26282 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 412, 413, and 485

[HCFA–1118–P]

RIN 0938–AK09

Medicare Program; Changes to the

Hospital Inpatient Prospective

Payment Systems and Fiscal Year 2001

Rates

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Proposed rule.

SUMMARY: We are proposing to revise the

Medicare hospital inpatient prospective

payment system for operating costs to:

implement applicable statutory

requirements, including a number of

provisions of the Medicare, Medicaid,

and State Children’s Health Insurance

Program Balanced Budget Refinement

Act of 1999 (Public Law 106–113); and

implement changes arising from our

continuing experience with the system.

In addition, in the Addendum to this

proposed rule, we are describing

proposed changes to the amounts and

factors used to determine the rates for

Medicare hospital inpatient services for

operating costs and capital-related costs.

These changes would be applicable to

discharges occurring on or after October

1, 2000. We also are setting forth

proposed rate-of-increase limits as well

as proposed policy changes for hospitals

and hospital units excluded from the

prospective payment systems.

We are proposing changes to the

policies governing payments to

hospitals for the direct costs of graduate

medical education and payments to

disproportionate share hospitals, sole

community hospitals, and critical access

hospitals to implement changes made

by Public Law 106–113.

Finally, we are proposing a new

condition of participation on organ,

tissue, and eye procurement for critical

access hospitals that parallels the

condition of participation that we

previously published for all other

Medicare-participating hospitals.

DATES: Comments will be considered if

received at the appropriate address, as

provided below, no later than 5 p.m. on

July 5, 2000.

ADDRESSES: Mail written comments (an

original and three copies) to the

following address only: Health Care

Financing Administration, Department

of Health and Human Services,

Attention: HCFA–1118–P, P.O. Box

8010, Baltimore, MD 21244–1850.

If you prefer, you may deliver by

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.

Comments mailed to those addresses

may be delayed and could be

considered late.

Because of staffing and resource

limitations, we cannot accept comments

by facsimile (FAX) transmission. In

commenting, please refer to file code

HCFA–1118–P.

Comments received timely will be

available for public inspection as they

are received, generally beginning

approximately 3 weeks after publication

of a document, in Room 443–G of the

Department’s offices at 200

Independence Avenue, SW,

Washington, DC, on Monday through

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

5 p.m. (phone: (202) 690–7890).

For comments that relate to

information collection requirements,

mail a copy of comments to the

following addresses:

Health Care Financing Administration,

Office of Information Services,

Security and Standards Group,

Division of HCFA Enterprise

Standards, Room N2–14–26, 7500

Security Boulevard, Baltimore,

Maryland 21244–1850. Attn: John

Burke HCFA–1118–P; and

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Room 3001, New Executive

Office Building, Washington, DC

20503, Attn: Allison Herron Eydt,

HCFA Desk Officer.

FOR FURTHER INFORMATION CONTACT:

Steve Phillips, (410) 786–4531,

Operating Prospective Payment, DRG,

Wage Index, Reclassifications, and

Sole Community Hospital Issues.

Tzvi Hefter, (410) 786–4487, Capital

Prospective Payment, Excluded

Hospitals, Graduate Medical

Education and Critical Access

Hospital Issues.

SUPPLEMENTARY INFORMATION:

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.

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I. Background

A. Summary

Section 1886(d) of the Social Security

Act (the Act) sets forth a system of

payment for the operating costs of acute

care hospital inpatient stays under

Medicare Part A (Hospital Insurance)

based on prospectively set rates. Section

1886(g) of the Act requires the Secretary

to pay for the capital-related costs of

hospital inpatient stays under a

prospective payment system. Under

these prospective payment systems,

Medicare payment for hospital inpatient

operating and capital-related costs is

made at predetermined, specific rates

for each hospital discharge. Discharges

are classified according to a list of

diagnosis-related groups (DRGs).

