Friday,

January 30, 2004

Part V

Department of 

Health and Human 

Services

Centers for Medicare & Medicaid Services 

42 CFR Part 412

Medicare Program; Prospective Payment 

System for Long-Term Care Hospitals: 

Proposed Annual Payment Rate Updates 

and Policy Changes; Proposed Rule

4754 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 412

[CMS–1263–P] 

RIN 0938–AM84

Medicare Program; Prospective 

Payment System for Long-Term Care 

Hospitals: Proposed Annual Payment 

Rate Updates and Policy Changes

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

SUMMARY: This rule proposes an update 

to the annual payment rates for the 

Medicare prospective payment system 

(PPS) for inpatient hospital services 

provided by long-term care hospitals 

(LTCHs). The payment amounts and 

factors used to determine the proposed 

updated Federal rates that are described 

in this proposed rule have been 

determined based on the LTCH PPS rate 

year. The annual update of the longterm care diagnosis-related groups 

(LTC–DRG) classifications and relative 

weights remains linked to the annual 

adjustments of the acute care hospital 

inpatient diagnosis-related group 

system, and will continue to be effective 

each October 1. The proposed outlier 

threshold for July 1, 2004, through June 

30, 2005, would also be derived from 

the LTCH PPS rate year calculations. In 

this proposed rule, we also are 

proposing to make clarifications to the 

existing policy regarding the 

designation of a satellite of a LTCH as 

an independent LTCH. In addition, we 

are proposing to expand the existing 

interrupted stay policy and proposing a 

change in the procedure for counting 

days in the average length of stay 

calculation for Medicare patients for 

hospitals qualifying as LTCHs.

DATES: We will consider comments if 

we receive them at the appropriate 

address, as provided below, no later 

than 5 p.m. on March 23, 2004.

ADDRESSES: In commenting, please refer 

to file code CMS–1263–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

Submit electronic comments to

http://www.accessdata.fda.gov/scripts/

oc/dockets/comments/

commentdocket.cfm?AGENCY=CMS or 

to http://www.regulations.gov. Mail 

written comments (one original and two 

copies) to the following address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1263–

P, P.O. Box 8010, Baltimore, MD 21244–

1850.

If you prefer, you may deliver, by 

hand or courier, your written comments 

(an original and three copies) to one of 

the following addresses:

Room 443–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201, or 

Room C5–14–03, Central Building, 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

Humphrey Building is not readily 

available to persons without Federal 

government identification, commenters 

are encouraged to leave their comments 

in the CMS drop slots located in the 

main lobby of the building. A stamp-in 

clock is available for commenters who 

wish to retain proof of filing by 

stamping in and keeping an extra copy 

of the comments being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

could be considered late. 

All comments received before the 

close of the comment period are 

available for viewing by the public, 

including any personally identifiable or 

confidential business information that is 

included in a comment. After the close 

of the comment period, CMS posts all 

electronic comments received before the 

close of the comment period on its 

public Web site. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:

Tzvi Hefter, (410) 786–4487 (General 

information); 

Judy Richter, (410) 786–2590 (General 

information, transition payments, 

payment adjustments, and onsite 

discharges and readmissions, 

interrupted stays, co-located 

providers, and short-stay outliers); 

Michele Hudson, (410) 786–5490 

(Calculation of the payment rates, 

relative weights and case-mix index, 

market basket update, and payment 

adjustments); 

Ann Fagan, (410) 786–5662 (Patient 

classification system); 

Miechal Lefkowitz, (410) 786–5316 

(High-cost outliers and budget 

neutrality); 

Linda McKenna, (410) 786–4537 

(Payment adjustments, interrupted 

stay, and transition period); 

Kathryn McCann, (410) 786–7623 

(Medigap); 

Robert Nakielny, (410) 786–4466 

(Medicaid).

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1263–P 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments:

Comments received timely will be 

available for public inspection as they 

are processed, generally beginning 

approximately 4 weeks after publication 

of a document, in Room C5–12–08 of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Blvd., 

Baltimore, MD, on Monday through 

Friday of each week from 8:30 a.m. to 

5 p.m. Please call (410) 786–7197 to 

schedule an appointment to view public 

comments. 

Availability of Copies and Electronic 

Access 

Copies: To order copies of the Federal 

Register containing this document, send 

your request to: New Orders, 

Superintendent of Documents, P.O. Box 

371954, Pittsburgh, PA 15250–7954. 

Specify the date of the issue requested 

and enclose a check or money order 

payable to the Superintendent of 

Documents, or enclose your Visa or 

Master Card number and expiration 

date. Credit card orders can also be 

placed by calling the order desk at (202) 

512–1800 or by faxing to (202) 512–

2250. The cost for each copy is $10. As 

an alternative, you can view and 

photocopy the Federal Register

document at most libraries designated 

as Federal Depository Libraries and at 

many other public and academic 

libraries throughout the country that 

receive the Federal Register.

This Federal Register document is 

also available from the Federal Register

online database through GPO Access, a 

service of the U.S. Government Printing 

Office. The Web site address is: http://

www.access.gpo.gov/nara/index.html.

To assist readers in referencing 

sections contained in this preamble, we 

are providing the following table of 

contents.

Table of Contents 

I. Background 

A. Legislative and Regulatory Authority 

B. Criteria for Classification as a LTCH 

1. Classification as a LTCH 

2. Hospitals Excluded from the LTCH PPS 

C. Transition Period for Implementation of 

the LTCH PPS 

D. Limitation on Charges to Beneficiaries 

E. Health Insurance Portability and 

Accountability Act Compliance 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4755

II. Summary of Major Contents of This 

Proposed Rule 

III. Long-Term Care Diagnosis-Related Group 

(LTC–DRG) Classifications and Relative 

Weights 

A. Background 

B. Patient Classifications into DRGs 

C. Organization of DRGs 

D. Update of LTC–DRGs 

E. ICD–9–CM Coding System 

1. Uniform Hospital Discharge Data Set 

(UHDDS) Definitions 

2. Maintenance of the ICD–9–CM Coding 

System 

3. Coding Rules and Use of ICD–9–CM 

Codes in LTCHs 

F. The Method for Updating the LTC–DRG 

Relative Weights 

IV. Proposed Changes to the LTCH PPS Rates 

and Proposed Changes in Policy for the 

2005 LTCH PPS Rate Year 

A. Overview of the Development of the 

Payment Rates 

B. Proposed Update to the Standard 

Federal Rate for the 2005 LTCH PPS Rate 

Year 

1. Proposed Standard Federal Rate Update 

a. Description of the Market Basket for the 

Proposed 2005 LTCH PPS Rate Year 

b. Proposed LTCH Market Basket Increase 

for the 2005 LTCH PPS Rate Year 

2. Proposed Standard Federal Rate for the 

2005 LTCH PPS rate year 

C. Calculation of Proposed LTCH 

Prospective Payments for the 2005 LTCH 

PPS rate year 

1. Proposed Adjustment for Area Wage 

Levels 

a. Background 

b. Wage Index Data 

c. Proposed Labor-Related Share 

2. Proposed Adjustment for Cost-Of-Living 

in Alaska and Hawaii 

3. Proposed Adjustment for High-Cost 

Outliers 

a. Background 

b. Establishment of the Proposed FixedLoss Amount 

c. Reconciliation of Outlier Payments Upon 

Cost Report Settlement 

d. Application of Outlier Policy to ShortStay Outlier Cases 

4. Proposed Adjustments for Special Cases 

a. General 

b. Adjustment for Short-Stay Outlier Cases 

c. Proposed Extension of the Interrupted 

Stay Policy 

d. Onsite Discharges and Readmittances 

5. Other Payment Adjustments 

6. Proposed Budget Neutrality Offset to 

Account for the Transition Methodology 

7. Proposed Changes in the Procedure for 

Counting Days in the Average Length of 

Stay Calculation 

8. Clarification of the Requirements for a 

Satellite Facility or a Remote Location to 

Qualify as a LTCH and Proposed 

Changes to the Requirements for Certain 

Satellite Facilities and Remote Locations

V. Computing the Proposed Adjusted Federal 

Prospective Payments for the 2005 LTCH 

PPS Rate Year 

VI. Transition Period 

VII. Payments to New LTCHs 

VIII. Method of Payment 

IX. Monitoring 

X. Collection of Information Requirements 

XI. Regulatory Impact Analysis 

A. Introduction 

1. Executive Order 12866 

2. Regulatory Flexibility Act (RFA) 

3. Impact on Rural Hospitals 

4. Unfunded Mandates 

5. Federalism 

B. Anticipated Effects of Proposed Payment 

Rate Changes 

1. Budgetary Impact 

2. Impact on Providers 

3. Calculation of Prospective Payments 

4. Results 

5. Effect on the Medicare Program 

6. Effect on Medicare Beneficiaries 

C. Impact of Proposed Policy Changes 

1. Clarification of the Requirements for 

Satellite Facilities and Remote Locations 

of Hospitals to Qualify as Long-Term 

Care Hospitals 

a. Proposed Policy Change for Certain 

Satellite Facilities and Remote Locations 

of a Hospital 

b. Technical Correction 

2. Proposed Change in Interruption of a 

Stay in a LTCH Policy 

3. Proposed Change in Procedure for 

Counting Covered and Noncovered Days 

in a Stay that Crosses Two Consecutive 

Cost Reporting Periods 

D. Executive Order 12866 

Regulations Text 

Addendum—Tables 

Acronyms 

Because of the many terms to which we 

refer by acronym in this proposed rule, we 

are listing the acronyms used and their 

corresponding terms in alphabetical order 

below:

BBA Balanced Budget Act of 1997, Pub. L. 

105–33 

BBRA Medicare, Medicaid, and SCHIP 

[State Children’s Health Insurance 

Program] Balanced Budget Refinement Act 

of 1999, Pub. L. 106–113 

BIPA Medicare, Medicaid, and SCHIP [State 

Children’s Health Insurance Program] 

Benefits Improvement and Protection Act 

of 2000, Pub. L. 106–554 

CMS Centers for Medicare & Medicaid 

Services 

COPS Medicare conditions of participation 

DRGs Diagnosis-related groups 

FY Federal fiscal year 

HCRIS Hospital Cost Report Information 

System 

HHA Home health agency 

HIPAA Health Insurance Portability and 

Accountability Act, Pub. L. 104–191 

IPPS Acute Care Hospital Inpatient 

Prospective Payment System 

IRF Inpatient rehabilitation facility 

LTC–DRG Long-term care diagnosis-related 

group 

LTCH Long-term care hospital 

MedPAC Medicare Payment Advisory 

Commission 

MedPAR Medicare provider analysis and 

review file 

OSCAR Online Survey Certification and 

Reporting (System) 

PPS Prospective Payment System 

QIO Quality Improvement Organization 

(formerly Peer Review organization (PRO)) 

SNF Skilled nursing facility

TEFRA Tax Equity and Fiscal 

Responsibility Act of 1982, Pub. L. 97–248

I. Background 

(If you choose to comment on issues in 

this section, please include the caption 

‘‘BACKGROUND’’ at the beginning of 

your comments.) 

A. Legislative and Regulatory Authority 

The Medicare, Medicaid, and SCHIP 

(State Children’s Health Insurance 

Program) Balanced Budget Refinement 

Act of 1999 (BBRA) (Pub. L. 106–113) 

and the Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection 

Act of 2000 (BIPA) (Pub. L. 106–554) 

provide for payment for both the 

operating and capital-related costs of 

hospital inpatient stays in long-term 

care hospitals (LTCHs) under Medicare 

Part A based on prospectively set rates. 

The Medicare prospective payment 

system (PPS) for LTCHs applies to 

hospitals described in section 

1886(d)(1)(B)(iv) of the Social Security 

Act (the Act), effective for cost reporting 

periods beginning on or after October 1, 

2002. 

Section 1886(d)(1)(B)(iv)(I) of the Act 

defines a LTCH as ‘‘a hospital which has 

an average inpatient length of stay (as 

determined by the Secretary) of greater 

than 25 days.’’ Section 

1886(d)(1)(B)(iv)(II) of the Act also 

provides an alternative definition of 

LTCHs: specifically, a hospital that first 

received payment under section 1886(d) 

of the Act in 1986 and has an average 

inpatient length of stay (as determined 

by the Secretary) of greater than 20 days 

and has 80 percent or more of its annual 

Medicare inpatient discharges with a 

principal diagnosis that reflects a 

finding of neoplastic disease in the 12-

month cost reporting period ending in 

FY 1997. 

Section 123 of Pub. L. 106–113 

requires the PPS for LTCHs to be a per 

discharge system with a diagnosisrelated group (DRG) based patient 

classification system that reflects the 

differences in patient resources and 

costs in LTCHs while maintaining 

budget neutrality. 

Section 307(b)(1) of Pub. L. 106–554, 

among other things, mandates that the 

Secretary shall examine and may 

provide for adjustments to payments 

under the LTCH PPS, including 

adjustments to DRG weights, area wage 

adjustments, geographic reclassification, 

outliers, updates, and a disproportionate 

share adjustment. 

In a Federal Register document 

issued on August 30, 2002 (67 FR 

55954), we implemented the LTCH PPS 

authorized under Pub. L. 106–113 and 

4756 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

Pub. L. 106–554. This system uses 

information from LTCH patient records 

to classify patients into distinct longterm care diagnosis-related groups 

(LTC–DRGs) based on clinical 

characteristics and expected resource 

needs. Payments are calculated for each 

LTC–DRG and provisions are made for 

appropriate payment adjustments. 

Payment rates under the LTCH PPS are 

updated annually and published in the 

Federal Register. 

The LTCH PPS replaced the 

reasonable cost-based payment system 

under the Tax Equity and Fiscal 

Responsibility Act of 1982 (TEFRA), 

Pub. L. 97–248, for payments for 

inpatient services provided by a LTCH 

with a cost reporting period beginning 

on or after October 1, 2002. (The 

regulations implementing the TEFRA 

(reasonable cost-based) payment 

provisions are located at 42 CFR part 

413.) With the implementation of the 

prospective payment system for acute 

care hospitals authorized by the Social 

Security Amendments of 1983 (Pub. L. 

98–21), which added section 1886(d) to 

the Act, certain hospitals, including 

LTCHs, were excluded from the PPS for 

acute care hospitals and were paid their 

reasonable costs for inpatient services 

subject to a per discharge limitation or 

target amount under the TEFRA system. 

For each cost reporting period, a 

hospital-specific ceiling on payments 

was determined by multiplying the 

hospital’s updated target amount by the 

number of total current year Medicare 

discharges. The August 30, 2002, final 

rule further details payment policy 

under the TEFRA system (67 FR 55954).

In the August 30, 2002, final rule, we 

presented an in-depth discussion of the 

LTCH PPS, including the patient 

classification system, relative weights, 

payment rates, additional payments, 

and the budget neutrality requirements 

mandated by section 123 of Pub. L. 106–

113. The same final rule, that 

established regulations for the LTCH 

PPS under 42 CFR part 412, subpart O, 

also contained provisions related to 

covered inpatient services, limitation on 

charges to beneficiaries, medical review 

requirements, furnishing of inpatient 

hospital services directly or under 

arrangement, and reporting and 

recordkeeping requirements. 

We refer readers to the August 30, 

2002, final (67 FR 55954) rule for a 

comprehensive discussion of the 

research and data that supported the 

establishment of the LTCH PPS. 

On June 6, 2003, we published a final 

rule in the Federal Register (68 FR 

34122) that set forth the annual update 

of the payment rates for the Medicare 

PPS for inpatient hospital services 

furnished by LTCHs. It also changed the 

annual period for which the payment 

rates are effective. The annual updated 

rates are now effective from July 1 to 

June 30 instead of from October 1 

through September 30. We refer to this 

time period as a ‘‘long-term care 

hospital rate year’’ (LTCH PPS rate 

year). In addition, we changed the 

publication schedule for these updates 

to allow for an effective date of July 1. 

The payment amounts and factors used 

to determine the annual update of the 

Federal rates are based on a LTCH PPS 

rate year. The annual update of the 

LTC–DRG classifications and relative 

weights are linked to the annual 

adjustments of the acute care hospital 

inpatient diagnosis-related groups and 

are effective each October 1.

B. Criteria for Classification as a LTCH 

1. Classification as a LTCH 

Under the existing regulations at 

§§ 412.23(e)(1) and (2)(i), which 

implement section 1886(d)(1)(B)(iv)(I) of 

the Act, to qualify to be paid under the 

LTCH PPS, a hospital must have a 

provider agreement with Medicare and 

must have an average Medicare 

inpatient length of stay of greater than 

25 days. Alternatively, for cost reporting 

periods beginning on or after August 5, 

1997, a hospital that was first excluded 

from the PPS in 1986, and can 

demonstrate that at least 80 percent of 

its annual Medicare inpatient discharges 

in the 12-month cost reporting period 

ending in FY 1997 have a principal 

diagnosis that reflects a finding of 

neoplastic disease must have an average 

inpatient length of stay for all patients, 

including both Medicare and nonMedicare inpatients, of greater than 20 

days (§ 412.23(e)(2)(ii)). 

Existing § 412.23(e)(3) provides that 

the average Medicare inpatient length of 

stay is determined based on all covered 

and noncovered days of stay of 

Medicare patients as calculated by 

dividing the total number of covered 

and noncovered days of stay of 

Medicare inpatients (less leave or pass 

days) by the number of total Medicare 

discharges for the hospital’s most recent 

complete cost reporting period. Fiscal 

intermediaries verify that LTCHs meet 

the average length of stay requirements. 

We note that the inpatient days of a 

patient who is admitted to a LTCH 

without any remaining Medicare days of 

coverage, regardless of the fact that the 

patient is a Medicare beneficiary, will 

not be included in the above 

calculation. Because Medicare would 

not be paying for any of the patient’s 

treatment, the patient is not a ‘‘Medicare 

inpatient’’ and data on the patient’s stay 

would not be included in the Medicare 

claims processing systems. In order for 

both covered and noncovered days of a 

LTCH hospitalization to be included, for 

purposes of the average length of stay 

calculation, a patient admitted to the 

LTCH must have at least one remaining 

benefit day as described in § 409.61. 

The fiscal intermediary’s 

determination of whether or not a 

hospital qualifies as an LTCH is based 

on the hospital’s discharge data from its 

most recent cost reporting period and is 

effective at the start of the hospital’s 

next cost reporting period (§ 412.22(d)). 

If a hospital does not meet the length of 

stay requirement, the hospital may 

provide the intermediary with data 

indicating a change in the hospital’s 

average length of stay by the same 

method for the period of at least 5 

months of the immediately preceding 6-

month period (§ 412.23(e)(3)(ii)). (See 68 

FR 45464, August 1, 2003.) 

Requirements for hospitals seeking 

classification as LTCHs that have 

undergone a change in ownership, as 

described in § 489.18, are set forth in 

§ 412.23(e)(3)(iii). 

LTCHs that exist as hospitals-withinhospitals or satellite facilities of LTCHs 

must also meet the criteria set forth in 

§ 412.22(e) or § 412.22(h), respectively, 

for the LTCH to be excluded from the 

acute care hospital inpatient prospective 

payment system (IPPS) and paid under 

the LTCH PPS. 

2. Hospitals Excluded From the LTCH 

PPS 

The following hospitals are paid 

under special payment provisions, as 

described in § 412.22(c) and, therefore, 

are not subject to the LTCH PPS rules: 

• Veterans Administration hospitals. 

• Hospitals that are reimbursed 

under State cost control systems 

approved under 42 CFR part 403. 

• Hospitals that are reimbursed in 

accordance with demonstration projects 

authorized under section 402(a) of 

Public Law 90–248 (42 U.S.C. 1395b–1) 

or section 222(a) of Public Law 92–603 

(42 U.S.C. 1395b–1 (note)) (statewide 

all-payer systems, subject to the rate-ofincrease test at section 1814(b) of the 

Act). 

• Nonparticipating hospitals 

furnishing emergency services to 

Medicare beneficiaries. 

C. Transition Period for Implementation 

of the LTCH PPS

In the August 30, 2002, final rule, we 

provided for a 5-year transition period 

from reasonable cost-based 

reimbursement to fully Federal 

prospective payment for LTCHs (67 FR 

56038). During the 5-year period, two 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4757

payment percentages are to be used to 

determine a LTCH’s total payment 

under the PPS. The blend percentages 

are as follows:

Cost reporting periods beginning on or after 

Prospective

payment federal 

rate percentage 

Reasonable

cost-based

reimbursement

rate percentage 

October 1, 2002 ........................................................................................................................................... 20 80 

October 1, 2003 ........................................................................................................................................... 40 60 

October 1, 2004 ........................................................................................................................................... 60 40 

October 1, 2005 ........................................................................................................................................... 80 20 

October 1, 2006 ........................................................................................................................................... 100 0 

D. Limitation on Charges to 

Beneficiaries 

In the August 30, 2002, final rule, we 

presented an in-depth discussion of 

beneficiary liability under the LTCH 

prospective payment system (67 FR 

55974–55975). Under § 412.507, as 

consistent with other established 

hospital prospective payment systems, a 

LTCH may not bill a Medicare 

beneficiary for more than the deductible 

and coinsurance amounts as specified 

under §§ 409.82, 409.83, and 409.87 and 

for items and services as specified under 

§ 489.30(a), if the Medicare payment to 

the LTCH is the full LTC–DRG payment 

amount. However, under the LTCH PPS, 

Medicare will only pay for days for 

which the beneficiary has coverage until 

the short-stay outlier threshold is 

exceeded. (See section IV.C.4.b.) 

Therefore, if the Medicare payment was 

for a short-stay outlier case (§ 412.529) 

that was less than the full LTC–DRG 

payment amount because the 

beneficiary had insufficient remaining 

Medicare days, the LTCH could also 

charge the beneficiary for services 

delivered on those uncovered days. 

(§ 412.507). 

Since the origin of the Medicare 

system, the intent of our regulations has 

been to set limits on beneficiary liability 

and to clearly establish the 

circumstances under which the 

beneficiary would be required to assume 

responsibility for payment, that is, upon 

exhausting benefits described in 42 CFR 

part 409, subpart F. The discussion in 

the August 30, 2002, final rule was not 

meant to establish rates or payments for, 

or define, Medicare-eligible expenses. 

While we regulate beneficiary liability 

for coinsurance and deductibles for 

hospital stays that are covered by 

Medicare, payments from Medigap 

insurers to providers for inpatient 

hospital coverage after Medicare 

benefits are exhausted are not regulated 

by us. Furthermore, regulations 

beginning at § 403.200 and the 1991 

National Association of Insurance 

Commissioners (NAIC) Model 

Regulation for Medicare Supplemental 

Insurance, which was incorporated by 

reference into section 1882 of the Act, 

govern the relationship between 

Medigap insurers and beneficiaries. 

E. Health Insurance Portability and 

Accountability Act Compliance 

We note that as of October 16, 2002, 

a LTCH that was required to comply 

with the Administrative Simplification 

Standards under the Health Insurance 

Portability and Accountability Act 

(HIPAA) (Pub. L. 104–191) and that had 

not obtained an extension in 

compliance with the Administrative 

Compliance Act (Pub. L. 107–105) is 

obligated to comply with the standards 

for submitting claim forms to the 

LTCH’s Medicare fiscal intermediary (45 

CFR 162.1002 and 45 CFR 162.1102). 

Beginning October 16, 2003, LTCHs that 

obtained an extension and that are 

required to comply with the HIPAA 

Administrative Simplification 

Standards must start submitting 

electronic claims in compliance with 

the HIPAA regulations cited above, 

among others.

II. Summary of Major Contents of This 

Proposed Rule 

We are proposing an annual update of 

the payment rates for the Medicare PPS 

for inpatient hospital services provided 

by LTCHs for the 2005 LTCH PPS rate 

year. (The annual update of the LTC–

DRG classifications and relative weights 

for FY 2005 remains linked to the 

annual adjustments of the acute care 

hospital inpatient DRG system and will 

be effective October 1, 2004.) 

We are proposing an outlier threshold 

for July 1, 2004, through June 30, 2005, 

derived from the LTCH PPS rate year 

calculations. 

As discussed in section I.B.2. of this 

preamble, we are proposing a change in 

the procedure for counting the days in 

the inpatient average length of stay for 

hospitals to qualify as LTCHs. 

In section I.B.3. of this preamble, we 

discuss and clarify existing policies 

regarding the classification of a satellite 

facility, or a remote location, of a LTCH 

as an independent LTCH and propose 

new policies for certain satellite 

facilities and remote locations. 

In section IV.C.4.c. of this preamble, 

we are proposing to revise existing 

interrupted stay policy applicable under 

the LTCH PPS. 

III. Long-Term Care Diagnosis-Related 

Group (LTC–DRG) Classifications and 

Relative Weights 

(If you choose to comment on issues in 

this section, please include the caption 

‘‘LTC–DRG CLASSIFICATIONS AND 

RELATIVE WEIGHTS’’ at the beginning 

of your comments.) 

A. Background 

Section 123 of Pub. L. 106–113 

specifically requires that the PPS for 

LTCHs be a per discharge system with 

a DRG-based patient classification 

system reflecting the differences in 

patient resources and costs in LTCHs 

while maintaining budget neutrality. 

Section 307(b)(1) of Pub. L. 106–554 

modified the requirements of section 

123 of Pub. L. 106–113 by specifically 

requiring that the Secretary examine 

‘‘the feasibility and the impact of basing 

payment under such a system [the 

LTCH PPS] on the use of existing (or 

refined) hospital DRGs that have been 

modified to account for different 

resource use of LTCH patients as well as 

the use of the most recently available 

hospital discharge data.’’

In accordance with section 307(b)(1) 

of Pub. L. 106–554 and § 412.515 of our 

existing regulations, the LTCH PPS uses 

information from LTCH patient records 

to classify patient cases into distinct 

LTC–DRGs based on clinical 

characteristics and expected resource 

needs. The LTC–DRGs used as the 

patient classification component of the 

LTCH PPS correspond to the hospital 

inpatient DRGs in the IPPS. We apply 

weights to the existing hospital 

inpatient DRGs to account for the 

difference in resource use by patients 

exhibiting the case complexity and 

multiple medical problems 

characteristic of LTCHs. 

In a departure from the IPPS, we use 

low volume LTC–DRGs (less than 25 

4758 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

LTCH cases) in determining the LTC–

DRG weights, since LTCHs do not 

typically treat the full range of 

diagnoses as do acute care hospitals. In 

order to deal with the large number of 

low volume DRGs (all DRGs with fewer 

than 25 cases), we group low volume 

DRGs into 5 quintiles based on average 

charge per discharge. (A listing of the 

composition of low volume quintiles 

appears in the August 30, 2002, LTCH 

PPS final rule at 67 FR 55986.) We also 

take into account adjustments to 

payments for cases in which the stay at 

the LTCH is five-sixths of the geometric 

average length of stay and classify these 

cases as short-stay outlier cases. (A 

detailed discussion of the application of 

the Lewin Group model that was used 

to develop the LTC–DRGs appears in the 

August 30, 2002 LTCH PPS final rule at 

67 FR 55978.) 

B. Patient Classifications Into DRGs 

Generally, under the LTCH PPS, 

Medicare payment is made at a 

predetermined specific rate for each 

discharge; that payment varies by the 

LTC–DRG to which a beneficiary’s stay 

is assigned. Cases are classified into 

LTC–DRGs for payment based on the 

following six data elements: 

(1) Principal diagnosis. 

(2) Up to eight additional diagnoses. 

(3) Up to six procedures performed. 

(4) Age. 

(5) Sex. 

(6) Discharge status of the patient. 

Upon the discharge of the patient 

from a LTCH, the LTCH must assign 

appropriate diagnosis and procedure 

codes from the International 

Classification of Diseases, Ninth 

Revision, Clinical Modification (ICD–9–

CM). As of October 16, 2002, a LTCH 

that was required to comply with the 

HIPAA Administrative Simplification 

Standards and that had not obtained an 

extension in compliance with the 

Administrative Compliance Act (Pub. L. 

107–105) is obligated to comply with 

the standards at 45 CFR 162.1002 and 

45 CFR 162.1102. Completed claim 

forms are to be submitted to the LTCH’s 

Medicare fiscal intermediary.

Medicare fiscal intermediaries enter 

the clinical and demographic 

information into their claims processing 

systems and subject this information to 

a series of automated screening 

processes called the Medicare Code 

Editor (MCE). These screens are 

designed to identify cases that require 

further review before assignment into a 

DRG can be made. During this process, 

the following types of cases are selected 

for further development: 

• Cases that are improperly coded. 

(For example, diagnoses are shown that 

are inappropriate, given the sex of the 

patient. Code 68.6, Radical abdominal 

hysterectomy, would be an 

inappropriate code for a male.) 

• Cases including surgical procedures 

not covered under Medicare. (For 

example, organ transplant in a 

nonapproved transplant center.) 

• Cases requiring more information. 

(For example, ICD–9–CM codes are 

required to be entered at their highest 

level of specificity. There are valid 3-

digit, 4-digit, and 5-digit codes. That is, 

code 136.3, Pneumocystosis, contains 

all appropriate digits, but if it is 

reported with either fewer or more than 

4 digits, the claim will be rejected by the 

MCE as invalid.) 

• Cases with principal diagnoses that 

do not usually justify admission to the 

hospital. (For example, code 437.9, 

Unspecified cerebrovascular disease. 

While this code is valid according to the 

ICD–9–CM coding scheme, a more 

precise code should be used for the 

principal diagnosis.) 

After screening through the MCE, 

each claim will be classified into the 

appropriate LTC–DRG by the Medicare 

LTCH GROUPER. The LTCH GROUPER 

is specialized computer software based 

on the same GROUPER used by the 

IPPS. The GROUPER software was 

developed as a means of classifying 

each case into a DRG on the basis of 

diagnosis and procedure codes and 

other demographic information (age, 

sex, and discharge status). Following the 

LTC–DRG assignment, the Medicare 

fiscal intermediary will determine the 

prospective payment by using the 

Medicare PRICER program, which 

accounts for hospital-specific 

adjustments. As provided for under the 

IPPS, we provide an opportunity for the 

LTCH to review the LTC–DRG 

assignments made by the fiscal 

intermediary and to submit additional 

information within a specified 

timeframe (§ 412.513(c)). 

The GROUPER is used both to classify 

past cases in order to measure relative 

hospital resource consumption to 

establish the DRG weights and to 

classify current cases for purposes of 

determining payment. The records for 

all Medicare hospital inpatient 

discharges are maintained in the 

MedPAR file. The data in this file are 

used to evaluate possible DRG 

classification changes and to recalibrate 

the DRG weights during our annual 

update. DRG weights are based on data 

for the population of LTCH discharges, 

reflecting the fact that LTCH patients 

represent a different patient-mix than 

patients in short-term acute care 

hospitals.

C. Organization of DRGs 

The DRGs are organized into 25 Major 

Diagnostic Categories (MDCs), most of 

which are based on a particular organ 

system of the body; the remainder 

involve multiple organ systems (such as 

MDC 22, Burns). Accordingly, the 

principal diagnosis determines MDC 

assignment. Within most MDCs, cases 

are then divided into surgical DRGs and 

medical DRGs. Surgical DRGs are 

assigned based on a surgical hierarchy 

that orders operating room (O.R.) 

procedures or groups of O.R. procedures 

by resource intensity. The GROUPER 

does not recognize all ICD–9–CM 

procedure codes as procedures that 

affect DRG assignment, that is, 

procedures which are not surgical (for 

example, EKG), or minor surgical 

procedures (for example, 86.11, Biopsy 

of skin and subcutaneous tissue). 

The medical DRGs are generally 

differentiated on the basis of diagnosis. 

Both medical and surgical DRGs may be 

further differentiated based on age, sex, 

discharge status, and presence or 

absence of complications or 

comorbidities (CC). We note that CCs 

are defined by certain secondary 

diagnoses not related to, or not 

inherently a part of, the disease process 

identified by the principal diagnosis. 

(For example, the GROUPER would not 

recognize a code from the 800.0x series, 

Skull fracture, as a CC when combined 

with principal diagnosis 850.4, 

Concussion with prolonged loss of 

consciousness, without return to 

preexisting conscious level.) In 

addition, we note that the presence of 

additional diagnoses does not 

automatically generate a CC, as not all 

DRGs recognize a comorbid or 

complicating condition in their 

definition. (For example, DRG 466, 

Aftercare without History of Malignancy 

as Secondary Diagnosis, is based solely 

on the principal diagnosis, without 

consideration of additional diagnoses 

for DRG determination.) 

In its June 2000 Report to Congress, 

MedPAC recommended that the 

Secretary ‘‘* * * improve the hospital 

inpatient prospective payment system 

by adopting, as soon as practicable, 

diagnosis-related group refinements that 

more fully capture differences in 

severity of illness among patients.’’

(Recommendation 3A, p. 63) We have 

determined it is not practical at this 

time to develop a refinement to 

inpatient hospital DRGs based on 

severity due to time and resource 

requirements. However, this does not 

preclude us from development of a 

severity-adjusted DRG refinement in the 

future. That is, a refinement to the list 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4759

of comorbidities and complications 

could be incorporated into the existing 

DRG structure. It is also possible a more 

comprehensive severity adjusted 

structure may be created if a new code 

set is adopted. That is, if ICD–9–CM is 

replaced by ICD–10–CM (for diagnostic 

coding) and ICD–10–PCS (for procedure 

coding) or by other code sets, a severity 

concept may be built into the resulting 

DRG assignments. Of course any change 

to the code set would be adopted 

through the process established in the 

HIPAA Administrative Simplification 

Standards provisions. 

D. Update of LTC–DRGs 

For FY 2004, the LTC–DRG patient 

classification system was based on 

LTCH data from the FY 2002 MedPAR 

file, which contained hospital bills data 

from the December 2002 update. The 

patient classification system consisted 

of 518 DRGs that formed the basis of the 

FY 2004 LTCH PPS GROUPER. The 518 

LTC–DRGs included two ‘‘error DRGs’’. 

As in the IPPS, we included two error 

DRGs in which cases that cannot be 

assigned to valid DRGs will be grouped. 

These two error DRGs are DRG 469 

(Principal Diagnosis Invalid as a 

Discharge Diagnosis) and DRG 470 

(Ungroupable). (See the August 1, 2001, 

Medicare Program final rule, Changes to 

the Hospital Inpatient Prospective 

Payment Systems and Rates and Costs of 

Graduate Medical Education; Fiscal 

Year 2002 Rates (66 FR 40062).) The 

other 516 LTC–DRGs are the same DRGs 

used in the IPPS GROUPER for FY 2004 

(Version 21.0). 

In the health care industry, annual 

changes to the ICD–9–CM codes are 

effective for discharges occurring on or 

after October 1 each year. Thus, the 

manual and electronic versions of the 

GROUPER software, which are based on 

the ICD–9–CM codes, are also revised 

annually and effective for discharges 

occurring on or after October 1 each 

year. As discussed earlier, the patient 

classification system for the LTCH PPS 

(LTC–DRGs) is based on the IPPS 

patient classification system (CMS–

DRGs), which is updated annually and 

effective for discharges occurring on or 

after October 1 through September 30 

each year. The updated DRGs and 

GROUPER software are based on the 

latest revision to the ICD–9–CM codes, 

which are published annually in the 

IPPS proposed rule and final rule. The 

new or revised ICD–9–CM codes are not 

used by the industry for either the IPPS 

or the LTCH PPS until the beginning of 

the next Federal fiscal year (effective for 

discharges occurring on or after October 

1 through September 30). (The use of 

the ICD–9–CM codes in this manner is 

consistent with current usage and the 

HIPAA regulations.) October 1 is also 

when the changes to the CMS–DRGs 

and the next version of the GROUPER 

software becomes effective.

As indicated in the June 3, 2002, 

LTCH PPS and the August 1, 2003, IPPS 

final rules (68 FR 34122 and 68 FR 

45374), we make the annual update to 

the LTCH PPS effective from July 1 

through June 30 each year. As a result, 

the LTCH PPS uses two GROUPERS 

during the course of a 12-month period: 

one GROUPER for 3 months (from July 

1 through September 30); and an 

updated GROUPER for 9 months (from 

October 1 through June 30). The need to 

use two GROUPERs is based upon the 

October 1 effective date of the updated 

ICD–9–CM coding system. As 

previously discussed, new ICD–9–CM 

codes may result in changes to the 

structure of the DRGs. In order for the 

industry to be on the same schedule (for 

both the IPPS and the LTCH PPS) for the 

use of the most current ICD–9–CM 

codes, it is necessary for us to apply two 

GROUPER programs to the LTCH PPS. 

LTCHs will continue to code diagnosis 

and procedures using the most current 

version of the ICD–9–CM coding system. 

Currently, for Federal FY 2004, we are 

using Version 21.0 of the GROUPER 

software for both the IPPS and the LTCH 

PPS. Discharges beginning on October 1, 

2003, and before October 1, 2004 

(Federal FY 2004), will use Version 21.0 

of the GROUPER software for both the 

IPPS and the LTCH PPS. Thus, changes 

to the CMS–DRGs (the DRGs on which 

the LTC–DRGs are based) and their 

relative weights, as well as the LTC–

DRGs and their relative weights, that 

will be effective for October 1, 2004, 

through September 30, 2005, will be 

presented in the IPPS FY 2005 proposed 

rule that will be published in the 

Federal Register in the spring of 2004 

and finalized in a final rule to be 

published by August 1, 2004. 

Accordingly, we will notify LTCHs of 

any revised LTC–DRG relative weights 

based on the final DRGs and the 

applicable GROUPER version for the 

IPPS that will be effective October 1, 

2004. 

E. ICD–9–CM Coding System 

1. Uniform Hospital Discharge Data Set 

(UHDDS) Definitions 

Because the assignment of a case to a 

particular LTC–DRG will help 

determine the amount that will be paid 

for the case, it is important that the 

coding is accurate. Classifications and 

terminology used in the LTCH PPS are 

consistent with the ICD–9–CM and the 

UHDDS, as recommended to the 

Secretary by the National Committee on 

Vital and Health Statistics (‘‘Uniform 

Hospital Discharge Data: Minimum Data 

Set, National Center for Health 

Statistics, April 1980’’) and as revised in 

1984 by the Health Information Policy 

Council (HIPC) of the U.S. Department 

of Health and Human Services. 

We point out that the ICD–9–CM 

coding terminology and the definitions 

of principal and other diagnoses of the 

UHDDS are consistent with the 

requirements of the HIPAA 

Administrative Simplification Act of 

1996 (45 CFR Part 162). Furthermore, 

the UHDDS has been used as a standard 

for the development of policies and 

programs related to hospital discharge 

statistics by both governmental and 

nongovernmental sectors for over 30 

years. In addition, the following 

definitions (as described in the 1984 

Revision of the UHDDS, approved by 

the Secretary of Health and Human 

Services for use starting January 1986) 

are requirements of the ICD–9–CM 

coding system, and have been used as 

a standard for the development of the 

CMS–DRGs:

• Diagnoses include all diagnoses that 

affect the current hospital stay. 

• Principal diagnosis is defined as the 

condition established after study to be 

chiefly responsible for occasioning the 

admission of the patient to the hospital 

for care. 

• Other diagnoses (also called 

secondary diagnoses or additional 

diagnoses) are defined as all conditions 

that coexist at the time of admission, 

that develop subsequently, or that affect 

the treatment received or the length of 

stay or both. Diagnoses that relate to an 

earlier episode of care that have no 

bearing on the current hospital stay are 

excluded. 

• All procedures performed will be 

reported. This includes those that are 

surgical in nature, carry a procedural 

risk, carry an anesthetic risk, or require 

specialized training. 

We provide LTCHs with a 60-day 

window after the date of the notice of 

the initial LTC–DRG assignment to 

request review of that assignment. 

Additional information may be 

provided by the LTCH to the fiscal 

intermediary as part of that review. 

2. Maintenance of the ICD–9–CM 

Coding System 

The ICD–9–CM Coordination and 

Maintenance (C&M) Committee is a 

Federal interdepartmental committee, 

co-chaired by the National Center for 

Health Statistics (NCHS) and CMS, that 

is charged with maintaining and 

updating the ICD–9–CM system. The 

C&M Committee is jointly responsible 

4760 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

for approving coding changes, and 

developing errata, addenda, and other 

modifications to the ICD–9–CM to 

reflect newly developed procedures and 

technologies and newly identified 

diseases. The C&M Committee is also 

responsible for promoting the use of 

Federal and non-Federal educational 

programs and other communication 

techniques with a view toward 

standardizing coding applications and 

upgrading the quality of the 

classification system. 

The NCHS has lead responsibility for 

the ICD–9–CM diagnosis codes included 

in the Tabular List and Alphabetic 

Index for Diseases, while CMS has lead 

responsibility for the ICD–9–CM 

procedure codes included in the 

Tabular List and Alphabetic Index for 

Procedures. 

The C&M Committee encourages 

participation by health-related 

organizations in the above process and 

holds public meetings for discussion of 

educational issues and proposed coding 

changes twice a year at the CMS Central 

Office located in Baltimore, Maryland. 

The agenda and dates of the meetings 

can be accessed on the CMS Web site at: 

http://www.cms.gov/paymentsystems/

icd9.

All changes to the ICD–9–CM coding 

system affecting DRG assignment are 

addressed annually in the IPPS 

proposed and final rules. Because the 

DRG-based patient classification system 

for the LTCH PPS is based on the IPPS 

DRGs, these changes will also affect the 

LTCH PPS LTC–DRG patient 

classification system. 

As discussed above, the ICD–9–CM 

coding changes that have been adopted 

by the C&M Committee become effective 

at the beginning of each Federal fiscal 

year, October 1. Regardless of the 

annual update of the LTCH PPS on July 

1 of each year, coders will use the most 

current updated ICD–9–CM coding 

book, which is effective from October 1 

through September 30 of each year. This 

means that coders and LTCHs that use 

the updated ICD–9–CM coding system 

will be on the same schedule (effective 

October 1) as the rest of the health care 

industry. The newest version of ICD–9–

CM is not available for use until October 

1 of each year, which is 5 months after 

the date that we publish the LTCH 

annual payment rate update final rule. 

The new codes on which the LTC–DRGs 

are based will go into effect and be 

available for use for discharges 

occurring on or after October 1 through 

September 30 of each year. This annual 

schedule of the revision to the ICD–9–

CM coding system and the change of the 

ICD–9–CM coding books or electronic 

coding programs has been in effect since 

the adoption of Revision 9 of the ICD in 

1979. 

Of particular note to LTCHs will be 

the invalid diagnosis codes (Table 6C) 

and the invalid procedure codes (Table 

6D) located in the annual proposed and 

final rules for the IPPS. Claims with 

invalid codes will not be processed by 

the Medicare claims processing system. 

3. Coding Rules and Use of ICD–9–CM 

Codes in LTCHs 

We emphasize the need for proper 

coding by LTCHs. Inappropriate coding 

of cases can adversely affect the 

uniformity of cases in each LTC-DRG 

and produce inappropriate weighting 

factors at recalibration. We continue to 

urge LTCHs to focus on improved 

coding practices. Because of concerns 

raised by LTCHs concerning correct 

coding, we have asked the American 

Hospital Association (AHA) to provide 

additional clarification or instruction on 

proper coding in the LTCH setting. The 

AHA will provide this instruction via 

their established process of addressing 

questions through their publication 

‘‘Coding Clinic for ICD–9–CM’’. Written 

questions or requests for clarification 

may be addressed to the Central Office 

on ICD–9–CM, American Hospital 

Association, One North Franklin, 

Chicago, IL 60606. A form for the 

question(s) is available to be 

downloaded and mailed on AHA’s Web 

site at: http://www.ahacentraloffice.org.

In addition, current coding guidelines 

are available at the National Center for 

Health Statistics (NCHS) Web site: 

www.cdc.gov/nchs.icd9.htm.

In conjunction with the cooperating 

parties (AHA, the American Health 

Information Management Association 

(AHIMA), and NCHS), we have 

reviewed actual medical records and are 

concerned about the quality of the 

documentation under the LTCH PPS, as 

was the case at the beginning of the 

IPPS. We fully believe that, with 

experience, the quality of the 

documentation and coding will 

improve, just as it did for the IPPS. As 

noted above, the cooperating parties 

have plans to assist their members with 

improvement in documentation and 

coding issues for the LTCHs through 

specific questions and coding 

guidelines. The importance of good 

documentation is emphasized in the 

revised ICD–9–CM Official Guidelines 

for Coding and Reporting (October 1, 

2002): ‘‘A joint effort between the 

attending physician and coder is 

essential to achieve complete and 

accurate documentation, code 

assignment, and reporting of diagnoses 

and procedures. The importance of 

consistent, complete documentation in 

the medical record cannot be 

overemphasized. Without such 

documentation, the application of all 

coding guidelines is a difficult, if not 

impossible, task. (Coding Clinic for 

ICD–9–CM, Fourth Quarter 2002, page 

115)

To improve medical record 

documentation, LTCHs should be aware 

that if the patient is being admitted for 

continuation of treatment of an acute or 

chronic condition, guidelines at Section 

I.B.10 of the Coding Clinic for ICD–9–

CM, Fourth Quarter 2002 (page 129) are 

applicable concerning selection of 

principal diagnosis. To clarify coding 

advice issued in the August 30, 2002, 

final rule (67 FR 55979–55981), we 

would like to point out that at Guideline 

I.B.12, Late Effects, a late effect is 

considered to be the residual effect 

(condition produced) after the acute 

phase of an illness or injury has 

terminated (Coding Clinic for ICD–9–

CM, Fourth Quarter 2002, page 129). 

Regarding whether a LTCH should 

report the ICD–9–CM code(s) for an 

unresolved acute condition instead of 

the code(s) for late effect of 

rehabilitation, we emphasize that each 

case must be evaluated on its unique 

circumstances and coded appropriately. 

Depending on the documentation in the 

medical record, either a code reflecting 

the acute condition or rehabilitation 

could be appropriate in a LTCH. 

Since implementation of the LTCH 

PPS, our Medicare fiscal intermediaries 

have been conducting training and 

providing assistance to LTCHs in correct 

coding. We have also issued manuals 

containing procedures as well as coding 

instructions to LTCHs and fiscal 

intermediaries. We will continue to 

conduct such training and provide 

guidance on an as-needed basis. We also 

refer readers to the detailed discussion 

on correct coding practices in the 

August 30, 2002, LTCH PPS final rule 

(67 FR 55979–55981). Additional coding 

instructions and examples will be 

published in Coding Clinic for ICD–9–

CM. 

