilities. The next six rows show 

the effects on facilities split by hospitalbased, freestanding, urban, and rural 

categories. The urban and rural 

designations are based on the location of 

the facility under the CBSA designation. 

The next nineteen rows show the effects 

on facilities by urban versus rural status 

by census region. The last three rows 


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show the effects on facilities by 

ownership (that is, government, profit, 

and non-profit status). 

The second column in the table shows 

the number of facilities in the impact 

database. 

The third column of the table shows 

the effect of the annual update to the 

wage index. This represents the effect of 

using the most recent wage data 

available. The total impact of this 

change is zero percent; however, there 

are distributional effects of the change. 

The fourth column shows the effect of 

all of the changes on the FY 2014 SNF 

PPS payments. The FY 2014 update of 

1.3 percent (consisting of the market 

basket increase of 2.3 percentage points, 

reduced by the 0.5 percentage point 

forecast error correction and further 

reduced by the 0.5 percentage point 

MFP adjustment) is constant for all 

providers and, though not shown 

individually, is included in the total 

column. It is projected that aggregate 

payments will increase by 1.3 percent, 

assuming facilities do not change their 

care delivery and billing practices in 

response. 

As illustrated in Table 10, the 

combined effects of all of the changes 

vary by specific types of providers and 

by location. Though all facilities would 

experience payment increases, the 

projected impact on providers for FY 

2014 varies due to the impact of the 

wage index update. For example, due to 

changes from updating the wage index, 

providers in the rural Pacific region 

would experience a 2.8 percent increase 

in FY 2014 total payments and 

providers in the urban East South 

Central region would experience a 0.8 

percent increase in FY 2014 total 

payments. 

TABLE 10—RUG–IV PROJECTED IMPACT TO THE SNF PPS FOR FY 2014 

Number of 

facilities 

FY 2014 

Update wage 

data 

(percent) 

Total FY 2014 

change 

(percent) 

Group: 

Total ................................................................................................................................. 15,380 0.0 1.3 

Urban ........................................................................................................................ 10,582 0.1 1.4 

Rural ......................................................................................................................... 4,798 ¥0.3 1.0 

Hospital based urban ............................................................................................... 758 0.2 1.5 

Freestanding urban .................................................................................................. 9,824 0.1 1.4 

Hospital based rural ................................................................................................. 402 ¥0.3 1.0 

Freestanding rural .................................................................................................... 4,396 ¥0.3 1.0 

Urban by region: 

New England ............................................................................................................ 804 0.3 1.6 

Middle Atlantic .......................................................................................................... 1,452 0.8 2.1 

South Atlantic ........................................................................................................... 1,741 ¥0.6 0.7 

East North Central .................................................................................................... 2,049 ¥0.2 1.1 

East South Central ................................................................................................... 526 ¥0.5 0.8 

West North Central ................................................................................................... 868 ¥0.7 0.6 

West South Central .................................................................................................. 1,241 ¥0.4 0.9 

Mountain ................................................................................................................... 490 ¥0.1 1.2 

Pacific ....................................................................................................................... 1,405 1.1 2.5 

Outlying ..................................................................................................................... 6 0.1 1.4 

Rural by region: 

New England ............................................................................................................ 153 0.2 1.5 

Middle Atlantic .......................................................................................................... 262 0.2 1.5 

South Atlantic ........................................................................................................... 608 ¥0.6 0.7 

East North Central .................................................................................................... 928 ¥0.6 0.7 

East South Central ................................................................................................... 551 ¥0.6 0.7 

West North Central ................................................................................................... 1,114 0.5 1.8 

West South Central .................................................................................................. 813 ¥0.9 0.4 

Mountain ................................................................................................................... 246 0.2 1.5 

Pacific ....................................................................................................................... 123 1.4 2.8 

Ownership: 

Government .............................................................................................................. 832 0.2 1.5 

Profit ......................................................................................................................... 10,724 0.0 1.3 

Non-profit .................................................................................................................. 3,824 0.0 1.3 

Note: The Total column includes the 2.3 percent market basket increase, reduced by the 0.5 percentage point forecast error correction and 

further reduced by the 0.5 percentage point MFP adjustment. Additionally, we found no SNFs in rural outlying areas. 

5. Alternatives Considered 

As described above, we estimate that 

the aggregate impact for FY 2014 would 

be an increase of $470 million in 

payments to SNFs, resulting from the 

SNF market basket update to the 

payment rates, as adjusted by the 

forecast error correction and the MFP 

adjustment. 

Section 1888(e) of the Act establishes 

the SNF PPS for payment of Medicare 

SNF services for cost reporting periods 

beginning on or after July 1, 1998. This 

section of the statute prescribes a 

detailed formula for calculating 

payment rates under the SNF PPS, and 

does not provide for the use of any 

alternative methodology. This section of 

the statute specifies that the base year 

cost data to be used for computing the 

SNF PPS payment rates are from FY 

1995 (October 1, 1994, through 

September 30, 1995). In accordance 

with the statute, we also incorporated a 

number of elements into the SNF PPS 

(for example, case-mix classification 

methodology, a market basket index, a 

wage index, and the urban and rural 

distinction used in the development or 

adjustment of the federal rates). Further, 

section 1888(e)(4)(H) of the Act 

specifically requires us to provide for 

publication of the payment rates for 

each new FY in the Federal Register, 

and to do so before the August 1 that 

precedes the start of the new FY. 


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Accordingly, we are not pursuing 

alternatives with respect to the payment 

methodology as discussed above. 

We received a number of comments 

on the potential impact of finalizing the 

proposals in the FY 2014 SNF PPS 

proposed rule. A discussion of those 

comments, and our responses, appear 

below. 

Comment: In their March 2013 report 

(available at: http://www.medpac.gov/ 

documents/Mar13_entirereport.pdf), 

and in their comment on this proposed 

rule, MedPAC recommended that CMS 

eliminate the market basket update for 

SNFs and rebase payments for the SNF 

PPS, beginning with a 4 percent 

reduction in FY 2014. Several 

commenters raised concerns with 

MedPAC’s recommendations, 

specifically that the cost and margin 

data used by MedPAC to justify their 

recommendations did not adequately 

represent the costs of providing SNF 

care. A few commenters also noted that 

any cuts in Medicare rates can have a 

cascading effect in combination with 

increased fiscal pressures deriving from 

reduced Medicaid funding. 

Response: With regard to MedPAC’s 

proposals to eliminate the market basket 

update for SNFs and to implement a 4 

percent reduction to the SNF PPS rates, 

we would note that CMS does not have 

the statutory authority to act on either 

one of these proposals at the current 

time. 

In addition, as we have stated in 

previous years—most recently, in the 

FY 2012 SNF PPS final rule (76 FR 

48496, August 8, 2011)—we believe that 

it is not the appropriate role of the 

Medicare SNF benefit to cross-subsidize 

nursing home payments made under the 

Medicaid program. As noted by several 

commenters, the primary purpose of the 

SNF PPS is to provide accurate payment 

for Medicare Part A services provided in 

a SNF setting. Further, we note that 

MedPAC has also indicated that it is 

inappropriate for the Medicare 

payments to SNFs to serve as a remedy 

for any Medicaid shortfalls. Specifically, 

on page 177 of its March 2013 Report to 

Congress on Medicare Payment Policy 

(which is available online at http:// 

www.medpac.gov/documents/ 

Mar13_EntireReport.pdf), MedPAC 

stated: 

The Commission believes such crosssubsidization is not advisable for several 

reasons. First, the strategy of using Medicare 

rates to supplement low payments from other 

payers results in poorly targeted subsidies. 

Facilities with high shares of Medicare 

payments—presumably the facilities that 

need revenues the least—would receive the 

most in subsidies from higher Medicare 

payments, while facilities with low Medicare 

shares—presumably the facilities with the 

greatest need—would receive the smallest 

subsidies * * * In addition, Medicare’s 

subsidy does not discriminate among states 

with relatively high and low payments * * * 

Finally, Medicare’s current overpayments 

represent a subsidy of trust fund dollars (and 

its taxpayer support) to the low payments 

made by states and private payers. 

We agree with MedPAC, and 

therefore, do not agree with the 

commenters that cited cross-subsidizing 

Medicaid as a justification for 

maintaining Medicare SNF payments at 

any specific level. 

Comment: A few commenters 

requested that CMS consider a larger 

update to account for the forthcoming 

costs associated with the 

implementation of the Affordable Care 

Act employer responsibility 

requirements, which, at a general level, 

would require that employers with 50 or 

more full-time-equivalent employees 

provide health care coverage to their 

full-time employees (those working on 

average 30 or more hours per week) or 

face a penalty. 

Response: As discussed in section 

IV.B of this proposed rule, CMS is 

required by statute to follow a specific 

methodology for updating the payment 

rates each year. We are not permitted to 

increase the update to account for these 

types of additional costs under existing 

authority. 

6. Accounting Statement 

As required by OMB Circular A–4 

(available online at 

www.whitehouse.gov/sites/default/files/ 

omb/assets/regulatory_matters_pdf/a4.pdf), in Table 11, we have prepared an 

accounting statement showing the 

classification of the expenditures 

associated with the provisions of this 

final rule. Table 11 provides our best 

estimate of the possible changes in 

Medicare payments under the SNF PPS 

as a result of the policies in this final 

rule, based on the data for 15,380 SNFs 

in our database. All expenditures are 

classified as transfers to Medicare SNF 

providers. 

TABLE 11—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2013 SNF 

PPS FISCAL YEAR TO THE 2014 

SNF PPS FISCAL YEAR

Category Transfers 

Annualized monetized transfers.$470 million* 

TABLE 11—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM THE 2013 SNF 

PPS FISCAL YEAR TO THE 2014 

SNF PPS FISCAL YEAR—Continued 

Category Transfers 

From Whom To 

Whom.