Certain specialty hospitals are

excluded from the prospective payment

systems. Under section 1886(d)(1)(B) of

the Act, the following hospitals and

hospital units are excluded from the

prospective payment systems:

psychiatric hospitals and units,

rehabilitation hospitals and units,

children’s hospitals, long-term care

hospitals, and cancer hospitals. For

these hospitals and units, Medicare

payment for operating costs is based on

reasonable costs subject to a hospitalspecific annual limit.

Under sections 1820 and 1834(g) of

the Act, payments are made to critical

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26283

access hospitals (CAHs) (that is, rural

nonprofit hospitals or facilities that

meet certain statutory requirements) for

outpatient services on a reasonable cost

basis. Reasonable cost is determined

under the provisions of section

1861(v)(1)(A) of the Act and existing

regulations under parts 413 and 415.

Under section 1886(a)(4) of the Act,

costs of approved educational activities

are excluded from the operating costs of

inpatient hospital services. Hospitals

with approved graduate medical

education (GME) programs are paid for

the direct costs of GME in accordance

with section 1886(h) of the Act; the

amount of payment for direct GME costs

for a cost reporting period is based on

the hospital’s number of residents in

that period and the hospital’s costs per

resident in a base year.

The regulations governing the

hospital inpatient prospective payment

system are located in 42 CFR part 412.

The regulations governing excluded

hospitals and hospital units are located

in parts 412 and 413, and the GME

regulations are located in part 413.

On July 30, 1999, we published a final

rule in the Federal Register (64 FR

41490) that implemented both statutory

requirements and other changes to the

Medicare hospital inpatient prospective

payment systems for both operating

costs and capital-related costs, as well

as changes addressing payment for

excluded hospitals and payments for

GME costs. Generally, these changes

were effective for discharges occurring

on or after October 1, 1999. Correction

notices for the July 30, 1999 final rule

relating to the wage index and

geographic adjustment factor were

issued in the Federal Register on

January 12, 2000 (65 FR 1817) and

February 7, 2000 (65 FR 5933).

On November 29, 1999, the Medicare,

Medicaid, and State Children’s Health

Insurance Program (SCHIP) Balanced

Budget Refinement Act of 1999, Public

Law 106–113, was enacted. Public Law

106–113 made a number of changes to

the Act relating to prospective payments

to hospitals for inpatient services and

payments to excluded hospitals. This

proposed rule would implement

amendments enacted by Public Law

106–113 relating to FY 2001 payments

for GME costs and FY 2001 payments to

disproportionate share hospitals (DSHs),

sole community hospitals (SCHs), and

CAHs. These changes are addressed in

sections IV. and VI. of this preamble.

Other provisions of Public Law 106–

113 that relate to Medicare payments to

hospitals effective prior to October 1,

2000, will be addressed in a separate

interim final rule with comment period.

The provisions that will be included in

the interim final rule are summarized in

section I.C. of this preamble.

Public Law 106–113 also amended

section 1886(j) of the Act, which was

added by section 4421 of the Balanced

Budget Act of 1997 (Public Law 105–

33). Section 1886(j) of the Act provides

for a fully implemented prospective

payment system for inpatient

rehabilitation hospitals and

rehabilitation units, effective for cost

reporting periods beginning on or after

October 1, 2002, with provisions for

payments during a transitional period of

October 1, 2000 to October 1, 2002,

based on target amounts specified in

section 1886(b) of the Act. In section VI

of this preamble, we describe the impact

of this provision on the proposed

changes applicable to excluded

hospitals and units in this proposed

rule. We are issuing a separate notice of

proposed rulemaking to implement the

prospective payment system for

inpatient rehabilitation hospitals and

units.

B. Major Contents of This Proposed Rule

In this proposed rule, we are setting

forth proposed changes to the Medicare

hospital inpatient prospective payment

system for operating costs. We are not

proposing any policy changes relating to

payments for capital-related costs under

the hospital inpatient prospective

payment system in FY 2001. Our

proposed changes relating to capitalrelated costs include only changes to the

amounts and factors for determining the

rates for capital-related costs for FY

2001. We also are proposing changes

relating to payments for GME costs and

payments to excluded hospitals and

units, DSHs, SCHs, and CAHs. This

proposed rule would be effective for

discharges occurring on or after October

1, 2000.