F. The Method for Updating the LTCDRG Relative Weights 

As discussed in the June 6, 2003, 

LTCH PPS final rule (68 FR 34131), 

under the LTCH PPS each LTCH will 

receive a payment that represents an 

appropriate amount for the efficient 

delivery of care to Medicare patients. 

The system must be able to account 

adequately for each LTCH’s case-mix in 

order to ensure both fair distribution of 

Medicare payments and access to 

adequate care for those Medicare 

patients whose care is more costly. 

Therefore, in accordance with section 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4761

412.523(c), we adjust the standard 

Federal PPS rate by the LTC–DRG 

relative weights in determining payment 

to LTCHs for each case. 

Under this payment system, relative 

weights for each LTC–DRG are a 

primary element used to account for the 

variations in cost per discharge and 

resource utilization among the payment 

groups (section 412.515). To ensure that 

Medicare patients who are classified to 

each LTC–DRG have access to an 

appropriate level of services and to 

encourage efficiency, we calculate a 

relative weight for each LTC–DRG that 

represents the resources needed by an 

average inpatient LTCH case in that 

LTC–DRG. For example, cases in a LTC–

DRG with a relative weight of 2 will, on 

average, cost twice as much as cases in 

a LTC–DRG with a weight of 1. 

As we discussed in the August 1, 

2003, IPPS final rule (68 FR 45374–

45384), the LTC–DRG relative weights 

effective under the LTCH PPS for 

Federal FY 2004 were calculated using 

the December 2002 update of FY 2002 

MedPAR data and Version 21.0 of the 

CMS GROUPER software. We use total 

days and total charges in the calculation 

of the LTC–DRG relative weights. 

By nature, LTCHs often specialize in 

certain areas, such as ventilatordependent patients and rehabilitation 

and wound care. Some case types 

(DRGs) may be treated, to a large extent, 

in hospitals that have, from a 

perspective of charges, relatively high 

(or low) charges. Such distribution of 

cases with relatively high (or low) 

charges in specific LTC–DRGs has the 

potential to inappropriately distort the 

measure of average charges. To account 

for the fact that cases may not be 

randomly distributed across LTCHs, we 

use a hospital-specific relative value 

method to calculate relative weights. We 

believe this method removes this 

hospital-specific source of bias in 

measuring average charges. Specifically, 

we reduce the impact of the variation in 

charges across providers on any 

particular LTC–DRG relative weight by 

converting each LTCH’s charge for a 

case to a relative value based on that 

LTCH’s average charge. (See the August 

1, 2003, IPPS final rule (68 FR 45376) 

for further information on the hospitalspecific relative value methodology.) 

In order to account for LTC–DRGs 

with low volume (that is, with fewer 

than 25 LTCH cases), we grouped those 

low volume LTC–DRGs into one of five 

categories (quintiles) based on average 

charges, for the purposes of determining 

relative weights. For FY 2004 based on 

the FY 2002 MedPAR data, we 

identified 173 LTC–DRGs that contained 

between 1 and 24 cases. This list of low 

volume LTC–DRGs was then divided 

into one of the five low volume 

quintiles, each containing a minimum of 

34 LTC–DRGs (173/5 = 34 with 1 LTC–

DRG as a remainder). Each of the low 

volume LTC–DRGs grouped to a specific 

quintile received the same relative 

weight and average length of stay using 

the formula applied to the regular LTC–

DRGs (25 or more cases), as described 

below. (See the August 1, 2003, final 

rule (68 FR 45376–45380) for further 

explanation of the development and 

composition of each of the five low 

volume quintiles for FY 2004.)

After grouping the cases in the 

appropriate LTC–DRG, we calculate the 

relative weights by first removing 

statistical outliers and cases with a 

length of stay of 7 days or less. Next, we 

adjust the number of cases in each LTC–

DRG for the effect of short-stay outlier 

cases under § 412.529. The short-stay 

adjusted discharges and corresponding 

charges were used to calculate ‘‘relative 

adjusted weights’’ in each LTC–DRG 

using the hospital-specific relative value 

method described above. (See August 1, 

2003, final rule (68 FR 45376–45385) for 

further details on the steps for 

calculating the LTC–DRG relative 

weights.) 

We also adjust the LTC–DRG relative 

weights to account for 

nonmonotonically increasing relative 

weights. That is, we make an adjustment 

if cases classified to the LTC–DRG ‘‘with 

comorbidities (CCs)’’ of a ‘‘with CC’’/

‘‘without CC’’ pair had a lower average 

charge than the corresponding LTC–

DRG ‘‘without CCs’’ by assigning the 

same weight to both LTC–DRGs in the 

‘‘with CC’’/‘‘without CC’’ pair. (See

August 1, 2003, final rule, 68 FR 45381–

45382.) In addition, of the 518 LTC–

DRGs in the LTCH PPS for FY 2004, 

based on the FY 2002 MedPAR data, we 

identified 167 LTC–DRGs for which 

there were no LTCH cases in the 

database. That is, no patients who 

would have been classified to those 

DRGs were treated in LTCHs during FY 

2002 and, therefore, no charge data were 

reported for those DRGs. Thus, in the 

process of determining the relative 

weights of LTC–DRGs, we were unable 

to determine weights for these 167 LTC–

DRGs using the method described 

above. However, since patients with a 

number of the diagnoses under these 

LTC–DRGs may be treated at LTCHs 

beginning in FY 2004, we assigned 

relative weights to each of the 167 ‘‘no 

volume’’ LTC–DRGs based on clinical 

similarity and relative costliness to one 

of the remaining 351 (518 ¥ 167 = 351) 

LTC–DRGs for which we were able to 

determine relative weights, based on the 

FY 2002 claims data. (A list of the no 

volume LTC–DRGs and further 

explanation of their relative weight 

assignment can be found in the August 

1, 2003, IPPS final rule (68 FR 45374–

45385).) 

Furthermore, for FY 2004 we 

established LTC–DRG relative weights 

of 0.0000 for heart, kidney, liver, lung, 

pancreas, and simultaneous pancreas/

kidney transplants (LTC–DRGs 103, 302, 

480, 495, 512 and 513, respectively) 

because Medicare will only cover these 

procedures if they are performed at a 

hospital that has been certified for the 

specific procedures by Medicare and 

presently no LTCH has been so certified. 

If in the future, however, a LTCH 

applies for certification as a Medicareapproved transplant center, we believe 

that the application and approval 

procedure would allow sufficient time 

for us to propose appropriate weights 

for the LTC–DRGs effected. At the 

present time, though, we include these 

six transplant LTC–DRGs in the 

GROUPER program for administrative 

purposes. As the LTCH PPS uses the 

same GROUPER program for LTCHs as 

is used under the IPPS, removing these 

DRGs would be administratively 

burdensome.

As we stated in the August 1, 2003, 

IPPS final rule, we will continue to use 

the same LTC–DRGs and relative 

weights for FY 2004 until October 1, 

2004. Accordingly, Table 3 in the 

Addendum to this proposed rule lists 

the LTC–DRGs and their respective 

relative weights and arithmetic mean 

length of stay that we will continue to 

use for the period of July 1, 2004, 

through September 30, 2004. (This table 

is the same as Table 3 of the Addendum 

to the August 1, 2003, IPPS final rule 

(68 FR 45650–45658), except that it 

includes the proposed five-sixth of the 

average length of stay for short-stay 

outliers under § 412.529.) As we noted 

earlier, the final DRGs and GROUPER 

for FY 2005 that will be used for the 

IPPS and the LTCH PPS, effective 

October 1, 2004, will be presented in the 

IPPS FY 2005 proposed and final rule in 

the Federal Register. 

Accordingly, we will notify LTCHs of 

the revised LTC–DRG relative weights 

for use in determining payments for 

discharges occurring between October 1, 

2004, and September 30, 2005, based on 

the final DRGs and the applicable 

GROUPER version that will be 

published in the IPPS rule by August 1, 

2004. 

IV. Proposed Changes to the LTCH PPS 

Rates and Proposed Changes in Policy 

for the 2005 LTCH PPS Rate Year 

(If you choose to comment on issues in 

this section, please include the caption 

4762 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

‘‘PROPOSED CHANGES TO LTCH PPS 

RATES AND POLICY FOR THE 2005 

LTCH PPS RATE YEAR’’ at the 

beginning of your comments.) 

A. Overview of the Development of the 

Payment Rates 

The LTCH PPS was effective for a 

LTCH’s first cost reporting period 

beginning on or after October 1, 2002. 

Effective with that cost reporting period, 

LTCHs are paid, during a 5-year 

transition period, on the basis of an 

increasing proportion of the LTCH PPS 

Federal rate and a decreasing proportion 

of a hospital’s payment under 

reasonable cost-based payment system, 

unless the hospital makes a one-time 

election to receive payment based on 

100 percent of the Federal rate (see

§ 412.533). New LTCHs (as defined at 

§ 412.23(e)(4)) are paid based on 100 

percent of the Federal rate, with no 

phase-in transition payments. 

The basic methodology for 

determining LTCH PPS Federal 

prospective payment rates is set forth in 

the regulations at §§ 412.515 through 

412.532. Below we discuss the proposed 

factors used to update the LTCH PPS 

standard Federal rate for the 2005 LTCH 

PPS rate year that will be effective for 

LTCHs discharges occurring on or after 

July 1, 2004, through June 30, 2005. 

When we implemented the LTCH PPS 

in the August 30, 2002, final rule (67 FR 

56029–56031), we computed the LTCH 

PPS standard Federal payment rate for 

FY 2003 by updating the best available 

(FY 1998 or FY 1999) Medicare 

inpatient operating and capital costs per 

case data, using the excluded hospital 

market basket. 

Section 123(a)(1) of Pub. L. 106–113 

requires that the PPS developed for 

LTCHs be budget neutral. Therefore, in 

calculating the standard Federal rate 

under § 412.523(d)(2), we set total 

estimated PPS payments equal to 

estimated payments that would have 

been made under the reasonable costbased payment methodology had the 

PPS for LTCHs not been implemented. 

Section 307(a) of Pub. L. 106–554 

specified that the increases to the 

hospital-specific target amounts and cap 

on the target amounts for LTCHs for FY 

2002 provided for by section 307(a)(1) of 

Pub. L. 106–554 shall not be taken into 

account in the development and 

implementation of the LTCH PPS. In 

addition, the statute as amended by 

section 122 of Pub. L. 106–113 provides 

for enhanced bonus payments for 

LTCHs for 2 years, FY 2001 and FY 

2002. Furthermore, as specified at 

§ 412.523(d)(1), the standard Federal 

rate is reduced by an adjustment factor 

to account for the estimated proportion 

of outlier payments under the LTCH 

PPS to total LTCH PPS payments (8 

percent). For further details on the 

development of the FY 2003 standard 

Federal rate, see the August 30, 2002, 

final rule (67 FR 56027–56037) and for 

the 2004 LTCH PPS rate year rate, see

the June 6, 2003, final rule (68 FR 

34122–34190).

Under the existing regulations at 

§ 412.523(c)(3)(ii), we update the 

standard Federal rate annually to adjust 

for the most recent estimate of the 

projected increases in prices for LTCH 

inpatient hospital services. 

B. Proposed Update to the Standard 

Federal Rate for the 2005 LTCH PPS 

Rate Year 

As established in the June 6, 2003, 

final rule (68 FR 34122), based on the 

most recent estimate of the excluded 

hospital with capital market basket, 

adjusted to account for the change in the 

LTCH PPS rate year update cycle, the 

LTCH PPS standard Federal rate 

effective from July 1, 2003, through June 

30, 2004, (the 2004 LTCH PPS rate year), 

is $35,726.18. 

In the discussion that follows, we 

explain how we developed the proposed 

standard Federal rate for the 2005 LTCH 

PPS rate year. The proposed standard 

Federal rate for the 2005 LTCH PPS rate 

year would be calculated based on the 

proposed update factor of 1.029. Thus, 

we estimate that the proposed standard 

Federal rate for the 2005 LTCH PPS rate 

year would increase 2.9 percent 

compared to the 2004 LTCH PPS rate 

year standard Federal rate. 

1. Proposed Standard Federal Rate 

Update 

Under § 412.523, the annual update to 

the LTCH PPS standard Federal rate 

must be equal to the percentage change 

in the excluded hospital with capital 

market basket (described in further 

detail below). As we discussed in the 

August 30, 2002, final rule (67 FR 

56087), in the future we may propose to 

develop a framework to update 

payments to LTCHs that would account 

for other appropriate factors that affect 

the efficient delivery of services and 

care provided to Medicare patients. As 

we discussed in the June 6, 2003, final 

rule (68 FR 34122), because the LTCH 

PPS has only been implemented for less 

than 2 years (for cost reporting periods 

beginning on or after October 1, 2002), 

we have not yet collected sufficient data 

to allow for the analysis and 

development of an update framework 

under the LTCH PPS. Therefore, we are 

not proposing an update framework for 

the 2005 LTCH PPS rate year in this 

proposed rule. However, we noted that 

a conceptual basis for the proposal of 

developing an update framework in the 

future can be found in Appendix B of 

the August 30, 2002, final rule (67 FR 

56086–56090). 

a. Description of the Proposed Market 

Basket for LTCHs for the 2005 LTCH 

PPS Rate Year 

A market basket has historically been 

used in the Medicare program to 

account for price increases of the 

services furnished by providers. The 

market basket used for the LTCH PPS 

includes both operating and capitalrelated costs of LTCHs because the 

LTCH PPS uses a single payment rate 

for both operating and capital-related 

costs. The development of the LTCH 

PPS standard Federal rate is discussed 

in further detail in the August 30, 2002, 

final rule (67 FR 56027–56037). 

Under the reasonable cost-based 

payment system, the excluded hospital 

market basket was used to update the 

hospital-specific limits on payment for 

operating costs of LTCHs. The excluded 

hospital market basket is based on 

operating costs from FY 1992 cost report 

data and includes data from Medicareparticipating long-term care, 

rehabilitation, psychiatric, cancer, and 

children’s hospitals. Since LTCHs’ costs 

are included in the excluded hospital 

market basket, this market basket index, 

in part, also reflects the costs of LTCHs. 

However, in order to capture the total 

costs (operating and capital-related) of 

LTCHs, we added a capital component 

to the excluded hospital market basket 

for use under the LTCH PPS. We refer 

to this index as the excluded hospital 

with capital market basket. 

As we discussed in the August 30, 

2002, final rule (67 FR 56016 and 

56086), beginning with the 

implementation of the LTCH PPS in FY 

2003, the excluded hospital with capital 

market basket based on FY 1992 

Medicare cost report data has been used 

for updating payments to LTCHs. In the 

June 6, 2003, final rule (68 FR 34137), 

we revised and rebased the excluded 

hospital with capital market basket, 

using more recent data, that is, using FY 

1997 base year data beginning with the 

2004 LTCH PPS rate year. (For further 

details on the development of the FY 

1997-based LTCH PPS market basket, 

see the June 6, 2003, final rule (68 FR 

34134–34137).

In the August 30, 2002, LTCH PPS 

final rule (67 FR 56016 and 56085–

56086), we discussed why we believe 

the excluded hospital with capital 

market basket provides a reasonable 

measure of the price changes facing 

LTCHs. However, as we discussed in the 

June 6, 2003, final rule (68 FR 34137), 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4763

we have been researching the feasibility 

of developing a market basket specific to 

LTCH services. This research has 

included analyzing data sources for cost 

category weights, specifically the 

Medicare cost reports, and investigating 

other data sources on cost, expenditure, 

and price information specific to 

LTCHs. Based on this research, we did 

not develop a market basket specific to 

LTCH services. 

As we also discussed in the June 6, 

2003, final rule (68 FR 34137), our 

analysis of the Medicare cost reports 

indicates that the distribution of costs 

among major cost report categories 

(wages, pharmaceuticals, capital) for 

LTCHs is not substantially different 

from the 1997-based excluded hospital 

with capital market basket. Data on 

other major cost categories (benefits, 

blood, contract labor) that we would 

like to analyze were excluded by many 

LTCHs in their Medicare cost reports. 

An analysis based on only the data 

available to us for these cost categories 

presented a potential problem since no 

other major cost category weight would 

be based on LTCH data. 

Furthermore, as we also discussed in 

that same final rule (68 FR 34137), we 

conducted a sensitivity analysis of 

annual percent changes in the market 

basket when the weights for wages, 

pharmaceuticals, and capital in LTCHs 

were substituted into the excluded 

hospital with capital market basket. 

Other cost categories were recalibrated 

using ratios available from the IPPS 

market basket. On average between FY 

1995 and FY 2002, the excluded 

hospital with capital market basket 

shows increases at nearly the same 

average annual rate (2.9 percent) as the 

market basket with LTCH weights for 

wages, pharmaceuticals, and capital (2.8 

percent). This difference is less than the 

0.25 percentage point criterion that 

determines whether a forecast error 

adjustment is warranted under the IPPS 

update framework. 

We continue to believe that an 

excluded hospital with capital market 

basket adequately reflects the price 

changes facing LTCHs. We continue to 

solicit comments about issues particular 

to LTCHs that should be considered in 

relation to the FY 1997-based excluded 

hospital with capital market basket and 

to encourage suggestions for additional 

data sources that may be available. 

Accordingly, in this proposed rule, we 

are proposing to use the FY 1997-based 

excluded hospital with capital market 

basket as the LTCH PPS market basket 

for determining the proposed update to 

the LTCH PPS standard Federal rate for 

the 2005 LTCH PPS rate year. 

b. Proposed LTCH Market Basket 

Increase for the 2005 LTCH Rate Year 

As we discussed in the June 6, 2003, 

final rule (68 FR 34137), for LTCHs paid 

under the LTCH PPS, we stated that the 

2004 rate year update would apply to 

discharges occurring from July 1, 2003, 

through June 30, 2004. Because we 

changed the timeframe of the LTCH PPS 

standard Federal rate annual update 

from October 1 to July 1, as we 

explained in that same final rule, we 

calculated an update factor that 

reflected that change in the update 

cycle. For the update to the 2004 LTCH 

PPS rate year, we calculated the 

estimated increase between FY 2003 

and the 2004 LTCH PPS rate year (July 

1, 2003, through June 30, 2004). 

Accordingly, based on Global Insight’s 

forecast of the revised and rebased FY 

1997-based excluded hospital with 

capital market basket using data from 

the fourth quarter of 2002, we used a 

market basket update of 2.5 percent for 

the 2004 LTCH PPS rate year (68 FR 

34138). 

Consistent with our historical practice 

of estimating market basket increases 

based on Global Insight’s forecast of the 

FY 1997-based excluded hospital with 

capital market basket using more recent 

data from the third quarter of 2003, we 

are proposing a 2.9 percent update to 

the Federal rate for the 2005 LTCH PPS 

rate year. 

In accordance with § 412.523, this 

update represents the most recent 

estimate of the increase in the excluded 

hospital with capital market basket for 

the 2005 LTCH PPS rate year.

2. Proposed Standard Federal Rate for 

the 2005 LTCH PPS Rate Year 

In the June 6, 2003, final rule (68 FR 

34140), we established a standard 

Federal rate of $35,726.18 for the 2004 

LTCH PPS rate year. For the 2005 LTCH 

PPS rate year, we are proposing a 

standard Federal rate of $36,762.24. 

Since the proposed 2005 LTCH PPS rate 

year standard Federal rate has already 

been adjusted for differences in casemix, wages, cost-of-living, and high-cost 

outlier payments, we are not proposing 

to make any additional adjustments in 

the proposed standard Federal rate for 

these factors. 

C. Calculation of Proposed LTCH 

Prospective Payments for the 2005 

LTCH PPS Rate Year 

The basic methodology for 

determining prospective payment rates 

for LTCH inpatient operating and 

capital-related costs is set forth in 

§ 412.515 through § 412.532. In 

accordance with § 412.515, we assign 

appropriate weighting factors to each 

LTC–DRG to reflect the estimated 

relative cost of hospital resources used 

for discharges within that group as 

compared to discharges classified 

within other groups. The amount of the 

prospective payment is based on the 

standard Federal rate, established under 

§ 412.523, and adjusted for the LTC–

DRG relative weights, differences in area 

wage levels, cost-of-living in Alaska and 

Hawaii, high-cost outliers, and other 

special payment provisions (short-stay 

outliers under § 412.529 and interrupted 

stays under § 412.531). 

In accordance with § 412.533, during 

the 5-year transition period, payment is 

based on the applicable transition blend 

percentage of the adjusted Federal rate 

and the reasonable cost-based payment 

rate unless the LTCH makes a one-time 

election to receive payment based on 

100 percent of the Federal rate. A LTCH 

defined as ‘‘new’’ under § 412.23(e)(4) is 

paid based on 100 percent of the Federal 

rate with no blended transition 

payments (§ 412.533(d)). As discussed 

in the August 30, 2002 final rule (67 FR 

56038) and in accordance with 

§ 412.533(a), the applicable transition 

blends are as follows:

Cost reporting periods beginning on or 

after 

Federal 

rate percentage 

Reasonable costbased 

payment 

rate percentage 

October 1, 2002 ........ 20 80 

October 1, 2003 ........ 40 60 

October 1, 2004 ........ 60 40 

October 1, 2005 ........ 80 20 

October 1, 2006 ........ 100 0 

Accordingly, for cost reporting 

periods beginning during FY 2004 (that 

is, on or after October 1, 2003, and 

before September 30, 2004), blended 

payments under the transition 

methodology are based on 60 percent of 

the LTCH’s reasonable cost-based 

payment rate and 40 percent of the 

adjusted LTCH PPS Federal rate. For 

cost reporting periods that begin during 

FY 2005 (that is, on or after October 1, 

2004, and before September 30, 2005), 

blended payments under the transition 

methodology will be based on 40 

percent of the LTCH’s reasonable costbased payment rate and 60 percent of 

the adjusted LTCH PPS Federal rate. 

1. Adjustment for Area Wage Levels 

a. Background 

Under the authority of section 307(b) 

of Pub. L. 106–554, we established an 

adjustment to account for differences in 

LTCH area wage levels under 

§ 412.525(c) using the labor-related 

4764 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

share estimated by the excluded 

hospital market basket with capital and 

wage indices that were computed using 

wage data from inpatient acute care 

hospitals without regard to 

reclassification under section 1886(d)(8) 

or section 1886(d)(10) of the Act. 

Furthermore, as we discussed in the 

August 30, 2002, final rule (67 FR 

56015–56019), we established a 5-year 

transition to the full wage adjustment. 

The applicable wage index phase-in 

percentages are based on the start of a 

LTCH’s cost reporting period as shown 

in the following table:

Cost reporting periods 

beginning on or after 

Phase-in percentage 

of the full wage index 

October 1, 2002 ........ 1⁄5ths (20 percent). 

October 1, 2003 ........ 2⁄5ths (40 percent). 

October 1, 2004 ........ 3⁄5ths (60 percent). 

October 1, 2005 ........ 4⁄5ths (80 percent). 

October 1, 2006 ........ 5⁄5ths (100 percent). 

For example, for cost reporting 

periods beginning on or after October 1, 

2004, and before September 30, 2005 

(FY 2005), the applicable LTCH wage 

index value would be three-fifths of the 

applicable full wage index value 

without taking into account geographic 

reclassification under sections 

1886(d)(8) and (d)(10) of the Act. 

In that same final rule (67 FR 56018), 

we stated that we would continue to 

reevaluate LTCH data as they become 

available and would propose to adjust 

the phase-in if subsequent data support 

a change. As we discussed in the June 

6, 2003, final rule (68 FR 34140), 

because the LTCH PPS has only been 

implemented for less than 2 years, 

sufficient new data have not been 

generated that would enable us to 

conduct a comprehensive reevaluation 

of the appropriateness of adjusting the 

phase-in. However, in that same final 

rule, we explained that we had 

reviewed the most recent data available 

at that time and did not find any 

evidence to support a change in the 5-

year phase-in of the wage index. 

Because of the recent implementation 

of the LTCH PPS and the lag time in 

availability of cost report data, we still 

do not yet have sufficient new data to 

allow us to conduct a comprehensive 

reevaluation of the appropriateness of 

the phase-in of the wage index 

adjustment. Again, we have reviewed 

the most recent data available and did 

not find any evidence to support a 

change in the 5-year phase-in of the 

wage index. Therefore, at this time, we 

are not proposing to adjust the phase-in 

of the wage index adjustment in this 

proposed rule. 

b. Wage Index Data 

In the June 6, 2003, final rule (68 FR 

34142), for the 2004 LTCH PPS rate 

year, we established that we would use 

the same data that was used to compute 

the FY 2003 acute care hospital 

inpatient wage index without taking 

into account geographic reclassifications 

under sections 1886(d)(8) and (d)(10) of 

the Act because that was the best 

available data at that time. The acute 

care hospital inpatient wage index data 

is also used in the inpatient 

rehabilitation PPS (IRF PPS), the home 

health agency PPS (HHA PPS), and the 

skilled nursing facility PPS (SNF PPS). 

As we discussed in the August 30, 2002, 

final rule (67 FR 56019), since hospitals 

that are excluded from the IPPS are not 

required to provide wage-related 

information on the Medicare cost report 

and we would need to establish 

instructions for the collection of such 

LTCH data in order to establish a 

geographic reclassification adjustment 

under the LTCH PPS, the wage 

adjustment established under the LTCH 

PPS is based on a LTCH’s actual 

location without regard to the urban or 

rural designation of any related or 

affiliated provider.

In this proposed rule, we are 

proposing that for the 2005 LTCH PPS 

rate year, the same data used to compute 

the FY 2004 acute care hospital 

inpatient wage index without taking 

into account geographic reclassifications 

under sections 1886(d)(8) and (d)(10) of 

the Act would be used to determine the 

applicable wage index values under the 

LTCH PPS, because these are the most 

recent available complete data. These 

data are the same wage data that were 

used to compute the FY 2003 wage 

indices currently used under the IPPS 

and SNF PPS. The proposed LTCH wage 

index values that would be used for 

discharges occurring on or after July 1, 

2004, through June 30, 2005, are shown 

in Table 1 (for urban areas) and Table 

2 (for rural areas) in the Addendum to 

this proposed rule. 

As noted above, the applicable wage 

index phase-in percentages are based on 

the start of a LTCH’s cost reporting 

period beginning on or after October 1st 

of each year during the 5-year transition 

period. For cost reporting periods 

beginning on or after October 1, 2003, 

and before September 30, 2004 (FY 

2004), the labor portion of the proposed 

standard Federal rate would be adjusted 

by two-fifths of the applicable LTCH 

wage index value. Specifically, for a 

LTCH’s cost reporting period beginning 

during FY 2004, for discharges 

occurring on or after July 1, 2004, 

through June 30, 2005, the applicable 

wage index value would be two-fifths of 

the full FY 2004 acute care hospital 

inpatient wage index data, without 

taking into account geographic 

reclassifications under sections 

1886(d)(8) and (d)(10) of the Act) as 

shown in Tables 1 and 2 in the 

Addendum to this proposed rule. 

Similarly, for cost reporting periods 

beginning on or after October 1, 2004, 

and before October 1, 2005 (FY 2005), 

the labor portion of the proposed 

standard Federal rate would be adjusted 

by three-fifths of the applicable LTCH 

wage index value. Specifically, for a 

LTCH’s cost reporting period beginning 

during FY 2005, for discharges 

occurring on or after July 1, 2004, 

through June 30, 2005, the applicable 

wage index value would be three-fifths 

of the full FY 2005 acute care hospital 

inpatient wage index data, without 

taking into account geographic 

reclassification under sections 

1886(d)(8) and (d)(10) of the Act as 

shown in Tables 1 and 2 in the 

addendum to this proposed rule.

Because the phase-in of the wage 

index does not coincide with the LTCH 

PPS rate year (July 1st through June 

30th), most LTCHs will experience a 

change in the wage index phase-in 

percentages during the LTCH PPS rate 

year. For example, during the 2005 

LTCH PPS rate year, for a LTCH with a 

January 1st fiscal year, the two-fifths 

wage index would be applicable for the 

first 6 months of the 2005 LTCH PPS 

rate year (July 1, 2004, through 

December 31, 2004) and the three-fifths 

wage index would be applicable for the 

second 6 months of the 2005 LTCH PPS 

rate year (January 1, 2005, through June 

30, 2005). We also note that some 

providers will still be in the first year of 

the 5-year phase-in of the LTCH wage 

index (that is, those LTCHs with cost 

reporting periods that began during FY 

2003 and are ending during the first 3 

months of the 2005 LTCH PPS rate year 

(July 1, 2004, through September 30, 

2004). For the remainder of those 

LTCHs’ FY 2003 cost reporting periods, 

for discharges occurring on or after July 

1, 2004, through June 30, 2005, the 

applicable wage index value would be 

one-fifth of the full FY 2005 acute care 

hospital inpatient wage index data, 

without taking into account geographic 

reclassification under sections 

1886(d)(8) and (d)(10) of the Act as 

shown in Tables 1 and 2 in the 

Addendum to this proposed rule. 

c. Labor-Related Share 

In the August 30, 2002, final rule (67 

FR 56016), we established a laborrelated share of 72.885 percent based on 

the relative importance of the laborVerDate jul<14>2003 18:46 Jan 29, 2004 Jkt 203001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\30JAP4.SGM 30JAP4
Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4765

related share of operating and capital 

costs of the excluded hospital with 

capital market basket based on FY 1992 

data. In the June 6, 2003, final rule (68 

FR 34142), in conjunction with our 

revision and rebasing of the excluded 

hospital with capital market basket from 

an FY 1992 to an FY 1997 base year, we 

used a labor-related share that is 

determined based on the relative 

importance of the labor-related share of 

operating costs (wages and salaries, 

employee benefits, professional fees, 

postal services, and all other laborintensive services) and capital costs of 

the excluded hospital with capital 

market basket based on FY 1997 data. 

While we adopted the revised and 

rebased FY 1997-based LTCH PPS 

market basket as the LTCH PPS update 

factor for the 2004 LTCH PPS rate year, 

we decided not to update the laborrelated share under the LTCH PPS 

pending further analysis. Accordingly, 

the labor-share for the 2004 LTCH PPS 

rate year was 72.885 percent. 

In the August 1, 2003, IPPS final rule 

(68 FR 50041–50042), we did not use a 

revised labor-related share for FY 2004 

because we had not yet completed our 

research into the appropriateness of this 

updated measure. In that rule, we 

discussed two methods that we were 

reviewing for establishing the laborrelated share—(1) updating the 

regression analysis that was done when 

the IPPS was originally developed and 

(2) reevaluating the methodology we 

currently use for determining the laborrelated share using the hospital market 

basket. We also explained that we 

would continue to explore all options 

for alternative data and a methodology 

for determining the labor-related share, 

and would propose to update the IPPS 

and excluded hospital labor-related 

shares, if necessary, once our research is 

complete. 

As we explained in the August 30, 

2002, final rule, which implemented the 

LTCH PPS, the June 6, 2003, LTCH PPS 

final rule, and the June 9, 2003, highcost outlier final rule, the LTCH PPS 

was modeled after the IPPS for shortterm, acute care hospitals. Specifically, 

the LTCH PPS uses the same patient 

classification system (CMS–DRGs) as 

the IPPS, and many of the case-level and 

facility-level adjustments explored or 

adopted for the LTCH PPS are payment 

adjustments under the IPPS (that is, 

wage index, high-cost outliers, and the 

evaluation of adjustments for indirect 

teaching costs and the treatment of a 

disproportionate share of low-income 

patients). 

Furthermore, as discussed in greater 

detail in the August 30, 2002, LTCH PPS 

final rule (67 FR 55960), LTCHs are 

certified as acute care hospitals that 

meet the criteria set forth in section 

1861(e) of the Act to participate as a 

hospital in the Medicare program, and 

in general, hospitals qualify for payment 

under the LTCH PPS instead of the IPPS 

solely because their inpatient average 

length of stay is greater than 25 days in 

accordance with section 

1886(d)(1)(B)(iv)(I) of the Act, 

implemented in § 412.23(e). In the June 

6, 2003, LTCH PPS final rule (68 FR 

34144), we explained that prior to 

qualifying as a LTCH under 

§ 412.23(e)(2)(i), hospitals generally are 

paid as acute care hospitals under the 

IPPS during the period in which they 

demonstrate that they have an average 

Medicare inpatient length of stay of 

greater than 25 days.

The primary reason that we did not 

update the LTCH PPS labor-related 

share for the 2004 LTCH PPS rate year 

was due to the same reason that we 

explained for not updating the laborrelated share under the IPPS for FY 

2004 in the August 1, 2003, IPPS (68 FR 

27226) which are equally applicable to 

the LTCH PPS. We did not revise the 

labor-related share under the IPPS based 

on the revised and rebased FY 1997 

hospital market basket and the excluded 

hospital market basket because of data 

and methodological concerns. We 

indicated that we would conduct further 

analysis to determine the most 

appropriate methodology and data for 

determining the labor-related share. 

Section 403 of the Medicare 

Prescription Drug and Modernization 

Act of 2003 (enacted December 8, 2003, 

Pub. L. 108–173) amends section 

1886(d) of the Act to provide that for 

discharges occurring on or after October 

1, 2004, the labor-related share under 

the IPPS is reduced to 62 percent if such 

a change would result in higher total 

payments to the hospital. While the 

statute provides the option to hospitals 

of using an alternative to the current 

IPPS labor-related share (71 percent), 

the statute does not address updating 

the current IPPS labor-related share. We 

intend to discuss the details of 

implementing this provision in the IPPS 

proposed rule for FY 2005. 

Although section 403 of Pub. L. 108–

173 provides for an alternative labor 

share percentage, this alternative only 

applies to hospitals paid under the IPPS 

and not to LTCHs. Consequently, since 

we have not yet implemented a change 

in the labor-share methodology used 

under the IPPS, and the alternative 

provided at section 403 does not apply 

to LTCHs, we are not proposing to 

change the LTCH PPS labor-share at this 

time. 

Accordingly, we are not proposing to 

update the labor-related share for the 

2005 LTCH PPS rate year; it would 

remain at 72.885 percent. As is the case 

under the IPPS, once our research on 

the labor-related share is complete, any 

future revisions to the LTCH PPS laborrelated share will be proposed and 

subject to public comment.

2. Proposed Adjustment for Cost-ofLiving in Alaska and Hawaii 

Under § 412.525(b), we make a costof-living adjustment (COLA) for LTCHs 

located in Alaska and Hawaii to account 

for the higher costs incurred in those 

States. For the 2005 LTCH PPS rate year, 

we are proposing to make a COLA to 

payments for LTCHs located in Alaska 

and Hawaii by multiplying the standard 

Federal payment rate by the appropriate 

factor listed in Table I. below. These 

factors are obtained from the U.S. Office 

of Personnel Management (OPM) and 

are currently used under the IPPS. In 

addition, in this proposed rule, we are 

proposing that if OPM releases revised 

COLA factors before March 1, 2004, we 

would use them for the development of 

payments and publish them in the 

LTCH PPS final rule.

TABLE I.—PROPOSED COST-OF-LIVING

ADJUSTMENT FACTORS FOR ALASKA

AND HAWAII HOSPITALS FOR THE

2005 LTCH PPS RATE YEAR

Alaska: All areas 1.25 

Hawaii: 

Honolulu County ......................... 1.25 

Hawaii County ............................. 1.165 

Kauai County .............................. 1.2325 

Maui County ................................ 1.2375 

Kalawao County .......................... 1.2375 

3. Proposed Adjustment for High-Cost 

Outliers 

a. Background 

Under § 412.525(a), we make an 

adjustment for additional payments for 

outlier cases that have extraordinarily 

high costs relative to the costs of most 

discharges. Providing additional 

payments for outliers strongly improves 

the accuracy of the LTCH PPS in 

determining resource costs at the patient 

and hospital level. These additional 

payments reduce the financial losses 

that would otherwise be caused by 

treating patients who require more 

costly care and, therefore, reduce the 

incentives to underserve these patients. 

We set the outlier threshold before the 

beginning of the applicable rate year so 

that total outlier payments are projected 

to equal 8 percent of total payments 

under the LTCH PPS. Outlier payments 

4766 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

under the LTCH PPS are determined 

consistent with the IPPS outlier policy. 

Under section 412.525(a), we make 

outlier payments for any discharges if 

the estimated cost of a case exceeds the 

adjusted LTCH PPS payment for the 

LTC–DRG plus a fixed-loss amount. The 

fixed-loss amount is the amount used to 

limit the loss that a hospital will incur 

under an outlier policy. This results in 

Medicare and the LTCH sharing 

financial risk in the treatment of 

extraordinarily costly cases. The LTCH’s 

loss is limited to the fixed-loss amount 

and the percentage of costs above the 

marginal cost factor. We calculate the 

estimated cost of a case by multiplying 

the overall hospital cost-to-charge ratio 

by the Medicare allowable covered 

charge. In accordance with section 

412.525(a), we pay outlier cases 80 

percent of the difference between the 

estimated cost of the patient case and 

the outlier threshold (the sum of the 

adjusted Federal prospective payment 

for the LTC–DRG and the fixed-loss 

amount). 

We determine a fixed-loss amount, 

that is, the maximum loss that a LTCH 

can incur under the LTCH PPS for a 

case with unusually high costs before 

the LTCH will receive any additional 

payments. We calculate the fixed-loss 

amount by simulating aggregate 

payments with and without an outlier 

policy. The fixed-loss amount would 

result in estimated total outlier 

payments being projected to be equal to 

8 percent of projected total LTCH PPS 

payments. 

Currently, under both the LTCH PPS 

and the IPPS, only a maximum cost-tocharge ratio threshold (ceiling) is 

applied to a hospital’s cost-to-charge 

ratio and, as discussed in the June 9, 

2003, high-cost outlier final rule (68 FR 

34506–34507) for discharges occurring 

on or after August 8, 2003, a minimum 

cost-to-charge ratio threshold (floor) is 

no longer applicable. Thus, if a LTCH’s 

cost-to-charge ratio is above the ceiling, 

the applicable statewide average cost-tocharge ratio is assigned to the LTCH. In 

addition, for LTCHs for which we are 

unable to compute a cost-to-charge ratio, 

we also assign the applicable statewide 

average cost-to-charge ratio. Currently, 

MedPAR claims data and cost-to-charge 

ratios based on the latest available cost 

report data from Hospital Cost Report 

Information System (HCRIS) and 

corresponding MedPAR claims data are 

used to establish a fixed-loss threshold 

amount under the LTCH PPS.

In the June 9, 2003, high-cost outlier 

final rule (68 FR 34507), consistent with 

the outlier policy changes for acute care 

hospitals under the IPPS discussed in 

that same final rule, we no longer assign 

the applicable statewide average cost-tocharge ratio when a LTCH’s cost-tocharge ratio falls below the minimum 

cost-to-charge ratio threshold (floor). We 

made this policy change because, as is 

the case for acute care hospitals, we 

believe LTCHs could arbitrarily increase 

their charges in order to maximize 

outlier payments. Even though this 

arbitrary increase in charges should 

result in a lower cost-to-charge ratio in 

the future (due to the lag time in cost 

report settlement), previously when a 

LTCH’s actual cost-to-charge ratio fell 

below the floor, the LTCH’s cost-tocharge ratio was raised to the applicable 

statewide average cost-to-charge ratio. 

This application of the statewide 

average resulted in inappropriately 

higher outlier payments. Accordingly, 

for LTCH PPS discharges occurring on 

or after August 8, 2003, in making 

outlier payments under § 412.525 (and 

short-stay outlier payments under 

§ 412.529), we apply the LTCH’s actual 

cost-to-charge ratio to determine the 

cost of the case, even where the LTCH’s 

actual cost-to-charge ratio falls below 

the floor. 

Also, in the June 9, 2003, high-cost 

outlier final rule (68 FR 34507), 

consistent with the policy change for 

acute care hospitals under the IPPS, 

under § 412.525(a)(4), by crossreferencing § 412.84(i), we established 

that we will continue to apply the 

applicable statewide average cost-tocharge ratio when a LTCH’s cost-tocharge ratio exceeds the maximum costto-charge ratio threshold (ceiling) by 

adopting the policy at § 412.84(i)(3)(ii). 

As we explained in that same final rule, 

cost-to-charge ratios above this range are 

probably due to faulty data reporting or 

entry. Therefore, these cost-to-charge 

ratios should not be used to identify and 

make payments for outlier cases because 

such data are clearly errors and should 

not be relied upon. In addition, we 

made a similar change to the short-stay 

outlier policy at § 412.529. Since costto-charge ratios are also used in 

determining short-stay outlier 

payments, the rationale for that change 

mirrors that for high-cost outliers. 

b. Establishment of the Proposed FixedLoss Amount 

In the June 6, 2003, final rule (68 FR 

34144), for the 2004 LTCH PPS rate 

year, we used the March 2002 update of 

the FY 2001 MedPAR claims data to 

determine a fixed-loss threshold that 

would result in outlier payments 

projected to be equal to 8 percent of 

total payments, based on the policies 

described in that final rule, because 

these data were the best data available. 

We calculated cost-to-charge ratios for 

determining the fixed-loss amount 

based on the latest available cost report 

data in HCRIS and corresponding 

MedPAR claims data from FYs 1998, 

1999, and 2000. 

In that same final rule, in determining 

the fixed-loss amount for the 2004 

LTCH PPS rate year (using the outlier 

policy under § 412.525(a) in effect on 

July 1, 2003), we used the current 

combined operating and capital cost-tocharge ratio floor and ceiling under the 

IPPS of 0.206 and 1.421, respectively (as 

explained in the IPPS final rule (67 FR 

50125, August 1, 2002)). As we 

discussed in the June 9, 2003, high-cost 

outlier final rule (68 FR 34508), we 

concluded that it was not necessary to 

recalculate a new fixed-loss amount 

once the changes to the outlier policy 

discussed in that final rule became 

effective because the difference between 

the fixed-loss amount determined with 

or without the application of the floor 

would be negligible. 

If a LTCH’s cost-to-charge ratio was 

below this floor or above this ceiling, we 

assigned the applicable IPPS statewide 

average cost-to-charge ratio. We also 

assigned the applicable statewide 

average for LTCHs for which we are 

unable to compute a cost-to-charge ratio, 

such as for new LTCHs. Therefore, 

based on the methodology and data 

described above, in the June 6, 2003, 

final rule (68 FR 34144), for the 2004 

LTCH PPS rate year, we established a 

fixed-loss amount of $19,590. Thus, 

during the 2004 LTCH PPS rate year, we 

pay an outlier case 80 percent of the 

difference between the estimated cost of 

the case and the outlier threshold (the 

sum of the adjusted Federal LTCH 

payment for the LTC–DRG and the 

fixed-loss amount of $19,590).

Also, in the June 6, 2003, final rule 

(68 FR 34145), we established that 

beginning with the 2004 LTCH PPS rate 

year, we will calculate a single fixedloss amount for each LTCH PPS rate 

year based on the version of the 

GROUPER that is in effect as of the 

beginning of the LTCH PPS rate year 

(that is, July 1, 2003, for the 2004 LTCH 

PPS rate year). Therefore, for the 2004 

LTCH PPS rate year, we established a 

single fixed-loss amount based on the 

Version 20.0 of the GROUPER, which 

was in effect at the start of the 2004 

LTCH PPS rate year (July 1, 2003). As 

we noted above, the fixed-loss amount 

for the 2004 LTCH PPS rate year is 

$19,590. 

In calculating the proposed fixed-loss 

amount for the 2005 LTCH PPS rate 

year, we applied the current outlier 

policy under § 412.525(a); that is, we 

assigned the applicable statewide 

average cost-to-charge ratio only to 

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LTCHs whose cost-to-charge ratios 

exceeded the ceiling (and not when they 

fell below the floor). Accordingly, we 

used the current IPPS combined 

operating and capital cost-to-charge 

ratio ceiling of 1.366 (as explained in 

the IPPS final rule (68 FR 45478, August 

1, 2003)). We believed that using the 

current combined IPPS operating and 

capital cost-to-charge ratio ceiling for 

LTCHs is appropriate for the same 

reasons we stated above regarding the 

use of the current combined operating 

and capital cost-to-charge ratio ceiling 

under the IPPS. 

In this proposed rule, for the 2005 

LTCH PPS rate year, we used the 

December 2002 update of the FY 2002 

MedPAR claims data to determine a 

proposed fixed-loss amount that would 

result in outlier payments projected to 

be equal to 8 percent of total payments, 

based on the policies described in this 

proposed rule, because these data are 

the best LTCH data available. We 

considered using claims data from the 

September 2003 update of the FY 2003 

MedPAR to determine the proposed 

fixed-loss amount (and the budget 

neutrality offset discussed below in 

section IV.C.6.) for the 2005 LTCH PPS 

rate year. However, initial analysis has 

shown that the FY 2003 MedPAR data 

contain coding errors. As in the case 

with the FY 2002 MedPAR, we have 

learned that a large hospital chain of 

LTCHs has continued to consistently 

code diagnoses inaccurately on the 

claims it submitted, and these coding 

errors are reflected in the FY 2003 

MedPAR data. The coding inaccuracies 

in the MedPAR claims data can cause 

significant skewing of the fixed-loss 

amount and would impact the 

determination of the budget neutrality 

offset. While we have corrected the 

coding inaccuracies in the FY 2002 

MedPAR, we were unable to correct the 

coding errors in the FY 2003 MedPAR 

in time for publication of this proposed 

rule since the correction process 

requires extensive programming work. 

Accordingly, we are using the December 

2002 update of the FY 2002 MedPAR 

claims data to determine a proposed 

fixed-loss amount for the 2005 LTCH 

PPS rate year for this proposed rule. We 

expect to be able to use the corrected FY 

2003 MedPAR to calculate a revised 

fixed-loss amount for the final rule. 