Federal Government 

to SNF Medicare 

Providers 

* The net increase of $470 million in transfer 

payments is a result of the SNF market basket 

update to the payment rates, as adjusted by 

the forecast error correction and the MFP 

adjustment. 

7. Conclusion 

This final rule sets forth updates of 

the SNF PPS rates contained in the 

update notice for FY 2013 (77 FR 

46214). Based on the above, we estimate 

the overall estimated payments for SNFs 

in FY 2014 are projected to increase by 

$470 million, or 1.3 percent, compared 

with those in FY 2013. We estimate that 

in FY 2014, SNFs in urban and rural 

areas would experience, on average, a 

1.4 and 1.0 percent increase, 

respectively, in estimated payments 

compared with FY 2013. Providers in 

the rural Pacific region would 

experience the largest estimated 

increase in payments of approximately 

2.8 percent. Providers in the rural West 

South Central region would experience 

the smallest increase in payments of 0.4 

percent. 

B. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, nonprofit organizations, and small 

governmental jurisdictions. Most SNFs 

and most other providers and suppliers 

are small entities, either by their nonprofit status or by having revenues of 

$25.5 million or less in any 1 year. For 

purposes of the RFA, approximately 91 

percent of SNFs are considered small 

businesses according to the Small 

Business Administration’s latest size 

standards (NAICS 623110), with total 

revenues of $25.5 million or less in any 

1 year. (For details, see the Small 

Business Administration’s Web site at 

http://www.sba.gov/category/ 

navigation-structure/contracting/ 

contracting-officials/eligibility-sizestandards). Individuals and States are 

not included in the definition of a small 

entity. In addition, approximately 25 

percent of SNFs classified as small 

entities are non-profit organizations. 

Finally, the estimated number of small 


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47968 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

business entities does not distinguish 

provider establishments that are within 

a single firm and, therefore, the number 

of SNFs classified as small entities may 

be higher than the estimate above. 

This final rule sets forth updates of 

the SNF PPS rates contained in the 

update notice for FY 2013 (77 FR 

46214). Based on the above, we estimate 

that the aggregate impact would be an 

increase of $470 million in payments to 

SNFs, resulting from the SNF market 

basket update to the payment rates, as 

adjusted by the forecast error correction 

and the MFP adjustment. While it is 

projected in Table 10 that all groups of 

providers would experience a net 

increase in payments, we note that some 

individual providers within the same 

group but different regions may 

experience different impacts on 

payments than others due to the 

distributional impact of the FY 2014 

wage indexes and the degree of 

Medicare utilization. 

Guidance issued by the Department of 

Health and Human Services on the 

proper assessment of the impact on 

small entities in rulemakings, utilizes a 

cost or revenue impact of 3 to 5 percent 

as a significance threshold under the 

RFA. According to MedPAC, Medicare 

covers approximately 12 percent of total 

patient days in freestanding facilities 

and 23 percent of facility revenue. 

However, they note that the distribution 

of days and payments is highly variable. 

That is, the majority of SNFs have 

significantly lower Medicare utilization 

(Report to the Congress: Medicare 

Payment Policy, March 2013, available 

at http://www.medpac.gov/documents/ 

Mar13_EntireReport.pdf). As a result, 

for most facilities, when all payers are 

included in the revenue stream, the 

overall impact on total revenues should 

be substantially less than those impacts 

presented in Table 10. As indicated in 

Table 10, the effect on facilities is 

projected to be an aggregate positive 

impact of 1.3 percent. As the overall 

impact on the industry as a whole, and 

thus on small entities specifically, is 

less than the 3 to 5 percent threshold 

discussed above, the Secretary has 

determined that this final rule would 

not have a significant impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. This final rule 

would affect small rural hospitals that 

(a) furnish SNF services under a swingbed agreement or (b) have a hospitalbased SNF. We anticipate that the 

impact on small rural hospitals would 

be similar to the impact on SNF 

providers overall. Moreover, as noted in 

the FY 2012 final rule (76 FR 48539), 

the category of small rural hospitals 

would be included within the analysis 

of the impact of this final rule on small 

entities in general. As indicated in Table 

10, the effect on facilities is projected to 

be an aggregate positive impact of 1.3 

percent. As the overall impact on the 

industry as a whole is less than the 3 to 

5 percent threshold discussed above, the 

Secretary has determined that this final 

rule would not have a significant impact 

on a substantial number of small rural 

hospitals. 

C. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold is approximately $141 

million. This final rule would not 

impose spending costs on State, local, or 

tribal governments in the aggregate, or 

by the private sector, of $141 million. 

D. Federalism Analysis 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that impose substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has federalism implications. 

This final rule would have no 

substantial direct effect on State and 

local governments, preempt State law, 

or otherwise have federalism 

implications. 

List of Subjects 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END-STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 1. The authority citation for part 413 

continues to read as follows: 

Authority: Secs. 1102, 1812(d), 1814(b), 

1815, 1833(a), (i), and (n), 1861(v), 1871, 

1881, 1883, and 1886 of the Social Security 

Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 

1395g, 1395l(a), (i), and (n), 1395x(v), 

1395hh, 1395rr, 1395tt, and 1395ww); sec. 

124 of Pub. L. 106–133 (113 Stat. 1501A–332) 

and sec. 3201 of Pub. L. 112–96 (126 Stat. 

156). 

■ 2. Section 413.345 is revised to read 

as follows: 

§ 413.345 Publication of Federal 

prospective payment rates. 

CMS publishes information pertaining 

to each update of the Federal payment 

rates in the Federal Register. This 

information includes the standardized 

Federal rates, the resident classification 

system that provides the basis for casemix adjustment (including the 

designation of those specific Resource 

Utilization Groups under the resident 

classification system that represent the 

required SNF level of care, as provided 

in § 409.30 of this chapter), and the 

factors to be applied in making the area 

wage adjustment. This information is 

published before May 1 for the fiscal 

year 1998 and before August 1 for the 

fiscal years 1999 and after. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 3. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 4. In § 424.10, paragraph (a) is 

amended by removing the phrase ‘‘nurse 

practitioners or clinical nurse 

specialists’’ and adding in its place 

‘‘nurse practitioners, clinical nurse 

specialists, or physician assistants’’. 

■ 5. Section 424.11 is amended by 

revising paragraph (e)(4) to read as 

follows: 

§ 424.11 General procedures. 

* * * * * 

(e) * * * 

(4) A nurse practitioner or clinical 

nurse specialist as defined in paragraph 

(e)(5) or (e)(6) of this section, or a 

physician assistant as defined in section 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47969 

1861(aa)(5)(A) of the Act, in the 

circumstances specified in § 424.20(e). 

* * * * * 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: July 19, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: July 29, 2013. 

Kathleen Sebelius, 

Secretary. 

Note: The following addendum will not 

appear in the Code of Federal Regulations. 

Addendum—FY 2014 CBSA Wage 

Index Tables 

In this addendum, we provide the wage 

index tables referred to in the preamble to 

this final rule. Tables A and B display the 

CBSA-based wage index values for urban and 

rural providers. As noted previously in this 

final rule, we are adopting an approach 

already being followed by other Medicare 

payment systems, whereby for SNF PPS rules 

and notices published on or after October 1, 

2013, these wage index tables will henceforth 

be made available exclusively through the 

Internet on the CMS Web site rather than 

being published in the Federal Register as 

part of the annual SNF PPS rulemaking. 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

10180 ..... Abilene, TX ................... 0.8225 

Callahan County, TX.

Jones County, TX.

Taylor County, TX.

10380 ..... Aguadilla-Isabela-San 

Sebastia ́n, PR.

0.3647 

Aguada Municipio, PR.

Aguadilla Municipio, PR.

An ̃asco Municipio, PR.

Isabela Municipio, PR.

Lares Municipio, PR.

Moca Municipio, PR.

Rinco ́n Municipio, PR.

San Sebastia ́n 

Municipio, PR.

10420 ..... Akron, OH ..................... 0.8521 

Portage County, OH.

Summit County, OH.

10500 ..... Albany, GA ................... 0.8713 

Baker County, GA.

Dougherty County, GA.

Lee County, GA.

Terrell County, GA.

Worth County, GA.

10580 ..... Albany-SchenectadyTroy, NY.0.8600 

Albany County, NY.

Rensselaer County, NY.

Saratoga County, NY.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Schenectady County, 

NY.

Schoharie County, NY.

10740 ..... Albuquerque, NM ......... 0.9663 

Bernalillo County, NM.

Sandoval County, NM.

Torrance County, NM.

Valencia County, NM.

10780 ..... Alexandria, LA .............. 0.7788 

Grant Parish, LA.

Rapides Parish, LA.

10900 ..... Allentown-BethlehemEaston, PA–NJ.0.9215 

Warren County, NJ.

Carbon County, PA.

Lehigh County, PA.

Northampton County, 

PA.

11020 ..... Altoona, PA .................. 0.9101 

Blair County, PA.

11100 ..... Amarillo, TX .................. 0.8302 

Armstrong County, TX.

Carson County, TX.

Potter County, TX.

Randall County, TX.

11180 ..... Ames, IA ....................... 0.9425 

Story County, IA.

11260 ..... Anchorage, AK ............. 1.2221 

Anchorage Municipality, 

AK.

Matanuska-Susitna Borough, AK.

11300 ..... Anderson, IN ................ 0.9654 

Madison County, IN.

11340 ..... Anderson, SC ............... 0.8766 

Anderson County, SC.

11460 ..... Arbor, MI ....................... 1.0086 

Washtenaw County, MI.

11500 ..... Anniston-Oxford, AL ..... 0.7402 

Calhoun County, AL.