The following is a summary of the

major changes that we are proposing to

make:

1. Proposed Changes to the DRG

Reclassifications and Recalibrations of

Relative Weights

As required by section 1886(d)(4)(C)

of the Act, we adjust the DRG

classifications and relative weights

annually. Our proposed changes for FY

2001 are set forth in section II. of this

preamble.

2. Proposed Changes to the Hospital

Wage Index

In section III. of this preamble, we

discuss proposed revisions to the wage

index and the annual update of the

wage data. Specific issues addressed in

this section include the following:

• The FY 2001 wage index update,

using FY 1997 wage data.

• The transition to excluding from the

wage index Part A physician wage costs

that are teaching-related, as well as

resident and Part A certified registered

nurse anesthetist (CRNA) costs.

• Revisions to the wage index based

on hospital redesignations and

reclassifications.

3. Other Decisions and Proposed

Changes to the Prospective Payment

System for Inpatient Operating and

Graduate Medical Education Costs

In section IV. of this preamble, we

discuss several provisions of the

regulations in 42 CFR Parts 412 and 413

and set forth certain proposed changes

concerning the following:

• Postacute care transfers.

• Sole community hospitals.

• Rural referral centers.

• Changes relating to the indirect

medical education adjustment.

• Changes relating to the DSH

adjustment and collection of data on

uncompensated costs for services

furnished in hospitals under the

prospective payment system.

• Medicare Geographic Classification

Review Board (MGCRB) classifications.

• Payment for the direct costs of

GME.

4. Last Year of Transition Period for the

Prospective Payment System for CapitalRelated Costs

In section V. of this preamble, we

discuss FY 2001 as the last year of a 10-

year transition period established to

phase-in the prospective payment

system for capital-related costs for

inpatient hospital services.

5. Proposed Changes for Hospitals and

Hospital Units Excluded from the

Prospective Payment Systems

In section VI. of this preamble, we

discuss the following proposals

concerning excluded hospital and

hospital units and CAHs:

• Limits on and adjustments to the

proposed target amounts for FY 2001.

• Development of prospective

payment system for inpatient

rehabilitation hospitals and units.

• Continuous improvement bonus

payments.

• Clarification that the 5-percent

threshold used in calculating an

excluded hospital’s cost per discharge is

based only on Medicare inpatients

discharged from the hospital-within-ahospital.

• All-inclusive payment rate option

for CAHs.

• Condition of participation for CAHs

relating to organ, tissue, and eye

procurement.

26284 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

6. Determining Prospective Payment

Operating and Capital Rates and Rate-ofIncrease Limits

In the Addendum to this proposed

rule, we set forth proposed changes to

the amounts and factors for determining

the FY 2001 prospective payment rates

for operating costs and capital-related

costs. We also address update factors for

determining the rate-of-increase limits

for cost reporting periods beginning in

FY 2001 for hospitals and hospital units

excluded from the prospective payment

system.

7. Impact Analysis

In Appendix A, we set forth an

analysis of the impact that the proposed

changes described in this proposed rule

would have on affected entities.

8. Capital Acquisition Model

Appendix B contains the technical

appendix on the proposed FY 2001

capital cost model.

9. Report to Congress on the Update

Factor for Hospitals under the

Prospective Payment System and

Hospitals and Units Excluded from the

Prospective Payment System

Section 1886(e)(3) of the Act requires

the Secretary to report to Congress on

our initial estimate of a recommended

update factor for FY 2001 for payments

to hospitals included in the prospective

payment systems, and hospitals

excluded from the prospective payment

systems. This report is included as

Appendix C to this proposed rule.

10. Proposed Recommendation of

Update Factor for Hospital Inpatient

Operating Costs

As required by sections 1886(e)(4) and

(e)(5) of the Act, Appendix D provides

our recommendation of the appropriate

percentage change for FY 2001 for the

following:

• Large urban area and other area

average standardized amounts (and

hospital-specific rates applicable to sole

community and Medicare-dependent,

small rural hospitals) for hospital

inpatient services paid for under the

prospective payment system for

operating costs.