Furthermore, as noted above, we 

determined the proposed fixed-loss 

amount based on the version of the 

GROUPER that would be in effect as of 

the beginning of the 2005 LTCH PPS 

rate year (July 1, 2004), that is, Version 

21.0 of the LTCH PPS GROUPER (68 FR 

45374–45385). We also computed costto-charge ratios for determining the 

proposed fixed-loss amount for the 2005 

LTCH PPS rate year based on the latest 

available cost report data in HCRIS and 

corresponding MedPAR claims data 

from FYs 1999, 2000, and 2001. As we 

explained above, the current applicable 

IPPS statewide average cost-to-charge 

ratios were applied when a LTCH’s costto-charge ratio exceeded the ceiling 

(1.366). In addition, we assigned the 

applicable statewide average to LTCHs 

for which we were unable to compute 

a cost-to-charge ratio. (Currently, the 

applicable IPPS statewide averages can 

be found in Tables 8A and 8B of the 

August 1, 2003, IPPS final rule (68 FR 

45637–45638).)

Accordingly, based on the data and 

policies described above, we are 

proposing a fixed-loss amount of 

$21,864 for the 2005 LTCH PPS rate 

year. Thus, we would pay an outlier 

case 80 percent of the difference 

between the estimated cost of the case 

and the proposed outlier threshold (the 

sum of the adjusted proposed Federal 

LTCH payment for the LTC–DRG and 

the proposed fixed-loss amount of 

$21,864). 

c. Reconciliation of Outlier Payments 

Upon Cost Report Settlement 

In the June 9, 2003, high-cost outlier 

final rule (68 FR 34508–34512), we 

made changes to the LTCH outlier 

policy consistent with those made for 

acute care hospitals under the IPPS 

because, as we discussed in that same 

final rule, we became aware that 

payment vulnerabilities existed in the 

previous IPPS outlier policy. Because 

the LTCH PPS high-cost outlier and 

short-stay policies are modeled after the 

outlier policy in the IPPS, we believe 

they were susceptible to the same 

payment vulnerabilities and, therefore, 

also merited revision. Consistent with 

the change made for acute care hospitals 

under the IPPS at § 412.84(m), we 

established under § 412.525(a)(4)(ii), by 

cross-referencing § 412.84(m), that 

effective for LTCH PPS discharges 

occurring on or after August 8, 2003, 

any reconciliation of outlier payments 

may be made upon cost report 

settlement to account for differences 

between the actual cost-to-charge ratio 

and the estimated cost-to-charge ratio 

for the period during which the 

discharge occurs. As is the case with the 

changes made to the outlier policy for 

acute care hospitals under the IPPS, the 

instructions for implementing these 

regulations are discussed in further 

detail in Program Memorandum 

Transmittal A–03–058. In addition, in 

that same final rule (68 FR 34513), we 

established a similar change to the 

short-stay outlier policy at 

§ 412.529(c)(5)(ii). 

We also discussed in the June 9, 2003, 

IPPS high-cost outlier final rule (68 FR 

34507–34512) that only using cost-tocharge ratios based on the latest settled 

cost report does not reflect any dramatic 

increases in charges during the payment 

year when making outlier payments. 

Because a LTCH has the ability to 

increase its outlier payments through a 

dramatic increase in charges and 

because of the lag time in the data used 

to calculate cost-to-charge ratios, in that 

same final rule (68 FR 34494–34515), 

consistent with the policy change for 

acute care hospitals under the IPPS at 

§ 412.84(i)(2), we established that, for 

LTCH PPS discharges occurring on or 

after October 1, 2003, fiscal 

intermediaries will use more recent data 

when determining a LTCH’s cost-tocharge ratio. Therefore, by crossreferencing § 412.84(i)(2) under 

§ 412.525(a)(4)(iii), we established that 

fiscal intermediaries will use either the 

most recent settled cost report or the 

most recent tentative settled cost report, 

whichever is from the later period. In 

addition, in that same final rule, we 

established a similar change to the 

short-stay outlier policy at 

§ 412.529(c)(5)(iii). 

d. Application of Outlier Policy to 

Short-Stay Outlier Cases 

As we discussed in the August 30, 

2002, final rule (67 FR 56026), under 

some rare circumstances, a LTCH 

discharge could qualify as a short-stay 

outlier case (as defined under § 412.529 

and discussed in section IV.B.4.b. of this 

preamble) and also as a high-cost outlier 

case. In such a scenario, a patient could 

be hospitalized for less than five-sixths 

of the geometric average length of stay 

for the specific LTC–DRG, and yet incur 

extraordinarily high treatment costs. If 

the costs exceeded the outlier threshold 

(that is, the short-stay outlier payment 

plus the fixed-loss amount), the 

discharge would be eligible for payment 

as a high-cost outlier. Thus, for a shortstay outlier case in the 2005 LTCH PPS 

rate year, the high-cost outlier payment 

would be 80 percent of the difference 

between the estimated cost of the case 

and the outlier threshold (the sum of the 

proposed fixed-loss amount of $21,864 

and the amount paid under the shortstay outlier policy).

4. Proposed Adjustments for Special 

Cases 

a. General 

As discussed in the August 30, 2002, 

final rule (67 FR 55995), under section 

123 of Pub. L. 106–113, the Secretary 

4768 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

generally has broad authority in 

developing the PPS for LTCHs, 

including whether (and how) to provide 

for adjustments to reflect variations in 

the necessary costs of treatment among 

LTCHs. 

Generally, LTCHs, as described in 

section 1886(d)(1)(B)(iv) of the Act, are 

distinguished from other inpatient 

hospital settings by maintaining an 

average inpatient length of stay of 

greater than 25 days. However, LTCHs 

may have cases that have stays of 

considerably less than the average 

length of stay and that receive 

significantly less than the full course of 

treatment for a specific LTC–DRG. As 

we explained in the August 30, 2002, 

final rule (67 FR 55995), such cases 

would be paid inappropriately if the 

hospital were to receive the full LTC–

DRG payment. Below we discuss the 

payment methodology for these special 

cases as implemented in the August 30, 

2002, final rule (67 FR 55955–56010). 

b. Proposed Adjustment for Short-Stay 

Outlier Cases 

A short-stay outlier case may occur 

when a beneficiary receives less than 

the full course of treatment at the LTCH 

before being discharged. These patients 

may be discharged to another site of 

care or they may be discharged and not 

readmitted because they no longer 

require treatment. Furthermore, patients 

may expire early in their LTCH stay. 

As noted above, generally LTCHs are 

defined by statute as having an average 

inpatient length of stay of greater than 

25 days. We believe that a payment 

adjustment for short-stay outlier cases 

results in more appropriate payments, 

because these cases most likely would 

not receive a full course of treatment in 

such a short period of time and a full 

LTC–DRG payment may not always be 

appropriate. Payment-to-cost ratios 

simulated for LTCHs, for the cases 

described above, show that if LTCHs 

receive a full LTC–DRG payment for 

those cases, they would be significantly 

‘‘overpaid’’ for the resources they have 

actually expended. 

Under § 412.529, in general, we adjust 

the per discharge payment to the least 

of 120 percent of the cost of the case, 

120 percent of the LTC–DRG specific 

per diem amount multiplied by the 

length of stay of that discharge, or the 

full LTC–DRG payment, for all cases 

with a length of stay up to and 

including five-sixths of the geometric 

average length of stay of the LTC–DRG. 

As we noted in section IV.C.3. of this 

preamble, in the June 9, 2003, high-cost 

outlier final rule (68 FR 34494–34515), 

we revised the methodology for 

determining cost-to-charge ratios for 

acute care hospitals under the IPPS 

because we became aware that payment 

vulnerabilities existed in the previous 

IPPS outlier policy. As we also 

explained in that same final rule, 

because the LTCH PPS high-cost outlier 

and short-stay outlier policies are 

modeled after the outlier policy in the 

IPPS, we believe they were susceptible 

to the same payment vulnerabilities 

and, therefore, merited revision. 

Consistent with the policy established 

for acute care hospitals under the IPPS 

at § 412.84(i) and (m) in the June 9, 

2003, high-cost outlier final rule (68 FR 

34515), and similar to the policy change 

described above for LTCH PPS high-cost 

outlier payments at § 412.525(a)(4)(ii), 

we established under § 412.529(c)(5)(ii) 

that for discharges on or after August 8, 

2003, short-stay outlier payments are 

subject to the provisions in the 

regulations at § 412.84(i)(1), (i)(3) and 

(i)(4), and (m). In addition, short-stay 

outlier payments are subject to the 

provisions in the regulations at 

§ 412.84(i)(2) for discharges on or after 

October 1, 2003, in accordance with 

§ 412.529(c)(5)(iii). Therefore, in the 

June 9, 2003, high-cost outlier final rule 

(68 FR 34548–34513), under 

§ 412.529(c)(5)(ii), by cross-referencing 

proposed § 412.84(i)(2), we established 

that fiscal intermediaries will use either 

the most recent settled cost report or the 

most recent tentative settled cost report, 

whichever is from the later period, in 

determining a LTCH’s cost-to-charge 

ratio.

In addition, by cross-referencing 

§ 412.84(i), we established that the 

applicable statewide average cost-tocharge ratio is only applied when a 

LTCH’s cost-to-charge ratio exceeds the 

ceiling. Thus, the applicable statewide 

average cost-to-charge ratio is no longer 

applied when a LTCH’s cost-to-charge 

ratio falls below the floor. Furthermore, 

by cross-referencing § 412.84(i)(4), we 

established that any reconciliation of 

payments for short-stay outliers may be 

made upon cost report settlement to 

account for differences between the 

estimated cost-to-charge ratio and the 

actual cost-to-charge ratio for the period 

during which the discharge occurs. As 

noted above, in the discussion of the 

high-cost outlier policy in section 

IV.C.3. of this preamble, the instructions 

for implementing these regulations are 

discussed in further detail in Program 

Memorandum Transmittal A–03–058. In 

the June 6, 2003, final rule (68 FR 

34146–34148), for certain hospitals that 

qualify as LTCHs under section 

1886(d)(1)(B)(iv)(II) of the Act 

(‘‘subclause (II)’’ LTCHs) as added by 

section 4417(b) of Pub. L. 105–33, and 

implemented in § 412.23(e)(2)(ii), we 

established a temporary adjustment to 

the short-stay outlier policy during the 

5-year transition period. Under 

§ 412.529(c)(4), effective for discharges 

from a ‘‘subclause (II)’’ LTCH occurring 

on or after July 1, 2003, the short-stay 

outlier percentage is 195 percent during 

the first year of the hospital’s 5-year 

transition. For the second cost reporting 

period, the short-stay outlier percentage 

is 193 percent; for the third cost 

reporting period, the percentage is 165 

percent; for the fourth cost reporting 

period, the percentage is 136 percent; 

and for the final cost reporting period of 

the 5-year transition (and future cost 

reporting periods), the short-stay outlier 

percentage is 120 percent, that is, the 

same as it is for all other LTCHs under 

the LTCH PPS. 

As we discussed in the June 6, 2003, 

final rule (68 FR 34147), we established 

this formula with the expectation that 

an adjustment to short-stay outlier 

payments during the transition will 

result in reducing the difference 

between payments and costs for a 

‘‘subclause (II)’’ LTCH for the period of 

July 1, 2003, through the end of the 

transition period, when the LTCH PPS 

will be fully phased-in.

As we stated in that same final rule, 

we also expect that during this 5-year 

period, ‘‘subclause (II)’’ LTCHs will 

make every attempt to adopt the type of 

efficiency enhancing policies that 

generally result from the 

implementation of prospective payment 

systems in other health care settings. We 

are not proposing any changes to the 

short-stay outlier policy in this 

proposed rule. 

c. Proposed Extension of the Interrupted 

Stay Policy 

At existing § 412.531(a), we define an 

‘‘interruption of a stay’’ as a stay at a 

LTCH during which a Medicare 

inpatient is transferred upon discharge 

to an acute care hospital, an IRF, or a 

SNF for treatment or services that are 

not available in the LTCH and returns 

to the same LTCH within applicable 

fixed-day periods. (We also include 

transfers to swing beds under this 

interrupted stay policy for LTCH 

payment policy determinations, 

consistent with the SNF PPS payment 

policy. That is, a readmission to a LTCH 

from post-hospital SNF care being 

provided in a swing bed that is located 

either in the LTCH itself or in another 

onsite Medicare provider has the same 

policy consequence as a readmission to 

the LTCH from an onsite SNF (June 6, 

2003, 68 FR 34149).) 

As defined above, an interrupted stay 

is treated as one discharge from the 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4769

LTCH. The day-count of the applicable 

fixed-day period of an interrupted stay 

begins on the day of discharge from the 

LTCH (which is also the day of 

admission to the other site of care). For 

a discharge to an acute care hospital, the 

applicable fixed-day period is 9 days, 

for an IRF, 27 days, and for a SNF 45 

days. The counting of the days begins 

on the day of discharge from the LTCH 

and ends on the 9th, 27th, or 45th day 

for an acute care hospital, an IRF, or a 

SNF, respectively, after the discharge. 

If the patient is readmitted to the 

LTCH within the fixed-day threshold, 

return to the LTCH is considered part of 

the first admission and only a single 

LTCH PPS payment will be made. For 

example, if a LTCH patient is 

discharged to an acute hospital and is 

readmitted to the LTCH on any day up 

to and including the 9th day following 

the original day of discharge from the 

LTCH, one LTC–DRG payment will be 

made. If the patient is readmitted to the 

LTCH from the acute care hospital on 

the 10th day after the original discharge 

or later, Medicare will pay for the 

second admission as a separate stay 

with an additional LTC–DRG 

assignment. In implementing this 

policy, we provide that, in the event a 

Medicare inpatient is discharged from a 

LTCH and is readmitted and the stay 

qualifies as an interrupted stay, the 

provider should cancel the claim 

generated by the original stay in the 

LTCH and submit one claim for the 

entire stay. (For further details, see 

Medicare Program Memorandum 

Transmittal A–02–093, September 

2002.) 

On the other hand, if the patient stay 

exceeds the total fixed-day threshold 

outside of the LTCH at another facility 

before being readmitted, two separate 

payments would be made. One would 

be based on the principal diagnosis and 

length of stay for the first admission and 

the other based on the principal 

diagnosis and length of stay for the 

second admission. Depending upon 

their lengths of stay, both stays could 

result in payments as a short-stay outlier 

(§ 412.529), a full LTC–DRG, or even a 

high-cost outlier. Further, if the 

principal diagnosis is the same for both 

admissions, the hospital could receive 

two similar payments. 

When we introduced the interrupted 

stay policy for LTCHs in the August 30, 

2002, final rule (67 FR 56002–56006), 

we noted that we would consider 

expanding or revising the policy based 

on information received from the 

provider community or information 

gained from our ongoing monitoring 

activities. During the first year of the 

LTCH PPS, it has come to our attention, 

from both of these sources, that certain 

LTCHs are discharging patients during 

the course of their treatment for the sole 

purpose of receiving specific tests or 

procedures from another facility (that 

should have been furnished under 

arrangements by the LTCHs), and then 

readmitting the patient to the LTCH 

following the administration of the test 

or procedure. In other words, these 

patients do not stop receiving medical 

care that should be considered LTCH 

inpatient services during the period 

between their discharge from and 

readmission to the LTCH. On the 

contrary, they continue to receive care, 

often of a highly specialized type, from 

the other facility before being 

readmitted for further inpatient care at 

the LTCH. This sequence of care 

suggests that the original discharge from 

the LTCH may be motivated by financial 

considerations rather than by clinical 

judgment and, therefore, would be 

inappropriate.

Existing regulations at § 412.509(c) 

require a LTCH to furnish all necessary 

covered services for a Medicare 

beneficiary who is an inpatient of the 

hospital either directly or under 

arrangements (as defined in § 409.3). 

Under § 409.3, when services are 

furnished under arrangements, 

Medicare payments made to the 

provider that arranged for the services 

discharges the liability of the 

beneficiary or any other person to pay 

for those services. The ‘‘under 

arrangements’’ policy set forth in 

§ 412.509 for LTCHs derives from the 

regulations at § 411.15(m), which 

implement section 1862(a)(14) of the 

Act. Section 1862(a) of the Act specifies 

the services for which no payment may 

be made under Medicare Part A and Part 

B. Section 1862(a)(14) of the Act 

specifies the exception for certain 

services to be furnished ‘‘under 

arrangements’’ by providers. 

If a LTCH obtains, from another 

facility ‘‘under arrangements,’’ a specific 

test or procedure for one of its 

inpatients that is not available on the 

LTCH’s premises, as contemplated by 

§ 412.509, a discharge and a subsequent 

readmission would be unnecessary and 

inappropriate. This is true even if it is 

necessary to transport the patient to 

another facility to receive the arrangedfor service. Furthermore, no additional 

claim should be submitted to Medicare 

by the other entity that actually 

furnished the test or procedure because, 

under § 412.509(c), the LTCH must 

furnish all necessary covered services to 

the Medicare beneficiary who is an 

inpatient of the hospital either directly 

or under arrangements. In such a 

situation, generally, the LTCH would 

include the medically necessary test or 

procedure on its patient claim to 

Medicare (which could have an effect 

on the assignment of the LTC–DRG and 

thus the Medicare payment to the 

LTCH) and the LTCH would be 

responsible for paying the provider 

directly for the test or procedure. 

Patient discharges from the LTCH for 

tests or procedures that should have 

been provided under arrangements, 

followed by LTCH readmission, result 

in an inappropriate increase in 

Medicare costs in three ways: 

First, the Medicare payment 

associated with the LTC–DRG that 

would be assigned to the patient’s stay 

will typically already include the costs 

of the test or procedure. (The August 30, 

2002, LTCH PPS final rule (67 FR 

55977–55985), includes an in-depth 

description of the derivation of LTC–

DRGs from ICD–9–CM codes on 

Medicare claims and a discussion of the 

development and calculation of LTC–

DRG relative weights.) Second, the 

intervening provider will bill Medicare 

separately for the test or procedure. 

Thus, if services that should have been 

furnished directly or under 

arrangements by the LTCH are instead 

unbundled and billed separately, 

Medicare would pay the other provider 

for the service that should have been 

paid for ‘‘under arrangements’’ by the 

LTCH under § 412.509. 

Third, a discharge for outpatient 

services and a subsequent readmission 

to the LTCH is not currently covered 

under the interrupted stay policy at 

existing § 412.531. Section 412.531(a) 

only includes discharges from a LTCH 

to an acute care hospital, an IRF, and a 

SNF for treatment or services not 

available in the LTCH and subsequent 

readmission to the same LTCH. If a 

patient is discharged and readmitted to 

the LTCH following an outpatient test or 

procedure, under current policy, after 

making a LTCH PPS payment for the 

first discharge, there would be a second 

Medicare payment to the LTCH when 

the patient is finally discharged.

In order to address these concerns, we 

are proposing to revise the definition of 

an interruption of a stay under § 412.531 

to add situations in which a patient is 

discharged from the LTCH and 

readmitted to the same LTCH within 3 

days of the discharge (proposed revised 

§ 412.531(a)(1)). We believe that if a 

patient is discharged from a LTCH for 

any reason and is then readmitted 

within 3 days, in general, the patient’s 

original admitting diagnoses would not 

change significantly during those 3 

days. Therefore, such a readmission 

would not constitute a new episode of 

care. We question whether a patient 

4770 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

who was discharged and then returned 

to the same LTCH within 3 days should 

have been discharged in the first place. 

Since LTCHs are designed to treat 

patients with a high level of acuity and 

multicomorbidities, we believe that a 3-

day period is a reasonable window 

during which necessary offsite medical 

care might be delivered, under 

arrangements, as contemplated under 

§ 412.509, without an appreciable 

change in the original admitting 

diagnoses. Moreover, this 3-day period 

is consistent with the interrupted stay 

policy under the IRF PPS under which 

the maximum period of time that a 

patient could be away from the IRF is 

3 days before a new patient assessment 

is required. Therefore, under our 

proposal, if a patient were discharged 

on Monday, and readmitted either on 

that Monday (the first day), Tuesday 

(the second day), or Wednesday (the 

third day), the subsequent readmission 

would not be considered a new 

admission and Medicare would pay the 

LTCH for only one discharge based on 

the combined length of stay for the 

period prior to and after the absence 

from the LTCH. 

We are further proposing that, under 

the proposed revision of the 

interruption of stay policy for LTCHs, 

any treatment or medical services 

furnished to the individual during the 3-

day (or less) absence from the LTCH 

could not be billed separately to the 

Medicare program or to the beneficiary, 

but would be paid as ‘‘under 

arrangements’’ services to the LTCH. We 

calculate payments under the LTCH PPS 

using base year costs that include the 

numerous tests and procedures typical 

of the complicated medical conditions 

that characterize LTCH patients, 

including those furnished by other 

providers. Therefore, we believe that a 

readmission to the LTCH that triggers 

the proposed 3-day interrupted stay 

policy should be treated as a 

continuation of the episode of care that 

occasioned the first admission. Further, 

we believe that the readmission to the 

LTCH within 3 days establishes the 

presumption that any treatment or 

services furnished during the 

intervening 3 (or less) days should have 

been provided by the LTCH ‘‘either 

directly or under arrangements’’

(§ 412.509(b)). The entire stay would 

generate one LTC–DRG payment under 

the LTCH PPS, which would be 

‘‘payment in full for all inpatient 

hospital services, as defined in 

§ 409.10.’’ (§ 412.509(a)) Under 

§ 409.10(a) inpatient hospital services 

means the following services furnished 

to an inpatient of a qualified hospital: 

(1) Bed and board; (2) nursing services 

and other related services; (3) use of 

hospital or CAH facilities; (4) medical 

social services; (5) drugs, biologicals, 

supplies, appliances, and equipment; (6) 

certain other diagnostic or therapeutic 

services; (7) medical or surgical services 

provided by certain interns or residentsin-training; and (8) transportation 

services, including transport by 

ambulance. 

As explained above, we are proposing 

that a readmittance to the LTCH within 

3 days after a discharge will result in 

one LTC–DRG payment for the entire 

stay. Since we are treating both parts of 

the stay as one episode of care, we are 

proposing that treatment or care 

provided during the ‘‘interruption’’ be 

considered to have occurred during that 

episode of care and that payment for 

such services are included in the LTC–

DRG payment. We are also proposing to 

include the days of the 3-day 

interruption of stay in counting LTCH 

days to determine the total length of 

stay of the patient at the LTCH if 

medical treatment or care were provided 

during the 3 days because these services 

will be considered to have been paid for 

as part of the total LTCH stay (proposed 

§ 412.531(b)(1)(iii)). We are further 

proposing that if a patient is discharged 

home, and within a 3-day period 

received no additional medical 

treatment or service, but is readmitted to 

the LTCH, the days away from the LTCH 

would not be included in the length of 

stay calculation. This is presently the 

day count methodology that we use in 

the existing interrupted stay policy at 

§ 412.531(b)(1) as applied to acute care 

hospitals, IRFs, and SNFs.

We are proposing that this policy be 

applicable to all services or procedures 

provided to the patient either under 

Medicare Part A, or Part B, except for 

the services which are expressly 

excluded from bundling under section 

1886(a)(1)(H)(i) of the Act and 

§ 411.15(m), such as services furnished 

by physicians under § 415.102(a) and 

other specific health professionals. 

Failure to comply with this bundling 

requirement could lead to sanctions 

such as termination of the LTCH’s 

Medicare provider agreement or civil 

money penalties (under section 

1866(a)(1)(H)(i) of the Act). 

Although we understand that, in good 

faith, a patient could be discharged from 

a LTCH, return home for a day or two, 

experience a setback, and then be 

readmitted to the LTCH, we believe that 

such a readmission to the LTCH should 

be considered an extension of the 

original hospitalization and that 

Medicare should not pay for two claims 

for what was, in effect, one episode of 

care. The proposed 3-day interrupted 

stay policy takes into account the profile 

of most LTCH patients, as typically very 

sick individuals with 

multicomorbidities. We believe that it is 

reasonable to presume that, should this 

type of patient be discharged and then 

readmitted to a LTCH with 3 days the 

readmission signifies a continuation of 

the original hospital stay and not a new 

episode of care. Furthermore, we are 

concerned about reports of LTCHs 

discharging and readmitting patients 

who are still undergoing active 

treatment rather than obtaining services 

for these patients ‘‘under arrangements’’

in accordance with section 1862(a)(14) 

of the Act and the regulations at 

§ 412.509. 

If the policy is finalized, we intend to 

collect data on any Medicare claims for 

outpatient services as well as inpatient 

services furnished during the time that 

the patients are away from the LTCH 

under the proposed 3-day interrupted 

stay policy. We would review data to 

determine whether we should expand 

the 3-day time period and we will 

consider proposing such a change in a 

future rule. Further, if it appears that 

additional patients are being discharged 

for the purpose of receiving tests or 

procedures at other Medicare settings, 

and then readmitted to the LTCH, in 

order for the LTCH to avoid paying for 

the procedure ‘‘under arrangements,’’

we may find it appropriate for our 

Quality Improvement Organizations 

(QIO) to evaluate the medical basis for 

the original discharge. A patient 

discharge that is not clinically 

justifiable could constitute potential 

violation of the LTCH’s conditions of 

participation in the Medicare program 

for inadequate discharge planning or an 

inappropriate discharge from the LTCH 

under § 482.43. Moreover, as noted 

above, if a separate bill is submitted by 

an entity other than the LTCH for 

services furnished during this period, 

this could also be a violation of the 

LTCH’s provider agreement obligation 

regarding bundled services. 

In proposing this policy, we are not 

attempting to restrict a LTCH from 

pursuing necessary or more appropriate 

clinical care from another facility. As 

we designed the PPS for LTCHs, the 

original interrupted stay policy was 

created for situations where sound 

clinical judgment could suggest a 

different treatment setting for LTCH 

patients: a patient requiring emergency 

surgery at an acute care hospital; a 

patient who would appear to benefit 

from a specific therapy regimen at an 

IRF; or a patient who had improved and, 

therefore, could be appropriately cared 

for at a SNF. The policy accounted for 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4771

a readmission to the LTCH after the 

emergency care or in the event of a 

change in the patient’s condition, that 

is, for sound clinical reasons. 

Fundamentally, the interrupted stay 

policy resulted from our determination 

to allow considerable latitude to 

medical personnel in this regard 

without untoward payment 

consequences for the Medicare program.

We are proposing a revision to the 

existing interrupted stay policy because 

we believe that 3 days in most instances 

represents an appropriate interval for 

establishing whether or not the reason 

for the patient’s readmission is directly 

connected to the original episode of care 

and whether or not Medicare-covered 

services were obtained during the 

interruption that should have otherwise 

been provided ‘‘under arrangements’’ by 

the LTCH. 

All inpatient services, under 

Medicare, fall within the purview of the 

requirement of section 1862(a)(14) of the 

Act, and, therefore, what we have 

proposed is not a departure from 

existing policy. Under section 

1862(a)(14) of the Act, notwithstanding 

any other provision of this title, ‘‘no 

payment may be made under Part A or 

Part B for any expenses incurred for 

items or services which are other than 

physicians’ services (as defined in 

regulations promulgated specifically for 

purposes of this paragraph), services 

described by section 1861(s)(2)(K) of the 

Act (certified nurse-midwife services, 

qualified psychologist services, and 

services of a certified registered nurse 

anesthetist) and which are furnished to 

an individual who is a patient of a 

hospital or critical access hospital by an 

entity other than the hospital or critical 

access hospital unless the services are 

furnished under arrangements (as 

defined in section 1861(w)(1) of the Act 

with the entity made by the hospital or 

critical access hospital.’’ Section 

1861(w)(1) of the Act states that ‘‘[t]he 

term ‘arrangements’ is limited to 

arrangements under which receipt of 

payment by the hospital, critical access 

hospital, skilled nursing facility, home 

health agency, or hospice program 

(whether in its own right or as agent), 

with respect to services for which an 

individual is entitled to have payment 

made under this title, discharges the 

liability of such individual or any other 

person to pay for the services.’’ We 

believe the objective of these statutory 

provisions, which were implemented 

for inpatient acute care hospitals in 

regulations at § 411.15(m) and 

subsequently at § 412.509 for LTCHs, 

was to discharge financial liability for 

inpatients who may have received 

additional care off-premises and to 

assign payment responsibility for such 

care to the hospital that is being paid for 

that beneficiary’s total care for that spell 

of illness. The total care delivered by 

the hospital may be provided ‘‘directly’’

or ‘‘under arrangements’’ with other 

facilities (§ 412.509(c)) and was 

included in Medicare’s payment to the 

hospital. Over the years, we have often 

referred to this as the ‘‘prohibition 

against unbundling’’ for purposes of 

emphasizing that if a Medicare provider 

‘‘unbundles’’ specific components of a 

beneficiary’s total inpatient care 

(provided either ‘‘directly’’ or ‘‘under 

arrangements’’) and sends separate 

claims to Medicare for those tests or 

treatments, the provider would be acting 

in violation of the statute and applicable 

regulations. Since LTCHs treat patients 

with multicomorbidities who are often 

in need of a wide range of diagnostic 

and treatment modalities and lengthy 

hospitalizations, we believe that in this 

particular setting, this statutory 

requirement is particularly vulnerable to 

gaming. For that reason, we are taking 

this opportunity to clarify the existing 

general unbundling prohibition and to 

propose specific language on the 

unbundling prohibition as it applies to 

the interrupted stay policy under the 

LTCH PPS and are proposing to codify 

it in regulations. As noted above, we are 

concerned that LTCH patients, under 

active treatment, are being 

inappropriately discharged to other 

treatment sites, receiving tests or 

procedures related to one of the 

diagnoses for which the patient is being 

hospitalized and which otherwise 

should have been provided at the LTCH 

either directly or under arrangements 

under § 412.509 and then readmitted to 

the LTCH. Another claim is also being 

submitted to Medicare by the other 

treatment site for those tests or 

procedures. As stated earlier, under the 

LTCH PPS, payments associated with 

specific LTC–DRGs include all costs 

associated with rendering care to the 

type of patients treated in LTCHs and, 

therefore, additional Medicare payments 

for such services would be 

inappropriate.

We understand that during a 

particular hospitalization, a typical 

LTCH patient, with multicomorbidities, 

could suddenly require emergency care 

at an acute care hospital. This would be 

the case, for example, if a patient who 

was admitted to the LTCH with a 

principal diagnosis of chronic 

obstructive pulmonary disease and 

respirator dependence, with secondary 

diagnoses of hypertension, Type II 

diabetes mellitus, history of coronary 

artery disease, and history of bladder 

cancer suddenly exhibits symptoms 

consistent with a pneumothorax (lung 

collapse) and requires treatment that is 

beyond the scope of the LTCH. Services 

obtained at an acute care hospital, under 

the proposed policy would be 

considered related to the original 

diagnoses and submission of a separate 

claim by the acute hospital should be 

considered a violation of the 

unbundling requirement established by 

section 1862(a)(14) of the Act. Payment 

to the acute hospital for any services 

delivered would be the responsibility of 

the LTCH since the critical episode was 

directly related to the hospitalization at 

the LTCH. Conversely, if the same 

patient had instead suddenly suffered a 

myocardial infarction (heart attack) that 

requires a cardiac workup, evaluation, 

and possible implantation of a cardiac 

stent, it may be appropriate to discharge 

this patient for admission to an acute 

care facility for appropriate evaluation 

and the invasive cardiac procedure. 

Under these circumstances, the 

admission to the acute hospital was 

totally unrelated to the patient’s 

diagnoses in the LTCH and arguably 

there may be no need to bundle the 

services. A discharge from the LTCH 

and a readmission following the 

procedure at the acute hospital in order 

to resume the treatment provided by the 

LTCH, for which the patient was 

originally hospitalized, could be 

entirely appropriate. (Notwithstanding 

the necessity of the discharge, under the 

proposed 3-day interrupted stay policy, 

there would be no additional LTC–DRG 

payment generated to the LTCH if the 

patient returns to the LTCH within the 

3-day period.) It could be argued that in 

this type of a subsequent admission to 

the acute hospital, the acute care 

hospital should be able to submit a 

claim to Medicare for the procedure. 

(This payment to the acute hospital may 

be subject to the postacute care policy 

at § 412.4, depending upon the DRG to 

which it is assigned (68 FR 45404 and 

45412, August 1, 2003).)

We are aware that there may be 

exceptions, and that in the example 

cited above, sound medical judgment 

could have dictated that the patient who 

needed the cardiac stent should first be 

discharged to the acute hospital and 

then readmitted to the LTCH within 3-

days in order to continue necessary 

treatment at the LTCH. In such a case, 

notwithstanding our proposed 3-day 

interrupted stay policy, it is arguable 

that the implantation of the cardiac 

stent does not fall within the category of 

services that should be paid for by the 

LTCH under arrangements, and that the 

4772 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

acute hospital should be able to submit 

a claim to Medicare. 

Accordingly, while, arguably, it may 

be appropriate to attempt to limit the 

proposed unbundling requirement that 

services be provided under arrangement 

to those that are ‘‘related’’ to the 

admitting diagnoses of the LTCH 

patient, we have not been able to 

develop a methodology that would be 

administratively feasible and not subject 

to gaming, given the multiple 

comorbidities typical of LTCH patients. 

The prospective payment system for this 

particular setting was designed to 

capture all costs associated with treating 

these highly complicated cases and we 

believe that it will difficult to 

distinguish whether a particular critical 

episode can been seen as arising from 

one of the patient’s many medical 

conditions for which the patient is 

presently at the LTCH. We are soliciting 

comments and suggestions that are 

consistent with the stated policy goals 

described above and that would be 

administratively feasible. 

We understand that any policy that is 

adopted in the final regulation would 

need to be issued with detailed 

instructions to fiscal intermediaries on 

implementation procedures to ensure a 

correct and consistent interpretation of 

our policy objectives. 

d. Onsite Discharges and Readmittances 

Under § 412.532, generally, if more 

than 5 percent of all Medicare 

discharges during a cost reporting 

period are patients who are discharged 

to an onsite SNF, IRF, or psychiatric 

facility, or to an onsite acute care 

hospital and who are then directly 

readmitted to the LTCH, only one LTC–

DRG payment will be made to the LTCH 

for these type of discharges and 

readmittances during the LTCH’s cost 

reporting period. Therefore, payment for 

the entire stay will be paid either as one 

full LTC–DRG payment or a short-stay 

outlier, depending on the duration of 

the entire LTCH stay. 

In applying the 5-percent threshold, 

we apply one threshold for discharges 

and readmittances with a co-located 

acute care hospital. There is also a 

separate 5-percent threshold for all 

discharges and readmittances with colocated SNFs, IRFs, and psychiatric 

facilities. In the case of a LTCH that is 

co-located with an acute care hospital, 

an IRF, or a SNF, the interrupted stay 

policy at § 412.531 applies until the 5-

percent threshold is reached. However, 

once the applicable threshold is 

reached, all such discharges and 

readmittances to the applicable site(s) 

for that cost reporting period are paid as 

one discharge pursuant to § 412.532. 

This means that even if a discharged 

LTCH Medicare patient was readmitted 

to the LTCH following a stay in an acute 

care hospital of greater than 9 days, if 

the facilities share a common location 

and the 5-percent threshold were 

exceeded, the subsequent discharge 

from the LTCH will not represent a 

separate hospitalization for payment 

purposes. Only one LTC–DRG payment 

will be made for all such discharges 

during a cost reporting period to the 

acute care hospital, regardless of the 

length of stay at the acute care hospital, 

that are followed by readmittances to 

the onsite LTCH. 

Similarly, if the LTCH has exceeded 

its 5-percent threshold for all discharges 

to an onsite IRF, SNF, or psychiatric 

hospital or unit, with readmittances to 

the LTCH, the subsequent LTCH 

discharge for patients from any of those 

sites for the entire cost reporting period 

will not be treated as a separate 

discharge for Medicare payment 

purposes. (As under the interrupted stay 

policy, payment to an acute care 

hospital under the IPPS, to an IRF under 

the IRF PPS, and to a SNF under the 

SNF PPS, will not be affected. Payments 

to the psychiatric facility also will not 

be affected.)

5. Other Payment Adjustments 

As indicated earlier, we have broad 

authority under section 123 of Public 

Law 106–113, including whether (and 

how) to provide for adjustments to 

reflect variations in the necessary costs 

of treatment among LTCHs. Thus, in the 

August 30, 2002, final rule (67 FR 

56014–56027), we discussed our 

extensive data analysis and rationale for 

not implementing an adjustment for 

geographic reclassification, rural 

location, treating a disproportionate 

share of low-income patients (DSH), or 

indirect medical education (IME) costs. 

In that same final rule, we stated that we 

would collect data and reevaluate the 

appropriateness of these adjustments in 

the future once more LTCH data become 

available after the LTCH PPS is 

implemented. Because the LTCH PPS 

has only been implemented for less than 

2 years and the lag-time in data 

availability, sufficient new data have 

still not yet been generated that would 

enable us to conduct a comprehensive 

reevaluation of these payment 

adjustments. Nonetheless, we have 

reviewed the limited data that are 

available and found no evidence to 

support additional proposed policy 

changes. Therefore, in this proposed 

rule, we are not proposing an 

adjustment for geographic 

reclassification, rural location, DSH, or 

IME at this time. However, we will 

continue to collect and interpret new 

data as they become available in the 

future to determine if these data support 

proposing any additional payment 

adjustments. 

6. Proposed Budget Neutrality Offset To 

Account for the Transition Methodology 

Under § 412.533, we implemented a 

5-year transition period from reasonable 

cost-based payment to prospective 

payment, during which a LTCH will be 

paid an increasing percentage of the 

LTCH PPS rate and a decreasing 

percentage of its payments under the 

reasonable cost-based payment 

methodology for each discharge. 

Furthermore, we allow a LTCH to elect 

to be paid based on 100 percent of the 

standard Federal rate in lieu of the 

blended methodology. 

The standard Federal rate was 

determined as if all LTCHs will be paid 

based on 100 percent of the standard 

Federal rate. As stated earlier, we 

provide for a 5-year transition period 

that allows LTCHs to receive payments 

based partially on the reasonable costbased methodology. In order to maintain 

budget neutrality as required by section 

123(a)(1) of the Pub. L. 106–113 and 

§ 412.523(d)(2) during the 5-year 

transition period, we reduce all LTCH 

Medicare payments (whether a LTCH 

elects payment based on 100 percent of 

the Federal rate or whether a LTCH is 

being paid under the transition blend 

methodology). Specifically, we reduce 

all LTCH Medicare payments during the 

5-year transition by a factor that is equal 

to 1 minus the ratio of the estimated 

TEFRA reasonable cost-based payments 

that would have been made if the LTCH 

PPS had not been implemented, to the 

projected total Medicare program PPS 

payments (that is, payments made under 

the transition methodology and the 

option to elect payment based on 100 

percent of the Federal rate). 

In the June 6, 2003, final rule (68 FR 

34512), based on the best available data, 

we projected that a certain percentage of 

LTCHs would elect to be paid based on 

100 percent of the standard Federal rate 

rather than receive payment based on 

the transition blend methodology. As 

discussed in that same final rule, using 

the same methodology established in 

the August 30, 2002, final rule (67 FR 

56034), this projection was based on our 

estimate that either: (1) a LTCH has 

already elected payment based on 100 

percent of the Federal rate prior to the 

beginning of the 2004 LTCH PPS rate 

year (July 1, 2003); or (2) a LTCH will 

receive higher payments based on 100 

percent of the standard Federal rate 

compared to the payments they would 

receive under the transition blend 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4773

methodology. Similarly, we projected 

that the remaining LTCHs would choose 

to be paid based on the transition blend 

methodology at § 412.533 because those 

payments would be higher than if they 

were paid based on 100 percent of the 

standard Federal rate.

In the June 6, 2003, final rule (68 FR 

34513), we projected that the full effect 

of the remaining 4 years of the transition 

period, including the election option, 

will result in a cost to the Medicare 

program of $310 million. Specifically, 

for the 2005 LTCH PPS rate year, we 

estimated that the cost of the transition 

would be $100 million. This cost would 

have necessitated an estimated budget 

neutrality offset of 4.6 percent (0.954) 

for payments to LTCHs in the 2005 rate 

year. Furthermore, in order to maintain 

budget neutrality, we indicated that, in 

the future, we would propose a budget 

neutrality offset for each of the 

remaining years of the transition period 

to account for the estimated payments 

for the respective fiscal year. 

For the proposed 2005 LTCH PPS rate 

year, based on the best available data, 

we are projecting that approximately 69 

percent of LTCHs would be paid based 

on 100 percent of the proposed standard 

Federal rate rather than receive payment 

under the transition blend methodology. 

Using the same methodology described 

in the August 30, 2002, final rule (67 FR 

56034), this projection, which uses 

updated data and inflation factors, is 

based on our estimate that either—(1) a 

LTCH has already elected payment 

based on 100 percent of the Federal rate 

prior to the start of the 2005 LTCH PPS 

rate year (July 1, 2004); or (2) a LTCH 

would receive higher payments based 

on 100 percent of the proposed 2005 

LTCH PPS rate year standard Federal 

rate compared to the payments it would 

receive under the transition blend 

methodology. Similarly, we are 

projecting that the remaining 31 percent 

of LTCHs would choose to be paid 

based on the applicable transition blend 

methodology (as set forth under 

§ 412.533(a)) because they would 

receive higher payments than if they 

were paid based on 100 percent of the 

proposed 2005 LTCH PPS rate year 

standard Federal rate. The applicable 

transition blend percentage is applicable 

for a LTCH’s entire cost reporting period 

beginning on or after October 1 (unless 

the LTCH elects payment based on 100 

percent of the Federal rate). 

In this proposed rule, based on the 

best available data and the proposed 

policy revisions described above, we 

project that the full effect of the 

remaining 4 years of the transition 

period (including the election option) 

would result in a cost to the Medicare 

program of $170 million as follows:

LTCH PPS rate year Estimated cost

(in millions) 

2005 .................................. $80 

2006 .................................. 50 

2007 .................................. 30 

2008 .................................. 10 

We note that although the transition 

period will have ended for most LTCHs 

by the 2008 LTCH PPS rate year, a small 

cost is projected for the 2008 LTCH PPS 

rate year (July 1, 2007, through June 30, 

2008) because the applicable transition 

period percentages are based on a 

LTCH’s individual cost reporting period 

and not the LTCH PPS rate year (July 1 

through June 30). Specifically, LTCHs 

with cost reporting periods beginning 

July 1, 2006, through October 1, 2006 

(during the 4th year of the transition 

period), where the applicable transition 

blend percentages are 20 percent based 

on reasonable cost and 80 percent based 

on the Federal rate (see § 412.533), will 

end during the first 3 months of the 

2008 LTCH PPS rate year (July 1, 2007, 

through September 30, 2007). Therefore, 

a small cost is projected for the 2008 

LTCH PPS rate year to account for those 

LTCHs that will still be receiving 

blended transition payments for a 

portion of the 2008 LTCH PPS rate year. 

Accordingly, using the methodology 

established in the August 30, 2002, final 

rule (67 FR 56034) based on updated 

data and the proposed policies and rates 

discussed in this proposed rule, we are 

proposing a 3.0 percent reduction 

(0.970) to all LTCHs’ payments for 

discharges occurring on or after July 1, 

2004, and through June 30, 2005, to 

account for the estimated cost of the 

transition period methodology 

(including the option to elect payment 

based on 100 percent of the Federal rate) 

of the $80 million for the 2005 LTCH 

PPS rate year.

This offset of 3.0 percent has 

decreased relative to the estimate of 4.6 

percent for several reasons. For this 

proposed rule, we have used data from 

more recent cost reports and were able 

to obtain data from more LTCHs (211 

LTCHs as compared to 194 LTCHs in 

the June 6, 2003, final rule). In addition, 

in projecting the percentage of hospitals 

that would elect to be paid based on 100 

percent of the proposed 2005 LTCH PPS 

rate year standard Federal rate, we used 

the Provider Specific File (PSF) in 

which LTCHs indicated whether they 

opted to be paid based on 100 percent 

of standard Federal rate or the transition 

blend methodology for the FY 2003 

LTCH PPS payment year. However, 

based on information obtained from the 

PSF, we learned that, for those LTCHs 

that we projected would choose 

payment for FY 2003 based on 100 

percent of the standard Federal rate 

(where payment based on the full 

Federal rate would be expected to be 

higher for those LTCHs than payment 

under the transition blend 

methodology), a significant number of 

those LTCHs chose to be paid under the 

transition blend methodology that is 

projected to result in payment lower 

than that using 100 percent of the 

standard Federal rate. 

Similarly, a significant number of 

those LTCHs that we expected would 

choose payment under the transition 

blend methodology (where payment 

under the transition blend for those 

LTCHs would be expected to be higher 

than payment based on 100 percent of 

the standard Federal rate) chose to be 

paid using 100 percent of the standard 

Federal rate, which is projected to result 

in payment lower than that under the 

transition blend methodology. Since a 

number of LTCHs opted to be paid 

based on a methodology in which they 

would receive lower payments, we 

assume that the overall cost of $100 

million to the Medicare program of the 

transition period would be less than 

what was projected in the June 6, 2003, 

final rule for the proposed 2005 LTCH 

PPS rate year. Thus, in the June 6, 2003, 

final rule, in estimating the $100 million 

cost to the transition, which would have 

necessitated a 4.6 percent reduction to 

all LTCHs’ payments for the 2005 LTCH 

PPS rate year, we overstated our 

assumptions of the cost of the transition 

period. Accordingly, to account for the 

projected lower cost of the transition 

period due to those LTCHs that chose to 

be paid based on a methodology in 

which they would receive lower 

payments in FY 2003, for this proposed 

rule, we are proposing a 3.0 percent 

(0.970) reduction to all LTCHs’

payments during the 2005 LTCH PPS 

rate year. We note that the proposed 

0.970 transition period budget neutrality 

factor for the 2005 LTCH PPS rate year 

is 3 percentage points lower than the 

transition period budget neutrality 

factor for the 2004 LTCH PPS rate year 

(0.940). This smaller budget neutrality 

offset contributes to greater LTCH 

payment increases between the 2004 

and 2005 LTCH PPS rate years 

compared to the increases seen between 

FY 2003 and the 2004 LTCH PPS rate 

year. We do not expect to see these large 

payment per discharge increases in 

future years as the majority of LTCHs 

will have transitioned fully to the LTCH 

PPS and, therefore, the transition period 

4774 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

budget neutrality factor should remain 

more stable. 