11540 ..... Appleton, WI ................. 0.9445 

Calumet County, WI.

Outagamie County, WI.

11700 ..... Asheville, NC ................ 0.8511 

Buncombe County, NC.

Haywood County, NC.

Henderson County, NC.

Madison County, NC.

12020 ..... Athens-Clarke County, 

GA.

0.9244 

Clarke County, GA.

Madison County, GA.

Oconee County, GA.

Oglethorpe County, GA.

12060 ..... Atlanta-Sandy SpringsMarietta, GA.0.9452 

Barrow County, GA.

Bartow County, GA.

Butts County, GA.

Carroll County, GA.

Cherokee County, GA.

Clayton County, GA.

Cobb County, GA.

Coweta County, GA.

Dawson County, GA.

DeKalb County, GA.

Douglas County, GA.

Fayette County, GA.

Forsyth County, GA.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Fulton County, GA.

Gwinnett County, GA.

Haralson County, GA.

Heard County, GA.

Henry County, GA.

Jasper County, GA.

Lamar County, GA.

Meriwether County, GA.

Newton County, GA.

Paulding County, GA.

Pickens County, GA.

Pike County, GA.

Rockdale County, GA.

Spalding County, GA.

Walton County, GA.

12100 ..... Atlantic CityHammonton, NJ.1.2258 

Atlantic County, NJ.

12220 ..... Auburn-Opelika, AL ...... 0.7771 

Lee County, AL.

12260 ..... Augusta-Richmond 

County, GA–SC.

0.9150 

Burke County, GA.

Columbia County, GA.

McDuffie County, GA.

Richmond County, GA.

Aiken County, SC.

Edgefield County, SC.

12420 ..... Austin-Round Rock, TX 0.9576 

Bastrop County, TX.

Caldwell County, TX.

Hays County, TX.

Travis County, TX.

Williamson County, TX.

12540 ..... Bakersfield, CA ............. 1.1579 

Kern County, CA.

12580 ..... Baltimore-Towson, MD 0.9873 

Anne Arundel County, 

MD.

Baltimore County, MD.

Carroll County, MD.

Harford County, MD.

Howard County, MD.

Queen Anne’s County, 

MD.

Baltimore City, MD.

12620 ..... Bangor, ME .................. 0.9710 

Penobscot County, ME.

12700 ..... Barnstable Town, MA ... 1.3007 

Barnstable County, MA.

12940 ..... Baton Rouge, LA .......... 0.8078 

Ascension Parish, LA.

East Baton Rouge Parish, LA.

East Feliciana Parish, 

LA.

Iberville Parish, LA.

Livingston Parish, LA.

Pointe Coupee Parish, 

LA.

St. Helena Parish, LA.

West Baton Rouge Parish, LA.

West Feliciana Parish, 

LA.

12980 ..... Battle Creek, MI ........... 0.9915 

Calhoun County, MI.

13020 ..... Bay City, MI .................. 0.9486 

Bay County, MI.


tkelley on DSK3SPTVN1PROD with RULES3
47970 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

13140 ..... Beaumont-Port Arthur, 

TX.

0.8598 

Hardin County, TX.

Jefferson County, TX.

Orange County, TX.

13380 ..... Bellingham, WA ............ 1.1890 

Whatcom County, WA.

13460 ..... Bend, OR ...................... 1.1807 

Deschutes County, OR.

13644 ..... Bethesda-FrederickGaithersburg, MD.1.0319 

Frederick County, MD.

Montgomery County, 

MD.

13740 ..... Billings, MT ................... 0.8691 

Carbon County, MT.

Yellowstone County, 

MT.

13780 ..... Binghamton, NY ........... 0.8602 

Broome County, NY.

Tioga County, NY.

13820 ..... Birmingham-Hoover, AL 0.8367 

Bibb County, AL.

Blount County, AL.

Chilton County, AL.

Jefferson County, AL.

St. Clair County, AL.

Shelby County, AL.

Walker County, AL.

13900 ..... Bismarck, ND ............... 0.7282 

Burleigh County, ND.

Morton County, ND.

13980 ..... BlacksburgChristiansburgRadford, VA.0.8319 

Giles County, VA.

Montgomery County, 

VA.

Pulaski County, VA.

Radford City, VA.

14020 ..... Bloomington, IN ............ 0.9304 

Greene County, IN.

Monroe County, IN.

Owen County, IN.

14060 ..... Bloomington-Normal, IL 0.9310 

McLean County, IL.

14260 ..... Boise City-Nampa, ID ... 0.9259 

Ada County, ID.

Boise County, ID.

Canyon County, ID.

Gem County, ID.

Owyhee County, ID.

14484 ..... Boston-Quincy, MA ...... 1.2453 

Norfolk County, MA.

Plymouth County, MA.

Suffolk County, MA.

14500 ..... Boulder, CO .................. 0.9850 

Boulder County, CO.

14540 ..... Bowling Green, KY ....... 0.8573 

Edmonson County, KY.

Warren County, KY.

14740 ..... Bremerton-Silverdale, 

WA.

1.0268 

Kitsap County, WA.

14860 ..... Bridgeport-StamfordNorwalk, CT.1.3252 

Fairfield County, CT.

15180 ..... Brownsville-Harlingen, 

TX.

0.8179 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Cameron County, TX.

15260 ..... Brunswick, GA .............. 0.8457 

Brantley County, GA.

Glynn County, GA.

McIntosh County, GA.

15380 ..... Buffalo-Niagara Falls, 

NY.

1.0045 

Erie County, NY.

Niagara County, NY.

15500 ..... Burlington, NC .............. 0.8529 

Alamance County, NC.

15540 ..... Burlington-South Burlington, VT.1.0130 

Chittenden County, VT.

Franklin County, VT.

Grand Isle County, VT.

15764 ..... Cambridge-Newton-Framingham, MA.1.1146 

Middlesex County, MA.

15804 ..... Camden, NJ ................. 1.0254 

Burlington County, NJ.

Camden County, NJ.

Gloucester County, NJ.

15940 ..... Canton-Massillon, OH .. 0.8730 

Carroll County, OH.

Stark County, OH.

15980 ..... Cape Coral-Fort Myers, 

FL.

0.8683 

Lee County, FL.

16020 ..... Cape Girardeau-Jackson, MO–IL.0.9174 

Alexander County, IL.

Bollinger County, MO.

Cape Girardeau County, MO.

16180 ..... Carson City, NV ........... 1.0721 

Carson City, NV.

16220 ..... Casper, WY .................. 1.0111 

Natrona County, WY.

16300 ..... Cedar Rapids, IA .......... 0.8964 

Benton County, IA.

Jones County, IA.

Linn County, IA.

16580 ..... Champaign-Urbana, IL 0.9416 

Champaign County, IL.

Ford County, IL.

Piatt County, IL.

16620 ..... Charleston, WV ............ 0.8119 

Boone County, WV.

Clay County, WV.

Kanawha County, WV.

Lincoln County, WV.

Putnam County, WV.

16700 ..... Charleston-North 

Charleston-Summerville, SC.

0.8972 

Berkeley County, SC.

Charleston County, SC.

Dorchester County, SC.

16740 ..... Charlotte-Gastonia-Concord, NC–SC.0.9447 

Anson County, NC.

Cabarrus County, NC.

Gaston County, NC.

Mecklenburg County, 

NC.

Union County, NC.

York County, SC.

16820 ..... Charlottesville, VA ........ 0.9209 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Albemarle County, VA.

Fluvanna County, VA.

Greene County, VA.

Nelson County, VA.

Charlottesville City, VA.

16860 ..... Chattanooga, TN–GA ... 0.8783 

Catoosa County, GA.

Dade County, GA.

Walker County, GA.

Hamilton County, TN.

Marion County, TN.

Sequatchie County, TN.

16940 ..... Cheyenne, WY ............. 0.9494 

Laramie County, WY.

16974 ..... Chicago-Naperville-Joliet, IL.1.0418 

Cook County, IL.

DeKalb County, IL.

DuPage County, IL.

Grundy County, IL.

Kane County, IL.

Kendall County, IL.

McHenry County, IL.

Will County, IL.

17020 ..... Chico, CA ..................... 1.1616 

Butte County, CA.

17140 ..... Cincinnati-Middletown, 

OH–KY–IN.

0.9470 

Dearborn County, IN.

Franklin County, IN.

Ohio County, IN.

Boone County, KY.

Bracken County, KY.

Campbell County, KY.

Gallatin County, KY.

Grant County, KY.

Kenton County, KY.

Pendleton County, KY.

Brown County, OH.

Butler County, OH.

Clermont County, OH.

Hamilton County, OH.

Warren County, OH.

17300 ..... Clarksville, TN–KY ....... 0.7802 

Christian County, KY.

Trigg County, KY.

Montgomery County, 

TN.

Stewart County, TN.

17420 ..... Cleveland, TN ............... 0.7496 

Bradley County, TN.

Polk County, TN.

17460 ..... Cleveland-Elyria-Mentor, OH.0.9303 

Cuyahoga County, OH.

Geauga County, OH.

Lake County, OH.

Lorain County, OH.

Medina County, OH.

17660 ..... Coeur d’Alene, ID ......... 0.9064 

Kootenai County, ID.

17780 ..... College Station-Bryan, 

TX.

0.9497 

Brazos County, TX.

Burleson County, TX.

Robertson County, TX.

17820 ..... Colorado Springs, CO .. 0.9282 

El Paso County, CO.

Teller County, CO.


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47971 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

17860 ..... Columbia, MO .............. 0.8196 

Boone County, MO.

Howard County, MO.

17900 ..... Columbia, SC ............... 0.8601 

Calhoun County, SC.

Fairfield County, SC.

Kershaw County, SC.

Lexington County, SC.

Richland County, SC.

Saluda County, SC.