• Target rate-of-increase limits to the

allowable operating costs of hospital

inpatient services furnished by hospitals

and hospital units excluded from the

prospective payment system.

11. Discussion of Medicare Payment

Advisory Commission

Recommendations

Under section 1805(b) of the Act, the

Medicare Payment Advisory

Commission (MedPAC) is required to

submit a report to Congress, not later

than March 1 of each year, that reviews

and makes recommendations on

Medicare payment policies. This annual

report makes recommendations

concerning hospital inpatient payment

policies. In section VII. of this preamble,

we discuss the MedPAC

recommendations and any actions we

are proposing to take with regard to

them (when an action is recommended).

For further information relating

specifically to the MedPAC March 1

report or to obtain a copy of the report,

contact MedPAC at (202) 653–7220.

C. Provisions of Public Law 106–113 To

Be Included in Interim Final Rule With

Comment Period

As we have indicated under section

I.A. of this preamble, we are planning to

publish an interim final rule with

comment period to address provisions

of Public Law 106–113 that are effective

prior to October 1, 2000. This interim

final rule with comment period will be

issued prior to the publication of the

hospital inpatient prospective payment

system final rule by August 1. A

summary of the provisions of Public

Law 106–113 that will be addressed in

the interim final rule with comment

period follows:

• Section 111(b), which provides for

an additional payment to teaching

hospitals equal to the additional amount

the hospital would have been paid for

FY 2000 if the IME adjustment formula

under section 1886(d)(5)(B) of the Act

(which reflects the higher indirect

operating costs associated with GME)

for FY 2000 had remained the same as

for FY 1999. (Section 111(a) also

changed the IME adjustment formula for

discharges occurring during FY 2001

and for discharges occurring on or after

October 1, 2001, which is addressed in

section IV.D. of this preamble.)

• Section 121, which amended

section 1886(b)(3)(H) of the Act to

provide for an appropriate wage

adjustment to the cap on the target

amounts for psychiatric hospitals and

units, rehabilitation hospitals and units,

and long-term care hospitals, effective

for cost reporting periods beginning on

or after October 1, 1999, through

September 30, 2002. We will address

the wage adjustment to the FY 2000

caps in the interim final rule. (The wage

adjustment to the FY 2001 caps is

discussed in section VI. of this

preamble.)

• Section 312, which amended

section 1886(h)(5) of the Act to provide

that, effective July 1, 2000, in

determining the cap on the number of

residents for GME and IME costs, the

period of board eligibility and the initial

residency period for child neurology is

the period of board eligibility for

pediatrics plus 2 years. This provision

applies on and after July 1, 2000, to

residency programs that began before,

on, or after November 29, 1999.

• Section 401(a), which amended

section 1886(d)(8) of the Act to direct

the Secretary to treat certain hospitals

located in urban areas as being located

in rural areas of their State if the

hospital meets statutory criteria and

files an application with HCFA. This

provision is effective on January 1,

2000.

• Section 401(b), which contains

conforming changes to incorporate the

reclassifications under the amendments

made by section 401(a) of Public Law

106–113 to outpatient hospital services

(section 1833(t) of the Act) and the CAH

statute (section 1820(c)(2)(B)(i) of the

Act). This provision is effective on

January 1, 2000.

• Section 403(a), which amended

section 1820(c)(2)(B)(iii) of the Act to

delete the 96-hour length of stay

restriction on inpatient care in a CAH

and to authorize a period of stay that

does not exceed, on an annual basis, 96

hours per patient. This provision is

effective on November 29, 1999.

• Section 403(b), which amended

section 1820(c)(2)(B)(i) of the Act to

allow for-profit hospitals to qualify for

CAH status. This provision is effective

on November 29, 1999.

• Section 403(c), which amended

section 1820(c) of the Act to allow

hospitals that have closed within 10

years prior to November 29, 1999, or

hospitals that downsized to a health

clinic or health center, to be designated

as CAHs if they meet the established

criteria for designation.