As noted above, in order to maintain 

budget neutrality, we indicated that we 

would propose a budget neutrality offset 

for each of the remaining years of the 

transition period to account for the 

estimated costs for the respective LTCH 

PPS rate years. In this proposed rule, 

based on the best available data, we are 

proposing the following budget 

neutrality offsets to the LTCH PPS 

during the remaining years of the 

transition period: 2.2 percent (0.978) for 

the 2006 LTCH PPS rate year, 1.1 

percent (0.989) for the 2007 LTCH PPS 

rate year, and 0.1 percent (0.990) for the 

2008 LTCH PPS rate year. As noted 

above, the small offset in the 2008 LTCH 

PPS rate year accounts for those LTCHs 

whose blended transition period 

payments will be concluding in the first 

3 months of the 2008 LTCH PPS rate 

year (that is, July 1, 2007, through 

September 30, 2007).

As we discussed in the August 30, 

2002, final rule (67 FR 56036), 

consistent with the statutory 

requirement for budget neutrality in 

section 123(a)(1) of Public Law 106–113, 

we intended for estimated aggregate 

payments under the LTCH PPS to equal 

the estimated aggregate payments that 

would be made if the LTCH PPS was not 

implemented. Our methodology for 

estimating payments for purposes of the 

budget neutrality calculations use the 

best available data at that time and 

necessarily reflect assumptions. As the 

LTCH PPS progresses, we are 

monitoring payment data and will 

evaluate the ultimate accuracy of the 

assumptions used in the budget 

neutrality calculations (for example, 

inflation factors, intensity of services 

provided, or behavioral response to the 

implementation of the LTCH PPS) 

described in the August 30, 2002, final 

rule (67 FR 56027–56037). To the extent 

these assumptions significantly differ 

from actual experience, the aggregate 

amount of actual payments may turn out 

to be significantly higher or lower than 

the estimates on which the budget 

neutrality calculations were based. 

Section 123 of Pub. L. 106–113 and 

section 307 of Pub. L. 106–554 provide 

broad authority to the Secretary in 

developing the LTCH PPS, including the 

authority for appropriate adjustments. 

Under this broad authority, as 

implemented in the regulations at 

§ 412.523(d)(3), we have provided for 

the possibility of making a one-time 

prospective adjustment to the LTCH 

PPS rates by October 1, 2006, so that the 

effect of any significant difference 

between actual payments and estimated 

payments for the first year of the LTCH 

PPS would not be perpetuated in the 

LTCH PPS rates for future years. 

In the June 6, 2003, final rule (67 FR 

34153), we estimated that total Medicare 

program payments for LTCH services 

over the next 5 LTCH PPS rate years 

would be $2.17 billion for the 2004 

LTCH PPS rate year; $2.29 billion for 

the 2005 LTCH PPS rate year; $2.42 

billion for the 2006 LTCH PPS rate year; 

$2.56 billion for the 2007 LTCH PPS 

rate year; and $2.71 billion for the 2008 

LTCH PPS rate year. 

Consistent with the methodology 

discussed in the June 6, 2003, final rule 

(68 FR 34138), in this proposed rule, 

based on the most recent available data, 

we estimate that total Medicare program 

payments for LTCH services for the next 

5 LTCH PPS rate years would be as 

follows:

LTCH PPS rate year 

Estimated

payments

($ in billions) 

2005 .................................. $2.33 

2006 .................................. 2.48 

2007 .................................. 2.64 

2008 .................................. 2.79 

2009 .................................. 2.96 

As noted above, in accordance with 

the methodology established in the 

August 30, 2002, final rule (67 FR 

56037), these estimates are based on the 

projection that 69 percent of LTCHs 

would elect to be paid based on 100 

percent of the proposed 2005 LTCH PPS 

rate year standard Federal rate rather 

than the applicable transition blend, 

and our estimate of 2005 LTCH PPS rate 

year payments to LTCHs using our 

Office of the Actuary’s most recent 

estimate of the excluded hospital with 

capital market basket of 2.9 percent for 

the 2005 LTCH PPS rate year, 3.2 

percent for the 2006 LTCH PPS rate 

year, 3.1 percent for the 2007 LTCH PPS 

rate year, 3.0 percent for the 2008 LTCH 

PPS rate year, and 3.2 percent for the 

2009 LTCH PPS rate year. We also took 

into account our Office of the Actuary’s 

projection that there would be an 

increase in Medicare beneficiary 

enrollment of 2.1 percent in the 2005 

LTCH PPS rate year, 2.4 percent in the 

2006 LTCH PPS rate year, 2.1 percent in 

the 2007 LTCH PPS rate year, 2.0 

percent in the 2008 LTCH PPS rate year, 

and 2.1 percent in the 2009 LTCH PPS 

rate year. 

Because the LTCH PPS has only been 

implemented for less than 2 years, 

sufficient new data have not been 

generated that would enable us to 

conduct a comprehensive reevaluation 

of our budget neutrality calculations. 

Therefore, in this proposed rule, we are 

not proposing to make a one-time 

adjustment under § 412.523(d)(3) so that 

the effect of any significant difference 

between actual payments and estimated 

payments for the first year of the LTCH 

PPS is not perpetuated in the PPS rates 

for future years. However, we will 

continue to collect and interpret new 

data as the data become available in the 

future to determine if such an 

adjustment should be proposed. 

7. Proposed Changes in the Procedure 

for Counting Days in the Average Length 

of Stay Calculation 

Prior to the implementation of the 

PPS for LTCHs, Medicare paid LTCHs 

under the reasonable cost methodology 

subject to limitations on payments. Both 

the BBRA and BIPA required the 

development and implementation of a 

per discharge PPS for LTCHs based on 

DRGs for cost reporting periods 

beginning on or after October 1, 2002 

(67 FR 55954, August 30, 2002). 

Under the reasonable cost-based 

reimbursement system, the number of 

patient days that occurred during a cost 

reporting period and the costs 

associated with those days were 

reported on the hospital’s cost report 

(Hospital and Hospital Health Care 

Complex Cost Report, CMS Form 2552–

96), as were the number of patient 

discharges that occurred during that 

same period. This method of reporting 

and reimbursement did not require that 

all of the days of care to a patient be 

counted as occurring in the cost 

reporting period during which the 

patient was discharged. Under this 

method of reporting and reimbursement 

the days of care to a patient are counted 

in the cost reporting period in which it 

occurred.

With the FY 2003 implementation of 

the LTCH PPS, as in other dischargebased PPS’’, such as those for acute care 

hospitals and for IRFs, all days of the 

patient’s stay, even those occurring 

prior to the cost reporting period in 

which the discharge occurs are counted 

for payment purposes as occurring in 

the cost reporting period of the patient’s 

discharge. An example of this 

distinction is as follows: A LTCH has a 

January 1 through December 31 cost 

reporting period; a Medicare patient is 

admitted on December 15 and 

discharged on February 5, 2004. Prior to 

the LTCH PPS, under the reasonable 

cost-based reimbursement system, costs 

and patient days occurring in December 

2003 would be included in the January 

1 through December 31, 2003, cost 

reporting period, even though the 

patient was not discharged until 

February of the next cost reporting 

period that began January 1, 2004. 

Those patient days occurring in January 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4775

and February would be counted in the 

next cost reporting period (2004) in 

which the discharge occurred. Since the 

implementation of the LTCH PPS, for 

payment purposes, all patient days for 

this stay would be reported in the cost 

reporting period in which the discharge 

occurred. In the above example, 

therefore, all of the patient stay would 

be counted in the next cost reporting 

period which is the 2004 cost reporting 

period. Even if a LTCH is transitioning 

into fully Federal payments and a 

percentage of its payments is based 

upon what would have been paid under 

the former reasonable cost-based 

reimbursement system, under 

§§ 412.500 and 412.533, payment policy 

is governed by the LTCH PPS. At cost 

report settlement, payment is dischargebased. Therefore, once a LTCH is subject 

to the LTCH PPS, that is, for its first cost 

reporting period starting on or after 

October 1, 2002, the ‘‘days follow the 

discharge,’’ which means that both days 

and costs are linked to the patient’s 

discharge, even when the days occurred 

in a previous cost reporting period. 

In the August 30, 2002, final rule (67 

FR 55972), which established the 

policies of the LTCH PPS, we stated that 

‘‘[t]he procedure by which a LTCH will 

be evaluated by its fiscal intermediary to 

determine whether it will qualify as a 

LTCH * * * is the same procedure 

currently employed under the TEFRA 

system.’’ Currently, for determining 

whether a hospital meets the greater 

than 25 day average Medicare inpatient 

length of stay criterion, in the case of a 

Medicare patient who was admitted 

during one cost reporting period, but 

was discharged in a following cost 

reporting period, both covered and 

uncovered days are counted in the cost 

reporting period in which they occurred 

and not linked to the cost reporting 

period in which the patient is 

discharged.

Therefore, presently, for a LTCH with 

a January 1 through December 31 cost 

reporting period, if a patient was 

admitted on December 1, 2002, and 

discharged on January 15, 2003, patient 

days would be counted one way for 

payment purposes and another way for 

purposes of counting the average length 

of stay. For payment purposes, all 46 

days of the stay and the costs associated 

with them would be reported during the 

cost reporting period that the discharge 

occurred, that is, January 1, 2003, 

through December 31, 2003. For 

purposes of determining whether a 

hospital meets the greater than 25 day 

length of stay criterion, under 

§ 412.23(e)(2)(i), however, for the same 

patient, the 31 days in December would 

be counted as occurring during the 

January 1, 2002, to December 31, 2002, 

cost reporting period and the 15 days in 

January 2003 would be counted, along 

with the discharge, during the January 

1, 2003, through December 31, 2003, 

cost reporting period. 

We have received numerous inquiries 

from providers and fiscal intermediaries 

indicating that our two different ways of 

counting days under the LTCH PPS for 

payment and for average length of stay 

calculations have created considerable 

confusion. Therefore, in response to 

these inquiries and consistent with the 

payment system already in place for 

LTCHs as discussed above, in this 

proposed rule, we are proposing to 

revise § 412.23(e)(3)(i) of the regulations 

to specify that if a patient’s stay 

includes days of care furnished during 

two or more separate consecutive cost 

reporting periods, the total days of a 

patient’s stay would be reported in the 

cost reporting period during which the 

patient is discharged in calculating the 

average length of stay for hospitals that 

qualify as LTCHs under both 

§ 412.23(e)(2)(i) and (ii). We are not 

proposing any changes to the formula of 

dividing the number of total days for 

Medicare patients by discharges for 

LTCHs in order to determine whether a 

hospital qualifies as a LTCH under 

§ 412.23(e)(2)(i) or in the formula of 

dividing total days for all patients by 

discharges for LTCHs to qualify under 

§ 412.23(e)(2)(ii). 

In the August 1, 2003, final rule for 

the IPPS (68 FR 45464), we discussed 

the inability of the present cost report 

(Hospital and Hospital Health Care 

Complex Cost Report, CMS Form 2552–

96) to capture total days for Medicare 

patients as required under 

§§ 412.23(e)(2) and (e)(3) for hospitals 

qualifying under § 412.23(e)(2)(i) and 

our present use of census data gathered 

from the Medicare provider analysis and 

review (MedPAR) files for this purpose. 

Prior to the October 1, 2002, 

implementation of the LTCH PPS, we 

relied on data from the most recently 

submitted hospital cost report in order 

to determine whether or not a hospital 

qualified as a LTCH. We would 

continue to utilize patient days and 

discharge data from MedPAR files for 

the qualification calculation under the 

proposed revised § 412.23(e)(3)(i) until 

the cost reporting form is revised to 

capture total days for Medicare 

inpatients. 

As discussed earlier, for a hospital to 

qualify as a LTCH under 

§ 412.23(e)(2)(i), it must demonstrate 

that the Medicare inpatients require care 

for an average Medicare inpatient length 

of stay of greater than 25 days for the 

hospital’s most recent cost reporting 

period. Alternatively, for cost reporting 

periods beginning on or after August 5, 

1997, a hospital that was first excluded 

from the PPS in 1986, and can 

demonstrate that at least 80 percent of 

its annual Medicare inpatient discharges 

in the 12-month cost reporting period 

ending in FY 1997 have a principal 

diagnosis that reflects a finding of 

neoplastic disease must have an average 

inpatient length of stay for all patients, 

including both Medicare and nonMedicare inpatients, of greater than 20 

days (§ 412.23(e)(2)(ii)). As described 

above, under the previous reasonable 

cost-based reimbursement system to 

determine whether or not a hospital met 

this requirement, total days for all 

patients were divided by the total 

number of discharges that occurred 

during a cost reporting period. When we 

implemented the LTCH PPS on October 

1, 2002, we limited this calculation to 

only Medicare patients for hospitals to 

qualify under § 412.23(e)(2)(i), but did 

not change the calculation for hospitals 

to qualify under § 412.23(e)(2)(ii). As we 

noted in the August 30, 2002, final rule, 

‘‘[w]e believe that excluding nonMedicare patients in determining the 

average inpatient length of stay for 

purposes of subclause (I) would be more 

appropriate in identifying the hospitals 

that warrant exclusion under the general 

definition of LTCH in subclause (I). 

However in enacting subclause (II), the 

Congress provided an exception to the 

general definition of LTCH under 

subclause (I), and we have no reason to 

believe that the change in methodology 

for determining the average inpatient 

length of stay would better identify the 

hospitals that the Congress intended to 

exclude under subclause (II) (67 FR 

55974). These hospitals will continue to 

have their greater than 20 days average 

length of stay calculated based on all 

days for all patients, whether Medicare 

or non-Medicare patients, and will 

continue to be determined based on the 

days of care provided during the cost 

reporting period and not based solely on 

the count of days for the patients 

discharged during the cost reporting 

period. 

8. Clarification of the Requirements for 

a Satellite Facility or a Remote Location 

To Qualify as a LTCH and Proposed 

Changes to the Requirements for Certain 

Satellite Facilities and Remote 

Locations 

a. Proposed Policy Change

In § 412.22(h)(1), we define a satellite 

as ‘‘a part of a hospital that provides 

inpatient services in a building also 

used by another hospital, or in one or 

more entire buildings located on the 

4776 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

same campus as buildings used by 

another hospital.’’ Satellite 

arrangements exist when a IPPS 

excluded hospital is either a 

freestanding hospital or a hospitalwithin-a-hospital under § 412.22(e) that 

establishes an additional location by 

sharing space in a building also used by 

another hospital, or in one or more 

entire buildings located on the same 

campus as buildings used by another 

hospital. A detailed discussion of our 

policies regarding Medicare payments 

for satellite facilities of hospitals 

excluded from the IPPS was set forth in 

the IPPS final rules published on July 

30, 1999 (64 FR 41532–41534), and 

August 1, 2003 (67 FR 49982). 

We established Medicare regulations 

regarding satellite facilities for several 

reasons. First, we believe that whenever 

a facility that is co-located with an acute 

care hospital is presented as part of 

another IPPS-excluded hospital, it is 

necessary to ensure that the facility is, 

in fact, organized and operated as part 

of the IPPS-excluded hospital and is not 

simply a unit of the acute hospital with 

which it is co-located. Although we 

recognize that the co-location of 

Medicare providers, in the form of 

satellite facilities, hospitals-withinhospitals, and excluded units, may have 

some legitimate advantages from the 

standpoint of clinical care as well as 

medical efficiency, we continue to 

believe that the physical proximity 

inherent in such arrangements also has 

considerable potential for Medicare 

program payment abuse in that it may 

facilitate patient shifting for reasons 

related to payment rather than clinical 

benefits. In existing regulations at 

§ 412.22(e) for hospitals-withinhospitals (59 FR 45330, September 1, 

1994), at § 412.23(h) for hospital 

satellites (64 FR 41532–41534, July 30, 

1999, and 67 FR 49982, August 1, 2002), 

and § 412.25(e) for satellite facilities, we 

promulgated ‘‘separateness and control’’

requirements governing the 

relationships between these facilities 

and their host hospitals. 

Research by the Urban Institute on the 

universe of LTCHs that was used in 

developing the LTCH PPS pointed to the 

considerable growth of new LTCHs (or 

LTCH beds, as in the case of satellite 

facilities) that were co-located with 

other Medicare providers. Our more 

recent data confirm that this trend has 

continued. Even though our existing 

regulations governing hospitals-withinhospitals and satellite facilities 

established certain functional 

boundaries between these entities and 

their hosts, we instituted a policy under 

the LTCH regulations at § 412.532 to 

discourage inappropriate patient 

discharges and readmissions among colocated Medicare providers (67 FR 

56007–56010, August 30, 2002). 

Furthermore, in the June 6, 2003, LTCH 

PPS final rule (68 FR 34157), we noted 

that we are monitoring the movement of 

patients among onsite providers for the 

purpose of determining whether we 

should consider proposing further 

changes to LTCH coverage and payment 

policy. 

LTCH hospitals-within-hospitals and 

LTCH satellite facilities are similar in 

that both are located on the same 

campus or in the same building as 

another hospital, and many of the same 

separateness and control regulations 

exist for both types of facilities. 

However, there is an important 

distinction between them. A LTCH that 

is co-located with another Medicare 

hospital (generally an acute care 

hospital) is itself a distinct hospital 

(§ 412.22(e)). Section 412.23(e)(1) 

requires a LTCH to have a provider 

agreement as described under 42 CFR 

Part 489 to participate as a hospital. A 

satellite facility of a LTCH, like all 

satellite facilities of hospitals excluded 

from the IPPS (§ 412.22(h)), is not itself 

a separate hospital, but a ‘‘part of a 

hospital that provides inpatient services 

in a building also used by another 

hospital * * *’’ Consistent with its 

status as another hospital, a hospitalwithin-a-hospital has its own Medicare 

provider number. A satellite facility 

shares the provider number of the 

parent hospital.

Because a satellite facility is not 

considered a separate hospital under 

Medicare, if a LTCH with a satellite 

facility is interested in ‘‘spinning off’’

the satellite facility and establishing the 

previous satellite facility as an 

independent LTCH, the satellite must 

first be separately licensed by the State. 

The facility must further demonstrate 

compliance with the Medicare 

conditions of participation (COPS) 

under part 482 and other requirements 

for establishing a provider agreement 

under parts 482 and 489 to participate 

under Medicare as a hospital 

(§ 412.23(e)(1)). (Compliance with the 

COPS may be either demonstrated by a 

State agency survey or based on 

accreditation as a hospital by the Joint 

Commission on Accreditation of 

Healthcare Organizations (JCAHO or the 

American Osteopathic Association 

(AOA) (section 1865 of the Act).) 

Second, if the newly established 

hospital meets the provider agreement 

requirements under 42 CFR part 489, it 

must demonstrate that it has an average 

Medicare inpatient length of stay of 

greater than 25 days (§ 412.23(e)(2)(i)) 

by providing data of a period of at least 

5 months of the preceding 6-month 

period (§ 412.22(e)(3)(ii) and (iii)). The 

data used by the fiscal intermediary to 

calculate the average length of stay 

would be from discharges from the 

newly established hospital and not from 

discharges attributable to stays at the 

previous satellite facility for the period 

prior to its participation as a separate 

hospital. 

Although we believe that these 

requirements, under existing 

§ 412.23(e)(1) and (2), are clear and 

unambiguous, we have been informed 

that due to misinterpretation, in some 

circumstances, application of this policy 

has been inconsistent. Therefore, some 

facilities operating as LTCH satellite 

facilities have been inappropriately 

granted autonomous status that has 

resulted in the assignment of their own 

Medicare provider numbers as LTCHs 

without first obtaining provider 

agreements to participate in Medicare as 

hospitals, under § 412.23(e)(1). 

Apparently, in these cases, the satellite 

facilities were able to demonstrate that 

as satellite facilities of LTCHs, Medicare 

patients at their location had an average 

length of stay of greater than 25 days, in 

compliance with § 412.22(h)(2)(ii) 

which required satellite facilities of 

hospitals excluded from the IPPS to 

comply with specific requirements for 

their provider category. In other 

situations, we understand that fiscal 

intermediaries correctly refused to 

accept data from LTCH satellite 

facilities for purposes of qualification as 

an autonomous LTCH and instead 

required the satellites to satisfy criteria 

for designation as a hospital, under 

§ 412.23(e)(1). In these cases, the fiscal 

intermediary evaluated average length 

of stay data dating from that hospital 

designation forward, as required by 

§ 412.23(e)(2). 

We believe consistency in the 

application of this policy is needed, in 

compliance with existing regulations at 

§ 412.23(e)(1) and (e)(2). We are 

emphasizing that a LTCH satellite 

facility that is ‘‘a part of a hospital that 

provides inpatient services in a building 

also used by another hospital***’’

that is seeking to become an 

independent LTCH, must comply with 

the requirements set forth in the 

definition of a new LTCH in existing 

§ 412.23(e)(4). Therefore, we are 

proposing to revise § 412.23(e)(4) to 

include a new paragraph (e)(4)(ii) that 

specifies that only data reflecting the 

average length of stay for Medicare 

patients in the newly established 

hospital will be utilized in the 

qualifying calculation at § 412.23(e)(2). 

Thus, we are proposing clarifying 

language that emphasizes that if a 

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satellite facility is reorganized as a 

separately participating hospital under 

Medicare with or without a concurrent 

change of ownership, the new hospital 

cannot be paid under Medicare as a 

LTCH until it demonstrates that it has 

an average Medicare inpatient length of 

stay in excess of 25 days based on 

discharges occurring on or after its 

effective date of participation as a 

hospital and not based on discharges at 

the satellite facility site when it was part 

of another hospital (proposed 

§ 412.23(e)(4)(ii)).

This proposed policy clarification 

would also be applicable to remote 

locations of LTCHs that are being 

voluntarily separated from the parent 

LTCHs or sold and are seeking status as 

independent LTCHs. A remote location 

of a hospital (as defined at 

§ 413.65(a)(2)) is similar to a satellite 

facility because it does not participate in 

Medicare as a separate hospital, but 

only as an integral and subordinate part 

of another hospital. However, unlike a 

satellite facility, a remote location is not 

one that is in the same building or on 

the same campus as another hospital. 

(Because a remote location has no 

‘‘host’’ hospital, it is not required to 

meet the separateness criteria as 

hospitals-within-hospitals in § 412.22(e) 

that would arise for satellite facilities 

that become independent LTCHs, as 

discussed above.) Since the hospital 

would not be a LTCH until the fiscal 

intermediary reviews its documentation 

and determines that it qualifies, during 

those initial months, the hospital would 

be paid under the IPPS. 

We emphasize that notwithstanding 

the fact that satellite facilities of LTCHs 

are required to independently meet the 

average Medicare inpatient length of 

stay requirement of greater than 25 days 

under § 412.22(h)(2)(ii)(D), we are 

proposing to evaluate length of stay data 

only from discharges occurring after the 

facility has become a hospital. This is 

the case as the prerequisite to 

designation as a LTCH is a provider 

agreement under part 489 of chapter IV 

to participate as a hospital in the 

Medicare program (§ 412.23(e)(1)). The 

requirement that a satellite facility 

independently meets the length of stay 

criterion was never intended as an 

alternative method of qualifying as a 

separate excluded hospital. Under 

§ 412.23(h)(2)(ii), satellite facilities of 

psychiatric, rehabilitation, and 

children’s hospitals, as well as LTCHs, 

are required to meet specific 

requirements for their provider category 

because we believed that it was 

essential to ensure that satellite facilities 

of excluded hospitals actually delivered 

the specialized care for which Medicare 

was paying (§ 412.23(h)(2)(ii)). 

Furthermore, those regulations were 

designed to ensure that there is both an 

appropriate financial and administrative 

linkage between the satellite facility and 

the parent hospital, and a clear 

separation of the satellite facility from 

the host hospital. These policies are set 

forth in the July 30, 1999, IPPS final rule 

(64 FR 41534). In the case of a LTCH, 

we believe that our existing requirement 

that a satellite facility independently 

meet the greater than 25-day average 

Medicare inpatient length of stay 

requirement is consistent with the 

guiding principles of the LTCH PPS. We 

do not believe patients who do not 

require long-term hospital-level care 

should be admitted to either a LTCH or 

its satellite facility. In addition, we were 

concerned that, without requiring 

separate compliance, shorter lengths of 

stay at either the LTCH or its satellite 

facility could be balanced by longer 

stays at the other. By establishing these 

distinct standards for satellite facilities 

of excluded hospitals, we also wanted to 

safeguard against the possibility of these 

facilities functioning as a part of an 

acute care hospital. In the case of a 

LTCH, that result would be inconsistent 

with section 1886(d)(1)(B) of the Act, 

which provides for excluded 

rehabilitation and psychiatric units to 

be established in acute care hospitals, 

but not long-term care units. 

There is another situation that must 

be distinguished from the scenario 

discussed above in which a LTCH is 

voluntarily separating from or selling its 

satellite facility or remote location with 

the intent of the satellite facility or 

remote location converting into an 

independent hospital and eventually a 

LTCH. Our recent provider-based 

regulations under § 413.65 require a 

remote location of a hospital that fails 

to meet certain requirements at 

§ 413.65(e)(3) to seek status as a separate 

hospital if it is to continue functioning 

and being paid by Medicare. Satellite 

facilities of excluded hospitals, such as 

LTCHs, may also be affected by these 

new provider-based requirements and, 

in those cases, the following procedure 

would also be applicable.

Under the provider-based regulations, 

which became effective for the main 

providers as defined in § 413.65(a)(2), 

for cost reporting periods beginning on 

or after July 1, 2003, certain facilities 

that were formerly treated for payment 

purposes by Medicare as remote 

locations or satellite facilities of 

hospitals, are now precluded from 

continuing in that status because they 

do not meet the ‘‘common service area’’

location requirement for provider-based 

facilities under § 413.65(e)(3) (67 FR 

50078, August 1, 2002). It has come to 

our attention that certain satellite 

facilities and remote locations of LTCHs 

are being affected by this preclusion. 

Due to the compulsory nature of this 

separation requirement, we are 

proposing an exception for these 

affected satellite facilities and remote 

locations of LTCHs that will allow them 

to utilize length of stay data from the 5 

months of the previous 6 months prior 

to when they were compelled to 

separate from their main provider under 

§ 413.65(e)(3) (proposed 

§ 412.23(e)(4)(iii)). 

We want to emphasize that the only 

distinction that we are proposing 

between requirements proposed under 

§ 412.23(e)(4)(ii), for satellite facilities 

and remote locations that voluntarily 

separate from their parent LTCHs and 

requirements in proposed 

§ 412.23(e)(4)(iii) that apply to satellite 

facilities and remote locations 

compelled by provider-based location 

requirements at § 413.65(e)(3) to 

terminate their link to their main 

providers, is that we are proposing to 

allow the latter group to utilize data 

gathered prior to establishing 

themselves as distinct hospitals. 

Furthermore, this distinction only exists 

for satellite facilities and remote 

locations of LTCHs that are affected by 

(§ 413.65(e)(3)) and which were in 

existence prior to the effective date of 

the provider-based location 

requirements (July 1, 2003). Under the 

regulations at § 413.65(e)(3), we would 

not permit these entities to be 

established more than 35 miles from the 

main providers after June 30, 2003. We 

would assign new Medicare provider 

numbers to former remote locations of 

LTCH hospitals or satellite facilities that 

fail the new location requirement in 

§ 413.65(e)(3), but want to become new 

LTCHs, if the following conditions are 

satisfied in proposed § 412.23(e)(4)(iii): 

• The facility meets all Medicare 

COPs in 42 CFR Part 482 and other 

participation requirements set forth in 

42 CFR Part 489. 

• The facility provides data to its 

fiscal intermediary indicating that 

during 5 of the immediate 6 months 

preceding its separation from the main 

hospital, it has independently met the 

greater than 25-day average length of 

stay requirement for its Medicare 

patients (§ 412.23(e)(3)). 

b. Technical Correction 

In the August 30, 2002, LTCH PPS 

final rule (67 FR 56053), we issued 

regulations at § 412.532(i) that require a 

LTCH or a satellite of a LTCH to notify 

its fiscal intermediary and CMS in 

writing of its co-location and any 

4778 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

changes in co-location status. In 

§ 412.532(i), we include a crossreference to the Medicare regulations 

that contain the requirements for a 

satellite facility to be paid under 

Medicare. We made an unintentional 

error in specifying this cross-reference 

as paragraphs (h)(1) through (h)(4) of 

§ 412.532. The correct cross-reference to 

the requirements for satellite facilities is 

§ 412.22(h)(1) through (h)(4). Therefore, 

we are proposing to revise § 412.532(i) 

to include the correct cross-reference to 

§ 412.22(h)(1) through (h)(4). 

V. Computing the Proposed Adjusted 

Federal Prospective Payments for the 

2005 LTCH PPS Rate Year 

(If you choose to comment on issues 

in this section, please include the 

caption ‘‘COMPUTING THE PROPOSED 

ADJUSTED FEDERAL PROSPECTIVE 

PAYMENTS’’ at the beginning of your 

comments.) 

In accordance with § 412.525 and as 

discussed in section IV.C. of this 

proposed rule, the proposed standard 

Federal rate is adjusted to account for 

differences in area wages by multiplying 

the labor-related share of the proposed 

standard Federal rate by the appropriate 

proposed LTCH PPS wage index (as 

shown in Tables 1 and 2 of the 

Addendum to this proposed rule). The 

proposed standard Federal rate is also 

adjusted to account for the higher costs 

of hospitals in Alaska and Hawaii by 

multiplying the nonlabor-related share 

of the proposed standard Federal rate by 

the appropriate proposed cost-of-living 

factor (shown in Table I in section 

IV.C.2. of this preamble). In this 

proposed rule, as discussed in section 

IV.B. of this preamble, we are proposing 

a standard Federal rate of $36,762.24 for 

the 2005 LTCH PPS rate year. We 

illustrate the methodology used to 

adjust the proposed Federal prospective 

payments in the following example:

During the 2005 LTCH PPS rate year, 

a Medicare patient is in a LTCH located 

in Chicago, Illinois (MSA 1600) with a 

proposed two-fifths wage index value of 

1.0357 (see Table 1 in the Addendum to 

this proposed rule). The Medicare 

patient is classified into LTC–DRG 9 

(Spinal Disorders and Injuries), which 

has a relative weight of 1.5025 (see

Table 3 of the Addendum to this 

proposed rule). To calculate the LTCH’s 

total adjusted proposed Federal 

prospective payment for this Medicare 

patient, we compute the wage-adjusted 

proposed Federal prospective payment 

amount by multiplying the unadjusted 

proposed standard Federal rate 

($36,762.24) by the labor-related share 

(72.885 percent) and the proposed wage 

index value (1.0357). (We note that the 

LTCH in this example is in the second 

year of the wage index phase-in, thus, 

the two-fifths wage index value is 

applicable.) This wage-adjusted amount 

is then added to the nonlabor-related 

portion of the unadjusted proposed 

standard Federal rate (27.115 percent; 

adjusted for cost of living, if applicable) 

to determine the adjusted proposed 

Federal rate, which is then multiplied 

by the LTC–DRG relative weight 

(1.5025) to calculate the total adjusted 

proposed Federal prospective payment 

for the 2005 LTCH PPS rate year 

($56,672.48). In addition, as discussed 

in section IV.C.6. of this preamble, for 

the 2005 LTCH PPS rate year, we are 

proposing to reduce the LTCH PPS 

payment by 3.0 percent for the budget 

neutrality offset to account for the costs 

of the transition methodology. The 

following illustrates the components of 

the calculations in this example:

Unadjusted Proposed Standard Federal Prospective Payment Rate ................................................................................................. $36,762.24 

Labor-Related Share ........................................................................................................................................................................... ×0.72885 

Labor-Related Portion of the Proposed Federal Rate ........................................................................................................................ =$26,794.16 

Proposed 2⁄5th Wage Index (MSA 1600) ............................................................................................................................................. ×1.0357 

Wage-Adjusted Labor Share of Proposed Federal Rate .................................................................................................................... =$27,750.71 

Nonlabor-Related Portion of the Proposed Federal Rate ($36,762.24 × 0.27115) ......................................................................... +$ 9,968.08 

Adjusted Proposed Federal Rate Amount ........................................................................................................................................... =$37,718.79 

LTC–DRG 4 Relative Weight .............................................................................................................................................................. ×1.5025 

Total Adjusted Proposed Federal Prospective Payment (Before the Proposed Budget Neutrality Offset) ........................................ =$56,672.48 

Proposed Budget Neutrality Offset ...................................................................................................................................................... ×0.970 

Total Proposed Federal Prospective Payment (Including the Proposed Budget Neutrality Offset) ................................................... =$54,972.31 

VI. Transition Period 

(If you choose to comment on issues 

in this section, please include the 

caption ‘‘TRANSITION PERIOD’’ at the 

beginning of your comments.) 

To provide a stable fiscal base for 

LTCHs, under § 412.533, we 

implemented a 5-year transition period 

from reasonable cost-based 

reimbursement under the TEFRA 

system to a prospective payment based 

on industry-wide average operating and 

capital-related costs. Under the average 

pricing system, payment is not based on 

the experience of an individual hospital. 

As discussed in the August 30, 2002 

final rule (67 FR 56038), we believe that 

a 5-year phase-in provides LTCHs time 

to adjust their operations and capital 

financing to the LTCH PPS, which is 

based on prospectively determined 

Federal payment rates. Furthermore, we 

believe that the 5-year phase-in of the 

LTCH PPS also allows LTCH personnel 

to develop proficiency with the LTCDRG coding system, which will result in 

improvement in the quality of the data 

used for generating our annual 

determination of relative weights and 

payment rates.

In accordance with § 412.533, the 

transition period for all hospitals subject 

to the LTCH PPS begins with the 

hospital’s first cost reporting period 

beginning on or after October 1, 2002, 

and extends through the hospital’s last 

cost reporting period beginning before 

October 1, 2006. During the 5-year 

transition period, a LTCH’s total 

payment under the LTCH PPS is based 

on two payment percentages—one based 

on reasonable cost-based (TEFRA) 

payments and the other based on the 

standard Federal prospective payment 

rate. The percentage of payment based 

on the LTCH PPS Federal rate increases 

by 20 percentage points each year, while 

the reasonable cost-based payment rate 

percentage decreases by 20 percentage 

points each year, for the next 3 fiscal 

years. For cost reporting periods 

beginning on or after October 1, 2006, 

Medicare payment to LTCHs will be 

determined entirely under the Federal 

PPS methodology. The blend 

percentages as set forth in § 412.533(a) 

are as follows:

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4779

Cost reporting periods beginning on or after Federal rate percentage 

Reasonable cost

principles

rate percentage 

October 1, 2002 ................................................................................................................................... 20 80 

October 1, 2003 ................................................................................................................................... 40 60 

October 1, 2004 ................................................................................................................................... 60 40 

October 1, 2005 ................................................................................................................................... 80 20 

October 1, 2006 ................................................................................................................................... 100 0 

For cost reporting periods that begin 

on or after October 1, 2003, and before 

October 1, 2004 (FY 2004), the total 

payment for a LTCH is 60 percent of the 

amount calculated under reasonable 

cost principles for that specific LTCH 

and 40 percent of the Federal 

prospective payment amount. For cost 

reporting periods that begin on or after 

October 1, 2004, and before October 1, 

2005 (FY 2005), the total payment for a 

LTCH will be 40 percent of the amount 

calculated under reasonable cost 

principles for that specific LTCH and 60 

percent of the Federal prospective 

payment amount. As we noted in the 

June 6, 2003, final rule (68 FR 34155), 

the change in the effective date of the 

annual LTCH PPS rate update from 

October 1 to July 1 has no effect on the 

LTCH PPS transition period as set forth 

in § 412.533(a). That is, LTCHs paid 

under the transition blend under 

§ 412.533(a) will receive those blend 

percentages for the entire 5-year 

transition period (unless they elect 

payments based on 100 percent of the 

Federal rate). Furthermore, LTCHs paid 

under the transition blend will receive 

the appropriate blend percentages of the 

Federal and reasonable cost-based rate 

for their entire cost reporting period as 

prescribed in § 412.533(a)(1) through 

(a)(5). 

The reasonable cost-based rate 

percentage is a LTCH specific amount 

that is based on the amount that the 

LTCH would have been paid (under 

TEFRA) if the PPS were not 

implemented. Medicare fiscal 

intermediaries will continue to compute 

the LTCH reasonable cost-based 

payment amount according to 

§ 412.22(b) of the regulations and 

sections 1886(d) and (g) of the Act. 

In implementing the PPS for LTCHs, 

one of our goals is to transition hospitals 

to full prospective payments as soon as 

appropriate. Therefore, under 

§ 412.533(c), we allow a LTCH, which is 

subject to a blended rate, to elect 

payment based on 100 percent of the 

Federal rate at the start of any of its cost 

reporting periods during the 5-year 

transition period rather than 

incrementally shifting from reasonable 

cost-based payments to prospective 

payments. Once a LTCH elects to be 

paid based on 100 percent of the Federal 

rate, it will not be able to revert to the 

transition blend. For cost reporting 

periods that began on or after December 

1, 2002, and for the remainder of the 5-

year transition period, a LTCH must 

notify its fiscal intermediary in writing 

of its election on or before the 30th day 

prior to the start of the LTCH’s next cost 

reporting period. For example, a LTCH 

with a cost reporting period that begins 

on May 1, 2004, must notify its fiscal 

intermediary in writing of an election 

before April 1, 2004. 

Under § 412.533(c)(2)(i), the 

notification by the LTCH to make the 

election must be made in writing to the 

Medicare fiscal intermediary. Under 

§§ 412.533(c)(2)(ii) and (c)(2)(iii), the 

intermediary must receive the request 

on or before the specified date (that is, 

on or before the 30th day before the 

applicable cost reporting period begins 

for cost reporting periods beginning on 

or after December 1, 2002 through 

September 30, 2006), regardless of any 

postmarks or anticipated delivery dates.

Notifications received, postmarked, or 

delivered by other means after the 

specified date will not be accepted. If 

the specified date falls on a day that the 

postal service or other delivery sources 

are not open for business, the LTCH will 

be responsible for allowing sufficient 

time for the delivery of the request 

before the deadline. If a LTCH’s 

notification is not received timely, 

payment will be based on the transition 

period blend percentages. 

VII. Payments to New LTCHs 

(If you choose to comment on issues in 

this section, please include the caption 

‘‘PAYMENTS TO NEW LTCHs’’ at the 

beginning of your comments.) 

Under § 412.23(e)(4), for purposes of 

Medicare payment under the LTCH PPS, 

we define a new LTCH as a provider of 

inpatient hospital services that 

otherwise meets the qualifying criteria 

for LTCHs, set forth in § 412.23(e)(1) 

and (e)(2), under present or previous 

ownership (or both), and its first cost 

reporting period as a LTCH begins on or 

after October 1, 2002. We also specify in 

§ 412.500 that the LTCH PPS is 

applicable to hospitals with a cost 

reporting period that began on or after 

October 1, 2002. (In section I.B.3. of this 

proposed rule, we clarify existing policy 

for the time frame for calculating the 

average length of stay of a new LTCH as 

it relates to a satellite facility or remote 

location of a LTCH that voluntarily 

seeks to become a separate LTCH. We 

are also proposing a policy for the time 

frame for calculating the average length 

of stay as it relates to a remote location 

of a hospital that fails to meet certain 

requirements at § 413.65 and is required 

to seek status as a separate LTCH.) 

As we discussed in the August 30, 

2002, final rule (67 FR 56040), this 

definition of new LTCHs should not be 

confused with those LTCHs first paid 

under the TEFRA payment system for 

discharges occurring on or after October 

1, 1997, described in section 

1886(b)(7)(A) of the Act, as added by 

section 4416 of Public Law 105–33. As 

stated in § 413.40(f)(2)(ii), for cost 

reporting periods beginning on or after 

October 1, 1997, the payment amount 

for a ‘‘new’’ (post-FY 1998) LTCH is the 

lower of the hospital’s net inpatient 

operating cost per case or 110 percent of 

the national median target amount 

payment limit for hospitals in the same 

class for cost reporting periods ending 

during FY 1996, updated to the 

applicable cost reporting period (see 62 

FR 46019, August 29, 1997). Under the 

LTCH PPS, those ‘‘new’’ LTCHs that 

meet the definition of ‘‘new’’ under 

§ 413.40(f)(2)(ii) and that have their first 

cost reporting period as a LTCH 

beginning prior to October 1, 2002, will 

be paid under the transition 

methodology described in § 412.533. 

As noted above and in accordance 

with § 412.533(d), new LTCHs will not 

participate in the 5-year transition from 

reasonable cost-based reimbursement to 

prospective payment. As we discussed 

in the August 30, 2002, final rule (67 FR 

56040), the transition period is intended 

to provide existing LTCHs time to adjust 

to payment under the new system. Since 

these new LTCHs with cost reporting 

periods beginning on or after October 1, 

2002, would not have received payment 

under reasonable cost-based 

reimbursement for the delivery of LTCH 

services prior to the effective date of the 

LTCH PPS, we do not believe that those 

new LTCHs require a transition period 

4780 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

in order to make adjustments to their 

operations and capital financing, as will 

LTCHs that have been paid under the 

reasonable cost-based methodology. 

VIII. Method of Payment 

(If you choose to comment on issues in 

this section, please include the caption 

‘‘METHOD OF PAYMENT’’ at the 

beginning of your comments.)

Under § 412.513, a Medicare LTCH 

patient is classified into a LTC–DRG 

based on the principal diagnosis, up to 

eight additional (secondary) diagnoses, 

and up to six procedures performed 

during the stay, as well as age, sex, and 

discharge status of the patient. The 

LTC–DRG is used to determine the 

Federal prospective payment that the 

LTCH will receive for the Medicarecovered Part A services the LTCH 

furnished during the Medicare patient’s 

stay. Under § 412.541(a), the payment is 

based on the submission of the 

discharge bill. The discharge bill also 

provides data to allow for reclassifying 

the stay from payment at the full LTC–

DRG rate to payment for a case as a 

short-stay outlier (under § 412.529) or as 

an interrupted stay (under § 412.531), or 

to determine if the case will qualify for 

a high-cost outlier payment (under 

§ 412.525(a)). 

Accordingly, the ICD–9–CM codes 

and other information used to determine 

if an adjustment to the full LTC–DRG 

payment is necessary (for example, 

length of stay or interrupted stay status) 

are recorded by the LTCH on the 

Medicare patient’s discharge bill and 

submitted to the Medicare fiscal 

intermediary for processing. The 

payment represents payment in full, 

under § 412.521(b), for inpatient 

operating and capital-related costs, but 

not for the costs of an approved medical 

education program, bad debts, blood 

clotting factors, anesthesia services by 

hospital-employed nonphysician 

anesthetists or obtained under 

arrangement, or the costs of 

photocopying and mailing medical 

records requested by a QIO, which are 

costs paid outside the LTCH PPS. 

As under the previous reasonable 

cost-based payment system, under 

§ 412.541(b) a LTCH may elect to be 

paid using the periodic interim payment 

(PIP) method described in § 413.64(h) 

and may be eligible to receive 

accelerated payments as described in 

§ 413.64(g). 

For those LTCHs that are paid during 

the 5-year transition based on the 

blended transition methodology in 

§ 412.533(a) for cost reporting periods 

that began on or after October 1, 2002, 

and before October 1, 2006, the PIP 

amount is based on the transition blend. 

For those LTCHs that are paid based on 

100 percent of the standard Federal rate, 

the PIP amount is based on the 

estimated prospective payment for the 

year rather than on the estimated 

reasonable cost-based reimbursement. 

We exclude high-cost outlier payments 

that are paid upon submission of a 

discharge bill from the PIP amounts. In 

addition, Part A costs that are not paid 

for under the LTCH PPS, including 

Medicare costs of an approved medical 

education program, bad debts, blood 

clotting factors, anesthesia services by 

hospital-employed nonphysician 

anesthetists or obtained under 

arrangement, and the costs of 

photocopying and mailing medical 

records requested by a QIO, are subject 

to the interim payment provisions 

(§ 412.541(c)).

Under § 412.541(d), LTCHs with 

unusually long lengths of stay and that 

are not receiving payment under the PIP 

method may bill on an interim basis (60 

days after an admission and at intervals 

of at least 60 days after the date of the 

first interim bill) and should include 

any high-cost outlier payment 

determined as of the last day for which 

the services have been billed. 

IX. Monitoring 

(If you choose to comment on issues 

in this section, please include the 

caption ‘‘MONITORING’’ at the 

beginning of your comments.) 

In the August 30, 2002, final rule (67 

FR 56014), we discussed our intent to 

develop a monitoring system that will 

assist us in evaluating the LTCH PPS. 

Specifically, we discussed the 

monitoring of the various policies that 

we believe would provide equitable 

payment for stays that reflect less than 

the full course of treatment and reduce 

the incentives for inappropriate 

admissions, transfers, or premature 

discharges of patients that are present in 

a discharge-based prospective payment 

system. We also stated our intent to 

collect and interpret data on changes in 

average lengths of stay under the LTCH 

PPS for specific LTC–DRGs and the 

impact of these changes on the Medicare 

program. We stated that if our data 

indicates that changes might be 

warranted, we may revisit these issues 

and consider proposing revisions to 

these policies in the future. To this end, 

we have designed system features 

utilizing MedPAR data that will enable 

CMS and the fiscal intermediary to track 

beneficiary movement to and from a 

LTCH and to and from another Medicare 

provider. As we discussed in the June 

6, 2003, final rule (68 FR 34157), the 

MedPAC has endorsed this monitoring 

activity and is pursuing an independent 

research initiative that will evaluate all 

aspects of LTCHs, including the 

accuracy of data reporting, provision of 

equivalent services by other providers, 

growth in the number of LTCHs, and 

clinical outcomes. We are particularly 

concerned with the recent significant 

growth in the number of LTCHs. Since 

the implementation of LTCH PPS we 

have observed a growth of nearly 50 

percent in the number of LTCHs, and 

that growth is almost exclusively in the 

number of LTCH that are hospitals 

within hospitals. We intend to focus our 

monitoring on this growth and the 

potential for gaming the IPPS by the colocated acute care hospital and the 

LTCH PPS by the LTC hospital within 

a hospital. Based on the outcome of that 

monitoring activity we may need to 

address either the criteria for qualifying 

for LTCH PPS payments for hospitals 

within hospitals, the payment rates for 

patients that are discharged from acute 

care hospitals and admitted to a colocated LTCH or other policy issues that 

may arise as a result of our monitoring 

activity. 