17980 ..... Columbus, GA–AL ........ 0.8170 

Russell County, AL.

Chattahoochee County, 

GA.

Harris County, GA.

Marion County, GA.

Muscogee County, GA.

18020 ..... Columbus, IN ................ 0.9818 

Bartholomew County, 

IN.

18140 ..... Columbus, OH .............. 0.9803 

Delaware County, OH.

Fairfield County, OH.

Franklin County, OH.

Licking County, OH.

Madison County, OH.

Morrow County, OH.

Pickaway County, OH.

Union County, OH.

18580 ..... Corpus Christi, TX ........ 0.8433 

Aransas County, TX.

Nueces County, TX.

San Patricio County, TX.

18700 ..... Corvallis, OR ................ 1.0596 

Benton County, OR.

18880 ..... Crestview-Fort Walton 

Beach-Destin, FL.

0.8911 

Okaloosa County, FL.

19060 ..... Cumberland, MD–WV .. 0.8054 

Allegany County, MD.

Mineral County, WV.

19124 ..... Dallas-Plano-Irving, TX 0.9831 

Collin County, TX.

Dallas County, TX.

Delta County, TX.

Denton County, TX.

Ellis County, TX.

Hunt County, TX.

Kaufman County, TX.

Rockwall County, TX.

19140 ..... Dalton, GA .................... 0.8625 

Murray County, GA.

Whitfield County, GA.

19180 ..... Danville, IL .................... 0.9460 

Vermilion County, IL.

19260 ..... Danville, VA .................. 0.7888 

Pittsylvania County, VA.

Danville City, VA.

19340 ..... Davenport-Moline-Rock 

Island, IA–IL.

0.9306 

Henry County, IL.

Mercer County, IL.

Rock Island County, IL.

Scott County, IA.

19380 ..... Dayton, OH ................... 0.9034 

Greene County, OH.

Miami County, OH.

Montgomery County, 

OH.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Preble County, OH.

19460 ..... Decatur, AL .................. 0.7165 

Lawrence County, AL.

Morgan County, AL.

19500 ..... Decatur, IL .................... 0.8151 

Macon County, IL.

19660 ..... Deltona-Daytona 

Beach-Ormond 

Beach, FL.

0.8560 

Volusia County, FL.

19740 ..... Denver-Aurora-Broomfield, CO.1.0395 

Adams County, CO.

Arapahoe County, CO.

Broomfield County, CO.

Clear Creek County, 

CO.

Denver County, CO.

Douglas County, CO.

Elbert County, CO.

Gilpin County, CO.

Jefferson County, CO.

Park County, CO.

19780 ..... Des Moines-West Des 

Moines, IA.

0.9393 

Dallas County, IA.

Guthrie County, IA.

Madison County, IA.

Polk County, IA.

Warren County, IA.

19804 ..... Detroit-Livonia-Dearborn, MI.0.9237 

Wayne County, MI.

20020 ..... Dothan, AL ................... 0.7108 

Geneva County, AL.

Henry County, AL.

Houston County, AL.

20100 ..... Dover, DE ..................... 0.9939 

Kent County, DE.

20220 ..... Dubuque, IA ................. 0.8790 

Dubuque County, IA.

20260 ..... Duluth, MN–WI ............. 1.0123 

Carlton County, MN.

St. Louis County, MN.

Douglas County, WI.

20500 ..... Durham-Chapel Hill, NC 0.9669 

Chatham County, NC.

Durham County, NC.

Orange County, NC.

Person County, NC.

20740 ..... Eau Claire, WI .............. 1.0103 

Chippewa County, WI.

Eau Claire County, WI.

20764 ..... Edison-New Brunswick, 

NJ.

1.0985 

Middlesex County, NJ.

Monmouth County, NJ.

Ocean County, NJ.

Somerset County, NJ.

20940 ..... El Centro, CA ............... 0.8848 

Imperial County, CA.

21060 ..... Elizabethtown, KY ........ 0.7894 

Hardin County, KY.

Larue County, KY.

21140 ..... Elkhart-Goshen, IN ....... 0.9337 

Elkhart County, IN.

21300 ..... Elmira, NY .................... 0.8725 

Chemung County, NY.

21340 ..... El Paso, TX .................. 0.8404 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

El Paso County, TX.

21500 ..... Erie, PA ........................ 0.7940 

Erie County, PA.

21660 ..... Eugene-Springfield, OR 1.1723 

Lane County, OR.

21780 ..... Evansville, IN–KY ......... 0.8381 

Gibson County, IN.

Posey County, IN.

Vanderburgh County, IN.

Warrick County, IN.

Henderson County, KY.

Webster County, KY.

21820 ..... Fairbanks, AK ............... 1.0997 

Fairbanks North Star 

Borough, AK.

21940 ..... Fajardo, PR .................. 0.3728 

Ceiba Municipio, PR.

Fajardo Municipio, PR.

Luquillo Municipio, PR.

22020 ..... Fargo, ND–MN ............. 0.7802 

Cass County, ND.

Clay County, MN.

22140 ..... Farmington, NM ............ 0.9735 

San Juan County, NM.

22180 ..... Fayetteville, NC ............ 0.8601 

Cumberland County, 

NC.

Hoke County, NC.

22220 ..... Fayetteville-SpringdaleRogers, AR–MO.0.8955 

Benton County, AR.

Madison County, AR.

Washington County, AR.

McDonald County, MO.

22380 ..... Flagstaff, AZ ................. 1.2786 

Coconino County, AZ.

22420 ..... Flint, MI ......................... 1.1238 

Genesee County, MI.

22500 ..... Florence, SC ................ 0.7999 

Darlington County, SC.

Florence County, SC.

22520 ..... Florence-Muscle 

Shoals, AL.

0.7684 

Colbert County, AL.

Lauderdale County, AL.

22540 ..... Fond du Lac, WI ........... 0.9477 

Fond du Lac County, 

WI.

22660 ..... Fort Collins-Loveland, 

CO.

0.9704 

Larimer County, CO.

22744 ..... Fort Lauderdale-Pompano Beach-Deerfield 

Beach, FL.

1.0378 

Broward County, FL.

22900 ..... Fort Smith, AR–OK ...... 0.7561 

Crawford County, AR.

Franklin County, AR.

Sebastian County, AR.

Le Flore County, OK.

Sequoyah County, OK.

23060 ..... Fort Wayne, IN ............. 0.9010 

Allen County, IN.

Wells County, IN.

Whitley County, IN.

23104 ..... Fort Worth-Arlington, 

TX.

0.9535 

Johnson County, TX.

Parker County, TX.


tkelley on DSK3SPTVN1PROD with RULES3
47972 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Tarrant County, TX.

Wise County, TX.

23420 ..... Fresno, CA ................... 1.1768 

Fresno County, CA.

23460 ..... Gadsden, AL ................ 0.7983 

Etowah County, AL.

23540 ..... Gainesville, FL .............. 0.9710 

Alachua County, FL.

Gilchrist County, FL.

23580 ..... Gainesville, GA ............. 0.9253 

Hall County, GA.

23844 ..... Gary, IN ........................ 0.9418 

Jasper County, IN.

Lake County, IN.

Newton County, IN.

Porter County, IN.

24020 ..... Glens Falls, NY ............ 0.8367 

Warren County, NY.

Washington County, NY.

24140 ..... Goldsboro, NC .............. 0.8550 

Wayne County, NC.

24220 ..... Grand Forks, ND–MN .. 0.7290 

Polk County, MN.

Grand Forks County, 

ND.

24300 ..... Grand Junction, CO ..... 0.9270 

Mesa County, CO.

24340 ..... Grand Rapids-Wyoming, MI.0.9091 

Barry County, MI.

Ionia County, MI.

Kent County, MI.

Newaygo County, MI.

24500 ..... Great Falls, MT ............ 0.9235 

Cascade County, MT.

24540 ..... Greeley, CO ................. 0.9653 

Weld County, CO.

24580 ..... Green Bay, WI .............. 0.9587 

Brown County, WI.

Kewaunee County, WI.

Oconto County, WI.

24660 ..... Greensboro-High Point, 

NC.

0.8320 

Guilford County, NC.

Randolph County, NC.

Rockingham County, 

NC.

24780 ..... Greenville, NC .............. 0.9343 

Greene County, NC.

Pitt County, NC.

24860 ..... Greenville-MauldinEasley, SC.0.9604 

Greenville County, SC.

Laurens County, SC.

Pickens County, SC.

25020 ..... Guayama, PR ............... 0.3707 

Arroyo Municipio, PR.

Guayama Municipio, PR.

Patillas Municipio, PR.

25060 ..... Gulfport-Biloxi, MS ....... 0.8575 

Hancock County, MS.

Harrison County, MS.

Stone County, MS.

25180 ..... Hagerstown-Martinsburg, MD–WV.0.9234 

Washington County, 

MD.

Berkeley County, WV.

Morgan County, WV.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

25260 ..... Hanford-Corcoran, CA .. 1.1124 

Kings County, CA.

25420 ..... Harrisburg-Carlisle, PA 0.9533 

Cumberland County, PA.

Dauphin County, PA.

Perry County, PA.

25500 ..... Harrisonburg, VA .......... 0.9090 

Rockingham County, 

VA.

Harrisonburg City, VA.

25540 ..... Hartford-West HartfordEast Hartford, CT.1.1050 

Hartford County, CT.

Middlesex County, CT.

Tolland County, CT.

25620 ..... Hattiesburg, MS ............ 0.7938 

Forrest County, MS.

Lamar County, MS.

Perry County, MS.

25860 ..... Hickory-Lenoir-Morganton, NC.0.8492 

Alexander County, NC.

Burke County, NC.

Caldwell County, NC.

Catawba County, NC.