• Section 403(e), which amended

sections 1833(a)(1)(D)(i) and

1833(a)(2)(D)(i) the Act to eliminate the

Medicare Part B deductible and

coinsurance for clinical diagnostic

laboratory tests furnished by a CAH on

an outpatient basis. This provision is

effective with respect to services

furnished on or after November 29,

1999.

• Section 403(f), which amended

section 1883 of the Act to reinstate the

right of CAHs that meet applicable

requirements to enter into ‘‘swing-bed’’

agreements.

• Section 404, which amended

section 1886(d)(5)(G) of the Act to

extend the Medicare-dependent, small

rural hospital program for 5 years, from

FY 2001 through FY 2005. Section 404

also amended section 1886(b)(3)(D) of

the Act as a conforming change to make

the 5-year extension applicable to the

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26285

target amounts for Medicare-dependent,

small rural hospitals.

• Section 407(a)(1), which amended

section 1886(h)(4)(F) of the Act to direct

the Secretary, for purposes of

determining a hospital’s FTE cap for

direct GME payments, to count an

individual to the extent that the

individual would have been counted as

a primary care resident for purposes of

the FTE cap but for the fact that the

individual was on maternity or

disability leave or a similar approved

leave of absence. Section 407(a)(2) made

a corresponding amendment to section

1886(d)(5)(B)(v) of the Act relating to

the IME adjustment. The provision

relating to direct GME is effective with

cost reporting periods beginning on or

after November 29, 1999. The provision

relating to the IME adjustment applies

to discharges occurring in cost reporting

periods beginning on or after November

29, 1999.

• Section 407(b)(1), which amended

section 1886(h)(4)(F)(i) of the Act to

provide that a rural hospital’s direct

FTE count for direct GME may not

exceed 130 percent of the number of

unweighted residents that the rural

hospital counted in its most recent cost

reporting period ending on or before

December 31, 1996. Section 407(b)(2)

made a similar change to section

1886(d)(5)(B)(v) of the Act relating to

the IME adjustment. The provision

relating to direct GME applies to cost

reporting periods beginning on or after

April 1, 2000. The provision relating to

the IME adjustment applies to

discharges occurring on or after April 1,

2000.

• Section 407(c), which amended

sections 1886(h)(4)(H) and

1886(d)(5)(B)(v) of the Act to allow a

non-rural hospital that establishes

separately accredited approved medical

residency training programs (or rural

training tracks) in a rural area or has an

accredited training program with an

integrated rural track, to receive an FTE

cap adjustment for purposes of direct

GME and IME. The provision is effective

with cost reporting periods beginning

on or after April 1, 2000 for direct GME,

and with discharges occurring on or

after April 1, 2000 for IME.

• Section 407(d) addresses the

situation where residents were training

in a residency training program at a

Veterans Affairs hospital and then were

transferred on or after January 1, 1997

and on or before July 30, 1998, to a nonVeterans Affairs hospital because the

program in which the residents were

training would lose its accreditation by

the Accreditation Council on Graduate

Medical Education (ACGME) if the

residents continued to train at the

facility. In this scenario, the nonVeterans Affairs hospital may receive a

temporary adjustment to its 1996 FTE

cap to include in its FTE count those

residents who were transferred from the

Veterans Affairs hospital. This provision

applies as if it was included in the

enactment of Public Law 105–33, that is,

for GME with cost reporting periods

beginning on or after October 1, 1997,

and for IME, discharges occurring on or

after October 1, 1997. If a hospital is

owed payments as a result of this

provision, payments must be made

immediately.

• Section 541, which amended

section 1886 of the Act to provide an

additional payment to hospitals that

receive payments under section 1861(v)

of the Act for approved nursing and

allied health education programs to

reflect utilization of Medicare+Choice

enrollees. This provision is effective for

portions of cost reporting periods in a

year beginning with calendar year 2000.

II. Proposed Changes to DRG

Classifications and Relative Weights

A. Background

Under the prospective payment

system, we pay for inpatient hospital

services on a rate per discharge basis

that varies according to the DRG to

which a beneficiary’s stay is assigned.