Also, in the June 6, 2003, final rule 

(68 FR 34157), we explained that, given 

that the only unique requirement that 

distinguishes a LTCH from other acute 

care hospitals is an average inpatient 

length of stay of greater than 25 days, 

we continue to be concerned about the 

extent to which LTCH services and 

patients differ from those services and 

patients treated in other Medicare 

covered settings (for example, SNFs and 

IRFs) and how the LTCH PPS will affect 

the access, quality, and costs across the 

health care continuum. Thus, we will 

monitor trends in the supply and 

utilization of LTCHs and Medicare’s 

costs in LTCHs relative to other 

Medicare providers. For example, we 

may conduct medical record reviews of 

Medicare patients to monitor changes in 

service use (for example, ventilator use) 

over a LTCH episode of care and to 

assess patterns in the average length of 

stay at the facility level. 

We also are collecting data on patients 

staying for periods of 6 months or longer 

in LTCHs and may involve QIOs in 

evaluating whether or not such 

extensive stays may be indicative of 

LTCH patients who could be more 

appropriately served at a SNF.

Existing policy at § 412.509(c) 

provides that the LTCH must ‘‘furnish 

all necessary covered services to the 

Medicare beneficiary who is an 

inpatient of the hospital either directly 

or under arrangements.’’ In this 

proposed rule we are proposing to 

expand our interrupted stay policy, at 

§ 412.531, to include LTCH discharges 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4781

and readmissions within a period of 3 

days. 

We believe that such behavior by 

certain LTCHs may constitute gaming of 

the Medicare system, circumventing 

existing Medicare policy, and generating 

unnecessary Medicare payments. 

Therefore, we are proposing an 

expansion of our interrupted stay policy 

at § 412.531 to address this situation. 

(See section IV.C.4.c. of this proposed 

rule for additional information 

regarding the proposed expansion of our 

interrupted stay policy.) 

X. Collection of Information 

Requirements 

(If you choose to comment on issues 

in this section, please include the 

caption ‘‘COLLECTION OF 

INFORMATION REQUIREMENTS’’ at 

the beginning of your comments.) 

Under the Paperwork Reduction Act 

(PRA) of 1995, we are required to 

provide 60-day notice in the Federal 

Register and solicit public comment 

before a collection of information 

requirement is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. In order to fairly 

evaluate whether an information 

collection should be approved by OMB, 

section 3506(c)(2)(A) of the PRA of 1995 

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. 

Therefore, we are soliciting public 

comments on each of these issues for 

the information collection requirements 

discussed below. 

The following information collection 

requirements and associated burdens 

are subject to the PRA: 

§ 412.23 Excluded Hospitals: 

Classifications 

Section 412.23(e)(3) proposes 

revisions to the procedure for 

calculating the average length of stay for 

purposes of qualifying as a LTCH, so 

that the ‘‘days follow discharge.’’

Therefore, the total number of inpatient 

days for Medicare patients under 

paragraph (e)(2)(i), and the total number 

of days for all patients (both Medicare 

and non-Medicare) under paragraph 

(e)(2)(ii), would be divided by the 

discharges for the hospital’s most recent 

cost reporting period. If the days of a 

stay involve admission during one cost 

reporting period and discharge in a 

second consecutive cost reporting 

period, the total days of the stay are 

considered to have occurred in the cost 

reporting period during which the 

patient was discharged. Since this data 

was not captured on the cost reporting 

form, for cost reporting periods 

beginning on or after October 1, 2002, 

CMS retrieved data for the average 

length of stay calculation from MedPAR 

files for use by the fiscal intermediaries. 

If the days-follow-the-discharge policy 

is finalized, it may be possible to revise 

the cost reporting form and, thus, enable 

fiscal intermediaries to use the Medicare 

cost report for this calculation, as they 

did prior to the implementation of the 

LTCH PPS. We are presently analyzing 

whether use of the MedPAR for this 

purpose or revising the cost reporting 

form to capture all inpatient days for 

Medicare patients would be more 

appropriate. If we revert to using the 

cost report for this purpose, the task 

would require one calculation annually 

by fiscal intermediaries for each 

hospital: the division of the number of 

days by the number of discharges. We 

estimate that it would take 

approximately 5 minutes for each of the 

fiscal intermediaries to evaluate 

whether each of the 300 facilities meet 

the average length of stay requirement 

for a total one-time burden of 25 hours.

Section 412.23(e)(4)(ii) states that 

except as specified in paragraph 

(e)(4)(iii) of this section, a satellite 

facility (as defined in § 412.22(h)) or a 

remote location of a hospital (as defined 

in § 412.65(a)(2)) that voluntarily 

reorganizes as a separate Medicare 

participating hospital, with or without a 

concurrent change in ownership, and 

that seeks to qualify as a new long-term 

care hospital for Medicare payment 

purposes must demonstrate through 

documentation that it meets the average 

length of stay requirement specified 

under paragraphs (e)(2)(i) or (e)(2)(ii) of 

this section. 

The burden associated with this 

requirement is the time required to 

maintain documentation to demonstrate 

that a satellite facility or a remote 

location of a hospital has an average 

length of stay as specified by this 

section. Since this requirement is a 

voluntary decision that is made by each 

facility, we do not know the number of 

facilities and remote locations that will 

seek to become new LTCHs. However, 

the information to be documented is 

currently being collected and 

maintained on each facility’s cost 

report; therefore, this information 

collection requirement is currently 

approved under OMB control number 

0938–0050. 

Section 412.23(e)(4)(iii) states that 

satellite facilities and remote locations 

of hospitals that became subject to the 

provider-based status rules under 

§ 412.65 as of July 1, 2003, that become 

separately participating hospitals, and 

that seek to qualify as long-term care 

hospitals for Medicare payment 

purposes may submit to the fiscal 

intermediary discharge data gathered 

during 5 months of the immediate 6 

months preceding the facility’s 

separation from the main hospital for 

calculation of the greater than 25-day 

average Medicare inpatient length of 

stay requirement specified under 

paragraph (e)(2) of this section. 

The burden associated with this 

requirement is the time required of the 

satellite facilities and remote locations 

of hospitals that became subject to the 

provider-based status rules under as of 

July 1, 2003, to submit discharge data to 

the fiscal intermediary. We estimate that 

it will take approximately 5 minutes for 

each of the 300 facilities to submit the 

required information for a total one-time 

burden of 25 hours. 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the information collection requirements 

described above. These requirements are 

not effective until they have been 

approved by OMB.

If you comment on any of these 

information collection and record 

keeping requirements, please mail 

copies directly to the following:

Centers for Medicare & Medicaid 

Services, Office of Strategic 

Operations and Regulatory Affairs, 

Regulations Development and 

Issuances Group, Attn: Dawn 

Willinghan, CMS–1263–P, Room C5–

14–03, 7500 Security Boulevard, 

Baltimore, MD 21244–1850; and 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10235, New Executive 

Office Building, Washington, DC 

20503, Attn: Brenda Aguilar, CMS 

Desk Officer.

Comments submitted to OMB may 

also be emailed to the following 

address: email: baguilar@omb.eop.gov;

or faxed to OMB at (202) 395–6974. 

XI. Regulatory Impact Analysis 

(If you choose to comment on issues in 

this section, please include the caption 

‘‘REGULATORY IMPACT ANALYSIS’’

at the beginning of your comments.) 

A. Introduction 

We have examined the impact of this 

proposed rule as required by Executive 

4782 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

Order 12866 (September 1993, 

Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA) 

(September 16, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act (the Act), the Unfunded Mandates 

Reform Act of 1995 (UMRA) (Pub. L. 

104–4), and Executive Order 13132. 

1. Executive Order 12866 

Executive Order 12866 (as amended 

by Executive Order 13258, which 

merely assigns responsibility of duties) 

directs 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). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any one year). 

In this proposed rule, we are using the 

most recent estimate of the LTCH PPS 

market basket and updated wage index 

values to estimate proposed payments 

for the 2005 LTCH PPS rate year. Based 

on the best available data for 211 

LTCHs, we estimate that the proposed 

2.9 percent increase in the standard 

Federal rate for the 2005 LTCH PPS rate 

year, in conjunction with the proposed 

decrease in the budget neutrality offset 

to account for the transition 

methodology (discussed in section 

IV.C.6. of this preamble), would result 

in an increase in payments from the 

2004 LTCH PPS rate year of $118 

million for the 211 LTCHs. (Section 

IV.C.6. of this preamble includes an 

estimate of Medicare program payments 

for LTCH services.) Because the 

combined distributional effects and 

costs to the Medicare program are 

greater than $100 million, this proposed 

rule is considered a major economic 

rule, as defined above. 

2. Regulatory Flexibility Act (RFA) 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $26 

million or less in any 1 year. For 

purposes of the RFA, all hospitals are 

considered small entities according to 

the Small Business Administration’s 

latest size standards with total revenues 

of $26 million or less in any 1 year (for 

further information, see the Small 

Business Administration’s regulation at 

65 FR 69432, November 17, 2000). 

Because we lack data on individual 

hospital receipts, we cannot determine 

the number of small proprietary LTCHs. 

Therefore, we assume that all LTCHs are 

considered small entities for the 

purpose of the analysis that follows. 

Medicare fiscal intermediaries are not 

considered to be small entities. 

Individuals and States are not included 

in the definition of a small entity.

The provisions of this proposed rule 

represent a 5.4 percent increase in 

estimated payments in the 2005 LTCH 

PPS rate year (as shown in Table II 

below). We do not expect an 

incremental increase of 5.4 percent to 

the Medicare payment rates to have a 

significant effect on the overall revenues 

of most LTCHs. In addition, LTCHs also 

provide services to (and generate 

revenue from) patients other than 

Medicare beneficiaries. Accordingly, we 

certify that this proposed rule would not 

have a significant impact on a 

substantial number of small entities, in 

accordance with RFA. 

3. Impact on Rural Hospitals 

Section 1102(b) of the Social Security 

Act requires us to prepare a regulatory 

impact analysis if a proposed or final 

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. As discussed in detail below, the 

rates and policies set forth in this 

proposed rule would not have a 

substantial impact on the 8 rural 

hospitals for which data were available 

that have fewer than 100 beds and that 

are located in rural areas. 

4. Unfunded Mandates 

Section 202 of the UMRA requires 

that agencies assess anticipated costs 

and benefits before issuing any rule that 

may result in expenditure in any one 

year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million or more. 

This proposed rule would not mandate 

any requirements for State, local, or 

tribal governments, nor would it result 

in expenditures by the private sector of 

$110 million or more in any one year. 

5. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

We have examined this proposed rule 

under the criteria set forth in Executive 

Order 13132 and have determined that, 

based on the 20 State and local LTCHs 

in our database, this proposed rule 

would not have any significant impact 

on the rights, roles, and responsibilities 

of State, local, or tribal governments or 

preempt State law. 

B. Anticipated Effects of Proposed 

Payment Rate Changes

We discuss the impact of the 

proposed payment rate changes in this 

proposed rule below in terms of their 

fiscal impact on the Medicare budget 

and on LTCHs. 

1. Budgetary Impact 

Section 123(a)(1) of Medicare, 

Medicaid and State Child Health 

Insurance Program (SCHIP) Balanced 

Budget Refinement Act of 1999 (BBRA) 

(Pub. L. 106–113) requires us to set the 

proposed payment rates contained in 

this proposed rule such that total 

payments under the LTCH PPS are 

projected to equal the amount that 

would have been paid if this PPS had 

not been implemented. However, as 

discussed in greater detail in the August 

30, 2002, final rule (67 FR 56033–

56036), the FY 2003 standard Federal 

rate ($34,956.15) was calculated as 

though all LTCHs will be paid based on 

100 percent of the standard Federal rate 

in FY 2003. As discussed in section 

IV.C.6. of this proposed rule, we would 

apply a proposed budget neutrality 

offset to payments to account for the 

monetary effect of the 5-year transition 

period and the policy to permit LTCHs 

to elect to be paid based on 100 percent 

of the proposed standard Federal rate 

rather than a blend of proposed Federal 

prospective payments and reasonable 

cost-based payments during the 

transition. The amount of the proposed 

offset is equal to 1 minus the ratio of the 

estimated reasonable cost-based 

payments that would have been made if 

the LTCH PPS had not been 

implemented, to the projected total 

Medicare program payments that would 

be made under the transition 

methodology and the option to elect 

payment based on 100 percent of the 

Federal prospective payment rate. 

2. Impact on Providers 

The basic methodology for 

determining a LTCH PPS payment is set 

forth in the regulations at § 412.515 

through § 412.525. In addition to the 

basic LTC–DRG payment (standard 

Federal rate × LTC–DRG relative 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4783

weight), we make adjustments for 

differences in area wage levels, cost-ofliving adjustment for Alaska and 

Hawaii, and short-stay outliers. In 

addition, LTCHs may also receive highcost outlier payments for those cases 

that qualify under the threshold 

established each rate year. Section 

412.533 provides for a 5-year transition 

to fully prospective payments from 

payment based on reasonable cost-based 

methodology. During the 5-year 

transition period, payments to LTCHs 

are based on an increasing percentage of 

the LTCH PPS Federal rate and a 

decreasing percentage of payment based 

on reasonable cost-based methodology. 

Section 412.533(c) provides for a onetime opportunity for LTCHs to elect 

payments based on 100 percent of the 

LTCH PPS Federal rate. 

In order to understand the impact of 

the changes to the LTCH PPS discussed 

in this proposed rule on different 

categories of LTCHs for the 2005 LTCH 

PPS rate year, it is necessary to estimate 

payments per discharge under the LTCH 

PPS rates and factors for the 2004 LTCH 

PPS rate year (see the June 6, 2003, final 

rule; 68 FR 34122–34190) and payments 

per discharge that would be made under 

the LTCH PPS rates and factors for the 

2005 LTCH PPS rate year as discussed 

in the preamble of this proposed rule. 

We also evaluated the percent change in 

payments per discharge of estimated 

2004 LTCH PPS rate year payments to 

estimated 2005 LTCH PPS rate year 

payments for each category of LTCHs. 

Hospital groups were based on 

characteristics provided in the Online 

Survey Certification and Reporting 

(System) (OSCAR) data and FYs 1999 

through 2001 cost report data. Hospitals 

with incomplete characteristics were 

grouped into the ‘‘unknown’’ category. 

Hospital groups include: 

• Location: Large Urban/Other Urban/

Rural; 

• Participation Date; 

• Ownership Control; 

• Census Region; 

• Bed Size. 

To estimate the impacts among the 

various categories of providers during 

the transition period, it is imperative 

that reasonable cost-based methodology 

payments and prospective payments 

contain similar inputs. More 

specifically, in the impact analysis 

showing the impact reflecting the 

applicable transition blend percentages 

of proposed prospective payments and 

reasonable cost-based methodology 

payments and the option to elect 

payment based on 100 percent of the 

proposed Federal rate (Table III below), 

we estimated payments only for those 

providers for whom we are able to 

calculate payments based on reasonable 

cost-based methodology. For example, if 

we did not have at least 2 years of 

historical cost data for a LTCH, we were 

unable to determine an update to the 

LTCH’s target amount to estimate 

payment under reasonable cost-based 

methodology.

Using LTCH cases from the FY 2002 

MedPAR file and cost data from FYs 

1996 through 2001 to estimate payments 

under the current reasonable cost-based 

principles, we have both case-mix and 

cost data for 211 LTCHs. Thus, for the 

impact analyses reflecting the 

applicable transition blend percentages 

of proposed prospective payments and 

reasonable cost-based methodology 

payments and the option to elect 

payment based on 100 percent of the 

proposed Federal rate (see Table II 

below), we used data from 211 LTCHs. 

While currently there are approximately 

300 LTCHs, the most recent growth is 

predominantly in for-profit LTCHs that 

provide respiratory and ventilatordependent patient care. We believe that 

the discharges from the MedPAR data 

for the 211 LTCHs in our database 

provide sufficient representation in the 

LTC–DRGs containing discharges for 

patients who received respiratory and 

ventilator-dependent care. However, 

using cases from the FY 2002 MedPAR 

file, we had case-mix data for 272 

LTCHs. Cost data to determine current 

payments under reasonable cost-based 

methodology payments are not needed 

to simulate payments based on 100 

percent of the proposed Federal rate. 

Therefore, for the impact analyses 

reflecting fully phased-in prospective 

payments (see Table III below), we used 

data from 272 LTCHs. 

These impacts reflect the estimated 

‘‘losses’’ or ‘‘gains’’ among the various 

classifications of providers for the 2004 

LTCH PPS rate year (July 1, 2003, 

through June 30, 2004) compared to the 

2005 LTCH PPS rate year (July 1, 2004, 

through June 30, 2005). Prospective 

payments for the 2004 LTCH rate year 

were based on the standard Federal rate 

of $35,726.18 and the hospital’s 

estimated case-mix based on FY 2002 

claims data. Prospective payments for 

the 2005 LTCH PPS rate year were based 

on the proposed standard Federal rate of 

$36,762.24 and the same FY 2002 

claims data. 

3. Calculation of Prospective Payments 

To estimate payments under the 

LTCH PPS, we simulated payments on 

a case-by-case basis by applying the 

existing payment policy for short-stay 

outliers (as described in section 

IV.C.4.b. of this proposed rule) and the 

existing adjustments for area wage 

differences (as described in section 

IV.C.1. of this proposed rule) and for the 

cost-of-living for Alaska and Hawaii (as 

described in section IV.C.2. of this 

proposed rule). Additional payments 

would also be made for high-cost outlier 

cases (as described in section IV.C.3. of 

this proposed rule). As noted in section 

IV.C.5. of this proposed rule, we are not 

making adjustments for rural location, 

geographic reclassification, indirect 

medical education costs, or a 

disproportionate share of low-income 

patients. 

We adjusted for area wage differences 

for estimated 2004 LTCH PPS rate year 

payments by computing a weighted 

average of a LTCH’s applicable wage 

index during the period from July 1, 

2003, through June 30, 2004, because 

some providers may experience a 

change in the wage index phase-in 

percentage during that period. For cost 

reporting periods beginning on or after 

October 1, 2002, and before September 

30, 2003, the labor portion of the 

Federal rate is adjusted by one-fifth of 

the applicable ‘‘LTCH PPS wage index’’

(that is, the FY 2004 IPPS wage index 

data without geographic reclassification, 

under sections 1886(d)(8) and (d)(10)) of 

the Act. For cost reporting periods 

beginning on or after October 1, 2003, 

and before September 30, 2004, the 

labor portion of the Federal rate is 

adjusted by two-fifths of the applicable 

LTCH PPS wage index. Therefore, a 

provider with a cost reporting period 

that began October 1, 2003, will have 3 

months of payments under the one-fifth 

wage index value and 9 months of 

payment under the two-fifths wage 

index value. For this provider, we 

computed a blended wage index of 25 

percent (3 months/12 months) of the 

one-fifth wage index value and 75 

percent (9 months/12 months) of the 

two-fifths wage index value. Similarly, 

we adjusted for area wage differences 

for estimated 2005 LTCH PPS rate year 

payments by computing a weighted 

average of a LTCH’s applicable wage 

index during the period from July 1, 

2004, through June 30, 2005, because 

some providers may experience a 

change in the wage index phase-in 

percentage during that period. For cost 

reporting periods beginning on or after 

October 1, 2003, and before September 

30, 2004, the labor portion of the 

Federal rate is adjusted by two-fifths of 

the applicable LTCH PPS wage index. 

For cost reporting periods beginning on 

or after October 1, 2004, and before 

September 30, 2005, the labor portion of 

the Federal rate is adjusted by threefifths of the applicable LTCH PPS wage 

index. The applicable proposed LTCH 

4784 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

PPS wage index values for the 2005 

LTCH PPS rate year are shown in Tables 

1 and 2 of the Addendum to this 

proposed rule.

We also calculated payments using 

the applicable transition blend 

percentages. During the 2004 LTCH PPS 

rate year, based on the transition blend 

percentages set forth in § 412.533(a), 

some providers may experience a 

change in the transition blend 

percentage during the period from July 

1, 2003, through June 30, 2004. That is, 

during the period from July 1, 2003, 

through June 30, 2004, a provider with 

a cost reporting period beginning on 

October 1, 2002 (which is paid under 

the 80/20 transition blend (80 percent of 

payments based on reasonable costbased methodology and 20 percent of 

payments under the LTCH PPS), 

beginning October 1, 2002) had 3 

months (July 1, 2003, through 

September 30, 2003) under the 80/20 

blend and 9 months (October 1, 2003, 

through June 30, 2004) of payment 

under the 60/40-transition blend (60 

percent of payments based on 

reasonable cost-based methodology and 

40 percent of payments under the LTCH 

PPS). (The 60 percent/40 percent blend 

would continue until the provider’s cost 

reporting period beginning on October 

1, 2004.) 

Similarly, during the 2005 LTCH PPS 

rate year, based on the transition blend 

percentages set forth in § 412.533(a), 

some providers may experience a 

change in the transition blend 

percentage during the period from July 

1, 2004, through June 30, 2005. That is, 

during the period from July 1, 2004, 

through June 30, 2005, a provider with 

a cost reporting period beginning on 

October 1, 2003 (which is paid under 

the 60/40 transition blend), had 3 

months (July 1, 2004, through 

September 30, 2004) under the 60/40 

blend and 9 months (October 1, 2004, 

through June 30, 2005) of payment 

under the 40/60-transition blend (40 

percent of payments based on 

reasonable cost-based methodology and 

60 percent of payments under the LTCH 

PPS). (The 40 percent/60 percent blend 

would continue until the provider’s cost 

reporting period beginning on October 

1, 2005.) 

In estimating blended transition 

payments, we estimated payments based 

on reasonable cost-based methodology 

in accordance with the methodology in 

section 1886(b) of the Act. We compared 

the estimated blended transition 

payment to the LTCH’s estimated 

payment if it would elect payment 

based on 100 percent of the Federal rate. 

If we estimated that a LTCH would be 

paid more based on 100 percent of the 

Federal rate, we assumed that it would 

elect to bypass the transition 

methodology and to receive immediate 

prospective payments. 

Then we applied the 6.0 percent 

budget neutrality reduction to payments 

to account for the effect of the 5-year 

transition methodology and election of 

payment based on 100 percent of the 

Federal rate on Medicare program 

payments established in the June 6, 

2003, final rule (68 FR 34153) to each 

LTCH’s estimated payments under the 

LTCH PPS for the 2004 LTCH PPS rate 

year. Similarly, we applied the 

proposed 3.0 percent budget neutrality 

reduction to payment to account for the 

effect of the 5-year transition 

methodology and election of payment 

based on 100 percent of the proposed 

Federal rate on Medicare program 

payments (see section IV.C.6. of this 

proposed rule) to each LTCH’s 

estimated payments under the LTCH 

PPS for the 2005 LTCH PPS rate year. 

The impact based on our projection of 

whether a LTCH would be paid based 

on the transition blend methodology or 

would elect payment based on 100 

percent of the Federal rate is shown 

below in Table II. 

In Table III below, we also show the 

impact if the LTCH PPS were fully 

implemented; that is, as if there were an 

immediate transition to fully Federal 

prospective payments under the LTCH 

PPS for the 2004 LTCH PPS rate year 

and the 2005 LTCH PPS rate year. 

Accordingly, the 6.0 percent budget 

neutrality reduction to account for the 

5-year transition methodology on 

LTCHs’ Medicare program payments for 

the 2004 LTCH PPS rate year and the 

proposed 3.0 percent budget neutrality 

reduction to account for the 5-year 

transition methodology on LTCHs’

Medicare program payments established 

for the 2005 LTCH PPS rate year were 

not applied to LTCHs’ estimated 

payments under the PPS. 

Tables II and III below illustrate the 

aggregate impact of the payment system 

among various classifications of LTCHs. 

• The first column, LTCH 

Classification, identifies the type of 

LTCH.

• The second column lists the 

number of LTCHs of each classification 

type. 

• The third column identifies the 

number of long-term care cases. 

• The fourth column shows the 

estimated payment per discharge for the 

2004 LTCH PPS rate year. 

• The fifth column shows the 

estimated payment per discharge for the 

2005 LTCH PPS rate year. 

• The sixth column shows the 

percent change of 2004 LTCH PPS rate 

year compared to the 2005 LTCH PPS 

rate year.

TABLE II.—PROJECTED IMPACT REFLECTING APPLICABLE TRANSITION BLEND PERCENTAGES OF PROPOSED PROSPECTIVE

PAYMENTS AND REASONABLE COST-BASED (TEFRA) PAYMENTS AND OPTION TO ELECT PAYMENT BASED ON 100 

PERCENT OF THE FEDERAL RATE 1

[2004 LTCH PPS Rate Year Payments Compared to Proposed 2005 LTCH Prospective Payment System Rate Year] 

LTCH classification Number of 

LTCHs 

Number of 

LTCH cases 

Average 2004 

LTCH PPS 

rate year payment per 

case 2

Average proposed 2005 

LTCH prospective payment system 

rate year payment per 

case 3

Percent 

change 

All Providers ......................................................................... 211 81,431 26,672.42 28,120.97 5.4 

By location: 

Rural ............................................................................. 8 2,476 21,055.14 22,167.94 5.3 

Urban ............................................................................ 203 78,955 26,848.58 28,307.66 5.4 

Large ...................................................................... 108 45,078 27,001.83 28,594.50 5.9 

Other ...................................................................... 95 33,877 26,644.66 27,925.98 4.8 

By Participation Date: 

After October 1993 ....................................................... 148 52,146 27,162.64 28,566.47 5.2 

Before October 1983 .................................................... 16 7,985 20,472.43 22,910.93 11.9 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4785

TABLE II.—PROJECTED IMPACT REFLECTING APPLICABLE TRANSITION BLEND PERCENTAGES OF PROPOSED PROSPECTIVE

PAYMENTS AND REASONABLE COST-BASED (TEFRA) PAYMENTS AND OPTION TO ELECT PAYMENT BASED ON 100 

PERCENT OF THE FEDERAL RATE 1—Continued

[2004 LTCH PPS Rate Year Payments Compared to Proposed 2005 LTCH Prospective Payment System Rate Year] 

LTCH classification Number of 

LTCHs 

Number of 

LTCH cases 

Average 2004 

LTCH PPS 

rate year payment per 

case 2

Average proposed 2005 

LTCH prospective payment system 

rate year payment per 

case 3

Percent 

change 

October 1983—September 1993 .................................. 45 20,824 27,561.37 28,734.45 4.3 

Unknown ....................................................................... 2 476 38,085.50 39,877.49 4.7 

By Ownership Control: 

Voluntary ....................................................................... 54 21,723 24,589.76 26,297.41 6.9 

Proprietary .................................................................... 149 57,690 27,484.50 28,863.61 5.0 

Government .................................................................. 8 2,018 25,876.08 26,520.63 2.5 

By Census Region: 

New England ................................................................ 12 9,603 20,505.41 23,280 13.5 

Middle Atlantic .............................................................. 11 4,253 27,252.20 28,405.28 4.2 

South Atlantic ................................................................ 22 7,439 31,663.08 32,403.26 2.3 

East North Central ........................................................ 40 10,781 29,094.38 30,485.73 4.8 

East South Central ....................................................... 12 3,678 28,447.45 29,194.17 2.6 

West North Central ....................................................... 14 3,653 27,235.20 29,108.58 6.9 

West South Central ...................................................... 71 32,839 25,375.16 26,629.22 4.9 

Mountain ....................................................................... 17 3,610 27,193.75 28,510.11 4.8 

Pacific ........................................................................... 12 5,575 31,274.04 33,135.55 6.0 

By Bed Size: 

Beds: 0–24 .................................................................... 18 2,342 27,880.61 29,462.25 5.7 

Beds: 25–49 .................................................................. 97 24,920 27,199.38 28,666.55 5.4 

Beds: 50–74 .................................................................. 33 11,778 27,470.38 28,694.19 4.5 

Beds: 75–124 ................................................................ 32 13,657 27,374.27 28,554.40 4.3 

Beds: 125–199 .............................................................. 22 19,130 25,168.06 26,784.95 6.4 

Beds: 200+ ................................................................... 9 9,604 26,030.39 27,720.14 6.5 

Unknown ....................................................................... 0 0 0 0 0.0 

1These calculations take into account that some providers may experience a change in the blend percentage changes during the 2004 and 

2005 LTCH PPS rate years. For example, during the period of July 1, 2003, through June 30, 2004, a provider with a cost reporting period beginning October 1 would have 3 months (July 1, 2003, through September 30, 2003) of payments under the 80/20 blend and 9 months (October 

1, 2003, through June 30, 2004) of payment under the 60/40 blend. 2Average payment per case for the 12-month period of July 1, 2003, through June 30, 2004. 

3Average payment per case for the 12-month period of July 1, 2004, through June 30, 2005. 

TABLE III.—PROJECTED IMPACT REFLECTING THE FULLY PHASED-IN PROPOSED PROSPECTIVE PAYMENTS

[2004 LTCH PPS Rate Year Payments Compared to Proposed 2005 LTCH Prospective Payment System Rate Year Payments] 

LTCH classification Number of 

LTCHs 

Number of 

LTCH cases 

Average 2004 

LTCH PPS 

rate year payment per 

case 1

Average proposed 2005 

LTCH prospective payment system 

rate year payment per 

case 2

Percent 

change 

All Providers ......................................................................... 272 96,104 26,955.97 27,499.11 2.0 

By Location: 

Rural ............................................................................. 20 7,114 21,361.01 21,774.57 1.9 

Urban ............................................................................ 252 88,990 27,403.24 27,956.74 2.0 

Large ...................................................................... 129 49,215 27,624.32 28,325.67 2.5 

Other ...................................................................... 123 39,775 27,129.69 27,500.24 1.4 

By Participation Date: 

After October 1993 ....................................................... 200 64,968 27,376.79 27,878.10 1.8 

Before October 1983 .................................................... 17 8,038 21,542.46 23,435.89 8.8 

October 1983—September 1993 .................................. 48 21,622 27,615.27 27,797.35 0.7 

Unknown ....................................................................... 7 1,476 28,255.89 28,575.78 1.1 

By Ownership Control: 

Voluntary ....................................................................... 62 23,427 25,183.86 26,444.67 5.0 

Proprietary .................................................................... 169 62,914 27,937.26 28,371.37 1.6 

Government .................................................................. 20 6,998 25,497.90 24,712.39 –3.1 

By Census Region: 

New England ................................................................ 14 9,835 21,856.33 24,089.72 10.2 

Middle Atlantic .............................................................. 18 5,454 26,816.54 27,386.99 2.1 

South Atlantic ................................................................ 27 8,028 32,480.27 31,363.84 –3.4 

4786 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE III.—PROJECTED IMPACT REFLECTING THE FULLY PHASED-IN PROPOSED PROSPECTIVE PAYMENTS—Continued

[2004 LTCH PPS Rate Year Payments Compared to Proposed 2005 LTCH Prospective Payment System Rate Year Payments] 

LTCH classification Number of 

LTCHs 

Number of 

LTCH cases 

Average 2004 

LTCH PPS 

rate year payment per 

case 1

Average proposed 2005 

LTCH prospective payment system 

rate year payment per 

case 2

Percent 

change 

East North Central ........................................................ 53 13,354 29,429.54 29,810.95 1.3 

East South Central ....................................................... 15 4,169 30,028.46 29,916.90 –0.4 

West North Central ....................................................... 17 4,355 28,596.20 29,832.89 4.3 

West South Central ...................................................... 94 40,775 25,234.32 25,781.35 2.2 

Mountain ....................................................................... 21 4,335 26,659.53 27,096.15 1.6 

Pacific ........................................................................... 13 5,799 31,278.68 31,601.47 1.0 

By Bed Size: 

Beds: 0–24 .................................................................... 23 3,105 27,760.33 28,478.85 2.6 

Beds: 25–49 .................................................................. 115 29,060 28,131.57 28,808.02 2.4 

Beds: 50–74 .................................................................. 33 11,778 27,599.01 28,175.22 2.1 

Beds: 75–124 ................................................................ 34 14,270 28,116.29 27,657.35 –1.6 

Beds: 125–199 .............................................................. 24 19,451 25,851.29 26,930.75 4.2 

Beds: 200+ ................................................................... 10 9,657 26,826.41 27,405.20 2.2 

Unknown ....................................................................... 33 8,783 22,623.37 23,020.17 1.8 

1Average payment per case for the 12-month period of July 1, 2003, through June 30, 2004. 

2Average payment per case for the 12-month period of July 1, 2004, through June 30, 2005. 

4. Results

We have prepared the following 

summary of the impact (as shown in 

Table II) of the LTCH PPS set forth in 

this proposed rule. 

a. Location 

The majority of LTCHs are in urban 

areas. Approximately 4 percent of the 

LTCHs are identified as being located in 

a rural area, and approximately 3 

percent of all LTCH cases are treated in 

these rural hospitals. Impact analysis in 

Table II shows that the percent change 

in estimated payments per discharge for 

the 2004 LTCH PPS rate year compared 

to the 2005 LTCH PPS rate year for rural 

LTCHs would be 5.3 percent, and would 

be 5.4 percent for urban LTCHs. Large 

urban LTCHs are projected to 

experience a 5.9 percent increase in 

payments per discharge from the 2004 

LTCH PPS rate year compared to the 

2005 LTCH PPS rate year, while other 

urban LTCHs projected to experience a 

4.8 percent increase in payments per 

discharge from the 2004 LTCH PPS rate 

year compared to the 2005 LTCH PPS 

rate year. (See Table II.) 

b. Participation Date 

LTCHs are grouped by participation 

date into three categories: (1) Before 

October 1983; (2) between October 1983 

and September 1993; and (3) after 

October 1993. We did not have 

sufficient OSCAR data on two LTCHs, 

which we labeled as an ‘‘Unknown’’

category. The majority, approximately 

64 percent, of the LTCH cases are in 

hospitals that began participating after 

October 1993 and are projected to 

experience a 5.2 percent increase in 

payments per discharge from the 2004 

LTCH PPS rate year compared to the 

2005 LTCH PPS rate year. 

Approximately 10 percent of the cases 

are in LTCHs that began participating in 

Medicare before October 1983 and are 

projected to experience a 11.9 percent 

increase in payments per discharge from 

the 2004 LTCH PPS rate year compared 

to the 2005 LTCH PPS rate year. This 

relatively large increase in payments for 

the 2005 LTCH PPS rate year may be 

attributable to the fact that many of 

these LTCHs that began participating in 

Medicare prior to October 1983 are 

located in the New England census 

region (as explained below). In addition 

to the update in the standard Federal 

rate, these LTCHs are experiencing 

increases in payments because of an 

increasing wage index adjustment, 

which is two-fifths of the applicable 

LTCH PPS wage index for cost reporting 

periods beginning on or after October 1, 

2003, and three-fifths of the applicable 

wage index for cost reporting periods 

beginning on or after October 1, 2004. In 

addition, as we discuss in section 

IV.C.6. of the preamble of this proposed 

rule, we are proposing a 3.0 percent 

budget neutrality reduction (0.970) to 

payments in the 2005 LTCH PPS rate 

year to account for the effect of the 5-

year transition methodology. The 

proposed 0.970 transition period budget 

neutrality factor for the 2005 LTCH PPS 

rate year is 3 percentage points lower 

than the transition period budget 

neutrality factor for the 2004 LTCH PPS 

rate year (0.940). This smaller budget 

neutrality offset contributes to greater 

LTCH payment increases between the 

2004 and 2005 LTCH PPS rate years 

compared to the increases seen between 

FY 2003 and the 2004 LTCH PPS rate 

year. We do not expect to see these large 

payment per discharge increases in 

future years as the majority of LTCHs 

will have transitioned fully to the LTCH 

PPS and, therefore, the transition period 

budget neutrality factor should remain 

more stable. 

LTCHs that began participating 

between October 1983 and September 

1993 are projected to experience a 4.3 

percent increase in payments per 

discharge from the 2004 LTCH PPS rate 

year compared to the 2005 LTCH PPS 

rate year. (See Table II.) 

c. Ownership Control 

LTCHs are grouped into three 

categories based on ownership control 

type—(1) voluntary; (2) proprietary; and 

(3) government. 

Approximately 4 percent of LTCHs 

are government run and we expect that 

they would ‘‘gain’’ from the changes 

based on our projection that they would 

experience a 2.5 percent increase in 

payments per discharge from the 2004 

LTCH PPS rate year compared to the 

2005 LTCH PPS rate year. Voluntary 

and proprietary LTCHs are projected to 

experience a 6.9 percent and 5.0 percent 

increase in payments per discharge from 

the 2004 LTCH PPS rate year compared 

to the 2005 LTCH PPS rate year, 

respectively. (See Table II.) 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4787

d. Census Region

LTCHs located in all regions are 

expected to experience an increase in 

payments per discharge from the 2004 

LTCH PPS rate year compared to the 

2005 LTCH PPS rate year. Specifically, 

of the nine census regions, we expect 

that LTCHs in the New England region 

would experience the largest percent 

increase in payments per discharge from 

the 2004 LTCH PPS rate year compared 

to the 2005 LTCH PPS rate year (13.5 

percent). As explained above, under 

section B.4.b. (Participation Date), this 

relatively large increase in payments for 

the 2005 LTCH PPS rate year may be 

attributable to the update in the 

standard Federal rate, and the fact that 

these LTCHs are experiencing increases 

in payments because of an increasing 

wage index adjustment, which is twofifths of the applicable LTCH PPS wage 

index for cost reporting periods 

beginning on or after October 1, 2003, 

and three-fifths of the applicable wage 

index for cost reporting periods 

beginning on or after October 1, 2004. In 

addition, as we discuss in section 

IV.C.6. of the preamble of this proposed 

rule, we are proposing a 3.0 percent 

budget neutrality reduction (0.970) to 

payments in the 2005 LTCH PPS rate 

year to account for the effect of the 5-

year transition methodology. The 

proposed 0.970 transition period budget 

neutrality factor for the 2005 LTCH PPS 

rate year is 3 percentage points lower 

than the transition period budget 

neutrality factor for the 2004 LTCH PPS 

rate year (0.940). This smaller budget 

neutrality offset contributes to greater 

LTCH payment increases between the 

2004 and 2005 LTCH PPS rate years 

compared to the increases seen between 

FY 2003 and the 2004 LTCH PPS rate 

year. We do not expect to see these large 

payment per discharge increases in 

future years as the majority of LTCHs 

will have transitioned fully to the LTCH 

PPS and, therefore, the transition period 

budget neutrality factor should remain 

more stable. 

We expect LTCHs in the South 

Atlantic region would experience the 

smallest percent increase in payments 

per discharge from the 2004 LTCH PPS 

rate year compared to the 2005 LTCH 

PPS rate year (2.3 percent). (See Table 

II.) 

e. Bed Size 

LTCHs were grouped into six 

categories based on bed size—0–24 

beds, 25–49 beds, 50–74 beds, 75–124 

beds, 125–199 beds, and 200+ beds. 

The percent increase in payments per 

discharge from the 2004 LTCH PPS rate 

year compared to the 2005 LTCH PPS 

rate year are projected to increase for all 

bed size categories. 

Most LTCHs were in bed size 

categories where the percent increase in 

payments per discharge from the 2004 

LTCH PPS rate year compared to the 

2005 LTCH PPS rate year is estimated to 

be greater than 5.4 percent. LTCHs with 

200 or more beds have the highest 

estimated percent change in payments 

per discharge from the 2004 LTCH PPS 

rate year compared to the 2005 LTCH 

PPS rate year (6.5 percent), while 

LTCHs with 75–124 beds have the 

lowest projected increase in the percent 

change in payments per discharge from 

the 2004 LTCH PPS rate year compared 

to the 2005 LTCH PPS rate year (4.3 

percent). (See Table II.) 

5. Effect on the Medicare Program 

Based on actuarial projections, we 

estimate that Medicare spending (total 

Medicare program payments) for LTCH 

services over the next 5 years will be as 

follows:

LTCH PPS rate year 

Estimated

payments

($ in billions) 

2005 .................................. $2.33 

2006 .................................. 2.48 

2007 .................................. 2.64 

2008 .................................. 2.79 

2009 .................................. 2.96 

These estimates are based on the 

current estimate of increase in the 

excluded hospital with capital market 

basket of 2.9 percent for the 2005 LTCH 

PPS rate year, 3.2 percent for the 2006 

LTCH PPS rate year, 3.1 percent for the 

2007 LTCH PPS rate year, 3.0 percent 

for the 2008 LTCH PPS rate year, and 

3.2 percent for the 2009 LTCH PPS rate 

year. We estimate that there would be 

an increase in Medicare beneficiary 

enrollment of 2.1 percent in the 2005 

LTCH PPS rate year, 2.4 percent in the 

2006 LTCH PPS rate year, 2.1 percent in 

2007 LTCH PPS rate year, 2.0 percent in 

the 2008 LTCH PPS rate year, 2.1 

percent in the 2009 LTCH PPS rate year, 

and an estimated increase in the total 

number of LTCHs.

Consistent with the statutory 

requirement for budget neutrality, we 

intend for estimated aggregate payments 

under the LTCH PPS in FY 2003 to 

equal the estimated aggregate payments 

that will be made if the LTCH PPS were 

not implemented. Our methodology for 

estimating payments for purposes of the 

budget neutrality calculations uses the 

best available data and necessarily 

reflects assumptions. As we collect data 

from LTCHs, we will monitor payments 

and evaluate the ultimate accuracy of 

the assumptions used to calculate the 

budget neutrality calculations (that is, 

inflation factors, intensity of services 

provided, or behavioral response to the 

implementation of the LTCH PPS). 

Section 123 of BBRA and section 307 

of BIPA provide the Secretary with 

extremely broad authority in developing 

the LTCH PPS, including the authority 

for appropriate adjustments. In 

accordance with this broad authority, 

we may discuss in a future proposed 

rule a possible one-time prospective 

adjustment to the LTCH PPS rates to 

maintain budget neutrality so that the 

effect of the difference between actual 

payments and estimated payments for 

the first year of LTCH PPS is not 

perpetuated in the PPS rates for future 

years. Because the LTCH PPS was only 

recently implemented, we do not yet 

have sufficient complete data to 

determine whether such an adjustment 

is warranted. 

6. Effect on Medicare Beneficiaries 

Under the LTCH PPS, hospitals 

receive payment based on the average 

resources consumed by patients for each 

diagnosis. We do not expect any 

changes in the quality of care or access 

to services for Medicare beneficiaries 

under the LTCH PPS, but we expect that 

paying prospectively for LTCH services 

will enhance the efficiency of the 

Medicare program. 

C. Impact of Proposed Policy Changes 

1. Proposed Requirements for Satellite 

Facilities and Remote Locations of 

Hospitals To Qualify as Long-Term Care 

Hospitals 

Under section I.B.3. of the preamble 

of this proposed rule, we discuss our 

proposal to clarify the procedures under 

which a satellite facility or a remote 

location of a hospital must meet the 

statutory and regulatory requirements to 

qualify as a distinct LTCH. Specifically, 

we are proposing to present in 

regulations the procedure for 

determining the period from which the 

fiscal intermediaries will use discharge 

data in calculating the average Medicare 

inpatient length of stay requirement for 

a new, separately participating hospital 

that seeks classification as a LTCH. 

In this proposed rule, we are restating 

in regulations our existing policy that a 

satellite facility or remote location of a 

hospital (except for those that are 

subject to the location requirement 

under the provider-based rules at 

§ 413.65) that voluntarily reorganizes 

itself as a separate hospital and meets 

the provider agreement requirements of 

42 CFR part 489 and the Medicare 

conditions of participation under 42 

CFR part 482 would have its average 

4788 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

Medicare inpatient length of stay 

calculated based on discharges that 

occur after the satellite facility or remote 

location is established as a separate 

participating hospital. 

The policy that we are proposing to 

incorporate in the regulations is already 

in existence. Therefore, complying with 

the proposed regulation amendments 

would pose no additional burden on 

LTCHs. 

We are proposing to incorporate in 

regulations that govern requirements for 

LTCHs a provision that the average 

Medicare inpatient length of stay for 

satellite facilities and remote locations 

of hospitals that became subject to the 

revised location-based provider-based 

requirements on July 1, 2003, that 

reorganize as separate participating 

hospitals, and that seek classification as 

LTCHs, would continue to be based on 

discharge data during the 5 months of 

the immediate 6 months preceding the 

facility’s separation from the main 

hospital. This proposed amendment to 

the regulation text would incorporate 

procedures that are already established 

under the regulations governing 

provider-based entities, but whose 

implementation applicable to LTCH 

classifications were not expounded in 

the specific regulations governing 

LTCHs. The proposed regulations apply 

only to those facilities or locations that 

became subject to the revised providerbased location rules on July 1, 2003, and 

that seek classification as LTCHs for 

Medicare payment purposes. Therefore, 

we are unable to quantify how many or 

when a facility or location would seek 

LTCH classification. 

These proposed amendments to the 

regulations would not impose any 

additional requirements on providers. 

The data used in the calculation of the 

average length of stay are already being 

collected. The existing procedure for 

application of the discharge data in 

calculating the average length of stay in 

both circumstances is consistent with 

existing statutory and regulatory 

requirements.

2. Proposed Change in Policy on 

Interruption of a Stay in a LTCH 

Under section IV.C.4.c. of the 

preamble of this proposed rule, we are 

proposing to expand the definition of an 

interruption of a stay to include an 

interruption in which the patient is 

discharged from the LTCH, and returns 

to the LTCH within 3 days of the 

original discharge. We have found, 

through monitoring activities and other 

sources, that certain LTCHs are 

discharging patients during the course 

of their treatment for the sole purpose 

of the patient receiving specific tests or 

procedures and then readmitting the 

patient following the administration of 

the test or procedure. We believe these 

situations are resulting in improper 

increases in Medicare costs through 

separate billings for services that are 

already included in the LTC–DRG 

payment made to the LTCH. The 

proposed regulation change would 

prevent these inappropriate Medicare 

payments. However, we do not have 

sufficient data at this time to quantify 

either the number of providers that 

would be affected by the proposed 

change nor the savings to the Medicare 

program. 

3. Proposed Change in Procedure for 

Counting Covered and Noncovered Days 

in a Stay That Crosses Two Consecutive 

Cost Reporting Periods 

Under section I.B.2. of the preamble 

to this proposed rule, we are proposing 

to specify the procedure for calculating 

a hospital’s inpatient average length of 

stay for purposes of classification as a 

LTCH when covered and noncovered 

days of the stay involve admission in 

one cost reporting period and discharge 

in a second consecutive cost reporting 

period. Under this circumstance, we are 

proposing to count the total number of 

days of the stay in the cost reporting 

period during which the inpatient was 

discharged. We are proposing this 

revised procedure to make it consistent 

with reporting and payment procedures 

already in place for discharge-based 

payment systems that link patient days 

to discharges. 