25980 ..... Hinesville-Fort Stewart, 

GA1.

0.8700 

Liberty County, GA.

Long County, GA.

26100 ..... Holland-Grand Haven, 

MI.

0.8016 

Ottawa County, MI.

26180 ..... Honolulu, HI .................. 1.2321 

Honolulu County, HI.

26300 ..... Hot Springs, AR ........... 0.8474 

Garland County, AR.

26380 ..... Houma-Bayou CaneThibodaux, LA.0.7525 

Lafourche Parish, LA.

Terrebonne Parish, LA.

26420 ..... Houston-Sugar LandBaytown, TX.0.9915 

Austin County, TX.

Brazoria County, TX.

Chambers County, TX.

Fort Bend County, TX.

Galveston County, TX.

Harris County, TX.

Liberty County, TX.

Montgomery County, 

TX.

San Jacinto County, TX.

Waller County, TX.

26580 ..... Huntington-Ashland, 

WV–KY–OH.

0.8944 

Boyd County, KY.

Greenup County, KY.

Lawrence County, OH.

Cabell County, WV.

Wayne County, WV.

26620 ..... Huntsville, AL ............... 0.8455 

Limestone County, AL.

Madison County, AL.

26820 ..... Idaho Falls, ID .............. 0.9312 

Bonneville County, ID.

Jefferson County, ID.

26900 ..... Indianapolis-Carmel, IN 1.0108 

Boone County, IN.

Brown County, IN.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Hamilton County, IN.

Hancock County, IN.

Hendricks County, IN.

Johnson County, IN.

Marion County, IN.

Morgan County, IN.

Putnam County, IN.

Shelby County, IN.

26980 ..... Iowa City, IA ................. 0.9854 

Johnson County, IA.

Washington County, IA.

27060 ..... Ithaca, NY ..................... 0.9326 

Tompkins County, NY.

27100 ..... Jackson, MI .................. 0.8944 

Jackson County, MI.

27140 ..... Jackson, MS ................. 0.8162 

Copiah County, MS.

Hinds County, MS.

Madison County, MS.

Rankin County, MS.

Simpson County, MS.

27180 ..... Jackson, TN ................. 0.7729 

Chester County, TN.

Madison County, TN.

27260 ..... Jacksonville, FL ............ 0.8956 

Baker County, FL.

Clay County, FL.

Duval County, FL.

Nassau County, FL.

St. Johns County, FL.

27340 ..... Jacksonville, NC ........... 0.7861 

Onslow County, NC.

27500 ..... Janesville, WI ............... 0.9071 

Rock County, WI.

27620 ..... Jefferson City, MO ....... 0.8465 

Callaway County, MO.

Cole County, MO.

Moniteau County, MO.

Osage County, MO.

27740 ..... Johnson City, TN .......... 0.7226 

Carter County, TN.

Unicoi County, TN.

Washington County, TN.

27780 ..... Johnstown, PA ............. 0.8450 

Cambria County, PA.

27860 ..... Jonesboro, AR .............. 0.7983 

Craighead County, AR.

Poinsett County, AR.

27900 ..... Joplin, MO .................... 0.7983 

Jasper County, MO.

Newton County, MO.

28020 ..... Kalamazoo-Portage, MI 0.9959 

Kalamazoo County, MI.

Van Buren County, MI.

28100 ..... Kankakee-Bradley, IL ... 0.9657 

Kankakee County, IL.

28140 ..... Kansas City, MO–KS ... 0.9447 

Franklin County, KS.

Johnson County, KS.

Leavenworth County, 

KS.

Linn County, KS.

Miami County, KS.

Wyandotte County, KS.

Bates County, MO.

Caldwell County, MO.

Cass County, MO.

Clay County, MO.

Clinton County, MO.


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47973 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Jackson County, MO.

Lafayette County, MO.

Platte County, MO.

Ray County, MO.

28420 ..... Kennewick-Pasco-Richland, WA.0.9459 

Benton County, WA.

Franklin County, WA.

28660 ..... Killeen-Temple-Fort 

Hood, TX.

0.8925 

Bell County, TX.

Coryell County, TX.

Lampasas County, TX.

28700 ..... Kingsport-Bristol-Bristol, 

TN–VA.

0.7192 

Hawkins County, TN.

Sullivan County, TN.

Bristol City, VA.

Scott County, VA.

Washington County, VA.

28740 ..... Kingston, NY ................ 0.9066 

Ulster County, NY.

28940 ..... Knoxville, TN ................ 0.7432 

Anderson County, TN.

Blount County, TN.

Knox County, TN.

Loudon County, TN.

Union County, TN.

29020 ..... Kokomo, IN ................... 0.9061 

Howard County, IN.

Tipton County, IN.

29100 ..... La Crosse, WI–MN ....... 1.0205 

Houston County, MN.

La Crosse County, WI.

29140 ..... Lafayette, IN ................. 0.9954 

Benton County, IN.

Carroll County, IN.

Tippecanoe County, IN.

29180 ..... Lafayette, LA ................ 0.8231 

Lafayette Parish, LA.

St. Martin Parish, LA.

29340 ..... Lake Charles, LA .......... 0.7765 

Calcasieu Parish, LA.

Cameron Parish, LA.

29404 ..... Lake County-Kenosha 

County, IL–WI.

1.0658 

Lake County, IL.

Kenosha County, WI.

29420 ..... Lake Havasu City-Kingman, AZ.0.9912 

Mohave County, AZ.

29460 ..... Lakeland-Winter Haven, 

FL.

0.8283 

Polk County, FL.

29540 ..... Lancaster, PA ............... 0.9695 

Lancaster County, PA.

29620 ..... Lansing-East Lansing, 

MI.

1.0618 

Clinton County, MI.

Eaton County, MI.

Ingham County, MI.

29700 ..... Laredo, TX .................... 0.7586 

Webb County, TX.

29740 ..... Las Cruces, NM ........... 0.9265 

Dona Ana County, NM.

29820 ..... Las Vegas-Paradise, 

NV.

1.1627 

Clark County, NV.

29940 ..... Lawrence, KS ............... 0.8664 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Douglas County, KS 

30020 ..... Lawton, OK ................... 0.7893 

Comanche County, OK.

30140 ..... Lebanon, PA ................. 0.8157 

Lebanon County, PA.

30300 ..... Lewiston, ID–WA .......... 0.9215 

Nez Perce County, ID.

Asotin County, WA.

30340 ..... Lewiston-Auburn, ME ... 0.9048 

Androscoggin County, 

ME.

30460 ..... Lexington-Fayette, KY .. 0.8902 

Bourbon County, KY.

Clark County, KY.

Fayette County, KY.

Jessamine County, KY.

Scott County, KY.

Woodford County, KY.

30620 ..... Lima, OH ...................... 0.9158 

Allen County, OH.

30700 ..... Lincoln, NE ................... 0.9465 

Lancaster County, NE.

Seward County, NE.

30780 ..... Little Rock-North Little 

Rock-Conway, AR.

0.8629 

Faulkner County, AR.

Grant County, AR.

Lonoke County, AR.

Perry County, AR.

Pulaski County, AR.

Saline County, AR.

30860 ..... Logan, UT–ID ............... 0.8754 

Franklin County, ID.

Cache County, UT.

30980 ..... Longview, TX ................ 0.8933 

Gregg County, TX.

Rusk County, TX.

Upshur County, TX.

31020 ..... Longview, WA .............. 1.0460 

Cowlitz County, WA.

31084 ..... Los Angeles-Long 

Beach-Glendale, CA.

1.2417 

Los Angeles County, 

CA.

31140 ..... Louisville-Jefferson 

County, KY–IN.

0.8852 

Clark County, IN.

Floyd County, IN.

Harrison County, IN.

Washington County, IN.

Bullitt County, KY.

Henry County, KY.

Meade County, KY.

Nelson County, KY.

Oldham County, KY.

Shelby County, KY.

Spencer County, KY.

Trimble County, KY.

31180 ..... Lubbock, TX ................. 0.8956 

Crosby County, TX.

Lubbock County, TX.

31340 ..... Lynchburg, VA .............. 0.8771 

Amherst County, VA.

Appomattox County, VA.

Bedford County, VA.

Campbell County, VA.

Bedford City, VA.

Lynchburg City, VA.

31420 ..... Macon, GA ................... 0.9014 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Bibb County, GA.

Crawford County, GA.

Jones County, GA.

Monroe County, GA.

Twiggs County, GA.

31460 ..... Madera-Chowchilla, CA 0.8317 

Madera County, CA.

31540 ..... Madison, WI ................. 1.1414 

Columbia County, WI.

Dane County, WI.

Iowa County, WI.

31700 ..... Manchester-Nashua, 

NH.

1.0057 

Hillsborough County, 

NH.

31740 ..... Manhattan, KS .............. 0.7843 

Geary County, KS.

Pottawatomie County, 

KS.

Riley County, KS.

31860 ..... Mankato-North Mankato, MN.0.9277 

Blue Earth County, MN.

Nicollet County, MN.

31900 ..... Mansfield, OH ............... 0.8509 

Richland County, OH.

32420 ..... Mayagu ̈ez, PR .............. 0.3762 

Hormigueros Municipio, 

PR.

Mayagu ̈ez Municipio, 

PR.

32580 ..... McAllen-Edinburg-Mission, TX.0.8393 

Hidalgo County, TX.

32780 ..... Medford, OR ................. 1.0690 

Jackson County, OR.

32820 ..... Memphis, TN–MS–AR .. 0.9038 

Crittenden County, AR.

DeSoto County, MS.

Marshall County, MS.

Tate County, MS.

Tunica County, MS.

Fayette County, TN.

Shelby County, TN.

Tipton County, TN.

32900 ..... Merced, CA .................. 1.2734 

Merced County, CA.