The formula used to calculate payment

for a specific case takes an individual

hospital’s payment rate per case and

multiplies it by the weight of the DRG

to which the case is assigned. Each DRG

weight represents the average resources

required to care for cases in that

particular DRG relative to the average

resources used to treat cases in all

DRGs.

Congress recognized that it would be

necessary to recalculate the DRG

relative weights periodically to account

for changes in resource consumption.

Accordingly, section 1886(d)(4)(C) of

the Act requires that the Secretary

adjust the DRG classifications and

relative weights at least annually. These

adjustments are made to reflect changes

in treatment patterns, technology, and

any other factors that may change the

relative use of hospital resources. The

proposed changes to the DRG

classification system, and the proposed

recalibration of the DRG weights for

discharges occurring on or after October

1, 2000, are discussed below.

B. DRG Reclassification

1. General

Cases are classified into DRGs for

payment under the prospective payment

system based on the principal diagnosis,

up to eight additional diagnoses, and up

to six procedures performed during the

stay, as well as age, sex, and discharge

status of the patient. The diagnosis and

procedure information is reported by

the hospital using codes from the

International Classification of Diseases,

Ninth Revision, Clinical Modification

(ICD–9–CM). Medicare fiscal

intermediaries enter the information

into their claims processing systems and

subject it to a series of automated

screens called the Medicare Code Editor

(MCE). These screens are designed to

identify cases that require further

review before classification into a DRG.

After screening through the MCE and

any further development of the claims,

cases are classified into the appropriate

DRG by the Medicare GROUPER

software program. The GROUPER

program was developed as a means of

classifying each case into a DRG on the

basis of the diagnosis and procedure

codes and demographic information

(that is, sex, age, and discharge status).

It 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 Medicare Provider

Analysis and Review (MedPAR) file.

The data in this file are used to evaluate

possible DRG classification changes and

to recalibrate the DRG weights.

In the July 30, 1999 final rule (64 FR

41500), we discussed a process for

considering non-MedPAR data in the

recalibration process. In order for the

use of particular data to be feasible, we

must have sufficient time to evaluate

and test the data. The time necessary to

do so depends upon the nature and

quality of the data submitted. Generally,

however, a significant sample of the

data should be submitted by August 1,

approximately 8 months prior to the

publication of the proposed rule, so that

we can test the data and make a

preliminary assessment as to the

feasibility of using the data.

Subsequently, a complete database

should be submitted no later than

December 1 for consideration in

conjunction with the next year’s

proposed rule.

Currently, cases are assigned to one of

501 DRGs (including one DRG for a

diagnosis that is invalid as a discharge

diagnosis and one DRG for ungroupable

diagnoses) in 25 major diagnostic

categories (MDCs). Most MDCs are

based on a particular organ system of

the body (for example, MDC 6 (Diseases

and Disorders of the Digestive System));

however, some MDCs are not

constructed on this basis since they

26286 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

1A single title combined with two DRG numbers

is used to signify pairs. Generally, the first DRG is

for cases with CC and the second DRG is for cases

without CC. If a third number is included, it

represents cases with patients who are age 0–17.

Occasionally, a pair of DRGs is split between age

≥17 and age 0–17.

involve multiple organ systems (for

example, MDC 22 (Burns)).

In general, cases are assigned to an

MDC based on the principal diagnosis,

before assignment to a DRG. However,

there are five DRGs to which cases are

directly assigned on the basis of

procedure codes. These are the DRGs for

liver, bone marrow, and lung

transplants (DRGs 480, 481, and 495,

respectively) and the two DRGs for

tracheostomies (DRGs 482 and 483).

Cases are assigned to these DRGs before

classification to an MDC.

Within most MDCs, cases are then

divided into surgical DRGs (based on a

surgical hierarchy that orders individual

procedures or groups of procedures by

resource intensity) and medical DRGs.

Medical DRGs generally are

differentiated on the basis of diagnosis

and age. Some surgical and medical

DRGs are further differentiated based on

the presence or absence of

complications or comorbidities (CC).