The proposed regulation imposes no 

additional requirements on providers. 

The discharge data are already being 

collected and the proposed revision 

would merely change the procedure for 

reporting it. 

D. Executive Order 12866 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget.

List of Subjects in 42 CFR Part 412 

Administrative practice and 

procedure, Health facilities, Medicare, 

Puerto Rico, Reporting and 

recordkeeping requirements.

In accordance with the discussion in 

this preamble, the Centers for Medicare 

& Medicaid Services is proposing to 

amend 42 CFR chapter IV, part 412, as 

set forth below:

PART 412—PROSPECTIVE PAYMENT 

SYSTEMS FOR INPATIENT HOSPITAL 

SERVICES 

1. The authority citation for part 412 

continues to read as follows:

Authority: Secs. 1102 and 1871 of the 

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

1395hh).

2. Section 412.23 is amended by—

A. Revising paragraphs (e)(3)(i) and 

(e)(3)(ii). 

B. In paragraph (e)(3)(iii), removing 

the phrase ‘‘required Medicare average 

length of stay,’’ and adding in its place 

the phrase ‘‘required average length of 

stay,’’. 

C. Revising paragraph (e)(4). 

The revisions and additions read as 

follows:

§ 412.23 Excluded hospitals: 

classifications.

* * * * *

(e) Long-term care hospitals. * * * 

(3) Calculation of average length of 

stay. (i) Subject to the provisions of 

paragraphs (e)(3)(ii) and (e)(3)(iii) of this 

section, the average Medicare inpatient 

length of stay specified under paragraph 

(e)(2)(i) of this section is calculated by 

dividing the total number of covered 

and noncovered days of stay of 

Medicare inpatients (less leave or pass 

days) by the number of total Medicare 

discharges for the hospital’s most recent 

complete cost reporting period. The 

average inpatient length of stay 

specified under paragraph (e)(2)(ii) of 

this section is calculated by dividing the 

total number of days for all patients, 

including both Medicare and nonMedicare inpatients (less leave or pass 

days) by the number of total discharges 

for the hospital’s most recent complete 

cost reporting period. If the days of a 

stay of an inpatient involve an 

admission during one cost reporting 

period and a discharge in a second 

consecutive cost reporting period, the 

total number of days of the stay are 

considered to have occurred in the cost 

reporting period during which the 

inpatient was discharged. 

(ii) If a change in a hospital’s average 

length of stay specified under paragraph 

(e)(2)(i) or paragraph (e)(2)(ii) of this 

section is indicated, the calculation is 

made by the same method for the period 

of at least 5 months of the immediately 

preceding 6-month period.

* * * * *

(4) Rules applicable to new long-term 

care hospitals—(i) Definition. For 

purposes of payment under the longterm care hospital prospective payment 

system under subpart O of this part, a 

new long-term care hospital is a 

provider of inpatient hospital services 

that meets the qualifying criteria in 

paragraphs (e)(1) and (e)(2) of this 

section and, under present or previous 

ownership (or both), its first cost 

reporting period as a LTCH begins on or 

after October 1, 2002. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4789

(ii) Satellite facilities and remote 

locations of hospitals seeking to become 

new long-term care hospitals. Except as 

specified in paragraph (e)(4)(iii) of this 

section, a satellite facility (as defined in 

§ 412.22(h)) or a remote location of a 

hospital (as defined in § 413.65(a)(2)) 

that voluntarily reorganizes as a 

separate Medicare participating 

hospital, with or without a concurrent 

change in ownership, and that seeks to 

qualify as a new long-term care hospital 

for Medicare payment purposes must 

demonstrate through documentation 

that it meets the average length of stay 

requirement as specified under 

paragraphs (e)(2)(i) or (e)(2)(ii) of this 

section based on discharges that occur 

on or after the effective date of its 

participation under Medicare as a 

separate hospital. 

(iii) Provider-based facility or 

organization identified as a satellite 

facility and remote location of a 

hospital prior to July l, 2003. Satellite 

facilities and remote locations of 

hospitals that became subject to the 

provider-based status rules under 

§ 413.65 as of July l, 2003, that become 

separately participating hospitals, and 

that seek to qualify as long-term care 

hospitals for Medicare payment 

purposes may submit to the fiscal 

intermediary discharge data gathered 

during 5 months of the immediate 6 

months preceding the facility’s 

separation from the main hospital for 

calculation of the average length of stay 

specified under paragraph (e)(2)(i) or 

paragraph (e)(2)(ii) of this section.

* * * * *

3. Section 412.531 is amended by—

A. Revising paragraph (a). 

B. Revising paragraph (b)(1). 

The revisions and additions read as 

follows:

§ 412.531 Special payment provisions 

when an interruption of a stay occurs in a 

long-term care hospital. 

(a) Interruption of a stay defined.

‘‘Interruption of a stay’’ means—

(1) A stay at a long-term care hospital 

during which a Medicare inpatient is 

discharged from the long-term care 

hospital and returns to the same longterm care hospital within 3 consecutive 

days under conditions other than those 

specified in paragraph (a)(2)(i) through 

(a)(2)(iii) of this section. The duration of 

the interruption of the stay of 3 

consecutive days begins with the date of 

discharge from the long-term care 

hospital and ends at midnight of the 

third day.

(2) A stay in a long-term care hospital 

during which a Medicare inpatient is 

discharged from the long-term care 

hospital to an acute care hospital, an 

IRF, or a SNF and returns to the same 

long-term care hospital within the 

applicable fixed day period specified in 

paragraphs (a)(2)(i) through (a)(2)(iii) of 

this section. 

(i) For a discharge to an acute care 

hospital, the applicable fixed day period 

is 9 days. The counting of the days 

begins on the date of discharge from the 

long-term care hospital and ends on the 

9th date after the discharge. 

(ii) For a discharge to an IRF, the 

applicable fixed day period is 27 days. 

The counting of the days begins on the 

day of discharge from the long-term care 

hospital and ends on the 27th day after 

discharge. 

(iii) For a discharge to a SNF, the 

applicable fixed day period is 45 days. 

The counting of the days begins on the 

day of discharge from the long-term care 

hospital and ends on the 45th day after 

the discharge. 

(b) Methods of determining payments.

(1) In determining payments, the 

following provisions apply: 

(i) For purposes of determining a 

Federal prospective payment, any stay 

in a long-term care hospital that 

involves an interruption of the stay will 

be paid as a single discharge from the 

long-term care hospital. CMS will make 

only one LTC–DRG payment for all 

portions of a long-term care stay that 

involves an interruption of stay. 

(ii) Except as specified in paragraph 

(b)(1)(iii) of this section, the number of 

days that a beneficiary spends away 

from the long-term care hospital during 

a 3-day interruption of stay, as defined 

in paragraph (a)(1) of this section, is not 

included in determining the length of 

stay of the patient at the long-term care 

hospital when there is no medical care 

or treatment that is considered a 

covered service delivered to the 

beneficiary. 

(iii) The number of days that a 

beneficiary spends away from a longterm care hospital during an 

interruption of stay defined under 

paragraph (a)(1) of this section during 

which the beneficiary receives medical 

care or treatment that is considered a 

covered service and returns to the longterm care hospital within 3 consecutive 

days or less after a discharge is counted 

in determining the length of stay of the 

patient at the long-term care hospital. 

(iv) In accordance with § 412.509, 

CMS will not make any payment other 

than the LTC–DRG payment as specified 

under paragraph (b)(1)(i) of this section 

for covered services that should have 

been furnished by the long-term care 

hospital during a 3-day interruption of 

stay, as defined in paragraph (a)(1) of 

this section. 

(v) In accordance with § 412.513(b), 

payment will be based on the patient’s 

LTC–DRG that would be determined by 

the principal diagnosis, which is the 

condition established after study to be 

chiefly responsible for occasioning the 

first admission of the patient to the 

hospital for care.

* * * * *

§ 412.532 [Amended] 

4. In § 412.532(i), the reference 

‘‘paragraphs (h)(1) through (h)(4) of this 

section’’ is revised to read 

‘‘§ 412.22(h)(1) through (h)(4)’’.

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance.)

Dated: December 14, 2003. 

Thomas A. Scully, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: January 21, 2004. 

Tommy G. Thompson, 

Secretary.

Addendum 

This addendum contains the tables referred 

to throughout the preamble to this proposed 

rule. The tables presented below are as 

follows: 

Table 1.—Long-Term Care Hospital 

Proposed Wage Index for Urban Areas for 

Discharges Occurring from July 1, 2004 

through June 30, 2005; 

Table 2.—Long-Term Care Hospital 

Proposed Wage Index for Rural Areas for 

Discharges Occurring from July 1, 2004 

through June 30, 2005; 

Table 3.—FY 2004 LTC–DRG Relative 

Weights, Geometric Mean Length of Stay, and 

Short-Stay Five-Sixths Average Length of 

Stay for Discharges Occurring from July 1, 

2004 through September 30, 2004.

(Note: This is the same information 

provided in Table 11 of the August 1, 2003, 

IPPS final rule (68 FR 45650–45658), which 

has been reprinted here for convenience.)

4790 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005 

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

0040 ..... Abilene, TX .................................................................................... 0.7627 0.9525 0.9051 0.8576

Taylor, TX 

0060 ..... Aguadilla, PR ................................................................................. 0.4306 0.8861 0.7722 0.6584

Aguada, PR 

Aguadilla, PR 

Moca, PR 

0080 ..... Akron, OH ...................................................................................... 0.9246 0.9849 0.9698 0.9548

Portage, OH 

Summit, OH 

0120 ..... Albany, GA ..................................................................................... 1.0863 1.0173 1.0345 1.0518

Dougherty, GA 

Lee, GA 

0160 ..... Albany-Schenectady-Troy, NY ...................................................... 0.8489 0.9698 0.9396 0.9093

Albany, NY 

Montgomery, NY 

Rensselaer, NY 

Saratoga, NY 

Schenectady, NY 

Schoharie, NY 

0200 ..... Albuquerque, NM ........................................................................... 0.9300 0.9860 0.9720 0.9580

Bernalillo, NM 

Sandoval, NM 

Valencia, NM 

0220 ..... Alexandria, LA ............................................................................... 0.8019 0.9604 0.9208 0.8811

Rapides, LA 

0240 ..... Allentown-Bethlehem-Easton, PA .................................................. 0.9721 0.9944 0.9888 0.9833

Carbon, PA 

Lehigh, PA 

Northampton, PA 

0280 ..... Altoona, PA .................................................................................... 0.8806 0.9761 0.9522 0.9284

Blair, PA 

0320 ..... Amarillo, TX ................................................................................... 0.8986 0.9797 0.9594 0.9392

Potter, TX 

Randall, TX 

0380 ..... Anchorage, AK ............................................................................... 1.2216 1.0443 1.0886 1.1330

Anchorage, AK 

0440 ..... Ann Arbor, MI ................................................................................ 1.1074 1.0215 1.0430 1.0644

Lenawee, MI 

Livingston, MI 

Washtenaw, MI 

0450 ..... Anniston, AL .................................................................................. 0.8090 0.9618 0.9236 0.8854

Calhoun, AL 

0460 ..... Appleton-Oshkosh-Neenah, WI ..................................................... 0.9035 0.9807 0.9614 0.9421

Calumet, WI 

Outagamie, WI 

Winnebago, WI 

0470 ..... Arecibo, PR .................................................................................... 0.4155 0.8831 0.7662 0.6493

Arecibo, PR 

Camuy, PR 

Hatillo, PR 

0480 ..... Asheville, NC ................................................................................. 0.9720 0.9944 0.9888 0.9832

Buncombe, NC 

Madison, NC 

0500 ..... Athens, GA .................................................................................... 0.9818 0.9964 0.9927 0.9891

Clarke, GA 

Madison, GA 

Oconee, GA 

0520 ..... Atlanta, GA .................................................................................... 1.0130 1.0026 1.0052 1.0078

Barrow, GA 

Bartow, GA 

Carroll, GA 

Cherokee, GA 

Clayton, GA 

Cobb, GA 

Coweta, GA 

DeKalb, GA 

Douglas, GA 

Fayette, GA 

Forsyth, GA 

Fulton, GA 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4791

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Gwinnett, GA 

Henry, GA 

Newton, GA 

Paulding, GA 

Pickens, GA 

Rockdale, GA 

Spalding, GA 

Walton, GA 

0560 ..... Atlantic-Cape May, NJ ................................................................... 1.0795 1.0159 1.0318 1.0477

Atlantic, NJ 

Cape May, NJ 

0580 ..... Auburn-Opelika, AL ....................................................................... 0.8494 0.9699 0.9398 0.9096

Lee, AL 

0600 ..... Augusta-Aiken, GA–SC ................................................................. 0.9625 0.9925 0.9850 0.9775

Columbia, GA 

McDuffie, GA 

Richmond, GA 

Aiken, SC 

Edgefield, SC 

0640 ..... Austin-San Marcos, TX .................................................................. 0.9609 0.9922 0.9844 0.9765

Bastrop, TX 

Caldwell, TX 

Hays, TX 

Travis, TX 

Williamson, TX 

0680 ..... Bakersfield, CA .............................................................................. 0.9810 0.9962 0.9924 0.9886

Kern, CA 

0720 ..... Baltimore, MD ................................................................................ 0.9919 0.9984 0.9968 0.9951

Anne Arundel, MD 

Baltimore, MD 

Baltimore City, MD 

Carroll, MD 

Harford, MD 

Howard, MD 

Queen Anne’s, MD 

0733 ..... Bangor, ME .................................................................................... 0.9904 0.9981 0.9962 0.9942

Penobscot, ME 

0743 ..... Barnstable-Yarmouth, MA ............................................................. 1.2956 1.0591 1.1182 1.1774

Barnstable, MA 

0760 ..... Baton Rouge, LA ........................................................................... 0.8406 0.9681 0.9362 0.9044

Ascension, LA 

East Baton Rouge, LA 

Livingston, LA 

West Baton Rouge, LA 

0840 ..... Beaumont-Port Arthur, TX ............................................................. 0.8424 0.9685 0.9370 0.9054

Hardin, TX 

Jefferson, TX 

Orange, TX 

0860 ..... Bellingham, WA ............................................................................. 1.1757 1.0351 1.0703 1.1054

Whatcom, WA 

0870 ..... Benton Harbor, MI ......................................................................... 0.8871 0.9774 0.9548 0.9323

Berrien, MI 

0875 ..... Bergen-Passaic, NJ ....................................................................... 1.1692 1.0338 1.0677 1.1015

Bergen, NJ 

Passaic, NJ 

0880 ..... Billings, MT .................................................................................... 0.8961 0.9792 0.9584 0.9377

Yellowstone, MT 

0920 ..... Biloxi-Gulfport-Pascagoula, MS ..................................................... 0.9029 0.9806 0.9612 0.9417

Hancock, MS 

Harrison, MS 

Jackson, MS 

0960 ..... Binghamton, NY ............................................................................. 0.8428 0.9686 0.9371 0.9057

Broome, NY 

Tioga, NY 

1000 ..... Birmingham, AL ............................................................................. 0.9212 0.9842 0.9685 0.9527

Blount, AL 

Jefferson, AL 

St. Clair, AL 

Shelby, AL 

1010 ..... Bismarck, ND ................................................................................. 0.7965 0.9593 0.9186 0.8779

4792 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Burleigh, ND 

Morton, ND 

1020 ..... Bloomington, IN ............................................................................. 0.8662 0.9732 0.9465 0.9197

Monroe, IN 

1040 ..... Bloomington-Normal, IL ................................................................. 0.8832 0.9766 0.9533 0.9299

McLean, IL 

1080 ..... Boise City, ID ................................................................................. 0.9209 0.9842 0.9684 0.9525

Ada, ID 

Canyon, ID 

1123 ..... Boston-Worcester-Lawrence-Lowell-Brockton, MA–NH (NH Hospitals).1.1233 1.0247 1.0493 1.0740

Bristol, MA 

Essex, MA 

Middlesex, MA 

Norfolk, MA 

Plymouth, MA 

Suffolk, MA 

Worcester, MA 

Hillsborough, NH 

Merrimack, NH 

Rockingham, NH 

Strafford, NH 

1125 ..... Boulder-Longmont, CO .................................................................. 1.0049 1.0010 1.0020 1.0029

Boulder, CO 

1145 ..... Brazoria, TX ................................................................................... 0.8137 0.9627 0.9255 0.8882

Brazoria, TX 

1150 ..... Bremerton, WA .............................................................................. 1.0580 1.0116 1.0232 1.0348

Kitsap, WA 

1240 ..... Brownsville-Harlingen-San Benito, TX .......................................... 1.0303 1.0061 1.0121 1.0182

Cameron, TX 

1260 ..... Bryan-College Station, TX ............................................................. 0.9019 0.9804 0.9608 0.9411

Brazos, TX 

1280 ..... Buffalo-Niagara Falls, NY .............................................................. 0.9604 0.9921 0.9842 0.9762

Erie, NY 

Niagara, NY 

1303 ..... Burlington, VT ................................................................................ 0.9704 0.9941 0.9882 0.9822

Chittenden, VT 

Franklin, VT 

Grand Isle, VT 

1310 ..... Caguas, PR ................................................................................... 0.4158 0.8832 0.7663 0.6495

Caguas, PR 

Cayey, PR 

Cidra, PR 

Gurabo, PR 

San Lorenzo, PR 

1320 ..... Canton-Massillon, OH .................................................................... 0.9071 0.9814 0.9628 0.9443

Carroll, OH 

Stark, OH 

1350 ..... Casper, WY ................................................................................... 0.9095 0.9819 0.9638 0.9457

Natrona, WY 

1360 ..... Cedar Rapids, IA ........................................................................... 0.8874 0.9775 0.9550 0.9324

Linn, IA 

1400 ..... Champaign-Urbana, IL .................................................................. 0.9907 0.9981 0.9963 0.9944

Champaign, IL 

1440 ..... Charleston-North Charleston, SC .................................................. 0.9332 0.9866 0.9733 0.9599

Berkeley, SC 

Charleston, SC 

Dorchester, SC 

1480 ..... Charleston, WV .............................................................................. 0.8880 0.9776 0.9552 0.9328

Kanawha, WV 

Putnam, WV 

1520 ..... Charlotte-Gastonia-Rock Hill, NC–SC ........................................... 0.9760 0.9952 0.9904 0.9856

Cabarrus, NC 

Gaston, NC 

Lincoln, NC 

Mecklenburg, NC 

Rowan, NC 

Stanly, NC 

Union, NC 

York, SC 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4793

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

1540 ..... Charlottesville, VA ......................................................................... 1.0025 1.0005 1.0010 1.0015

Albemarle, VA 

Charlottesville City, VA 

Fluvanna, VA 

Greene, VA 

1560 ..... Chattanooga, TN–GA .................................................................... 0.9086 0.9817 0.9634 0.9452

Catoosa, GA 

Dade, GA 

Walker, GA 

Hamilton, TN 

Marion, TN 

1580 ..... Cheyenne, WY ............................................................................... 0.8796 0.9759 0.9518 0.9278

Laramie, WY 

1600 ..... Chicago, IL ..................................................................................... 1.0892 1.0178 1.0357 1.0535

Cook, IL 

DeKalb, IL 

DuPage, IL 

Grundy, IL 

Kane, IL 

Kendall, IL 

Lake, IL 

McHenry, IL 

Will, IL 

1620 ..... Chico-Paradise, CA ....................................................................... 1.0193 1.0039 1.0077 1.0116

Butte, CA 

1640 ..... Cincinnati, OH–KY–IN ................................................................... 0.9413 0.9883 0.9765 0.9648

Dearborn, IN 

Ohio, IN 

Boone, KY 

Campbell, KY 

Gallatin, KY 

Grant, KY 

Kenton, KY 

Pendleton, KY 

Brown, OH 

Clermont, OH 

Hamilton, OH 

Warren, OH 

1660 ..... Clarksville-Hopkinsville, TN–KY .................................................... 0.8244 0.9649 0.9298 0.8946

Christian, KY 

Montgomery, TN 

1680 ..... Cleveland-Lorain-Elyria, OH .......................................................... 0.9671 0.9934 0.9868 0.9803

Ashtabula, OH 

Cuyahoga, OH 

Geauga, OH 

Lake, OH 

Lorain, OH 

Medina, OH 

1720 ..... Colorado Springs, CO ................................................................... 0.9833 0.9967 0.9933 0.9900

El Paso, CO 

1740 ..... Columbia, MO ................................................................................ 0.8695 0.9739 0.9478 0.9217

Boone, MO 

1760 ..... Columbia, SC ................................................................................. 0.8902 0.9780 0.9561 0.9341

Lexington, SC 

Richland, SC 

1800 ..... Columbus, GA–AL ......................................................................... 0.8694 0.9739 0.9478 0.9216

Russell, AL 

Chattahoochee, GA 

Harris, GA 

Muscogee, GA 

1840 ..... Columbus, OH ............................................................................... 0.9648 0.9930 0.9859 0.9789

Delaware, OH 

Fairfield, OH 

Franklin, OH 

Licking, OH 

Madison, OH 

Pickaway, OH 

1880 ..... Corpus Christi, TX ......................................................................... 0.8521 0.9704 0.9408 0.9113

Nueces, TX 

San Patricio, TX 

4794 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

1890 ..... Corvallis, OR .................................................................................. 1.1516 1.0303 1.0606 1.0910

Benton, OR 

1900 ..... Cumberland, MD–WV (WV Hospital) ............................................ 0.8200 0.9640 0.9280 0.8920

Allegany, MD 

Mineral, WV 

1920 ..... Dallas, TX ...................................................................................... 0.9974 0.9995 0.9990 0.9984

Collin, TX 

Dallas, TX 

Denton, TX 

Ellis, TX 

Henderson, TX 

Hunt, TX 

Kaufman, TX 

Rockwall, TX 

1950 ..... Danville, VA ................................................................................... 0.9035 0.9807 0.9614 0.9421

Danville City, VA 

Pittsylvania, VA 

1960 ..... Davenport-Moline-Rock Island, IA–IL ............................................ 0.8985 0.9797 0.9594 0.9391

Scott, IA 

Henry, IL 

Rock Island, IL 

2000 ..... Dayton-Springfield, OH .................................................................. 0.9518 0.9904 0.9807 0.9711

Clark, OH 

Greene, OH 

Miami, OH 

Montgomery, OH 

2020 ..... Daytona Beach, FL ........................................................................ 0.9078 0.9816 0.9631 0.9447

Flagler, FL 

Volusia, FL 

2030 ..... Decatur, AL .................................................................................... 0.8828 0.9766 0.9531 0.9297

Lawrence, AL 

Morgan, AL 

2040 ..... Decatur, IL ..................................................................................... 0.8161 0.9632 0.9264 0.8897

Macon, IL 

2080 ..... Denver, CO .................................................................................... 1.0837 1.0167 1.0335 1.0502

Adams, CO 

Arapahoe, CO 

Denver, CO 

Douglas, CO 

Jefferson, CO 

2120 ..... Des Moines, IA .............................................................................. 0.9106 0.9821 0.9642 0.9464

Dallas, IA 

Polk, IA 

Warren, IA 

2160 ..... Detroit, MI ...................................................................................... 1.0101 1.0020 1.0040 1.0061

Lapeer, MI 

Macomb, MI 

Monroe, MI 

Oakland, MI 

St. Clair, MI 

Wayne, MI 

2180 ..... Dothan, AL ..................................................................................... 0.7741 0.9548 0.9096 0.8645

Dale, AL 

Houston, AL 

2190 ..... Dover, DE ...................................................................................... 0.9805 0.9961 0.9922 0.9883

Kent, DE 

2200 ..... Dubuque, IA ................................................................................... 0.8886 0.9777 0.9554 0.9332

Dubuque, IA 

2240 ..... Duluth-Superior, MN–WI ................................................................ 1.0171 1.0034 1.0068 1.0103

St. Louis, MN 

Douglas, WI 

2281 ..... Dutchess County, NY .................................................................... 1.0934 1.0187 1.0374 1.0560

Dutchess, NY 

2290 ..... Eau Claire, WI ............................................................................... 0.9064 0.9813 0.9626 0.9438

Chippewa, WI 

Eau Claire, WI 

2320 ..... El Paso, TX .................................................................................... 0.9196 0.9839 0.9678 0.9518

El Paso, TX 

2330 ..... Elkhart-Goshen, IN ........................................................................ 0.9783 0.9957 0.9913 0.9870

Elkhart, IN 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4795

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

2335 ..... Elmira, NY ...................................................................................... 0.8377 0.9675 0.9351 0.9026

Chemung, NY 

2340 ..... Enid, OK ........................................................................................ 0.8559 0.9712 0.9424 0.9135

Garfield, OK 

2360 ..... Erie, PA .......................................................................................... 0.8601 0.9720 0.9440 0.9161

Erie, PA 

2400 ..... Eugene-Springfield, OR ................................................................. 1.1456 1.0291 1.0582 1.0874

Lane, OR 

2440 ..... Evansville-Henderson, IN–KY (in hospitals) .................................. 0.8429 0.9686 0.9372 0.9057

Posey, IN 

Vanderburgh, IN 

Warrick, IN 

Henderson, KY 

2520 ..... Fargo-Moorhead, ND–MN ............................................................. 0.9797 0.9959 0.9919 0.9878

Clay, MN 

Cass, ND 

2560 ..... Fayetteville, NC ............................................................................. 0.8986 0.9797 0.9594 0.9392

Cumberland, NC 

2580 ..... Fayetteville-Springdale-Rogers, AR .............................................. 0.8396 0.9679 0.9358 0.9038

Benton, AR 

Washington, AR 

2620 ..... Flagstaff, AZ–UT ............................................................................ 1.1333 1.0267 1.0533 1.0800

Coconino, AZ 

Kane, UT 

2640 ..... Flint, MI .......................................................................................... 1.0858 1.0172 1.0343 1.0515

Genesee, MI 

2650 ..... Florence, AL .................................................................................. 0.7747 0.9549 0.9099 0.8648

Colbert, AL 

Lauderdale, AL 

2655 ..... Florence, SC .................................................................................. 0.8709 0.9742 0.9484 0.9225

Florence, SC 

2670 ..... Fort Collins-Loveland, CO ............................................................. 1.0108 1.0022 1.0043 1.0065

Larimer, CO 

2680 ..... Ft. Lauderdale, FL ......................................................................... 1.0163 1.0033 1.0065 1.0098

Broward, FL 

2700 ..... Fort Myers-Cape Coral, FL ............................................................ 0.9816 0.9963 0.9926 0.9890

Lee, FL 

2710 ..... Fort Pierce-Port St. Lucie, FL ........................................................ 1.0008 1.0002 1.0003 1.0005

Martin, FL 

St. Lucie, FL 

2720 ..... Fort Smith, AR–OK ........................................................................ 0.8424 0.9685 0.9370 0.9054

Crawford, AR 

Sebastian, AR 

Sequoyah, OK 

2750 ..... Fort Walton Beach, FL .................................................................. 0.8966 0.9793 0.9586 0.9380

Okaloosa, FL 

2760 ..... Fort Wayne, IN .............................................................................. 0.9585 0.9917 0.9834 0.9751

Adams, IN 

Allen, IN 

De Kalb, IN 

Huntington, IN 

Wells, IN 

Whitley, IN 

2800 ..... Forth Worth-Arlington, TX .............................................................. 0.9359 0.9872 0.9744 0.9615

Hood, TX 

Johnson, TX 

Parker, TX 

Tarrant, TX 

2840 ..... Fresno, CA ..................................................................................... 1.0094 1.0019 1.0038 1.0056

Fresno, CA 

Madera, CA 

2880 ..... Gadsden, AL .................................................................................. 0.8206 0.9641 0.9282 0.8924

Etowah, AL 

2900 ..... Gainesville, FL ............................................................................... 0.9693 0.9939 0.9877 0.9816

Alachua, FL 

2920 ..... Galveston-Texas City, TX .............................................................. 0.9279 0.9856 0.9712 0.9567

Galveston, TX 

2960 ..... Gary, IN ......................................................................................... 0.9410 0.9882 0.9764 0.9646

Lake, IN 

Porter, IN 

4796 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

2975 ..... Glens Falls, NY .............................................................................. 0.8475 0.9695 0.9390 0.9085

Warren, NY 

Washington, NY 

2980 ..... Goldsboro, NC ............................................................................... 0.8622 0.9724 0.9449 0.9173

Wayne, NC 

2985 ..... Grand Forks, ND–MN .................................................................... 0.8636 0.9727 0.9454 0.9182

Polk, MN 

Grand Forks, ND 

2995 ..... Grand Junction, CO ....................................................................... 0.9633 0.9927 0.9853 0.9780

Mesa, CO 

3000 ..... Grand Rapids-Muskegon-Holland, MI ........................................... 0.9469 0.9894 0.9788 0.9681

Allegan, MI 

Kent, MI 

Muskegon, MI 

Ottawa, MI 

3040 ..... Great Falls, MT .............................................................................. 0.8809 0.9762 0.9524 0.9285

Cascade, MT 

3060 ..... Greeley, CO ................................................................................... 0.9372 0.9874 0.9749 0.9623

Weld, CO 

3080 ..... Green Bay, WI ............................................................................... 0.9461 0.9892 0.9784 0.9677

Brown, WI 

3120 ..... Greensboro-Winston-Salem-High Point, NC ................................. 0.9166 0.9833 0.9666 0.9500

Alamance, NC 

Davidson, NC 

Davie, NC 

Forsyth, NC 

Guilford, NC 

Randolph, NC 

Stokes, NC 

Yadkin, NC 

3150 ..... Greenville, NC ............................................................................... 0.9098 0.9820 0.9639 0.9459

Pitt, NC 

3160 ..... Greenville-Spartanburg-Anderson, SC .......................................... 0.9335 0.9867 0.9734 0.9601

Anderson, SC 

Cherokee, SC 

Greenville, SC 

Pickens, SC 

Spartanburg, SC 

3180 ..... Hagerstown, MD ............................................................................ 0.9172 0.9834 0.9669 0.9503

Washington, MD 

3200 ..... Hamilton-Middletown, OH .............................................................. 0.9214 0.9843 0.9686 0.9528

Butler, OH 

3240 ..... Harrisburg-Lebanon-Carlisle, PA ................................................... 0.9164 0.9833 0.9666 0.9498

Cumberland, PA 

Dauphin, PA 

Lebanon, PA 

Perry, PA 

3283 ..... Hartford, CT ................................................................................... 1.1555 1.0311 1.0622 1.0933

Litchfield, CT 

Middlesex, CT 

Tolland, CT 

3285 ..... Hattiesburg, MS ............................................................................. 0.7307 0.9461 0.8923 0.8384

Forrest, MS 

Lamar, MS 

3290 ..... Hickory-Morganton-Lenoir, NC ...................................................... 0.9242 0.9848 0.9697 0.9545

Alexander, NC 

Burke, NC 

Caldwell, NC 

Catawba, NC 

3320 ..... Honolulu, HI ................................................................................... 1.1098 1.0220 1.0439 1.0659

Honolulu, HI 

3350 ..... Houma, LA ..................................................................................... 0.7748 0.9550 0.9099 0.8649

Lafourche, LA 

Terrebonne, LA 

3360 ..... Houston, TX ................................................................................... 0.9834 0.9967 0.9934 0.9900

Chambers, TX 

Fort Bend, TX 

Harris, TX 

Liberty, TX 

Montgomery, TX 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4797

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Waller, TX 

3400 ..... Huntington-Ashland, WV–KY–OH ................................................. 0.9595 0.9919 0.9838 0.9757

Boyd, KY 

Carter, KY 

Greenup, KY 

Lawrence, OH 

Cabell, WV 

Wayne, WV 

3440 ..... Huntsville, AL ................................................................................. 0.9245 0.9849 0.9698 0.9547

Limestone, AL 

Madison, AL 

3480 ..... Indianapolis, IN .............................................................................. 0.9916 0.9983 0.9966 0.9950

Boone, IN 

Hamilton, IN 

Hancock, IN 

Henricks, IN 

Johnson, IN 

Madison, IN 

Marion, IN 

Morgan, IN 

Shelby, IN 

3500 ..... Iowa City, IA .................................................................................. 0.9548 0.9910 0.9819 0.9729

Johnson, IA 

3520 ..... Jackson, MI .................................................................................... 0.8986 0.9797 0.9594 0.9392

3560 ..... Jackson, MS .................................................................................. 0.8357 0.9671 0.9343 0.9014

Hinds, MS 

Madison, MS 

Rankin, MS 

3580 ..... Jackson, TN ................................................................................... 0.8984 0.9797 0.9594 0.9390

Madison, TN 

Chester, TN 

3600 ..... Jacksonville, FL ............................................................................. 0.9529 0.9906 0.9812 0.9717

Clay, FL 

Duval, FL 

Nasssau, FL 

St. Johns, FL 

3605 ..... Jacksonville, NC ............................................................................ 0.8544 0.9709 0.9418 0.9126

Onslow, NC 

3610 ..... Jamestown, NY .............................................................................. 0.7762 0.9552 0.9105 0.8657

Chautauqua, NY 

3620 ..... Janesville-Beloit, WI ...................................................................... 0.9282 0.9856 0.9713 0.9569

Rock, WI 

3640 ..... Jersey City, NJ .............................................................................. 1.1115 1.0223 1.0446 1.0669

Hudson, NJ 

3660 ..... Johnson City-Kingsport-Bristol, TN–VA ......................................... 0.8253 0.9651 0.9301 0.8952

Carter, TN 

Hawkins, TN 

Sullivan, TN 

Unicoi, TN 

Washington, TN 

Bristol City, VA 

Scott, VA 

Washington, VA 

3680 ..... Johnstown, PA ............................................................................... 0.8158 0.9632 0.9263 0.8895

Cambria, PA 

Somerset, PA 

3700 ..... Jonesboro, AR ............................................................................... 0.7794 0.9559 0.9118 0.8676

Craighead, AR 

3710 ..... Joplin, MO ...................................................................................... 0.8681 0.9736 0.9472 0.9209

Jasper, MO 

Newton, MO 

3720 ..... Kalamazoo-Battlecreek, MI ............................................................ 1.0500 1.0100 1.0200 1.0300

Calhoun, MI 

Kalamazoo, MI 

Van Buren, MI 

3740 ..... Kankakee, IL .................................................................................. 1.0419 1.0084 1.0168 1.0251

Kankakee, IL 

3760 ..... Kansas City, KS–MO ..................................................................... 0.9715 0.9943 0.9886 0.9829

Johnson, KS 

Leavenworth, KS 

4798 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Miami, KS 

Wyandotte, KS 

Cass, MO 

Clay, MO 

Clinton, MO 

Jackson, MO 

Lafayette, MO 

Platte, MO 

Ray, MO 

3800 ..... Kenosha, WI .................................................................................. 0.9761 0.9952 0.9904 0.9857

Kenosha, WI 

3810 ..... Killeen-Temple, TX ........................................................................ 0.9159 0.9832 0.9664 0.9495

Bell, TX 

Coryell, TX 

3840 ..... Knoxville, TN .................................................................................. 0.8820 0.9764 0.9528 0.9292

Anderson, TN 

Blount, TN 

Knox, TN 

Loudon, TN 

Sevier, TN 

Union, TN 

3850 ..... Kokomo, In ..................................................................................... 0.9045 0.9809 0.9618 0.9427

Howard, IN 

Tipton, IN 

3870 ..... La Crosse, WI–MN ........................................................................ 0.9247 0.9849 0.9699 0.9548

Houston, MN 

La Crosse, WI 

3880 ..... Lafayette, LA .................................................................................. 0.8189 0.9638 0.9276 0.8913

Acadia, LA 

Lafayette, LA 

St. Landry, LA 

St. Martin, LA 

3920 ..... Lafayette, IN .................................................................................. 0.8584 0.9717 0.9434 0.9150

Clinton, IN 

Tippecanoe, IN 

3960 ..... Lake Charles, LA ........................................................................... 0.7841 0.9568 0.9136 0.8705

Calcasieu, LA 

3980 ..... Lakeland-Winter Haven, FL ........................................................... 0.8811 0.9762 0.9524 0.9287

Polk, FL 

4000 ..... Lancaster, PA ................................................................................ 0.9282 0.9856 0.9713 0.9569

Lancaster, PA 

4040 ..... Lansing-East Lansing, MI .............................................................. 0.9714 0.9943 0.9886 0.9828

Clinton, MI 

Eaton, MI 

Ingham, MI 

4080 ..... Laredo, TX ..................................................................................... 0.8091 0.9618 0.9236 0.8855

Webb, TX 

4100 ..... Las Cruces, NM ............................................................................. 0.8688 0.9738 0.9475 0.9213

Dona Ana, NM 

4120 ..... Las Vegas, NV–AZ ........................................................................ 1.1528 1.0306 1.0611 1.0917

Mohave, AZ 

Clark, NV 

Nye, NV 

4150 ..... Lawrence, KS ................................................................................ 0.8677 0.9735 0.9471 0.9206

Douglas, KS 

4200 ..... Lawton, OK .................................................................................... 0.8267 0.9653 0.9307 0.8960

Comanche, OK 

4243 ..... Lewiston-Auburn, ME .................................................................... 0.9383 0.9877 0.9753 0.9630

Androscoggin, ME 

4280 ..... Lexington, KY ................................................................................ 0.8685 0.9737 0.9474 0.9211

Bourbon, KY 

Clark, KY 

Fayette, KY 

Jessamine, KY 

Madison, KY 

Scott, KY 

Woodford, KY 

4320 ..... Lima, OH ........................................................................................ 0.9522 0.9904 0.9809 0.9713

Allen, OH 

Auglaize, OH 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4799

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

4360 ..... Lincoln, NE .................................................................................... 1.0033 1.0007 1.0013 1.0020

Lancaster, NE 

4400 ..... Little Rock-North Little Rock, AR ................................................... 0.8923 0.9785 0.9569 0.9354

Faulkner, AR 

Lonoke, AR 

Pulaski, AR 

Saline, AR 

4420 ..... Longview-Marshall, TX .................................................................. 0.9113 0.9823 0.9645 0.9468

Gregg, TX 

Harrison, TX 

Upshur, TX 

4480 ..... Los Angeles-Long Beach, CA ....................................................... 1.1795 1.0359 1.0718 1.1077

Los Angeles, CA 

4520 ..... Louisville, KY–IN1 .......................................................................... 0.9242 0.9848 0.9697 0.9545

Clark, IN 

Floyd, IN 

Harrison, IN 

Scott, IN 

Bullitt, KY 

Jefferson, KY 

Oldham, KY 

4600 ..... Lubbock, TX ................................................................................... 0.8272 0.9654 0.9309 0.8963

Lubbock, TX 

4640 ..... Lynchburg, VA ............................................................................... 0.9134 0.9827 0.9654 0.9480

Amherst, VA 

Bedford, VA 

Bedford City, VA 

Campbell, VA 

Lynchburg City, VA 

4680 ..... Macon, GA ..................................................................................... 0.8953 0.9791 0.9581 0.9372

Bibb, GA 

Houston, GA 

Jones, GA 

Peach, GA 

Twiggs, GA 

4720 ..... Madison, WI ................................................................................... 1.0264 1.0053 1.0106 1.0158

Dane, WI 

4800 ..... Mansfield, OH ................................................................................ 0.9180 0.9836 0.9672 0.9508

Crawford, OH 

Richland, OH 

4840 ..... Mayaguez, PR ............................................................................... 0.4795 0.8959 0.7918 0.6877

Anasco, PR 

Cabo Rojo, PR 

Hormigueros, PR 

Mayaguez, PR 

Sabana Grande, PR 

San German, PR 

4880 ..... McAllen-Edinburg-Mission, TX ...................................................... 0.8381 0.9676 0.9352 0.9029

Hidalgo, TX 

4890 ..... Medford-Ashland, OR .................................................................... 1.0772 1.0154 1.0309 1.0463

Jackson, OR 

4900 ..... Melbourne-Titusville-Palm Bay, FL ................................................ 0.9776 0.9955 0.9910 0.9866

Brevard, FL 

4920 ..... Memphis, TN–AR–MS ................................................................... 0.9009 0.9802 0.9604 0.9405

Crittenden, AR 

DeSoto, MS 

Fayette, TN 

Shelby, TN 

Tipton, TN 

4940 ..... Merced, CA .................................................................................... 0.9690 0.9938 0.9876 0.9814

Merced, CA 

5000 ..... Miami, FL ....................................................................................... 0.9894 0.9979 0.9958 0.9936

Dade, FL 

5015 ..... Middlesex-Somerset-Hunterdon, NJ .............................................. 1.1366 1.0273 1.0546 1.0820

Hunterdon, NJ 

Middlesex, NJ 

Somerset, NJ 

5080 ..... Milwaukee-Waukesha, WI ............................................................. 0.9988 0.9998 0.9995 0.9993

Milwaukee, WI 

Ozaukee, WI 

4800 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Washington, WI 

Waukesha, WI 

5120 ..... Minneapolis-St. Paul, MN–WI ........................................................ 1.1001 1.0200 1.0400 1.0601

Anoka, MN 

Carver, MN 

Chisago, MN 

Dakota, MN 

Hennepin, MN 

Isanti, MN 

Ramsey, MN 

Scott, MN 

Sherburne, MN 

Washington, MN 

Wright, MN 

Pierce, WI 

St. Croix, WI 

5140 ..... Missoula, MT ................................................................................. 0.8718 0.9744 0.9487 0.9231

Missoula, MT 

5160 ..... Mobile, AL ...................................................................................... 0.7994 0.9599 0.9198 0.8796

Baldwin, AL 

Mobile, AL 

5170 ..... Modesto, CA .................................................................................. 1.1275 1.0255 1.0510 1.0765

Stanislaus, CA 

5190 ..... Monmouth-Ocean, NJ .................................................................... 1.0956 1.0191 1.0382 1.0574

Monmouth, NJ 

Ocean, NJ 

5200 ..... Monroe, LA .................................................................................... 0.7922 0.9584 0.9169 0.8753

Ouachita, LA 

5240 ..... Montgomery, AL ............................................................................ 0.7907 0.9581 0.9163 0.8744

Autauga, AL 

Elmore, AL 

Montgomery, AL 

5280 ..... Muncie, IN ...................................................................................... 0.8775 0.9755 0.9510 0.9265

Delaware, IN 

5330 ..... Myrtle Beach, SC ........................................................................... 0.9112 0.9822 0.9645 0.9467

Horry, SC 

5345 ..... Naples, FL ..................................................................................... 0.9790 0.9958 0.9916 0.9874

Collier, FL 

5360 ..... Nashville, TN ................................................................................. 0.9855 0.9971 0.9942 0.9913

Cheatham, TN 

Davidson, TN 

Dickson, TN 

Robertson, TN 

Rutherford TN 

Sumner, TN 

Williamson, TN 

Wilson, TN 

5380 ..... Nassau-Suffolk, NY ....................................................................... 1.3140 1.0628 1.1256 1.1884

Nassau, NY 

Suffolk, NY 

5483 ..... New Haven-Bridgeport-Stamford-Waterbury, CT .......................... 1.2385 1.0477 1.0954 1.1431

Danbury, CT 

Fairfield, CT 

New Haven, CT 

5523 ..... New London-Norwich, CT ............................................................. 1.1631 1.0326 1.0652 1.0979

New London, CT 

5560 ..... New Orleans, LA ........................................................................... 0.9174 0.9835 0.9670 0.9504

Jefferson, LA 

Orleans, LA 

Plaquemines, LA 

St. Bernard, LA 

St. Charles, LA 

St. James, LA 

St. John The Baptist, LA 

St. Tammany, LA 

5600 ..... New York, NY ................................................................................ 1.4018 1.0804 1.1607 1.2411

Bronx, NY 

Kings, NY 

New York, NY 

Putnam, NY 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4801

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Queens, NY 

Richmond, NY 

Rockland, NY 

Westchester, NY 

5640 ..... Newark, NJ .................................................................................... 1.1518 1.0304 1.0607 1.0911

Essex, NJ 

Morris, NJ 

Sussex, NJ 

Union, NJ 

Warren, NJ 

5660 ..... Newburgh, NY–PA ......................................................................... 1.1509 1.0302 1.0604 1.0905

Orange, NY 

Pike, PA 

5720 ..... Norfolk-Virginia Beach-Newport News, VA–NC ............................ 0.8619 0.9724 0.9448 0.9171

Currituck, NC 

Chesapeake City, VA 

Gloucester, VA 

Hampton City, VA 

Isle of Wight, VA 

James City, VA 

Mathews, VA 

Newport News City, VA 

Norfolk City, VA 

Poquoson City, VA 

Portsmouth City, VA 

Suffolk City, VA 

Virginia Beach City, VA 

Williamsburg City, VA 

York, VA 

5775 ..... Oakland, CA .................................................................................. 1.4921 1.0984 1.1968 1.2953

Alameda, CA 

Contra Costa, CA 

5790 ..... Ocala, FL ....................................................................................... 0.9728 0.9946 0.9891 0.9837

Marion, FL 

5800 ..... Odessa-Midland, TX ...................................................................... 0.9327 0.9865 0.9731 0.9596

Ector, TX 

Midland, TX 

5880 ..... Oklahoma City, OK ........................................................................ 0.8984 0.9797 0.9594 0.9390

Canadian, OK 

Cleveland, OK 

Logan, OK 

McClain, OK 

Oklahoma, OK 

Pottawatomie, OK 

5910 ..... Olympia, WA .................................................................................. 1.0963 1.0193 1.0385 1.0578

Thurston, WA 

5920 ..... Omaha, NE–IA ............................................................................... 0.9745 0.9949 0.9898 0.9847

Pottawattamie, IA 

Cass, NE 

Douglas, NE 

Sarpy, NE 

Washington, NE 

5945 ..... Orange County, CA ....................................................................... 1.1372 1.0274 1.0549 1.0823

Orange, CA 

5960 ..... Orlando, FL .................................................................................... 0.9654 0.9931 0.9862 0.9792

Lake, FL 

Orange, FL 

Osceola, FL 

Seminole, FL 

5990 ..... Owensboro, KY .............................................................................. 0.8374 0.9675 0.9350 0.9024