33124 ..... Miami-Miami BeachKendall, FL.0.9870 

Miami-Dade County, FL.

33140 ..... Michigan City-La Porte, 

IN.

0.9216 

LaPorte County, IN.

33260 ..... Midland, TX .................. 1.0049 

Midland County, TX.

33340 ..... Milwaukee-WaukeshaWest Allis, WI.0.9856 

Milwaukee County, WI.

Ozaukee County, WI.

Washington County, WI.

Waukesha County, WI.

33460 ..... Minneapolis-St. PaulBloomington, MN–WI.1.1213 

Anoka County, MN.

Carver County, MN.

Chisago County, MN.

Dakota County, MN.

Hennepin County, MN.

Isanti County, MN.


tkelley on DSK3SPTVN1PROD with RULES3
47974 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Ramsey County, MN.

Scott County, MN.

Sherburne County, MN.

Washington County, 

MN.

Wright County, MN.

Pierce County, WI.

St. Croix County, WI.

33540 ..... Missoula, MT ................ 0.9142 

Missoula County, MT.

33660 ..... Mobile, AL .................... 0.7507 

Mobile County, AL.

33700 ..... Modesto, CA ................. 1.3629 

Stanislaus County, CA.

33740 ..... Monroe, LA ................... 0.7530 

Ouachita Parish, LA.

Union Parish, LA.

33780 ..... Monroe, MI ................... 0.8718 

Monroe County, MI.

33860 ..... Montgomery, AL ........... 0.7475 

Autauga County, AL.

Elmore County, AL.

Lowndes County, AL.

Montgomery County, AL.

34060 ..... Morgantown, WV .......... 0.8339 

Monongalia County, WV.

Preston County, WV.

34100 ..... Morristown, TN ............. 0.6861 

Grainger County, TN.

Hamblen County, TN.

Jefferson County, TN. 

34580 ..... Mount VernonAnacortes, WA.1.0652 

Skagit County, WA.

34620 ..... Muncie, IN.

Delaware County, IN .... 0.8743 

34740 ..... Muskegon-Norton 

Shores, MI.

1.1076 

Muskegon County, MI.

34820 ..... Myrtle Beach-North 

Myrtle BeachConway, SC.

0.8700 

Horry County, SC.

34900 ..... Napa, CA ...................... 1.5375 

Napa County, CA.

34940 ..... Naples-Marco Island, 

FL.

0.9108 

Collier County, FL.

34980 ..... Nashville-Davidson— 

Murfreesboro-Franklin, TN.

0.9141 

Cannon County, TN.

Cheatham County, TN.

Davidson County, TN.

Dickson County, TN.

Hickman County, TN.

Macon County, TN.

Robertson County, TN.

Rutherford County, TN.

Smith County, TN.

Sumner County, TN.

Trousdale County, TN.

Williamson County, TN.

Wilson County, TN.

35004 ..... Nassau-Suffolk, NY ...... 1.2755 

Nassau County, NY.

Suffolk County, NY.

35084 ..... Newark-Union, NJ–PA 1.1268 

Essex County, NJ.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Hunterdon County, NJ.

Morris County, NJ.

Sussex County, NJ.

Union County, NJ.

Pike County, PA.

35300 ..... New Haven-Milford, CT 1.1883 

New Haven County, CT.

35380 ..... New Orleans-MetairieKenner, LA.0.8752 

Jefferson Parish, LA.

Orleans Parish, LA.

Plaquemines Parish, LA.

St. Bernard Parish, LA.

St. Charles Parish, LA.

St. John the Baptist 

Parish, LA.

St. Tammany Parish, 

LA.

35644 ..... New York-White PlainsWayne, NY–NJ.1.3089 

Bergen County, NJ.

Hudson County, NJ.

Passaic County, NJ.

Bronx County, NY.

Kings County, NY.

New York County, NY.

Putnam County, NY.

Queens County, NY.

Richmond County, NY.

Rockland County, NY.

Westchester County, 

NY.

35660 ..... Niles-Benton Harbor, MI 0.8444 

Berrien County, MI.

35840 ..... North Port-BradentonSarasota-Venice, FL.0.9428 

Manatee County, FL.

Sarasota County, FL.

35980 ..... Norwich-New London, 

CT.

1.1821 

New London County, 

CT.

36084 ..... Oakland-Fremont-Hayward, CA.1.7048 

Alameda County, CA.

Contra Costa County, 

CA.

36100 ..... Ocala, FL ...................... 0.8425 

Marion County, FL.

36140 ..... Ocean City, NJ ............. 1.0584 

Cape May County, NJ.

36220 ..... Odessa, TX .................. 0.9661 

Ector County, TX.

36260 ..... Ogden-Clearfield, UT ... 0.9170 

Davis County, UT.

Morgan County, UT.

Weber County, UT.

36420 ..... Oklahoma City, OK ...... 0.8879 

Canadian County, OK.

Cleveland County, OK.

Grady County, OK.

Lincoln County, OK.

Logan County, OK.

McClain County, OK.

Oklahoma County, OK.

36500 ..... Olympia, WA ................ 1.1601 

Thurston County, WA.

36540 ..... Omaha-Council Bluffs, 

NE–IA.

0.9756 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Harrison County, IA.

Mills County, IA.

Pottawattamie County, 

IA.

Cass County, NE.

Douglas County, NE.

Sarpy County, NE.

Saunders County, NE.

Washington County, NE.

36740 ..... Orlando-Kissimmee, FL 0.9063 

Lake County, FL.

Orange County, FL.

Osceola County, FL.

Seminole County, FL.

36780 ..... Oshkosh-Neenah, WI ... 0.9398 

Winnebago County, WI.

36980 ..... Owensboro, KY ............ 0.7790 

Daviess County, KY.

Hancock County, KY.

McLean County, KY.

37100 ..... Oxnard-Thousand 

Oaks-Ventura, CA.

1.3113 

Ventura County, CA.

37340 ..... Palm Bay-MelbourneTitusville, FL.0.8790 

Brevard County, FL.

37380 ..... Palm Coast, FL ............ 0.8174 

Flagler County, FL.

37460 ..... Panama City-Lynn 

Haven-Panama City 

Beach, FL.

0.7876 

Bay County, FL.

37620 ..... Parkersburg-MariettaVienna, WV–OH.0.7569 

Washington County, OH.

Pleasants County, WV.

Wirt County, WV.

Wood County, WV.

37700 ..... Pascagoula, MS ........... 0.7542 

George County, MS.

Jackson County, MS.

37764 ..... Peabody, MA ................ 1.0553 

Essex County, MA.

37860 ..... Pensacola-Ferry PassBrent, FL.0.7767 

Escambia County, FL.

Santa Rosa County, FL.

37900 ..... Peoria, IL ...................... 0.8434 

Marshall County, IL.

Peoria County, IL.

Stark County, IL.

Tazewell County, IL.

Woodford County, IL.

37964 ..... Philadelphia, PA ........... 1.0849 

Bucks County, PA.

Chester County, PA.

Delaware County, PA.

Montgomery County, 

PA.

Philadelphia County, PA.

38060 ..... Phoenix-Mesa-Scottsdale, AZ.1.0465 

Maricopa County, AZ.

Pinal County, AZ.

38220 ..... Pine Bluff, AR ............... 0.8069 

Cleveland County, AR.

Jefferson County, AR.

Lincoln County, AR.

38300 ..... Pittsburgh, PA .............. 0.8669 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47975 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Allegheny County, PA.

Armstrong County, PA.

Beaver County, PA.

Butler County, PA.

Fayette County, PA.

Washington County, PA.

Westmoreland County, 

PA.

38340 ..... Pittsfield, MA ................ 1.0920 

Berkshire County, MA.

38540 ..... Pocatello, ID ................. 0.9754 

Bannock County, ID.

Power County, ID.

38660 ..... Ponce, PR .................... 0.4594 

Juana Dı ́az Municipio, 

PR.

Ponce Municipio, PR.

Villalba Municipio, PR.

38860 ..... Portland-South Portland-Biddeford, ME.0.9981 

Cumberland County, 

ME.

Sagadahoc County, ME.

York County, ME.

38900 ..... Portland-VancouverBeaverton, OR–WA.1.1766 

Clackamas County, OR.

Columbia County, OR.

Multnomah County, OR.

Washington County, OR.

Yamhill County, OR.

Clark County, WA.

Skamania County, WA.

38940 ..... Port St. Lucie, FL ......... 0.9352 

Martin County, FL.

St. Lucie County, FL.

39100 ..... Poughkeepsie-Newburgh-Middletown, 

NY.

1.1544 

Dutchess County, NY.

Orange County, NY.

39140 ..... Prescott, AZ .................. 1.0161 

Yavapai County, AZ.

39300 ..... Providence-New Bedford-Fall River, RI– 

MA.

1.0539 

Bristol County, MA.

Bristol County, RI.

Kent County, RI.

Newport County, RI.

Providence County, RI.

Washington County, RI.

39340 ..... Provo-Orem, UT ........... 0.9461 

Juab County, UT.

Utah County, UT.

39380 ..... Pueblo, CO ................... 0.8215 

Pueblo County, CO.

39460 ..... Punta Gorda, FL ........... 0.8734 

Charlotte County, FL.

39540 ..... Racine, WI .................... 0.8903 

Racine County, WI.

39580 ..... Raleigh-Cary, NC ......... 0.9304 

Franklin County, NC.

Johnston County, NC.

Wake County, NC.

39660 ..... Rapid City, SD .............. 0.9568 

Meade County, SD.

Pennington County, SD.

39740 ..... Reading, PA ................. 0.9220 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Berks County, PA.

39820 ..... Redding, CA ................. 1.4990 

Shasta County, CA.