Generally, the GROUPER does not

consider other procedures; that is,

nonsurgical procedures or minor

surgical procedures generally not

performed in an operating room are not

listed as operating room (OR)

procedures in the GROUPER decision

tables. However, there are a few non-OR

procedures that do affect DRG

assignment for certain principal

diagnoses, such as extracorporeal shock

wave lithotripsy for patients with a

principal diagnosis of urinary stones.

The changes we are proposing to

make to the DRG classification system

for FY 2001 and other issues concerning

DRGs are set forth below. Unless

otherwise noted, our DRG analysis is

based on the full (100 percent) FY 1999

MedPAR file (bills received through

December 31, 1999 for discharges in FY

1999).

2. MDC 5 (Diseases and Disorders of the

Circulatory System)

In the August 29, 1997 final rule with

comment period (62 FR 45974), we

noted that, because of the many recent

changes in heart surgery, we were

considering conducting a

comprehensive review of the MDC 5

surgical DRGs. In the July 31, 1998 final

rule with comment period (63 FR

40956), we did adopt some changes to

the MDC 5 surgical DRGs. Since that

time, we have received inquiries on a

continuing basis regarding these DRGs.

We have continued to review Medicare

claims data and, based on our analysis,

we are proposing the following DRG

changes in MDC 5:

a. Heart Transplant (DRG 103)

As previously stated, cases are

generally assigned to an MDC based on

principal diagnosis and subsequently

assigned to surgical or medical DRGs

included in that MDC. However, cases

involving liver, bone marrow, and lung

transplants (DRGs 480, 481, and 495,

respectively) and the two DRGs for

tracheostomies (DRGs 482 and 483) are

directly assigned on the basis of

procedure codes. Cases assigned to

these DRGs before classification to an

MDC are referred to as pre-MDC.

However, cases involving heart

transplants are currently assigned first

to MDC 5 and then to DRG 103.

Currently, when a bone marrow

transplant and a heart transplant are

performed during the same admission,

the case is assigned to DRG 481 (Bone

Marrow Transplant). Because bone

marrow transplant cases are first

classified to pre-MDC, while heart

transplants are first assigned to MDC 5,

the bone marrow transplant assumes

precedence in the assignment of the

case to a DRG. However, payment for

DRG 481 is substantially less than DRG

103. For FY 2000, the relative weight for

DRG 103 is 19.5100, while the relative

weight for DRG 481 is 8.7285.

We reviewed the FY 1999 MedPAR

file containing bills through December

31, 1999 and found no cases in which

a bone marrow transplant and a heart

transplant were performed in the same

admission. However, to ensure

appropriate DRG assignment of these

cases, we are proposing that the heart

transplant DRG, which encompasses

combined heart-lung transplantation

(ICD–9–CM procedure code 33.6) and

heart transplantation (ICD–9–CM

procedure code 37.5) be assigned to preMDC. In this way, cases involving a

bone marrow transplant and a heart

transplant would be assigned to DRG

103 (DRG 103 would be reordered

higher in the pre-MDC surgical

hierarchy, as discussed in section II.B.5.

of this preamble).

b. Heart Assist Devices

We continue to review data in MDC

5 (Diseases and Disorders of the

Circulatory System) to determine if

cases are being assigned to the most

appropriate DRG based on clinical

coherence and similar resource

consumption. At the December 1, 1994

ICD–9–CM Coordination and

Maintenance Committee meeting, we

recommended creation of new codes to

capture single and bi-ventricular heart

assist systems. These codes, 37.65

(Implant of an external, pulsatile heart

assist system) and 37.66 (Implant of an

implantable, pulsatile heart assist

system), were adopted for use for

discharges occurring on or after October

1, 1995. However, code 37.66 was

deemed investigational and was not

considered a covered procedure.

Effective May 5, 1997, we revised

Medicare coverage of heart assist

devices to allow coverage of a

ventricular assist device (code 37.66)

used for support of blood circulation

postcardiotomy if certain conditions

were met.