Daviess, KY 

6015 ..... Panama City, FL ............................................................................ 0.8202 0.9640 0.9281 0.8921

Bay, FL 

6020 ..... Parkersburg-Marietta, WV–OH ...................................................... 0.8039 0.9608 0.9216 0.8823

Washington, OH 

Wood, WV 

6080 ..... Pensacola, FL ................................................................................ 0.8707 0.9741 0.9483 0.9224

Escambia, FL 

Santa Rosa, FL 

6120 ..... Peoria-Pekin, IL ............................................................................. 0.8734 0.9747 0.9494 0.9240

4802 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Peoria, IL 

Tazewell, IL 

Woodford, IL 

6160 ..... Philadelphia, PA–NJ ...................................................................... 1.0883 1.0177 1.0353 1.0530

Burlington, NJ 

Camden, NJ 

Gloucester, NJ 

Salem, NJ 

Bucks, PA 

Chester, PA 

Delaware, PA 

Montgomery, PA 

Philadelphia, PA 

6200 ..... Phoenix-Mesa, AZ ......................................................................... 1.0129 1.0026 1.0052 1.0077

Maricopa, AZ 

Pinal, AZ 

6240 ..... Pine Bluff, AR ................................................................................ 0.7865 0.9573 0.9146 0.8719

Jefferson, AR 

6280 ..... Pittsburgh, PA ................................................................................ 0.8901 0.9780 0.9560 0.9341

Allegheny, PA 

Beaver, PA 

Butler, PA 

Fayette, PA 

Washington, PA 

Westmoreland, PA 

6323 ..... Pittsfield, MA .................................................................................. 1.0276 1.0055 1.0110 1.0166

Berkshire, MA 

6340 ..... Pocatello, ID .................................................................................. 0.9042 0.9808 0.9617 0.9425

Bannock, ID 

6360 ..... Ponce, PR ...................................................................................... 0.4708 0.8942 0.7883 0.6825

Guayanilla, PR 

Juana Diaz, PR 

Penuelas, PR 

Ponce, PR 

Villalba, PR 

Yauco, PR 

6403 ..... Portland, ME .................................................................................. 0.9949 0.9990 0.9980 0.9969

Cumberland, ME 

Sagadahoc, ME 

York, ME 

6440 ..... Portland-Vancouver, OR–WA ........................................................ 1.1213 1.0243 1.0485 1.0728 

Clackamas, OR 

Columbia, OR 

Multnomah, OR 

Washington, OR 

Yamhill, OR 

Clark, WA 

6483 ..... Providence-Warwick-Pawtucket, RI ............................................... 1.0977 1.0195 1.0391 1.0586

Bristol, RI 

Kent, RI 

Newport, RI 

Providence, RI 

Washington, RI 

6520 ..... Provo-Orem, UT ............................................................................ 0.9976 0.9995 0.9990 0.9986

Utah, UT 

6560 ..... Pueblo, CO .................................................................................... 0.8778 0.9756 0.9511 0.9267

Pueblo, CO 

6580 ..... Punta Gorda, FL ............................................................................ 0.9510 0.9902 0.9804 0.9706

Charlotte, FL 

6600 ..... Racine, WI ..................................................................................... 0.8814 0.9763 0.9526 0.9288

Racine, WI 

6640 ..... Raleigh-Durham-Chapel Hill, NC ................................................... 0.9959 0.9992 0.9984 0.9975

Chatham, NC 

Durham, NC 

Franklin, NC 

Johnston, NC 

Orange, NC 

Wake, NC 

6660 ..... Rapid City, SD ............................................................................... 0.8806 0.9761 0.9522 0.9284

Pennington, SD 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4803

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

6680 ..... Reading, PA ................................................................................... 0.9133 0.9827 0.9653 0.9480

Berks, PA 

6690 ..... Redding, CA .................................................................................. 1.1352 1.0270 1.0541 1.0811

Shasta, CA 

6720 ..... Reno, NV ....................................................................................... 1.0682 1.0136 1.0273 1.0409

Washoe, NV 

6740 ..... Richland-Kennewick-Pasco, WA ................................................... 1.0609 1.0122 1.0244 1.0365

Benton, WA 

Franklin, WA 

6760 ..... Richmond-Petersburg, VA ............................................................. 0.9349 0.9870 0.9740 0.9609

Charles City County, VA 

Chesterfield, VA 

Colonial Heights City, VA 

Dinwiddie, VA 

Goochland, VA 

Hanover, VA 

Henrico, VA 

Hopewell City, VA 

New Kent, VA 

Petersburg City, VA 

Powhatan, VA 

Prince George, VA 

Richmond City, VA 

6780 ..... Riverside-San Bernardino, CA ...................................................... 1.1341 1.0268 1.0536 1.0805

Riverside, CA 

San Bernardino, CA 

6800 ..... Roanoke, VA .................................................................................. 0.8700 0.9740 0.9480 0.9220

Botetourt, VA 

Roanoke, VA 

Roanoke City, VA 

Salem City, VA 

6820 ..... Rochester, MN ............................................................................... 1.1739 1.0348 1.0696 1.1043

Olmsted, MN 

6840 ..... Rochester, NY ............................................................................... 0.9430 0.9886 0.9772 0.9658

Genesee, NY 

Livingston, NY 

Monroe, NY 

Ontario, NY 

Orleans, NY 

Wayne, NY 

6880 ..... Rockford, IL ................................................................................... 0.9666 0.9933 0.9866 0.9800

Boone, IL 

Ogle, IL 

Winnebago, IL 

6895 ..... Rocky Mount, NC .......................................................................... 0.9076 0.9815 0.9630 0.9446

Edgecombe, NC 

Nash, NC 

6920 ..... Sacramento, CA ............................................................................ 1.1845 1.0369 1.0738 1.1107

El Dorado, CA 

Placer, CA 

Sacramento, CA 

6960 ..... Saginaw-Bay City-Midland, MI ...................................................... 1.0032 1.0006 1.0013 1.0019

Bay, MI 

Midland, MI 

Saginaw, MI 

6980 ..... St. Cloud, MN ................................................................................ 0.9506 0.9901 0.9802 0.9704

Benton, MN 

Stearns, MN 

7000 ..... St. Joseph, MO .............................................................................. 0.9757 0.9951 0.9903 0.9854

Andrew, MO 

Buchanan, MO 

7040 ..... St. Louis, MO–IL ............................................................................ 0.9033 0.9807 0.9613 0.9420

Clinton, IL 

Jersey, IL 

Madison, IL 

Monroe, IL 

St. Clair, IL 

Franklin, MO 

Jefferson, MO 

Lincoln, MO 

4804 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

St. Charles, MO 

St. Louis, MO 

St. Louis City, MO 

Warren, MO 

7080 ..... Salem, OR ..................................................................................... 1.0482 1.0096 1.0193 1.0289

Marion, OR 

Polk, OR 

7120 ..... Salinas, CA .................................................................................... 1.4339 1.0868 1.1736 1.2603

Monterey, CA 

7160 ..... Salt Lake City-Ogden, UT ............................................................. 0.9913 0.9983 0.9965 0.9948

Davis, UT 

Salt Lake, UT 

Weber, UT 

7200 ..... San Angelo, TX ............................................................................. 0.8535 0.9707 0.9414 0.9121

Tom Green, TX 

7240 ..... San Antonio, TX ............................................................................ 0.8870 0.9774 0.9548 0.9322

Bexar, TX 

Comal, TX 

Guadalupe, TX 

Wilson, TX 

7320 ..... San Diego, CA ............................................................................... 1.1147 1.0229 1.0459 1.0688

San Diego, CA 

7360 ..... San Francisco, CA ......................................................................... 1.4514 1.0903 1.1806 1.2708

Marin, CA 

San Francisco, CA 

San Mateo, CA 

7400 ..... San Jose, CA ................................................................................. 1.4626 1.0925 1.1850 1.2776

Santa Clara, CA 

7440 ..... San Juan-Bayamon, PR ................................................................ 0.4909 0.8982 0.7964 0.6945

Aguas Buenas, PR 

Barceloneta, PR 

Bayamon, PR 

Canovanas, PR 

Carolina, PR 

Catano, PR 

Ceiba, PR 

Comerio, PR 

Corozal, PR 

Dorado, PR 

Fajardo, PR 

Florida, PR 

Guaynabo, PR 

Humacao, PR 

Juncos, PR 

Los Piedras, PR 

Loiza, PR 

Luguillo, PR 

Manati, PR 

Morovis, PR 

Naguabo, PR 

Naranjito, PR 

Rio Grande, PR 

San Juan, PR 

Toa Alta, PR 

Toa Baja, PR 

Trujillo Alto, PR 

Vega Alta, PR 

Vega Baja, PR 

Yabucoa, PR 

7460 ..... San Luis Obispo-Atascadero-Paso Robles, CA ............................ 1.1429 1.0286 1.0572 1.0857

San Luis Obispo, CA 

7480 ..... Santa Barbara-Santa Maria-Lompoc, CA ...................................... 1.0441 1.0088 1.0176 1.0265

Santa Barbara, CA 

7485 ..... Santa Cruz-Watsonville, CA .......................................................... 1.2942 1.0588 1.1177 1.1765

Santa Cruz, CA 

7490 ..... Santa Fe, NM ................................................................................ 1.0653 1.0131 1.0261 1.0392

Los Alamos, NM 

Santa Fe, NM 

7500 ..... Santa Rosa, CA ............................................................................. 1.2877 1.0575 1.1151 1.1726

Sonoma, CA 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4805

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

7510 ..... Sarasota-Bradenton, FL ................................................................ 0.9964 0.9993 0.9986 0.9978

Manatee, FL 

Sarasota, FL 

7520 ..... Savannah, GA ............................................................................... 0.9472 0.9894 0.9789 0.9683

Bryan, GA 

Chatham, GA 

Effingham, GA 

7560 ..... Scranton-Wilkes-Barre-Hazleton, PA ............................................ 0.8412 0.9682 0.9365 0.9047

Columbia, PA 

Lackawanna, PA 

Luzerne, PA 

Wyoming, PA 

7600 ..... Seattle-Bellevue-Everett, WA ........................................................ 1.1562 1.0312 1.0625 1.0937

Island, WA 

King, WA 

Snohomish, WA 

7610 ..... Sharon, PA .................................................................................... 0.7751 0.9550 0.9100 0.8651

Mercer, PA 

7620 ..... Sheboygan, WI .............................................................................. 0.8624 0.9725 0.9450 0.9174

Sheboygan, WI 

7640 ..... Sherman-Denison, TX ................................................................... 0.9700 0.9940 0.9880 0.9820

Grayson, TX 

7680 ..... Shreveport-Bossier City, LA .......................................................... 0.9083 0.9817 0.9633 0.9450

Bossier, LA 

Caddo, LA 

Webster, LA 

7720 ..... Sioux City, IA–NE .......................................................................... 0.8993 0.9799 0.9597 0.9396

Woodbury, IA 

Dakota, NE 

7760 ..... Sioux Falls, SD .............................................................................. 0.9309 0.9862 0.9724 0.9585

Lincoln, SD 

Minnehaha, SD 

7800 ..... South Bend, IN .............................................................................. 0.9821 0.9964 0.9928 0.9893

St. Joseph, IN 

7840 ..... Spokane, WA ................................................................................. 1.0901 1.0180 1.0360 1.0541

Spokane, WA 

7880 ..... Springfield, IL ................................................................................. 0.8944 0.9789 0.9578 0.9366

Menard, IL 

Sangamon, IL 

7920 ..... Springfield, MO .............................................................................. 0.8457 0.9691 0.9383 0.9074

Christian, MO 

Greene, MO 

Webster, MO 

8003 ..... Springfield, MA .............................................................................. 1.0543 1.0109 1.0217 1.0326

Hampden, MA 

Hampshire, MA 

8050 ..... State College, PA .......................................................................... 0.8740 0.9748 0.9496 0.9244

Centre, PA 

8080 ..... Steubenville-Weirton, OH–WV (WV Hospitals) ............................. 0.8398 0.9680 0.9359 0.9039

Jefferson, OH 

Brooke, WV 

Hancock, WV 

8120 ..... Stockton-Lodi, CA .......................................................................... 1.0404 1.0081 1.0162 1.0242

San Joaquin, CA 

8140 ..... Sumter, SC .................................................................................... 0.8243 0.9649 0.9297 0.8946

Sumter, SC 

8160 ..... Syracuse, NY ................................................................................. 0.9412 0.9882 0.9765 0.9647

Cayuga, NY 

Madison, NY 

Onondaga, NY 

Oswego, NY 

8200 ..... Tacoma, WA .................................................................................. 1.1116 1.0223 1.0446 1.0670

Pierce, WA 

8240 ..... Tallahassee, FL ............................................................................. 0.8520 0.9704 0.9408 0.9112

Gadsden, FL 

Leon, FL 

8280 ..... Tampa-St. Petersburg-Clearwater, FL .......................................... 0.9103 0.9821 0.9641 0.9462

Hernando, FL 

Hillsborough, FL 

Pasco, FL 

4806 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

Pinellas, FL 

8320 ..... Terre Haute, IN .............................................................................. 0.8325 0.9665 0.9330 0.8995

Clay, IN 

Vermillion, IN 

Vigo, IN 

8360 ..... Texarkana, AR–Texarkana, TX ..................................................... 0.8150 0.9630 0.9260 0.8890

Miller, AR 

Bowie, TX 

8400 ..... Toledo, OH .................................................................................... 0.9381 0.9876 0.9752 0.9629

Fulton, OH 

Lucas, OH 

Wood, OH 

8440 ..... Topeka, KS .................................................................................... 0.9108 0.9822 0.9643 0.9465

Shawnee, KS 

8480 ..... Trenton, NJ .................................................................................... 1.0517 1.0103 1.0207 1.0310

Mercer, NJ 

8520 ..... Tucson, AZ .................................................................................... 0.8981 0.9796 0.9592 0.9389

Pima, AZ 

8560 ..... Tulsa, OK ....................................................................................... 0.9185 0.9837 0.9674 0.9511

Creek, OK 

Osage, OK 

Rogers, OK 

Tulsa, OK 

Wagoner, OK 

8600 ..... Tuscaloosa, AL .............................................................................. 0.8212 0.9642 0.9285 0.8927

Tuscaloosa, AL 

8640 ..... Tyler, TX ........................................................................................ 0.9404 0.9881 0.9762 0.9642

Smith, TX 

8680 ..... Utica-Rome, NY ............................................................................. 0.8403 0.9681 0.9361 0.9042

Herkimer, NY 

Oneida, NY 

8720 ..... Vallejo-Fairfield-Napa, CA ............................................................. 1.3377 1.0675 1.1351 1.2026

Napa, CA 

Solano, CA 

8735 ..... Ventura, CA ................................................................................... 1.1064 1.0213 1.0426 1.0638

Ventura, CA 

8750 ..... Victoria, TX .................................................................................... 0.8184 0.9637 0.9274 0.8910

Victoria, TX 

8760 ..... Vineland-Millville-Bridgeton, NJ ..................................................... 1.0405 1.0081 1.0162 1.0243

Cumberland, NJ 

8780 ..... Visalia-Tulare-Porterville, CA ......................................................... 0.9794 0.9959 0.9918 0.9876

Tulare, CA 

8800 ..... Waco, TX ....................................................................................... 0.8394 0.9679 0.9358 0.9036

McLennan, TX 

8840 ..... Washington, DC–MD–VA–WV ...................................................... 1.0904 1.0181 1.0362 1.0542

District of Columbia, DC 

Calvert, MD 

Charles, MD 

Frederick, MD 

Montgomery, MD 

Prince Georges, MD 

Alexandria City, VA 

Arlington, VA 

Clarke, VA 

Culpeper, VA 

Fairfax, VA 

Fairfax City, VA 

Falls Church City, VA 

Fauquier, VA 

Fredericksburg City, VA 

King George, VA 

Loudoun, VA 

Manassas City, VA 

Manassas Park City, VA 

Prince William, VA 

Spotsylvania, VA 

Stafford, VA 

Warren, VA 

Berkeley, WV 

Jefferson, WV 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4807

TABLE 1.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR URBAN AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

MSA Urban area (constituent counties) Full wage 

index 1

1/5th wage 

index 2

2/5ths wage 

index 3

3/5ths wage 

index 4

8920 ..... Waterloo-Cedar Falls, IA ............................................................... 0.8366 0.9673 0.9346 0.9020

Black Hawk, IA 

8940 ..... Wausau, WI ................................................................................... 0.9692 0.9938 0.9877 0.9815

Marathon, WI 

8960 ..... West Palm Beach-Boca Raton, FL ............................................... 0.9798 0.9960 0.9919 0.9879

Palm Beach, FL 

9000 ..... Wheeling, WV–OH ......................................................................... 0.7494 0.9499 0.8998 0.8496

Belmont, OH 

Marshall, WV 

Ohio, WV 

9040 ..... Wichita, KS .................................................................................... 0.9238 0.9848 0.9695 0.9543

Butler, KS 

Harvey, KS 

Sedgwick, KS 

9080 ..... Wichita Falls, TX ............................................................................ 0.8341 0.9668 0.9336 0.9005

Archer, TX 

Wichita, TX 

9140 ..... Williamsport, PA ............................................................................ 0.8158 0.9632 0.9263 0.8895

Lycoming, PA 

9160 ..... Wilmington-Newark, DE–MD ......................................................... 1.0882 1.0176 1.0353 1.0529

New Castle, DE 

Cecil, MD 

9200 ..... Wilmington, NC .............................................................................. 0.9563 0.9913 0.9825 0.9738

New Hanover, NC 

Brunswick, NC 

9260 ..... Yakima, WA ................................................................................... 1.0372 1.0074 1.0149 1.0223

Yakima, WA 

9270 ..... Yolo, CA ......................................................................................... 0.9204 0.9841 0.9682 0.9522

Yolo, CA 

9280 ..... York, PA ......................................................................................... 0.9119 0.9824 0.9648 0.9471

York, PA 

9320 ..... Youngstown-Warren, OH ............................................................... 0.9214 0.9843 0.9686 0.9528

Columbiana, OH 

Mahoning, OH 

Trumbull, OH 

9340 ..... Yuba City, CA ................................................................................ 1.0196 1.0039 1.0078 1.0118

Sutter, CA 

Yuba, CA 

9360 ..... Yuma, AZ ....................................................................................... 0.8895 0.9779 0.9558 0.9337

Yuma, AZ 

1Wage index calculated using the same wage data used to compute the wage index used by acute care hospitals under the IPPS for Federal 

FY 2004 (that is, fiscal year 2000 audited acute care hospital inpatient wage data) without regard to reclassification under section 1886(d)(8) or 

section 1886(d)(10) of the Act. 2One-fifth of the proposed full wage index value, applicable for a LTCH’s cost reporting period beginning on or after October 1, 2002 through 

September 30, 2003 (Federal FY 2203). That is, for a LTCH’s cost reporting period that began during Federal FY 2003 and located in Chicago, 

Illinois (MSA 1600), the proposed 1/5th wage index value is computed as (1.0892 + 4)/5 = 1.0178. For further details on the 5-year phase-in of 

the wage index, see section IV.C.1.of this proposed rule. 3Two-fifths of the proposed full wage index value, applicable for a LTCH’s cost reporting period beginning on or after October 1, 2003 through 

September 30, 2004 (Federal FY 2004). That is, for a LTCH’s cost reporting period that begins during Federal FY 2004 and located in Chicago, 

Illinois (MSA 1600), the proposed 2/5ths wage index value is computed as ((2*1.0892) + 3))/5 = 1.0357. For further details on the 5-year phasein of the wage index, see section IV.C.1. of this proposed rule. 4Three-fifths of the proposed full wage index value, applicable for a LTCH’s cost reporting period beginning on or after October 1, 2004 

through September 30, 2005 (Federal FY 2005). That is, for a LTCH’s cost reporting period that begins during Federal FY 2004 and located in 

Chicago, Illinois (MSA 1600), the proposed 3/5ths wage index value is computed as ((3*1.0892) + 2))/5 = 1.0535. For further details on the 5-

year phase-in of the wage index, see section IV.C.1. of this proposed rule. 

TABLE 2.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR RURAL AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005 

Nonurban area Full wage 

index 1

1⁄5th wage 

index 2

2⁄5ths wage 

index 3

3⁄5ths wage 

index 4

Alabama ........................................................................................................................... 0.7492 0.9498 0.8997 0.8495

Alaska .............................................................................................................................. 1.1886 1.0377 1.0754 1.1132

Arizona ............................................................................................................................. 0.9270 0.9854 0.9708 0.9562

Arkansas .......................................................................................................................... 0.7734 0.9547 0.9094 0.8640

California .......................................................................................................................... 1.0027 1.0005 1.0011 1.0016

Colorado .......................................................................................................................... 0.9328 0.9866 0.9731 0.9597

Connecticut ...................................................................................................................... 1.2183 1.0437 1.0873 1.1310

Delaware .......................................................................................................................... 0.9557 0.9911 0.9823 0.9734

4808 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 2.—LONG-TERM CARE HOSPITAL PROPOSED WAGE INDEX FOR RURAL AREAS FOR DISCHARGES OCCURRING

FROM JULY 1, 2004 THROUGH JUNE 30, 2005—Continued

Nonurban area Full wage 

index 1

1⁄5th wage 

index 2

2⁄5ths wage 

index 3

3⁄5ths wage 

index 4

Florida .............................................................................................................................. 0.8870 0.9774 0.9548 0.9322

Georgia ............................................................................................................................ 0.8595 0.9719 0.9438 0.9157

Hawaii .............................................................................................................................. 0.9958 0.9992 0.9983 0.9975

Idaho ................................................................................................................................ 0.8974 0.9795 0.9590 0.9384

Illinois ............................................................................................................................... 0.8254 0.9651 0.9302 0.8952

Indiana ............................................................................................................................. 0.8824 0.9765 0.9530 0.9294

Iowa ................................................................................................................................. 0.8416 0.9683 0.9366 0.9050

Kansas ............................................................................................................................. 0.8034 0.9607 0.9214 0.8820

Kentucky .......................................................................................................................... 0.7973 0.9595 0.9189 0.8784

Louisiana .......................................................................................................................... 0.7458 0.9492 0.8983 0.8475

Maine ............................................................................................................................... 0.8812 0.9762 0.9525 0.9287

Maryland .......................................................................................................................... 0.9125 0.9825 0.9650 0.9475

Massachusetts ................................................................................................................. 1.0432 1.0086 1.0173 1.0259

Michigan ........................................................................................................................... 0.8884 0.9777 0.9554 0.9330

Minnesota ........................................................................................................................ 0.9330 0.9866 0.9732 0.9598

Mississippi ........................................................................................................................ 0.7778 0.9556 0.9111 0.8667

Missouri ............................................................................................................................ 0.7892 0.9578 0.9157 0.8735

Montana ........................................................................................................................... 0.8800 0.9760 0.9520 0.9280

Nebraska .......................................................................................................................... 0.8822 0.9764 0.9529 0.9293

Nevada ............................................................................................................................. 0.9806 0.9961 0.9922 0.9884

New Hampshire ............................................................................................................... 1.0030 1.0006 1.0012 1.0018

New Jersey 5 .................................................................................................................... .................... .................... .................... ....................

New Mexico ..................................................................................................................... 0.8270 0.9654 0.9308 0.8962

New York ......................................................................................................................... 0.8526 0.9705 0.9410 0.9116

North Carolina .................................................................................................................. 0.8458 0.9692 0.9383 0.9075

North Dakota .................................................................................................................... 0.7778 0.9556 0.9111 0.8667

Ohio ................................................................................................................................. 0.8820 0.9764 0.9528 0.9292

Oklahoma ......................................................................................................................... 0.7537 0.9507 0.9015 0.8522

Oregon ............................................................................................................................. 0.9994 0.9999 0.9998 0.9996

Pennsylvania .................................................................................................................... 0.8378 0.9676 0.9351 0.9027

Puerto Rico ...................................................................................................................... 0.4018 0.8804 0.7607 0.6411

Rhode Island 5 ................................................................................................................. .................... .................... .................... ....................

South Carolina ................................................................................................................. 0.8498 0.9700 0.9399 0.9099

South Dakota ................................................................................................................... 0.8195 0.9639 0.9278 0.8917

Tennessee ....................................................................................................................... 0.7886 0.9577 0.9154 0.8732

Texas ............................................................................................................................... 0.7780 0.9556 0.9112 0.8668

Utah ................................................................................................................................. 0.8974 0.9795 0.9590 0.9384

Vermont ........................................................................................................................... 0.9307 0.9861 0.9723 0.9584

Virginia ............................................................................................................................. 0.8498 0.9700 0.9399 0.9099

Washington ...................................................................................................................... 1.0388 1.0078 1.0155 1.0233

West Virginia .................................................................................................................... 0.8018 0.9604 0.9207 0.8811

Wisconsin ......................................................................................................................... 0.9304 0.9861 0.9722 0.9582

Wyoming .......................................................................................................................... 0.9110 0.9822 0.9644 0.9466

1Wage index calculated using the same wage data used to compute the wage index used by acute care hospitals under the IPPS for Federal 

FY 2004 (that is, fiscal year 2000 audited acute care hospital inpatient wage data) without regard to reclassification under section 1886(d)(8) or 

section 1886(d)(10) of the Act. 2One-fifth of the proposed full wage index value, applicable for a LTCH’s cost reporting period beginning on or after October 1, 2002 through 

September 30, 2003 (Federal FY 2203). That is, for a LTCH’s cost reporting period that began during Federal FY 2003 and located in rural Illinois, the proposed 1⁄5th wage index value is computed as (0.8254 + 4)/5 = 0.9651. For further details on the 5-year phase-in of the wage index, 

see section IV.C.1. of this proposed rule. 3Two-fifths of the proposed full wage index value, applicable for a LTCH’s cost reporting period beginning on or after October 1, 2003 through 

September 30, 2004 (Federal FY 2004). That is, for a LTCH’s cost reporting period that begins during Federal FY 2004 and located in rural Illinois, the proposed 2⁄5th wage index value is computed as ((2*0.8254) + 3))/5 = 0.9302. For further details on the 5-year phase-in of the wage 

index, see section IV.C.1. of this proposed rule. 4Three-fifths of the proposed full wage index value, applicable for a LTCH’s cost reporting period beginning on or after October 1, 2004 

through September 30, 2005 (Federal FY 2005). That is, for a LTCH’s cost reporting period that begins during Federal FY 2004 and located in 

rural Illinois, the proposed 3⁄5ths wage index value is computed as ((3*0.8254) + 2))/5 = 0.8952. For further details on the 5-year phase-in of the 

wage index, see section IV.C.1. of this proposed rule. 5All counties within the State are classified as urban. 

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004 

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

1 ................ CRANIOTOMY AGE >17 W CC 5 .................................................................................... 2.0841 40.0 33.3

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4809

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

2 ................ CRANIOTOMY AGE > 17 W/O CC 8 ............................................................................... 2.0841 40.0 33.3

3 ................ CRANIOTOMY AGE 0–17 8 ............................................................................................. 2.0841 40.0 33.3

6 ................ CARPAL TUNNEL RELEASE8 ........................................................................................ 0.4964 18.5 15.4

7 ................ PERIPH & CRANIAL NERVE & OTHER NERV SYST PROC W CC 7 ........................... 1.5754 41.0 34.1

8 ................ PERIPH & CRANIAL NERVE & OTHER NERV SYST PROC W/O CC 7 ....................... 1.5754 41.0 34.1

9 ................ SPINAL DISORDERS & INJURIES ................................................................................. 1.5025 32.9 27.4

10 .............. NERVOUS SYSTEM NEOPLASMS W CC ...................................................................... 0.7549 23.4 19.5

11 .............. NERVOUS SYSTEM NEOPLASMS W/O CC .................................................................. 0.7281 22.0 18.3

12 .............. DEGENERATIVE NERVOUS SYSTEM DISORDERS .................................................... 0.7485 25.8 21.5

13 .............. MULTIPLE SCLEROSIS & CEREBELLAR ATAXIA ........................................................ 0.7530 25.9 21.5

14 .............. INTERCRANIAL HEMORRHAGE & STROKE W INFARCT ........................................... 0.9196 27.4 22.8

15 .............. NONSPECIFIC CVA & PRECEREBRAL OCCULUSION W/O INFARCT ....................... 0.8714 28.8 24.0

16 .............. NONSPECIFIC CEREBROVASCULAR DISORDERS W CC ......................................... 0.9125 23.9 19.9

17 .............. NONSPECIFIC CEREBROVASCULAR DISORDERS W/O CC ...................................... 0.5262 20.4 17.0

18 .............. CRANIAL & PERIPHERAL NERVE DISORDERS W CC ................................................ 0.8225 23.9 19.9

19 .............. CRANIAL & PERIPHERAL NERVE DISORDERS W/O CC ............................................ 0.6236 22.7 18.9

20 .............. NERVOUS SYSTEM INFECTION EXCEPT VIRAL MENINGITIS .................................. 1.0097 24.8 20.6

21 .............. VIRAL MENINGITIS2 ....................................................................................................... 0.7372 23.5 19.5

22 .............. HYPERTENSIVE ENCEPHALOPATHY2 ......................................................................... 0.7372 23.5 19.5

23 .............. NONTRAUMATIC STUPOR & COMA ............................................................................. 0.9033 28.8 24.0

24 .............. SEIZURE & HEADACHE AGE >17 W CC ...................................................................... 0.8527 26.2 21.8

25 .............. SEIZURE & HEADACHE AGE >17 W/O CC ................................................................... 0.7727 24.1 20.0

26 .............. SEIZURE & HEADACHE AGE 0–17 8 ............................................................................. 0.7372 23.5 19.5

27 .............. TRAUMATIC STUPOR & COMA, COMA >1 HR ............................................................ 1.1929 30.4 25.3

28 .............. TRAUMATIC STUPOR & COMA, COMA <1 HR AGE >17 W CC ................................. 1.0211 29.0 24.1

29 .............. TRAUMATIC STUPOR & COMA, COMA <1 HR AGE >17 W/O CC .............................. 0.9056 26.6 22.1

30 .............. TRAUMATIC STUPOR & COMA, COMA <1 HR AGE 0–17 8 ........................................ 0.9562 26.1 21.7

31 .............. CONCUSSION AGE >17 W CC 7 .................................................................................... 0.9562 26.1 21.7

32 .............. CONCUSSION AGE >17 W/O CC 7 ................................................................................ 0.9562 26.1 21.7

33 .............. CONCUSSION AGE 0–17 8 ............................................................................................. 0.7372 23.5 19.5

34 .............. OTHER DISORDERS OF NERVOUS SYSTEM W CC ................................................... 0.9140 27.8 23.1

35 .............. OTHER DISORDERS OF NERVOUS SYSTEM W/O CC ............................................... 0.6651 24.5 20.4

36 .............. RETINAL PROCEDURES8 .............................................................................................. 0.4964 18.5 15.4

37 .............. ORBITAL PROCEDURES8 .............................................................................................. 0.4964 18.5 15.4

38 .............. PRIMARY IRIS PROCEDURES8 ..................................................................................... 0.4964 18.5 15.4

39 .............. LENS PROCEDURES WITH OR WITHOUT VITRECTOMY8 ........................................ 0.4964 18.5 15.4

40 .............. EXTRAOCULAR PROCEDURES EXCEPT ORBIT AGE >17 5 ...................................... 2.0841 40.0 33.3

41 .............. EXTRAOCULAR PROCEDURES EXCEPT ORBIT AGE 0–17 8 .................................... 0.4964 18.5 15.4

42 .............. INTRAOCULAR PROCEDURES EXCEPT RETINA, IRIS & LENS8 .............................. 0.4964 18.5 15.4

43 .............. HYPHEMA8 ...................................................................................................................... 0.4964 18.5 15.4

44 .............. ACUTE MAJOR EYE INFECTIONS1 .............................................................................. 0.4964 18.5 15.4

45 .............. NEUROLOGICAL EYE DISORDERS8 ............................................................................ 0.4964 18.5 15.4

46 .............. OTHER DISORDERS OF THE EYE AGE >17 W CC 1 ................................................... 0.4964 18.5 15.4

47 .............. OTHER DISORDERS OF THE EYE AGE >17 W/O CC 1 ............................................... 0.4964 18.5 15.4

48 .............. OTHER DISORDERS OF THE EYE AGE 0–17 8 ............................................................ 0.4964 18.5 15.4

49 .............. MAJOR HEAD & NECK PROCEDURES8 ....................................................................... 1.3569 32.5 27.0

50 .............. SIALOADENECTOMY8 .................................................................................................... 0.9562 26.1 21.7

51 .............. SALIVARY GLAND PROCEDURES EXCEPT SIALOADENECTOMY8 ......................... 0.9562 26.1 21.7

52 .............. CLEFT LIP & PALATE REPAIR 8 ..................................................................................... 0.9562 26.1 21.7

53 .............. SINUS & MASTOID PROCEDURES AGE >17 2 ............................................................. 0.7372 23.5 19.5

54 .............. SINUS & MASTOID PROCEDURES AGE 0–17 8 ........................................................... 0.9562 26.1 21.7

55 .............. MISCELLANEOUS EAR, NOSE, MOUTH & THROAT PROCEDURES8 ....................... 0.9562 26.1 21.7

56 .............. RHINOPLASTY8 .............................................................................................................. 0.7372 23.5 19.5

57 .............. T&A PROC, EXCEPT TONSILLECTOMY &/OR ADENOIDECTOMY ONLY, AGE 

>17 8.

0.9562 26.1 21.7

58 .............. T&A PROC, EXCEPT TONSILLECTOMY &/OR ADENOIDECTOMY ONLY, AGE 0–

17 8.

0.9562 26.1 21.7

59 .............. TONSILLECTOMY &/OR ADENOIDECTOMY ONLY, AGE >17 8 .................................. 0.9562 26.1 21.7

60 .............. TONSILLECTOMY &/OR ADENOIDECTOMY ONLY, AGE 0–17 8 ................................ 0.9562 26.1 21.7

61 .............. MYRINGOTOMY W TUBE INSERTION AGE >17 2 ........................................................ 0.7372 23.5 19.5

62 .............. MYRINGOTOMY W TUBE INSERTION AGE 0–17 8 ...................................................... 0.9562 26.1 21.7

63 .............. OTHER EAR, NOSE, MOUTH & THROAT O.R. PROCEDURES3 ................................ 0.9562 26.1 21.7

64 .............. EAR, NOSE, MOUTH & THROAT MALIGNANCY .......................................................... 1.2540 27.5 22.9

65 .............. DYSEQUILIBRIUM 1 ......................................................................................................... 0.4964 18.5 15.4

66 .............. EPISTAXIS1 ..................................................................................................................... 0.4964 18.5 15.4

67 .............. EPIGLOTTITIS8 ............................................................................................................... 0.9562 26.1 21.7

68 .............. OTITIS MEDIA & URI AGE >17 W CC ............................................................................ 0.8243 21.9 18.2

4810 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

69 .............. OTITIS MEDIA & URI AGE >17 W/O CC 1 ...................................................................... 0.4964 18.5 15.4

70 .............. OTITIS MEDIA & URI AGE 0–17 8 ................................................................................... 0.4964 18.5 15.4

71 .............. LARYNGOTRACHEITIS8 ................................................................................................. 0.4964 18.5 15.4

72 .............. NASAL TRAUMA & DEFORMITY2 .................................................................................. 0.7372 23.5 19.5

73 .............. OTHER EAR, NOSE, MOUTH & THROAT DIAGNOSES AGE >17 ............................... 0.7215 20.3 16.9

74 .............. OTHER EAR, NOSE, MOUTH & THROAT DIAGNOSES AGE 0–17 8 ........................... 0.4964 18.5 15.4

75 .............. MAJOR CHEST PROCEDURES5 ................................................................................... 2.0841 40.0 33.3

76 .............. OTHER RESP SYSTEM O.R. PROCEDURES W CC .................................................... 2.4382 43.9 36.5

77 .............. OTHER RESP SYSTEM O.R. PROCEDURES W/O CC 5 .............................................. 2.0841 40.0 33.3 

78 .............. PULMONARY EMBOLISM ............................................................................................... 0.8896 24.2 20.1 

79 .............. RESPIRATORY INFECTIONS & INFLAMMATIONS AGE >17 W CC ............................ 0.8985 22.6 18.8 

80 .............. RESPIRATORY INFECTIONS & INFLAMMATIONS AGE >17 W/O CC ........................ 0.7645 22.3 18.5 

81 .............. RESPIRATORY INFECTIONS & INFLAMMATIONS AGE 0–17 8 ................................... 0.4964 18.5 15.4 

82 .............. RESPIRATORY NEOPLASMS ......................................................................................... 0.7480 20.3 16.9 

83 .............. MAJOR CHEST TRAUMA W CC 3 .................................................................................. 0.9562 26.1 21.7 

84 .............. MAJOR CHEST TRAUMA W/O CC 2 ............................................................................... 0.7372 23.5 19.5 

85 .............. PLEURAL EFFUSION W CC ........................................................................................... 0.8514 23.5 19.5 

86 .............. PLEURAL EFFUSION W/O CC ....................................................................................... 0.6540 22.4 18.6 

87 .............. PULMONARY EDEMA & RESPIRATORY FAILURE ...................................................... 1.6513 31.9 26.5 

88 .............. CHRONIC OBSTRUCTIVE PULMONARY DISEASE ...................................................... 0.7653 20.7 17.2 

89 .............. SIMPLE PNEUMONIA & PLEURISY AGE >17 W CC .................................................... 0.8428 23.1 19.2 

90 .............. SIMPLE PNEUMONIA & PLEURISY AGE >17 W/O CC ................................................ 0.7318 21.7 18.0 

91 .............. SIMPLE PNEUMONIA & PLEURISY AGE 0–17 8 ........................................................... 0.7372 23.5 19.5 

92 .............. INTERSTITIAL LUNG DISEASE W CC ........................................................................... 0.7702 20.4 17.0 

93 .............. INTERSTITIAL LUNG DISEASE W/O CC 1 ..................................................................... 0.4964 18.5 15.4 

94 .............. PNEUMOTHORAX W CC ................................................................................................ 0.6571 18.9 15.7 

95 .............. PNEUMOTHORAX W/O CC 1 .......................................................................................... 0.4964 18.5 15.4 

96 .............. BRONCHITIS & ASTHMA AGE >17 W CC ..................................................................... 0.7381 20.5 17.0 

97 .............. BRONCHITIS & ASTHMA AGE >17 W/O CC ................................................................. 0.5296 18.7 15.5 

98 .............. BRONCHITIS & ASTHMA AGE 0–17 8 ............................................................................ 0.4964 18.5 15.4 

99 .............. RESPIRATORY SIGNS & SYMPTOMS W CC ............................................................... 1.0622 26.6 22.1 

100 ............ RESPIRATORY SIGNS & SYMPTOMS W/O CC ............................................................ 1.0579 26.1 21.7 

101 ............ OTHER RESPIRATORY SYSTEM DIAGNOSES W CC ................................................. 0.9009 22.6 18.8 

102 ............ OTHER RESPIRATORY SYSTEM DIAGNOSES W/O CC ............................................. 0.7011 21.0 17.5 

103 ............ HEART TRANSPLANT 6 ................................................................................................... 0.0000 0.0 0.0 

104 ............ CARDIAC VALVE & OTHER MAJOR CARDIOTHORACIC PROC W CARDIAC 

CATH 8.

2.0841 40.0 33.3 

105 ............ CARDIAC VALVE & OTHER MAJOR CARDIOTHORACIC PROC W/O CARDIAC 

CATH 8.

2.0841 40.0 33.3 

106 ............ CORONARY BYPASS W PTCA8 .................................................................................... 2.0841 40.0 33.3 

107 ............ CORONARY BYPASS W CARDIAC CATH 8 .................................................................. 2.0841 40.0 33.3 

108 ............ OTHER CARDIOTHORACIC PROCEDURES5 ............................................................... 2.0841 40.0 33.3 

109 ............ CORONARY BYPASS W/O PTCA OR CARDIAC CATH 8 ............................................. 2.0841 40.0 33.3 

110 ............ MAJOR CARDIOVASCULAR PROCEDURES W CC 5 ................................................... 2.0841 40.0 33.3 

111 ............ MAJOR CARDIOVASCULAR PROCEDURES W/O CC 8 ............................................... 2.0841 40.0 33.3 

113 ............ AMPUTATION FOR CIRC SYSTEM DISORDERS EXCEPT UPPER LIMB & TOE ...... 1.5629 38.7 32.2 

114 ............ UPPER LIMB & TOE AMPUTATION FOR CIRC SYSTEM DISORDERS ...................... 1.3604 38.3 31.9 

115 ............ PRM CARD PACEM IMPL W AMI,HRT FAIL OR SHK,OR AICD LEAD OR GNRTR 

P5.

2.0841 40.0 33.3 

116 ............ OTH PERM CARD PACEMAK IMPL OR PTCA W CORONARY ARTERY STENT 

IMPLNT 5.