39900 ..... Reno-Sparks, NV ......... 1.0326 

Storey County, NV.

Washoe County, NV.

40060 ..... Richmond, VA .............. 0.9723 

Amelia County, VA.

Caroline County, VA.

Charles City County, 

VA.

Chesterfield County, VA.

Cumberland County, VA.

Dinwiddie County, VA.

Goochland County, VA.

Hanover County, VA.

Henrico County, VA.

King and Queen County, VA.

King William County, 

VA.

Louisa County, VA.

New Kent County, VA.

Powhatan County, VA.

Prince George County, 

VA.

Sussex County, VA.

Colonial Heights City, 

VA.

Hopewell City, VA.

Petersburg City, VA.

Richmond City, VA.

40140 ..... Riverside-San 

Bernardino-Ontario, 

CA.

1.1497 

Riverside County, CA.

San Bernardino County, 

CA.

40220 ..... Roanoke, VA ................ 0.9195 

Botetourt County, VA.

Craig County, VA.

Franklin County, VA.

Roanoke County, VA.

Roanoke City, VA.

Salem City, VA.

40340 ..... Rochester, MN ............. 1.1662 

Dodge County, MN.

Olmsted County, MN.

Wabasha County, MN.

40380 ..... Rochester, NY .............. 0.8749 

Livingston County, NY.

Monroe County, NY.

Ontario County, NY.

Orleans County, NY.

Wayne County, NY.

40420 ..... Rockford, IL .................. 0.9751 

Boone County, IL.

Winnebago County, IL.

40484 ..... Rockingham CountyStrafford County, NH.1.0172 

Rockingham County, 

NH.

Strafford County, NH.

40580 ..... Rocky Mount, NC ......... 0.8750 

Edgecombe County, NC.

Nash County, NC.

40660 ..... Rome, GA ..................... 0.8924 

Floyd County, GA.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

40900 ..... Sacramento-Arden-Arcade-Roseville, CA.1.5498 

El Dorado County, CA.

Placer County, CA.

Sacramento County, CA.

Yolo County, CA.

40980 ..... Saginaw-Saginaw 

Township North, MI.

0.8849 

Saginaw County, MI.

41060 ..... St. Cloud, MN ............... 1.0658 

Benton County, MN.

Stearns County, MN.

41100 ..... St. George, UT ............. 0.9345 

Washington County, UT.

41140 ..... St. Joseph, MO–KS ...... 0.9834 

Doniphan County, KS.

Andrew County, MO.

Buchanan County, MO.

DeKalb County, MO.

41180 ..... St. Louis, MO–IL .......... 0.9336 

Bond County, IL.

Calhoun County, IL.

Clinton County, IL.

Jersey County, IL.

Macoupin County, IL.

Madison County, IL.

Monroe County, IL.

St. Clair County, IL.

Crawford County, MO.

Franklin County, MO.

Jefferson County, MO.

Lincoln County, MO.

St. Charles County, MO.

St. Louis County, MO.

Warren County, MO.

Washington County, 

MO.

St. Louis City, MO.

41420 ..... Salem, OR .................... 1.1148 

Marion County, OR.

Polk County, OR.

41500 ..... Salinas, CA ................... 1.5820 

Monterey County, CA.

41540 ..... Salisbury, MD ............... 0.8948 

Somerset County, MD.

Wicomico County, MD.

41620 ..... Salt Lake City, UT ........ 0.9350 

Salt Lake County, UT.

Summit County, UT.

Tooele County, UT.

41660 ..... San Angelo, TX ............ 0.8169 

Irion County, TX.

Tom Green County, TX.

41700 ..... San Antonio, TX ........... 0.8911 

Atascosa County, TX.

Bandera County, TX.

Bexar County, TX.

Comal County, TX.

Guadalupe County, TX.

Kendall County, TX.

Medina County, TX.

Wilson County, TX.

41740 ..... San Diego-CarlsbadSan Marcos, CA.1.2213 

San Diego County, CA.

41780 ..... Sandusky, OH .............. 0.7788 

Erie County, OH.


tkelley on DSK3SPTVN1PROD with RULES3
47976 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

41884 ..... San Francisco-San 

Mateo-Redwood City, 

CA.

1.6743 

Marin County, CA.

San Francisco County, 

CA.

San Mateo County, CA.

41900 ..... San Germa ́n-Cabo 

Rojo, PR.

0.4550 

Cabo Rojo Municipio, 

PR.

Lajas Municipio, PR.

Sabana Grande 

Municipio, PR.

San Germa ́n Municipio, 

PR.

41940 ..... San Jose-SunnyvaleSanta Clara, CA.1.7086 

San Benito County, CA.

Santa Clara County, CA.

41980 ..... San Juan-CaguasGuaynabo, PR.0.4356 

Aguas Buenas 

Municipio, PR.

Aibonito Municipio, PR.

Arecibo Municipio, PR.

Barceloneta Municipio, 

PR.

Barranquitas Municipio, 

PR.

Bayamo ́n Municipio, PR.

Caguas Municipio, PR.

Camuy Municipio, PR.

Cano ́vanas Municipio, 

PR.

Carolina Municipio, PR.

Catan ̃o Municipio, PR.

Cayey Municipio, PR.

Ciales Municipio, PR.

Cidra Municipio, PR.

Comerı ́o Municipio, PR.

Corozal Municipio, PR.

Dorado Municipio, PR.

Florida Municipio, PR.

Guaynabo Municipio, 

PR.

Gurabo Municipio, PR.

Hatillo Municipio, PR.

Humacao Municipio, PR.

Juncos Municipio, PR.

Las Piedras Municipio, 

PR.

Loı ́za Municipio, PR.

Manatı ́ Municipio, PR.

Maunabo Municipio, PR.

Morovis Municipio, PR.

Naguabo Municipio, PR.

Naranjito Municipio, PR.

Orocovis Municipio, PR.

Quebradillas Municipio, 

PR.

Rı ́o Grande Municipio, 

PR.

San Juan Municipio, PR.

San Lorenzo Municipio, 

PR.

Toa Alta Municipio, PR.

Toa Baja Municipio, PR.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Trujillo Alto Municipio, 

PR.

Vega Alta Municipio, 

PR.

Vega Baja Municipio, 

PR.

Yabucoa Municipio, PR.

42020 ..... San Luis Obispo-Paso 

Robles, CA.

1.3036 

San Luis Obispo County, CA.

42044 ..... Santa Ana-AnaheimIrvine, CA.1.2111 

Orange County, CA.

42060 ..... Santa Barbara-Santa 

Maria-Goleta, CA.

1.2825 

Santa Barbara County, 

CA.

42100 ..... Santa Cruz-Watsonville, 

CA.

1.7937 

Santa Cruz County, CA.

42140 ..... Santa Fe, NM ............... 1.0136 

Santa Fe County, NM.

42220 ..... Santa Rosa-Petaluma, 

CA.

1.6679 

Sonoma County, CA.

42340 ..... Savannah, GA .............. 0.8757 

Bryan County, GA.

Chatham County, GA.

Effingham County, GA.

42540 ..... Scranton-Wilkes-Barre, 

PA.

0.8331 

Lackawanna County, 

PA.

Luzerne County, PA.

Wyoming County, PA.

42644 ..... Seattle-Bellevue-Everett, WA.1.1733 

King County, WA.

Snohomish County, WA.

42680 ..... Sebastian-Vero Beach, 

FL.

0.8760 

Indian River County, FL.

43100 ..... Sheboygan, WI ............. 0.9203 

Sheboygan County, WI.

43300 ..... Sherman-Denison, TX .. 0.8723 

Grayson County, TX ..... 0.8723 

43340 ..... Shreveport-Bossier City, 

LA.

0.8262 

Bossier Parish, LA.

Caddo Parish, LA.

De Soto Parish, LA.

43580 ..... Sioux City, IA–NE–SD .. 0.9163 

Woodbury County, IA.

Dakota County, NE.

Dixon County, NE.

Union County, SD.

43620 ..... Sioux Falls, SD ............. 0.8275 

Lincoln County, SD.

McCook County, SD.

Minnehaha County, SD.

Turner County, SD.

43780 ..... South Bend-Mishawaka, 

IN–MI.

0.9425 

St. Joseph County, IN.

Cass County, MI.

43900 ..... Spartanburg, SC ........... 0.8782 

Spartanburg County, 

SC.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

44060 ..... Spokane, WA ............... 1.1174 

Spokane County, WA.

44100 ..... Springfield, IL ............... 0.9165 

Menard County, IL.

Sangamon County, IL.

44140 ..... Springfield, MA ............. 1.0378 

Franklin County, MA.

Hampden County, MA.

Hampshire County, MA.

44180 ..... Springfield, MO ............. 0.8440 

Christian County, MO.

Dallas County, MO.

Greene County, MO.

Polk County, MO.

Webster County, MO.

44220 ..... Springfield, OH ............. 0.8447 

Clark County, OH 

44300 ..... State College, PA ......... 0.9575 

Centre County, PA.

44600 ..... Steubenville-Weirton, 

OH–WV.

0.7598 

Jefferson County, OH.

Brooke County, WV.

Hancock County, WV.

44700 ..... Stockton, CA ................ 1.3734 

San Joaquin County, 

CA.

44940 ..... Sumter, SC ................... 0.7594 

Sumter County, SC.

45060 ..... Syracuse, NY ............... 0.9897 

Madison County, NY.

Onondaga County, NY.

Oswego County, NY.

45104 ..... Tacoma, WA ................. 1.1574 

Pierce County, WA.

45220 ..... Tallahassee, FL ............ 0.8391 

Gadsden County, FL.

Jefferson County, FL.

Leon County, FL.

Wakulla County, FL.

45300 ..... Tampa-St. PetersburgClearwater, FL.0.9075 

Hernando County, FL.

Hillsborough County, FL.

Pasco County, FL.

Pinellas County, FL.

45460 ..... Terre Haute, IN ............ 0.9706 

Clay County, IN.

Sullivan County, IN.

Vermillion County, IN.

Vigo County, IN.

45500 ..... Texarkana, TX-Texarkana, AR.0.7428 

Miller County, AR.

Bowie County, TX.

45780 ..... Toledo, OH ................... 0.9013 

Fulton County, OH.

Lucas County, OH.

Ottawa County, OH.

Wood County, OH.

45820 ..... Topeka, KS ................... 0.8974 

Jackson County, KS.

Jefferson County, KS.

Osage County, KS.

Shawnee County, KS.

Wabaunsee County, KS.

45940 ..... Trenton-Ewing, NJ ........ 1.0648 

Mercer County, NJ.

46060 ..... Tucson, AZ ................... 0.8953 


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Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 47977 

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Pima County, AZ.

46140 ..... Tulsa, OK ..................... 0.8145 

Creek County, OK.

Okmulgee County, OK.

Osage County, OK.

Pawnee County, OK.

Rogers County, OK.

Tulsa County, OK.

Wagoner County, OK.

46220 ..... Tuscaloosa, AL ............. 0.8500 

Greene County, AL.

Hale County, AL.

Tuscaloosa County, AL.

46340 ..... Tyler, TX ....................... 0.8526 

Smith County, TX.

46540 ..... Utica-Rome, NY ........... 0.8769 

Herkimer County, NY.

Oneida County, NY.

46660 ..... Valdosta, GA ................ 0.7527 

Brooks County, GA.

Echols County, GA.

Lanier County, GA.

Lowndes County, GA.

46700 ..... Vallejo-Fairfield, CA ...... 1.6286 

Solano County, CA.

47020 ..... Victoria, TX ................... 0.8949 

Calhoun County, TX.

Goliad County, TX.

Victoria County, TX.

47220 ..... Vineland-MillvilleBridgeton, NJ.1.0759 

Cumberland County, NJ.

47260 ..... Virginia Beach-NorfolkNewport News, VA– 

NC.

0.9121 

Currituck County, NC.

Gloucester County, VA.

Isle of Wight County, 

VA.

James City County, VA.

Mathews County, VA.

Surry County, VA.

York County, VA.

Chesapeake City, VA.

Hampton City, VA.

Newport News City, VA.

Norfolk City, VA.

Poquoson City, VA.

Portsmouth City, VA.

Suffolk City, VA.

Virginia Beach City, VA.

Williamsburg City, VA.

47300 ..... Visalia-Porterville, CA ... 0.9947 

Tulare County, CA.

47380 ..... Waco, TX ...................... 0.8213 

McLennan County, TX.

47580 ..... Warner Robins, GA ...... 0.7732 

Houston County, GA.

47644 ..... Warren-Troy-Farmington Hills, MI.0.9432 

Lapeer County, MI.

Livingston County, MI.

Macomb County, MI.

Oakland County, MI.

St. Clair County, MI.

47894 ..... Washington-ArlingtonAlexandria, DC–VA– 

MD–WV.

1.0533 

District of Columbia, DC.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Calvert County, MD.

Charles County, MD.

Prince George’s County, MD.

Arlington County, VA.

Clarke County, VA.

Fairfax County, VA.

Fauquier County, VA.

Loudoun County, VA.

Prince William County, 

VA.

Spotsylvania County, 

VA.

Stafford County, VA.

Warren County, VA.

Alexandria City, VA.

Fairfax City, VA.

Falls Church City, VA.

Fredericksburg City, VA.

Manassas City, VA.

Manassas Park City, 

VA.

Jefferson County, WV.

47940 ..... Waterloo-Cedar Falls, 

IA.

0.8331 

Black Hawk County, IA.

Bremer County, IA.

Grundy County, IA.

48140 ..... Wausau, WI .................. 0.8802 

Marathon County, WI.

48300 ..... Wenatchee-East 

Wenatchee, WA.

1.0109 

Chelan County, WA.

Douglas County, WA.

48424 ..... West Palm Beach-Boca 

Raton-Boynton 

Beach, FL.

0.9597 

Palm Beach County, FL.

48540 ..... Wheeling, WV–OH ....... 0.6673 

Belmont County, OH.

Marshall County, WV.

Ohio County, WV.

48620 ..... Wichita, KS ................... 0.8674 

Butler County, KS.

Harvey County, KS.

Sedgwick County, KS.

Sumner County, KS.

48660 ..... Wichita Falls, TX .......... 0.9537 

Archer County, TX.

Clay County, TX.

Wichita County, TX.

48700 ..... Williamsport, PA ........... 0.8268 

Lycoming County, PA.

48864 ..... Wilmington, DE–MD–NJ 1.0593 

New Castle County, DE.

Cecil County, MD.

Salem County, NJ.

48900 ..... Wilmington, NC.

Brunswick County, NC 0.8862 

New Hanover County, 

NC.

Pender County, NC.

49020 ..... Winchester, VA–WV ..... 0.9034 

Frederick County, VA.

Winchester City, VA.

Hampshire County, WV.

49180 ..... Winston-Salem, NC ...... 0.8560 

Davie County, NC.

Forsyth County, NC.

TABLE A—FY 2014 WAGE INDEX FOR

URBAN AREAS BASED ON CBSA 

LABOR MARKET AREAS—Continued 

CBSA 

Code 

Urban area (constituent 

counties) 

Wage 

index 

Stokes County, NC.

Yadkin County, NC.

49340 ..... Worcester, MA .............. 1.1584 

Worcester County, MA.

49420 ..... Yakima, WA .................. 1.0355 

Yakima County, WA.

49500 ..... Yauco, PR .................... 0.3782 

Gua ́nica Municipio, PR.

Guayanilla Municipio, 

PR.

Pen ̃uelas Municipio, PR.

Yauco Municipio, PR.

49620 ..... York-Hanover, PA ........ 0.9540 

York County, PA.

49660 ..... Youngstown-WarrenBoardman, OH–PA.0.8262 

Mahoning County, OH.

Trumbull County, OH.

Mercer County, PA.

49700 ..... Yuba City, CA ............... 1.1759 

Sutter County, CA.

Yuba County, CA.

49740 ..... Yuma, AZ ..................... 0.9674 

Yuma County, AZ.

1At this time, there are no hospitals located 

in this urban area on which to base a wage 

index. 

State 

code Nonurban area Wage index 

1 ........... Alabama ......................... 0.7147 

2 ........... Alaska ............................. 1.3662 

3 ........... Arizona ........................... 0.9166 

4 ........... Arkansas ......................... 0.7343 

5 ........... California ........................ 1.2788 

6 ........... Colorado ......................... 0.9802 

7 ........... Connecticut ..................... 1.1311 

8 ........... Delaware ........................ 1.0092 

10 ......... Florida ............................. 0.7985 

11 ......... Georgia ........................... 0.7459 

12 ......... Hawaii ............................. 1.0739 

13 ......... Idaho ............................... 0.7605 

14 ......... Illinois .............................. 0.8434 

15 ......... Indiana ............................ 0.8513 

16 ......... Iowa ................................ 0.8434 

17 ......... Kansas ............................ 0.7929 

18 ......... Kentucky ......................... 0.7784 

19 ......... Louisiana ........................ 0.7585 

20 ......... Maine .............................. 0.8238 

21 ......... Maryland ......................... 0.8696 

22 ......... Massachusetts ................ 1.3614 

23 ......... Michigan ......................... 0.8270 

24 ......... Minnesota ....................... 0.9133 

25 ......... Mississippi ...................... 0.7568 

26 ......... Missouri .......................... 0.7775 

27 ......... Montana .......................... 0.9098 

28 ......... Nebraska ........................ 0.8855 

29 ......... Nevada ........................... 0.9781 

30 ......... New Hampshire .............. 1.0339 

31 ......... New Jersey1 ................... — 

32 ......... New Mexico .................... 0.8922 

33 ......... New York ........................ 0.8220 

34 ......... North Carolina ................ 0.8100 

35 ......... North Dakota .................. 0.6785 

36 ......... Ohio ................................ 0.8377 

37 ......... Oklahoma ....................... 0.7704 

38 ......... Oregon ............................ 0.9435 


tkelley on DSK3SPTVN1PROD with RULES3
47978 Federal Register / Vol. 78, No. 151 / Tuesday, August 6, 2013 / Rules and Regulations 

State 

code Nonurban area Wage index 

39 ......... Pennsylvania .................. 0.8430 

40 ......... Puerto Rico1 ................... 0.4047 

41 ......... Rhode Island1 ................. — 

42 ......... South Carolina ................ 0.8329 

43 ......... South Dakota .................. 0.8164 

44 ......... Tennessee ...................... 0.7444 

45 ......... Texas .............................. 0.7874 

46 ......... Utah ................................ 0.8732 

State 

code Nonurban area Wage index 

47 ......... Vermont .......................... 0.9740 

48 ......... Virgin Islands .................. 0.7060 

49 ......... Virginia ............................ 0.7758 

50 ......... Washington ..................... 1.0529 

51 ......... West Virginia .................. 0.7407 

52 ......... Wisconsin ....................... 0.8904 

53 ......... Wyoming ......................... 0.9243 

State 

code Nonurban area Wage index 

65 ......... Guam .............................. 0.9611 

1All counties within the State are classified 

as urban, with the exception of Puerto Rico. 

Puerto Rico has areas designated as rural; 

however, no short-term, acute care hospitals 

are located in the area(s) for FY 2014. The 

Puerto Rico wage index is the same as FY 

2013. 

[FR Doc. 2013–18776 Filed 7–31–13; 4:15 pm] 

BILLING CODE 4120–01–P 


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