2.0841 40.0 33.3 

117 ............ CARDIAC PACEMAKER REVISION EXCEPT DEVICE REPLACEMENT 3 ................... 0.9562 26.1 21.7 

118 ............ CARDIAC PACEMAKER DEVICE REPLACEMENT 5 ..................................................... 2.0841 40.0 33.3 

119 ............ VEIN LIGATION & STRIPPING 4 ..................................................................................... 1.3569 32.5 27.0 

120 ............ OTHER CIRCULATORY SYSTEM O.R. PROCEDURES ............................................... 1.2435 34.4 28.6 

121 ............ CIRCULATORY DISORDERS W AMI & MAJOR COMP, DISCHARGED ALIVE .......... 0.7467 22.1 18.4 

122 ............ CIRCULATORY DISORDERS W AMI W/O MAJOR COMP, DISCHARGED ALIVE ...... 0.6440 18.8 15.6 

123 ............ CIRCULATORY DISORDERS W AMI, EXPIRED ........................................................... 0.8527 18.8 15.6 

124 ............ CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH & COMPLEX DIAG 4 .... 1.3569 32.5 27.0 

125 ............ CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH W/O COMPLEX DIAG 4 1.3569 32.5 27.0 

126 ............ ACUTE & SUBACUTE ENDOCARDITIS ......................................................................... 0.8706 25.6 21.3 

127 ............ HEART FAILURE & SHOCK ............................................................................................ 0.7719 22.1 18.4 

128 ............ DEEP VEIN THROMBOPHLEBITIS2 .............................................................................. 0.7372 23.5 19.5 

129 ............ CARDIAC ARREST, UNEXPLAINED 3 ............................................................................ 0.9562 26.1 21.7 

130 ............ PERIPHERAL VASCULAR DISORDERS W CC ............................................................. 0.7712 24.4 20.3 

131 ............ PERIPHERAL VASCULAR DISORDERS W/O CC ......................................................... 0.6398 23.1 19.2 

132 ............ ATHEROSCLEROSIS W CC ........................................................................................... 0.8092 22.4 18.6 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4811

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

133 ............ ATHEROSCLEROSIS W/O CC ........................................................................................ 0.7044 21.9 18.2 

134 ............ HYPERTENSION .............................................................................................................. 0.9154 27.9 23.2 

135 ............ CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W CC ........................ 0.9039 23.1 19.2 

136 ............ CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W/O CC .................... 0.7186 22.4 18.6 

137 ............ CARDIAC CONGENITAL & VALVULAR DISORDERS AGE 0–17 8 ............................... 0.7372 23.5 19.5 

138 ............ CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W CC .................................. 0.7430 22.7 18.9 

139 ............ CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W/O CC .............................. 0.6032 20.3 16.9 

140 ............ ANGINA PECTORIS ......................................................................................................... 0.6094 19.3 16.0 

141 ............ SYNCOPE & COLLAPSE W CC ...................................................................................... 0.6453 22.9 19.0 

142 ............ SYNCOPE & COLLAPSE W/O CC .................................................................................. 0.5041 20.3 16.9 

143 ............ CHEST PAIN .................................................................................................................... 0.7314 21.8 18.1 

144 ............ OTHER CIRCULATORY SYSTEM DIAGNOSES W CC ................................................. 0.7921 22.2 18.5 

145 ............ OTHER CIRCULATORY SYSTEM DIAGNOSES W/O CC ............................................. 0.6983 20.7 17.2 

146 ............ RECTAL RESECTION W CC 8 ........................................................................................ 2.0841 40.0 33.3 

147 ............ RECTAL RESECTION W/O CC 8 ..................................................................................... 2.0841 40.0 33.3 

148 ............ MAJOR SMALL & LARGE BOWEL PROCEDURES W CC 5 ......................................... 2.0841 40.0 33.3 

149 ............ MAJOR SMALL & LARGE BOWEL PROCEDURES W/O CC 1 ...................................... 0.4964 18.5 15.4 

150 ............ PERITONEAL ADHESIOLYSIS W CC 4 .......................................................................... 1.3569 32.5 27.0 

151 ............ PERITONEAL ADHESIOLYSIS W/O CC 8 ....................................................................... 1.3569 32.5 27.0 

152 ............ MINOR SMALL & LARGE BOWEL PROCEDURES W CC 4 .......................................... 1.3569 32.5 27.0 

153 ............ MINOR SMALL & LARGE BOWEL PROCEDURES W/O CC 8 ...................................... 1.3569 32.5 27.0 

154 ............ STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE >17 W CC 5 ............. 2.0841 40.0 33.3 

155 ............ STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE >17 W/O CC 8 ......... 1.3569 32.5 27.0 

156 ............ STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE 0–17 8 ...................... 1.3569 32.5 27.0 

157 ............ ANAL & STOMAL PROCEDURES W CC 4 ..................................................................... 1.3569 32.5 27.0 

158 ............ ANAL & STOMAL PROCEDURES W/O CC 3 ................................................................. 0.9562 26.1 21.7 

159 ............ HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE >17 W CC 8 ............. 1.3569 32.5 27.0 

160 ............ HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE >17 W/O CC 8 ......... 1.3569 32.5 27.0 

161 ............ INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W CC 4 ............................ 1.3569 32.5 27.0 

162 ............ INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W/O CC 8 ........................ 0.4964 18.5 15.4 

163 ............ HERNIA PROCEDURES AGE 0–17 8 .............................................................................. 0.4964 18.5 15.4 

164 ............ APPENDECTOMY W COMPLICATED PRINCIPAL DIAG WCC 8 .................................. 2.0841 40.0 33.3 

165 ............ APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W/O CC 8 ............................. 0.4964 18.5 15.4 

166 ............ APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W CC 8 ............................. 2.0841 40.0 33.3 

167 ............ APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W/O CC 8 ......................... 0.4964 18.5 15.4 

168 ............ MOUTH PROCEDURES W CC 5 ..................................................................................... 2.0841 40.0 33.3 

169 ............ MOUTH PROCEDURES W/O CC 8 ................................................................................. 0.7372 23.5 19.5 

170 ............ OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W CC ........................................... 1.7006 40.3 33.5 

171 ............ OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W/O CC 4 ..................................... 1.3569 32.5 27.0 

172 ............ DIGESTIVE MALIGNANCY W CC ................................................................................... 0.8702 22.5 18.7 

173 ............ DIGESTIVE MALIGNANCY W/O CC ............................................................................... 0.7092 20.2 16.8 

174 ............ G.I. HEMORRHAGE W CC .............................................................................................. 0.7874 23.7 19.7 

175 ............ G.I. HEMORRHAGE W/O CC .......................................................................................... 0.6345 21.1 17.5 

176 ............ COMPLICATED PEPTIC ULCER .................................................................................... 0.7728 21.2 17.6 

177 ............ UNCOMPLICATED PEPTIC ULCER W CC 2 .................................................................. 0.7372 23.5 19.5 

178 ............ UNCOMPLICATED PEPTIC ULCER W/O CC 1 .............................................................. 0.4964 18.5 15.4 

179 ............ INFLAMMATORY BOWEL DISEASE .............................................................................. 1.0023 25.2 21.0 

180 ............ G.I. OBSTRUCTION W CC 7 ............................................................................................ 0.8222 22.9 19.0 

181 ............ G.I. OBSTRUCTION W/O CC 7 ........................................................................................ 0.8222 22.9 19.0 

182 ............ ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE >17 W CC ........... 0.8449 23.5 19.5 

183 ............ ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE >17 W/O CC ....... 0.6362 20.3 16.9 

184 ............ ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE 0–17 8 .................. 0.7372 23.5 19.5 

185 ............ DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORATIONS, AGE >17 2 ....... 0.7372 23.5 19.5 

186 ............ DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORATIONS, AGE 0–17 8 ..... 0.7372 23.5 19.5 

187 ............ DENTAL EXTRACTIONS & RESTORATIONS8 .............................................................. 0.7372 23.5 19.5 

188 ............ OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W CC ....................................... 1.0308 25.3 21.0 

189 ............ OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W/O CC ................................... 0.7826 21.8 18.1 

190 ............ OTHER DIGESTIVE SYSTEM DIAGNOSES AGE 0–17 8 .............................................. 0.7372 23.5 19.5 

191 ............ PANCREAS, LIVER & SHUNT PROCEDURES W CC 4 ................................................. 1.3569 32.5 27.0 

192 ............ PANCREAS, LIVER & SHUNT PROCEDURES W/O CC 1 ............................................. 0.4964 18.5 15.4 

193 ............ BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O C.D.E. W CC 2 ..... 0.7372 23.5 19.5 

194 ............ BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O C.D.E. W/O CC 3 0.7372 23.5 19.5 

195 ............ CHOLECYSTECTOMY W C.D.E. W CC 4 ....................................................................... 1.3569 32.5 27.0 

196 ............ CHOLECYSTECTOMY W C.D.E. W/O CC 8 ................................................................... 0.9562 26.1 21.7 

197 ............ CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E. W CC 3 ................. 0.9562 26.1 21.7 

198 ............ CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E. W/O CC 8 ............. 0.9562 26.1 21.7 

199 ............ HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR MALIGNANCY8 .......................... 0.7372 23.5 19.5 

4812 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

200 ............ HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR NON-MALIGNANCY2 ................ 0.7372 23.5 19.5 

201 ............ OTHER HEPATOBILIARY OR PANCREAS O.R. PROCEDURES5 ............................... 2.0841 40.0 33.3 

202 ............ CIRRHOSIS & ALCOHOLIC HEPATITIS ......................................................................... 0.7254 22.3 18.5 

203 ............ MALIGNANCY OF HEPATOBILIARY SYSTEM OR PANCREAS ................................... 0.6758 18.9 15.7 

204 ............ DISORDERS OF PANCREAS EXCEPT MALIGNANCY ................................................. 0.9986 23.4 19.5 

205 ............ DISORDERS OF LIVER EXCEPT MALIG,CIRR,ALC HEPA W CC 7 ............................. 0.7029 22.1 18.4 

206 ............ DISORDERS OF LIVER EXCEPT MALIG,CIRR,ALC HEPA W/O CC 7 ......................... 0.7029 22.1 18.4 

207 ............ DISORDERS OF THE BILIARY TRACT W CC 7 ............................................................. 0.6671 20.5 17.0 

208 ............ DISORDERS OF THE BILIARY TRACT W/O CC 7 ......................................................... 0.6671 20.5 17.0 

209 ............ MAJOR JOINT & LIMB REATTACHMENT PROCEDURES OF LOWER EXTREMITY4 1.3569 32.5 27.0 

210 ............ HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17 W CC 4 .................. 1.3569 32.5 27.0 

211 ............ HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17 W/O CC 2 .............. 0.7372 23.5 19.5 

212 ............ HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE 0–17 8 ........................... 0.7372 23.5 19.5 

213 ............ AMPUTATION FOR MUSCULOSKELETAL SYSTEM & CONN TISSUE DISORDERS 1.3851 33.8 28.1 

216 ............ BIOPSIES OF MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE4 ................. 1.3569 32.5 27.0 

217 ............ WND DEBRID & SKN GRFT EXCEPT HAND,FOR MUSCSKELET & CONN TISS DIS 1.4038 39.3 32.7 

218 ............ LOWER EXTREM & HUMER PROC EXCEPT HIP,FOOT,FEMUR AGE >17 W CC 3 .. 0.9562 26.1 21.7 

219 ............ LOWER EXTREM & HUMER PROC EXCEPT HIP,FOOT,FEMUR AGE >17 W/O CC 8 0.9562 26.1 21.7 

220 ............ LOWER EXTREM & HUMER PROC EXCEPT HIP,FOOT,FEMUR AGE 0–17 8 ........... 0.9562 26.1 21.7 

223 ............ MAJOR SHOULDER/ELBOW PROC, OR OTHER UPPER EXTREMITY PROC W 

CC 3.

0.9562 26.1 21.7 

224 ............ SHOULDER,ELBOW OR FOREARM PROC,EXC MAJOR JOINT PROC, W/O CC 8 ... 0.9562 26.1 21.7 

225 ............ FOOT PROCEDURES3 ................................................................................................... 0.9562 26.1 21.7 

226 ............ SOFT TISSUE PROCEDURES W CC 7 .......................................................................... 1.3569 32.5 27.0 

227 ............ SOFT TISSUE PROCEDURES W/O CC 7 ....................................................................... 1.3569 32.5 27.0 

228 ............ MAJOR THUMB OR JOINT PROC,OR OTH HAND OR WRIST PROC W CC 4 ........... 1.3569 32.5 27.0 

229 ............ HAND OR WRIST PROC, EXCEPT MAJOR JOINT PROC, W/O CC 8 ......................... 0.9562 26.1 21.7 

230 ............ LOCAL EXCISION & REMOVAL OF INT FIX DEVICES OF HIP & FEMUR 4 ............... 1.3569 32.5 27.0 

232 ............ ARTHROSCOPY2 ............................................................................................................ 0.7372 23.5 19.5 

233 ............ OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W CC 3 .......................... 0.9562 26.1 21.7 

234 ............ OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W/O CC 3 ...................... 0.9562 26.1 21.7 

235 ............ FRACTURES OF FEMUR ................................................................................................ 0.8396 29.6 24.6 

236 ............ FRACTURES OF HIP & PELVIS ..................................................................................... 0.7368 27.1 22.5 

237 ............ SPRAINS, STRAINS, & DISLOCATIONS OF HIP, PELVIS & THIGH 2 ......................... 0.7372 23.5 19.5 

238 ............ OSTEOMYELITIS ............................................................................................................. 0.8432 27.9 23.2 

239 ............ PATHOLOGICAL FRACTURES & MUSCULOSKELETAL & CONN TISS MALIGNANCY.0.6610 22.0 18.3 

240 ............ CONNECTIVE TISSUE DISORDERS W CC ................................................................... 0.6685 21.2 17.6 

241 ............ CONNECTIVE TISSUE DISORDERS W/O CC ............................................................... 0.4538 18.7 15.5 

242 ............ SEPTIC ARTHRITIS ......................................................................................................... 0.7721 26.4 22.0 

243 ............ MEDICAL BACK PROBLEMS .......................................................................................... 0.6616 23.2 19.3 

244 ............ BONE DISEASES & SPECIFIC ARTHROPATHIES W CC ............................................ 0.5563 20.0 16.6 

245 ............ BONE DISEASES & SPECIFIC ARTHROPATHIES W/O CC ......................................... 0.4721 18.5 15.4 

246 ............ NON-SPECIFIC ARTHROPATHIES ................................................................................ 0.5128 22.2 18.5 

247 ............ SIGNS & SYMPTOMS OF MUSCULOSKELETAL SYSTEM & CONN TISSUE ............ 0.5536 20.2 16.8 

248 ............ TENDONITIS, MYOSITIS & BURSITIS ........................................................................... 0.7274 24.5 20.4 

249 ............ AFTERCARE, MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE ................... 0.7829 27.0 22.5 

250 ............ FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17 W CC ................... 0.8206 29.9 24.9 

251 ............ FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17 W/O CC ................ 0.6009 27.3 22.7 

252 ............ FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE 0–17 8 .......................... 0.9562 26.1 21.7 

253 ............ FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE >17 W CC .............. 0.8176 27.6 23.0 

254 ............ FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE >17 W/O CC .......... 0.6691 25.1 20.9 

255 ............ FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE 0–17 8 ..................... 0.9562 26.1 21.7 

256 ............ OTHER MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE DIAGNOSES ....... 0.8294 25.9 21.5 

257 ............ TOTAL MASTECTOMY FOR MALIGNANCY W CC 3 ..................................................... 0.9562 26.1 21.7 

258 ............ TOTAL MASTECTOMY FOR MALIGNANCY W/O CC 8 ................................................. 0.9562 26.1 21.7 

259 ............ SUBTOTAL MASTECTOMY FOR MALIGNANCY W CC 8 ............................................. 0.9562 26.1 21.7 

260 ............ SUBTOTAL MASTECTOMY FOR MALIGNANCY W/O CC 8 .......................................... 0.9562 26.1 21.7 

261 ............ BREAST PROC FOR NON-MALIGNANCY EXCEPT BIOPSY & LOCAL EXCISION 5 .. 2.0841 40.0 33.3 

262 ............ BREAST BIOPSY & LOCAL EXCISION FOR NON-MALIGNANCY3 ............................. 0.9562 26.1 21.7 

263 ............ SKIN GRAFT &/OR DEBRID FOR SKN ULCER OR CELLULITIS W CC ...................... 1.4522 42.4 35.3 

264 ............ SKIN GRAFT &/OR DEBRID FOR SKN ULCER OR CELLULITIS W/O CC .................. 1.2892 44.1 36.7 

265 ............ SKIN GRAFT &/OR DEBRID EXCEPT FOR SKIN ULCER OR CELLULITIS W CC 7 ... 1.2215 34.8 29.0 

266 ............ SKIN GRAFT &/OR DEBRID EXCEPT FOR SKIN ULCER OR CELLULITIS W/O CC 7 1.2215 34.8 29.0 

267 ............ PERIANAL & PILONIDAL PROCEDURES8 .................................................................... 0.9562 26.1 21.7 

268 ............ SKIN, SUBCUTANEOUS TISSUE & BREAST PLASTIC PROCEDURES5 ................... 2.0841 40.0 33.3 

269 ............ OTHER SKIN, SUBCUT TISS & BREAST PROC W CC ................................................ 1.4466 43.0 35.8 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4813

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

270 ............ OTHER SKIN, SUBCUT TISS & BREAST PROC W/O CC ............................................ 0.9916 33.9 28.2 

271 ............ SKIN ULCERS .................................................................................................................. 0.9620 30.4 25.3 

272 ............ MAJOR SKIN DISORDERS W CC .................................................................................. 0.7121 22.8 19.0 

273 ............ MAJOR SKIN DISORDERS W/O CC 1 ............................................................................ 0.4964 18.5 15.4 

274 ............ MALIGNANT BREAST DISORDERS W CC .................................................................... 0.9072 24.9 20.7 

275 ............ MALIGNANT BREAST DISORDERS W/O CC 2 .............................................................. 0.7372 23.5 19.5 

276 ............ NON-MALIGNANT BREAST DISORDERS1 ................................................................... 0.4964 18.5 15.4 

277 ............ CELLULITIS AGE >17 W CC ........................................................................................... 0.7409 23.6 19.6 

278 ............ CELLULITIS AGE >17 W/O CC ....................................................................................... 0.5982 20.7 17.2 

279 ............ CELLULITIS AGE 0–17 8 .................................................................................................. 0.9562 26.1 21.7 

280 ............ TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W CC .......................... 0.9724 29.5 24.5 

281 ............ TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W/O CC ...................... 0.7386 26.4 22.0 

282 ............ TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE 0–17 ................................... 0.7372 23.5 19.5 

283 ............ MINOR SKIN DISORDERS W CC 8 ................................................................................. 0.6508 19.3 16.0 

284 ............ MINOR SKIN DISORDERS W/O CC 1 ............................................................................. 0.4964 18.5 15.4 

285 ............ AMPUTAT OF LOWER LIMB FOR ENDOCRINE, NUTRIT,& METABOL DISORDERS 1.5176 37.4 31.1 

286 ............ ADRENAL & PITUITARY PROCEDURES8 ..................................................................... 0.7372 23.5 19.5 

287 ............ SKIN GRAFTS & WOUND DEBRID FOR ENDOC, NUTRIT & METAB DISORDERS .. 1.3982 39.7 33.0 

288 ............ O.R. PROCEDURES FOR OBESITY5 ............................................................................ 2.0841 40.0 33.3 

289 ............ PARATHYROID PROCEDURES8 ................................................................................... 0.7372 23.5 19.5 

290 ............ THYROID PROCEDURES8 ............................................................................................. 0.7372 23.5 19.5 

291 ............ THYROGLOSSAL PROCEDURES8 ................................................................................ 0.7372 23.5 19.5 

292 ............ OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W CC 4 ..................................... 1.3569 32.5 27.0 

293 ............ OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W/O CC 8 ................................. 0.9562 26.1 21.7 

294 ............ DIABETES AGE >35 ........................................................................................................ 0.8061 25.9 21.5 

295 ............ DIABETES AGE 0–35 3 .................................................................................................... 0.9562 26.1 21.7 

296 ............ NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W CC ............................ 0.8207 24.1 20.0 

297 ............ NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W/O CC ......................... 0.6524 24.5 20.4 

298 ............ NUTRITIONAL & MISC METABOLIC DISORDERS AGE 0–17 8 ................................... 0.7372 23.5 19.5 

299 ............ INBORN ERRORS OF METABOLISM 3 .......................................................................... 0.9562 26.1 21.7 

300 ............ ENDOCRINE DISORDERS W CC ................................................................................... 0.7704 22.3 18.5 

301 ............ ENDOCRINE DISORDERS W/O CC 2 ............................................................................. 0.7372 23.5 19.5 

302 ............ KIDNEY TRANSPLANT 6 ................................................................................................. 0.0000 0.0 0.0 

303 ............ KIDNEY,URETER & MAJOR BLADDER PROCEDURES FOR NEOPLASM 8 .............. 2.0841 40.0 33.3 

304 ............ KIDNEY,URETER & MAJOR BLADDER PROC FOR NON-NEOPL W CC 5 ................. 2.0841 40.0 33.3 

305 ............ KIDNEY,URETER & MAJOR BLADDER PROC FOR NON-NEOPL W/O CC 1 ............. 0.4964 18.5 15.4 

306 ............ PROSTATECTOMY W CC 8 ............................................................................................ 1.3569 32.5 27.0 

307 ............ PROSTATECTOMY W/O CC 8 ......................................................................................... 1.3569 32.5 27.0 

308 ............ MINOR BLADDER PROCEDURES W CC 4 .................................................................... 1.3569 32.5 27.0 

309 ............ MINOR BLADDER PROCEDURES W/O CC 2 ................................................................ 0.7372 23.5 19.5 

310 ............ TRANSURETHRAL PROCEDURES W CC 4 ................................................................... 1.3569 32.5 27.0 

311 ............ TRANSURETHRAL PROCEDURES W/O CC 1 ............................................................... 0.4964 18.5 15.4 

312 ............ URETHRAL PROCEDURES, AGE >17 W CC 4 .............................................................. 1.3569 32.5 27.0 

313 ............ URETHRAL PROCEDURES, AGE >17 W/O CC 8 .......................................................... 0.4964 18.5 15.4 

314 ............ URETHRAL PROCEDURES, AGE 0–17 8 ....................................................................... 0.4964 18.5 15.4 

315 ............ OTHER KIDNEY & URINARY TRACT O.R. PROCEDURES ......................................... 1.5070 36.8 30.6 

316 ............ RENAL FAILURE .............................................................................................................. 0.9214 23.8 19.8 

317 ............ ADMIT FOR RENAL DIALYSIS3 ..................................................................................... 0.9562 26.1 21.7 

318 ............ KIDNEY & URINARY TRACT NEOPLASMS W CC ........................................................ 0.7048 21.1 17.5 

319 ............ KIDNEY & URINARY TRACT NEOPLASMS W/O CC 1 .................................................. 0.4964 18.5 15.4 

320 ............ KIDNEY & URINARY TRACT INFECTIONS AGE >17 W CC ........................................ 0.7223 23.0 19.1 

321 ............ KIDNEY & URINARY TRACT INFECTIONS AGE >17 W/O CC .................................... 0.6260 23.2 19.3 

322 ............ KIDNEY & URINARY TRACT INFECTIONS AGE 0–17 8 ............................................... 0.4964 18.5 15.4 

323 ............ URINARY STONES W CC, &/OR ESW LITHOTRIPSY2 ............................................... 0.7372 23.5 19.5 

324 ............ URINARY STONES W/O CC 2 ......................................................................................... 0.7372 23.5 19.5 

325 ............ KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE >17 W CC 3 ....................... 0.9562 26.1 21.7 

326 ............ KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE >17 W/O CC 1 .................... 0.4964 18.5 15.4 

327 ............ KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE 0–17 8 ................................ 0.4964 18.5 15.4 

328 ............ URETHRAL STRICTURE AGE >17 W CC 8 ................................................................... 0.4964 18.5 15.4 

329 ............ URETHRAL STRICTURE AGE >17 W/O CC 8 ................................................................ 0.4964 18.5 15.4 

330 ............ URETHRAL STRICTURE AGE 0–17 8 ............................................................................. 0.4964 18.5 15.4 

331 ............ OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE >17 W/O CC ....................... 0.8473 23.2 19.3 

332 ............ OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE >17 W/O CC ....................... 0.5722 21.1 17.5 

333 ............ OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE 0–17 8 .................................. 0.4964 18.5 15.4 

334 ............ MAJOR MALE PELVIC PROCEDURES W CC 8 ............................................................. 2.0841 40.0 33.3 

335 ............ MAJOR MALE PELVIC PROCEDURES W/O CC 8 ......................................................... 2.0841 40.0 33.3 

336 ............ TRANSURETHRAL PROSTATECTOMY W CC 8 ............................................................ 0.7372 23.5 19.5 

4814 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

337 ............ TRANSURETHRAL PROSTATECTOMY W/O CC 8 ........................................................ 0.7372 23.5 19.5 

338 ............ TESTES PROCEDURES, FOR MALIGNANCY8 ............................................................ 0.7372 23.5 19.5 

339 ............ TESTES PROCEDURES, NON-MALIGNANCY AGE >17 2 ............................................ 0.7372 23.5 19.5 

340 ............ TESTES PROCEDURES, NON-MALIGNANCY AGE 0–17 8 .......................................... 0.7372 23.5 19.5 

341 ............ PENIS PROCEDURES2 .................................................................................................. 0.7372 23.5 19.5 

342 ............ CIRCUMCISION AGE >17 1 ............................................................................................. 0.4964 18.5 15.4 

343 ............ CIRCUMCISION AGE 0–17 8 ........................................................................................... 0.7372 23.5 19.5 

344 ............ OTHER MALE REPRODUCTIVE SYSTEM O.R. PROCEDURES FOR MALIGNANCY1.0.4964 18.5 15.4 

345 ............ OTHER MALE REPRODUCTIVE SYSTEM O.R. PROC EXCEPT FOR MALIGNANCY5.2.0841 40.0 33.3 

346 ............ MALIGNANCY, MALE REPRODUCTIVE SYSTEM, W CC 7 .......................................... 0.7150 22.3 18.5 

347 ............ MALIGNANCY, MALE REPRODUCTIVE SYSTEM, W/O CC 7 ...................................... 0.7150 22.3 18.5 

348 ............ BENIGN PROSTATIC HYPERTROPHY W CC 1 ............................................................. 0.4964 18.5 15.4 

349 ............ BENIGN PROSTATIC HYPERTROPHY W/O CC 1 ......................................................... 0.4964 18.5 15.4 

350 ............ INFLAMMATION OF THE MALE REPRODUCTIVE SYSTEM ....................................... 1.1820 26.6 22.1 

351 ............ STERILIZATION, MALE8 ................................................................................................. 0.7372 23.5 19.5 

352 ............ OTHER MALE REPRODUCTIVE SYSTEM DIAGNOSES3 ............................................ 0.9562 26.1 21.7 

353 ............ PELVIC EVISCERATION, RADICAL HYSTERECTOMY RADICAL VULVECTOMY8 ... 2.0841 40.0 33.3 

354 ............ UTERINE,ADNEXA PROC FOR NON-OVARIAN/ADNEXAL MALIG W CC 8 ................ 2.0841 40.0 33.3 

355 ............ UTERINE,ADNEXA PROC FOR NON-OVARIAN/ADNEXAL MALIG W/O CC 8 ............ 2.0841 40.0 33.3 

356 ............ FEMALE REPRODUCTIVE SYSTEM RECONSTRUCTIVE PROCEDURES8 .............. 1.3569 32.5 27.0 

357 ............ UTERINE & ADNEXA PROC FOR OVARIAN OR ADNEXAL MALIGNANCY8 ............. 1.3569 32.5 27.0 

358 ............ UTERINE & ADNEXA PROC FOR NON-MALIGNANCY W CC 8 ................................... 1.3569 32.5 27.0 

359 ............ UTERINE & ADNEXA PROC FOR NON-MALIGNANCY W/O CC 8 ............................... 1.3569 32.5 27.0 

360 ............ VAGINA, CERVIX & VULVA PROCEDURES4 ............................................................... 1.3569 32.5 27.0 

361 ............ LAPAROSCOPY & INCISIONAL TUBAL INTERRUPTION 8 .......................................... 0.4964 18.5 15.4 

362 ............ ENDOSCOPIC TUBAL INTERRUPTION 8 ....................................................................... 0.4964 18.5 15.4 

363 ............ DC, CONIZATION & RADIO-IMPLANT, FOR MALIGNANCY8 ...................................... 0.4964 18.5 15.4 

364 ............ DC, CONIZATION EXCEPT FOR MALIGNANCY8 ......................................................... 0.4964 18.5 15.4 

365 ............ OTHER FEMALE REPRODUCTIVE SYSTEM O.R. PROCEDURES5 ........................... 2.0841 40.0 33.3 

366 ............ MALIGNANCY, FEMALE REPRODUCTIVE SYSTEM W CC ......................................... 0.8139 23.1 19.2 

367 ............ MALIGNANCY, FEMALE REPRODUCTIVE SYSTEM W/O CC 1 ................................... 0.4964 18.5 15.4 

368 ............ INFECTIONS, FEMALE REPRODUCTIVE SYSTEM ...................................................... 0.6963 19.3 16.0 

369 ............ MENSTRUAL & OTHER FEMALE REPRODUCTIVE SYSTEM DISORDERS3 ............ 0.9562 26.1 21.7 

370 ............ CESAREAN SECTION W CC 8 ........................................................................................ 0.9562 26.1 21.7 

371 ............ CESAREAN SECTION W/O CC 8 .................................................................................... 0.4964 18.5 15.4 

372 ............ VAGINAL DELIVERY W COMPLICATING DIAGNOSES8 ............................................. 0.4964 18.5 15.4 

373 ............ VAGINAL DELIVERY W/O COMPLICATING DIAGNOSES8 .......................................... 0.4964 18.5 15.4 

374 ............ VAGINAL DELIVERY W STERILIZATION /OR DaC 8 ..................................................... 0.4964 18.5 15.4 

375 ............ VAGINAL DELIVERY W O.R. PROC EXCEPT STERIL /OR DaC 8 ............................... 0.4964 18.5 15.4 

376 ............ POSTPARTUM & POST ABORTION DIAGNOSES W/O O.R. PROCEDURE1 ............ 0.4964 18.5 15.4 

377 ............ POSTPARTUM & POST ABORTION DIAGNOSES W O.R. PROCEDURE8 ................ 0.4964 18.5 15.4 

378 ............ ECTOPIC PREGNANCY8 ................................................................................................ 0.9562 26.1 21.7 

379 ............ THREATENED ABORTION 8 ........................................................................................... 0.4964 18.5 15.4 

380 ............ ABORTION W/O D&C 8 .................................................................................................... 0.4964 18.5 15.4 

381 ............ ABORTION W D&C, ASPIRATION CURETTAGE OR HYSTEROTOMY8 ..................... 0.4964 18.5 15.4 

382 ............ FALSE LABOR 8 ............................................................................................................... 0.4964 18.5 15.4 

383 ............ OTHER ANTEPARTUM DIAGNOSES W MEDICAL COMPLICATIONS8 ...................... 0.4964 18.5 15.4 

384 ............ OTHER ANTEPARTUM DIAGNOSES W/O MEDICAL COMPLICATIONS8 .................. 0.4964 18.5 15.4 

385 ............ NEONATES, DIED OR TRANSFERRED TO ANOTHER ACUTE CARE FACILITY8 .... 0.4964 18.5 15.4 

386 ............ EXTREME IMMATURITY8 ............................................................................................... 0.4964 18.5 15.4 

387 ............ PREMATURITY W MAJOR PROBLEMS8 ...................................................................... 0.4964 18.5 15.4 

388 ............ PREMATURITY W/O MAJOR PROBLEMS8 ................................................................... 0.4964 18.5 15.4 

389 ............ FULL TERM NEONATE W MAJOR PROBLEMS8 ......................................................... 0.4964 18.5 15.4 

390 ............ NEONATE W OTHER SIGNIFICANT PROBLEMS8 ....................................................... 0.4964 18.5 15.4 

391 ............ NORMAL NEWBORN 8 .................................................................................................... 0.4964 18.5 15.4 

392 ............ SPLENECTOMY AGE >17 8 ............................................................................................ 0.7372 23.5 19.5 

393 ............ SPLENECTOMY AGE 0–17 8 ........................................................................................... 0.7372 23.5 19.5 

394 ............ OTHER O.R. PROCEDURES OF THE BLOOD AND BLOOD FORMING ORGANS3 .. 0.9562 26.1 21.7 

395 ............ RED BLOOD CELL DISORDERS AGE >17 .................................................................... 0.7782 24.0 20.0 

396 ............ RED BLOOD CELL DISORDERS AGE 0–17 8 ................................................................ 0.4964 18.5 15.4 

397 ............ COAGULATION DISORDERS ......................................................................................... 0.9454 23.5 19.5 

398 ............ RETICULOENDOTHELIAL & IMMUNITY DISORDERS W CC ....................................... 0.8372 22.0 18.3 

399 ............ RETICULOENDOTHELIAL & IMMUNITY DISORDERS W/O CC 1 ................................. 0.4964 18.5 15.4 

401 ............ LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W CC 5 .................... 2.0841 40.0 33.3 

402 ............ LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W/O CC 3 ................ 0.9562 26.1 21.7 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4815

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

403 ............ LYMPHOMA & NON-ACUTE LEUKEMIA W CC ............................................................. 0.8941 22.4 18.6 

404 ............ LYMPHOMA & NON-ACUTE LEUKEMIA W/O CC ......................................................... 0.7394 18.0 15.0 

405 ............ ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE 0–17 8 ............................... 0.7372 23.5 19.5 

406 ............ MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ O.R.PROC W CC 5 ....... 2.0841 40.0 33.3 

407 ............ MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ O.R.PROC W/O CC 8 ... 0.9562 26.1 21.7 

408 ............ MYELOPROLIF DISORD OR POORLY DIFF NEOPL W OTHER O.R.PROC 3 ............ 0.9562 26.1 21.7 

409 ............ RADIOTHERAPY .............................................................................................................. 0.8871 25.1 20.9 

410 ............ CHEMOTHERAPY W/O ACUTE LEUKEMIA AS SECONDARY DIAGNOSIS3 ............. 0.9562 26.1 21.7 

411 ............ HISTORY OF MALIGNANCY W/O ENDOSCOPY8 ........................................................ 0.4964 18.5 15.4 

412 ............ HISTORY OF MALIGNANCY W ENDOSCOPY8 ............................................................ 0.4964 18.5 15.4 

413 ............ OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W CC ......................... 0.9541 25.5 21.2 

414 ............ OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W/O CC 1 ................... 0.4964 18.5 15.4 

415 ............ O.R. PROCEDURE FOR INFECTIOUS & PARASITIC DISEASES ................................ 1.6849 40.1 33.4 

416 ............ SEPTICEMIA AGE >17 .................................................................................................... 0.9191 24.9 20.7 

417 ............ SEPTICEMIA AGE 0–17 8 ................................................................................................ 0.9562 26.1 21.7 

418 ............ POSTOPERATIVE & POST–TRAUMATIC INFECTIONS ............................................... 0.8304 25.2 21.0 

419 ............ FEVER OF UNKNOWN ORIGIN AGE >17 W CC 3 ........................................................ 0.9562 26.1 21.7 

420 ............ FEVER OF UNKNOWN ORIGIN AGE >17 W/O CC 2 ..................................................... 0.7372 23.5 19.5 

421 ............ VIRAL ILLNESS AGE >17 2 ............................................................................................. 0.7372 23.5 19.5 

422 ............ VIRAL ILLNESS & FEVER OF UNKNOWN ORIGIN AGE 0–17 8 .................................. 0.7372 23.5 19.5 

423 ............ OTHER INFECTIOUS & PARASITIC DISEASES DIAGNOSES ..................................... 0.9024 23.1 19.2 

424 ............ O.R. PROCEDURE W PRINCIPAL DIAGNOSES OF MENTAL ILLNESS4 ................... 1.3569 32.5 27.0 

425 ............ ACUTE ADJUSTMENT REACTION & PSYCHOLOGICAL DYSFUNCTION .................. 0.5981 27.5 22.9 

426 ............ DEPRESSIVE NEUROSES .............................................................................................. 0.4660 22.3 18.5 

427 ............ NEUROSES EXCEPT DEPRESSIVE4 ............................................................................ 1.3569 32.5 27.0 

428 ............ DISORDERS OF PERSONALITY & IMPULSE CONTROL 1 .......................................... 0.4964 18.5 15.4 

429 ............ ORGANIC DISTURBANCES & MENTAL RETARDATION ............................................. 0.6438 27.4 22.8 

430 ............ PSYCHOSES .................................................................................................................... 0.4689 22.7 18.9 

431 ............ CHILDHOOD MENTAL DISORDERS1 ............................................................................ 0.4964 18.5 15.4 

432 ............ OTHER MENTAL DISORDER DIAGNOSES1 ................................................................. 0.4964 18.5 15.4 

433 ............ ALCOHOL/DRUG ABUSE OR DEPENDENCE, LEFT AMA1 ......................................... 0.4964 18.5 15.4 

439 ............ SKIN GRAFTS FOR INJURIES ....................................................................................... 1.3663 40.5 33.7 

440 ............ WOUND DEBRIDEMENTS FOR INJURIES .................................................................... 1.5854 40.0 33.3 

441 ............ HAND PROCEDURES FOR INJURIES5 ......................................................................... 2.0841 40.0 33.3 

442 ............ OTHER O.R. PROCEDURES FOR INJURIES W CC ..................................................... 1.4971 44.6 37.1 

443 ............ OTHER O.R. PROCEDURES FOR INJURIES W/O CC 4 ............................................... 1.3569 32.5 27.0 

444 ............ TRAUMATIC INJURY AGE >17 W CC ............................................................................ 0.9609 30.6 25.5 

445 ............ TRAUMATIC INJURY AGE >17 W/O CC ........................................................................ 0.7552 26.6 22.1 

446 ............ TRAUMATIC INJURY AGE 0–17 8 ................................................................................... 0.7372 23.5 19.5 

447 ............ ALLERGIC REACTIONS AGE >17 3 ................................................................................ 0.9562 26.1 21.7 

448 ............ ALLERGIC REACTIONS AGE 0–17 8 .............................................................................. 0.7372 23.5 19.5 

449 ............ POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W CC 7 ................................... 0.9562 26.1 21.7 

450 ............ POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W/O CC 7 ............................... 0.9562 26.1 21.7 

451 ............ POISONING & TOXIC EFFECTS OF DRUGS AGE 0–17 8 ............................................ 0.7372 23.5 19.5 

452 ............ COMPLICATIONS OF TREATMENT W CC .................................................................... 0.9692 24.9 20.7 

453 ............ COMPLICATIONS OF TREATMENT W/O CC ................................................................ 0.8633 24.2 20.1 

454 ............ OTHER INJURY, POISONING & TOXIC EFFECT DIAG W CC 2 .................................. 0.7372 23.5 19.5 

455 ............ OTHER INJURY, POISONING & TOXIC EFFECT DIAG W/O CC 2 ............................... 0.7372 23.5 19.5 

461 ............ O.R. PROC W DIAGNOSES OF OTHER CONTACT W HEALTH SERVICES .............. 1.3216 36.5 30.4 

462 ............ REHABILITATION ............................................................................................................ 0.6471 23.2 19.3 

463 ............ SIGNS & SYMPTOMS W CC .......................................................................................... 0.7541 26.8 22.3 

464 ............ SIGNS & SYMPTOMS W/O CC ....................................................................................... 0.6170 25.5 21.2 

465 ............ AFTERCARE W HISTORY OF MALIGNANCY AS SECONDARY DIAGNOSIS2 .......... 0.7372 23.5 19.5 

466 ............ AFTERCARE W/O HISTORY OF MALIGNANCY AS SECONDARY DIAGNOSIS ........ 0.7365 22.0 18.3 

467 ............ OTHER FACTORS INFLUENCING HEALTH STATUS1 ................................................ 0.4964 18.5 15.4 

468 ............ EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS .............. 2.0686 42.5 35.4 

469 ............ PRINCIPAL DIAGNOSIS INVALID AS DISCHARGE DIAGNOSIS6 ............................... 0.0000 0.0 0.0 

470 ............ UNGROUPABLE6 ............................................................................................................ 0.0000 0.0 0.0 

471 ............ BILATERAL OR MULTIPLE MAJOR JOINT PROCS OF LOWER EXTREMITY5 ......... 2.0841 40.0 33.3 

473 ............ ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE >17 3 ................................. 0.9562 26.1 21.7 

475 ............ RESPIRATORY SYSTEM DIAGNOSIS WITH VENTILATOR SUPPORT ...................... 2.1358 35.2 29.3 

476 ............ PROSTATIC O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS .............. 1.0032 31.9 26.5 

477 ............ NON-EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS ..... 1.8998 40.0 33.3 

478 ............ OTHER VASCULAR PROCEDURES W CC 7 ................................................................. 1.2567 34.2 28.5 

479 ............ OTHER VASCULAR PROCEDURES W/O CC 7 ............................................................. 1.2567 34.2 28.5 

480 ............ LIVER TRANSPLANT 6 .................................................................................................... 0.0000 0.0 0.0 

481 ............ BONE MARROW TRANSPLANT 8 ................................................................................... 0.9562 26.1 21.7 

4816 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

482 ............ TRACHEOSTOMY FOR FACE, MOUTH & NECK DIAGNOSES5 ................................. 2.0841 40.0 33.3 

483 ............ TRACH W MECH VENT 96+ HRS OR PDX EXCEPT FACE,MOUTH & NECK DIAG .. 3.2131 55.7 46.4 

484 ............ CRANIOTOMY FOR MULTIPLE SIGNIFICANT TRAUMA8 ........................................... 2.0841 40.0 33.3 

485 ............ LIMB REATTACHMENT, HIP AND FEMUR PROC FOR MULTIPLE SIGNIFICANT 

TR 8.

1.3569 32.5 27.0 

486 ............ OTHER O.R. PROCEDURES FOR MULTIPLE SIGNIFICANT TRAUMA4 .................... 1.3569 32.5 27.0 

487 ............ OTHER MULTIPLE SIGNIFICANT TRAUMA .................................................................. 1.2484 32.7 27.2 

488 ............ HIV W EXTENSIVE O.R. PROCEDURE5 ....................................................................... 2.0841 40.0 33.3 

489 ............ HIV W MAJOR RELATED CONDITION .......................................................................... 0.9254 21.3 17.7 

490 ............ HIV W OR W/O OTHER RELATED CONDITION ........................................................... 0.7361 19.6 16.3 

491 ............ MAJOR JOINT & LIMB REATTACHMENT PROCEDURES OF UPPER EXTREMITY8 1.3569 32.5 27.0 

492 ............ CHEMOTHERAPY W ACUTE LEUKEMIA AS SECONDARY DIAGNOSIS OR W USE 

HIGH DOSE CHEMOTHERAPY AGENT 8.

0.9562 26.1 21.7 

493 ............ LAPAROSCOPIC CHOLECYSTECTOMY W/O C.D.E. W CC 7 ...................................... 1.3569 32.5 27.0 

494 ............ LAPAROSCOPIC CHOLECYSTECTOMY W/O C.D.E. W/O CC 7 .................................. 2.0841 40.0 33.3 

495 ............ LUNG TRANSPLANT 6 ..................................................................................................... 0.0000 0.0 0.0 

496 ............ COMBINED ANTERIOR/POSTERIOR SPINAL FUSION 8 .............................................. 1.3569 32.5 27.0 

497 ............ SPINAL FUSION W CC 7 ................................................................................................. 0.9562 26.1 21.7 

498 ............ SPINAL FUSION W/O CC 7 ............................................................................................. 0.9562 26.1 21.7 

499 ............ BACK & NECK PROCEDURES EXCEPT SPINAL FUSION W CC 5 ............................. 2.0841 40.0 33.3 

500 ............ BACK & NECK PROCEDURES EXCEPT SPINAL FUSION W/O CC 4 ......................... 1.3569 32.5 27.0 

501 ............ KNEE PROCEDURES W PDX OF INFECTION W CC 5 ................................................ 2.0841 40.0 33.3 

502 ............ KNEE PROCEDURES W PDX OF INFECTION W/O CC 2 ............................................. 0.7372 23.5 19.5 

503 ............ KNEE PROCEDURES W/O PDX OF INFECTION 3 ........................................................ 0.9562 26.1 21.7 

504 ............ EXTENSIVE 3RD DEGREE BURNS W SKIN GRAFT 8 ................................................. 2.0841 40.0 33.3 

505 ............ EXTENSIVE 3RD DEGREE BURNS W/O SKIN GRAFT 4 .............................................. 1.3569 32.5 27.0 

506 ............ FULL THICKNESS BURN W SKIN GRAFT OR INHAL INJ W CC OR SIG TRAUMA7 0.7372 23.5 19.5 

507 ............ FULL THICKNESS BURN W SKIN GRFT OR INHAL INJ W/O CC OR SIG TRAUMA7 0.7372 23.5 19.5 

508 ............ FULL THICKNESS BURN W/O SKIN GRFT OR INHAL INJ W CC OR SIG TRAUMA2 0.7372 23.5 19.5 

509 ............ FULL THICKNESS BURN W/O SKIN GRFT OR INH INJ W/O CC OR SIG TRAUMA 2 0.7372 23.5 19.5 

510 ............ NON-EXTENSIVE BURNS W CC OR SIGNIFICANT TRAUMA2 ................................... 0.7372 23.5 19.5 

511 ............ NON-EXTENSIVE BURNS W/O CC OR SIGNIFICANT TRAUMA1 ............................... 0.4964 18.5 15.4 

512 ............ SIMULTANEOUS PANCREAS/KIDNEY TRANSPLANT 6 ............................................... 0.0000 0.0 0.0 

513 ............ PANCREAS TRANSPLANT 6 ........................................................................................... 0.0000 0.0 0.0 

515 ............ CARDIAC DEFIBRILATOR IMPLANT W/O CARDIAC CATH 5 ....................................... 2.0841 40.0 33.3 

516 ............ PERCUTANEOUS CARDIVASCULAR PROCEDURE W AMI 8 ...................................... 0.9562 26.1 21.7 

517 ............ PERCUTANEOUS CARDIVASCULAR PROC W NON-DRUG ELUTING STENT W/O 

AMI 4.

1.3569 32.5 27.0 

518 ............ PERCUTANEOUS CARDIVASCULAR PROC W/O CORONARY ARTERY STENT OR 

AMI 3.

0.9562 26.1 21.7 

519 ............ CERVICAL SPINAL FUSION W CC 4 .............................................................................. 1.3569 32.5 27.0 

520 ............ CERVICAL SPINAL FUSION W/O CC 8 .......................................................................... 0.9562 26.1 21.7 

521 ............ ALCOHOL/DRUG ABUSE OR DEPENDENCE W CC .................................................... 0.4753 20.5 17.0 

522 ............ ALCOHOL/DRUG ABUSE OR DEPENDENCE W REHABILITATION THERAPY W/O 

CC.

0.4061 20.4 17.0 

523 ............ ALCOHOL/DRUG ABUSE OR DEPENDENCE W/O REHABILITATION THERAPY W/

O CC.

0.4214 19.8 16.5 

524 ............ TRANSIENT ISCHEMIA ................................................................................................... 0.5885 22.9 19.0 

525 ............ HEART ASSIST SYSTEM, OTHER THAN IMPLANT 8 ................................................... 2.0841 40.0 33.3 

526 ............ PERCUTANEOUS CARVIOVASCULAR PROC W DRUG–ELUTING STENT W AMI 8 1.3569 32.5 27.0 

527 ............ PERCUTANEOUS CARVIOVASCULAR PROC W DRUG–ELUTING STENT W/O 

AMI 8.

1.3569 32.5 27.0 

528 ............ INTRACRANIAL VASCLUAR PROCEDURES WITH PDX HEMORRHAGE8 ................ 2.0841 40.0 33.3 

529 ............ VENTRICULAR SHUNT PROCEDURES WITH CC 2 ..................................................... 0.7372 23.5 19.5 

530 ............ VENTRICULAR SHUNT PROCEDURES WITHOUT CC 8 .............................................. 0.7372 23.5 19.5 

531 ............ SPINAL PROCEDURES WITH CC 4 ................................................................................ 1.3569 32.5 27.0 

532 ............ SPINAL PROCEDURES WITHOUT CC 3 ........................................................................ 0.9562 26.1 21.7 

533 ............ EXTRACRANIAL VASCULAR PROCEDURES WITH CC 5 ............................................ 2.0841 40.0 33.3 

534 ............ EXTRACRANIAL VASCULAR PROCEDURES WITHOUT CC 8 ..................................... 1.3569 32.5 27.0 

535 ............ CARDIAC DEFIB IMPLANT WITH CARDIAC CATH WITH AMI/HF/SHOCK8 ............... 2.0841 40.0 33.3 

536 ............ CARDIAC DEFIB IMPLANT WITH CARDIAC CATH WITHOUT AMI/HF/SHOCK5 ....... 2.0841 40.0 33.3 

537 ............ LOCAL EXCISION AND REMOVAL OF INTERNAL FIXATION DEVICES EXCEPT 

HIP AND FEMUR WITH CC 4.

1.3569 32.5 27.0 

538 ............ LOCAL EXCISION AND REMOVAL OF INTERNAL FIXATION DEVICES EXCEPT 

HIP AND FEMUR WITHOUT CC 1.

0.4964 18.5 15.4 

539 ............ LYMPHOMA AND LEUKEMIA WITH MAJOR O.R. PROCEDURE WITH CC 8 ............. 2.0841 40.0 33.3 

540 ............ LYMPHOMA AND LEUKEMIA WITH MAJOR O.R. PROCEDURE WITHOUT CC 1 ...... 0.4964 18.5 15.4 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4817

TABLE 3.—PROPOSED FEDERAL FY 2004 LTC–DRG RELATIVE WEIGHTS, GEOMETRIC MEAN LENGTH OF STAY, AND

SHORT-STAYS OF FIVE-SIXTHS AVERAGE LENGTH OF STAY FOR DISCHARGES OCCURRING FROM OCTOBER 1, 2003 

THROUGH SEPTEMBER 30, 2004—Continued

LTC–DRG Description Relative 

weight 

Geometric 

average 

length of 

stay 

5/6th of the 

average 

length of 

stay 

541 ............ IMPLANT, PULSATILE HEART ASSIST SYSTEM 6 ....................................................... 0.0000 0.0 0.0 

1Proposed Relative weights for these LTC–DRGs were determined by assigning these cases to low volume quintile 1. 2Proposed Relative weights for these LTC–DRGs were determined by assigning these cases to low volume quintile 2. 3Proposed Relative weights for these LTC–DRGs were determined by assigning these cases to low volume quintile 3. 4Proposed Relative weights for these LTC–DRGs were determined by assigning these cases to low volume quintile 4. 5Proposed Relative weights for these LTC–DRGs were determined by assigning these cases to low volume quintile 5. 6Proposed Relative weights for these LTC–DRGs were assigned a value of 0.000. 7Proposed Relative weights for these LTC–DRGs were determined after adjusting to account for nonmonotonicity. 8Proposed Relative weights for these LTC–DRGs were determined by assigning these cases to the appropriate low volume quintile because 

they had no LTCH cases in the FY 2002 MedPAR. 

[FR Doc. 04–1886 Filed 1–23–04; 5:03 pm] 

BILLING CODE 4120–01–P