Due to some residual

misunderstanding regarding this

coverage policy, we would like to

emphasize that this device was and will

continue to be listed as a noncovered

procedure in the Medicare Code Editor

(MCE), the front-end software product

in the GROUPER program that detects

and reports errors in the coding of

claims data. The reason that this device

is listed in the MCE, in spite of the fact

that its implantation is covered, is

because of the stringent conditions that

must be met by hospitals in order to

receive payment.

In the August 29, 1997 final rule (62

FR 45973), we moved procedure code

37.66 from DRGs 110 and 111 1 (Major

Cardiovascular Procedures with and

without CCs, respectively) to DRG 108

(Other Cardiothoracic Procedures). As

stated in the July 31, 1998 final rule (63

FR 40956), we moved procedure code

37.66 to DRGs 104 and 105 (Cardiac

Valve and Other Major Cardiothoracic

Procedures with and without CCs,

respectively) for FY 1999.

In the July 30, 1999 final rule (64 FR

41498), we responded to a comment

suggesting that heart assist devices be

assigned to DRG 103. In further

consideration of this issue, we have

reviewed the 100 percent FY 1999

MedPAR file containing bills through

December 31, 1999, and found that there

were a total of 47 implantable heart

assist system procedures performed on

Medicare beneficiaries. Of these cases,

13 (approximately 28 percent) were

assigned to DRG 103 (Heart Transplant)

and four (approximately 9 percent) were

assigned to DRG 483 (Tracheostomy

Except for Face, Mouth and Neck

Diagnoses), and, therefore, were paid at

significantly higher rates than the

remaining 30 cases. All of the procedure

code 37.66 cases have extremely high

charges, which is consistent with past

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26287

analysis, and all of these cases are

subject to payment as cost outliers.

Our data analysis indicates that the

most cases in any one hospital is 5,

while 17 hospitals performed only one

heart assist system implant each. We

reiterate that only heart transplant cases

can be properly assigned to the

transplant DRG (August 29, 1997 final

rule (62 FR 45974)). Since heart assist

devices are used across DRGs, many not

involving a transplant, we are not

proposing to assign procedure code

37.66 to DRG 103.

In addition to the review of 37.66, we

also looked at procedure codes 37.62

(Implant of other heart assist system),

37.63 (Replacement and repair of heart

assist system), and 37.65 (Implant of an

external, pulsatile heart assist system).

These cases are currently assigned to

DRGs 110 and 111 (Major

Cardiovascular Procedures). We believe

that these procedures are similar both

clinically and in terms of resource

utilization to procedure code 37.66,

which is already assigned to DRGs 104

and 105. Therefore, we propose to move

codes 37.62, 37.63, and 37.65 from

DRGs 110 and 111 to DRGs 104 and 105.

c. Platelet Inhibitors

Effective October 1, 1998, procedure

code 99.20 (Injection or infusion of

platelet inhibitor) was created. The use

of platelet inhibitors have been shown

to significantly decrease the rate of

acute vessel closure, as well as the rate

of cardiac complications and death.

Platelet inhibitors are frequently

administered to patients undergoing

percutaneous transluminal coronary

angioplasty (PTCA). In addition,

patients admitted with unstable angina

may also benefit from platelet

inhibitors. This procedure code is

designated as a non-OR procedure that

does not affect DRG assignment (platelet

inhibitors are administered either

through intravenous injection or

infusion).

For the past 2 years, a manufacturer

of platelet inhibitors has submitted data

to support its position that cases

involving platelet inhibitor therapy

receiving angioplasty should be

reclassified from DRG 112

(Percutaneous Cardiovascular

Procedures) to DRG 116 (Other

Permanent Cardiac Pacemaker Implant

or PTCA with Coronary Artery Stent

Implant). In the July 30, 1999 final rule

(64 FR 41503), we noted that we had

received a new set of data from the

platelet inhibitor manufacturer

containing 27,673 cases from 164

hospitals in which Medicare patients

underwent an angioplasty.

Included with the data were tables

summarizing the results of the

commenter’s analysis of the data,

showing that angioplasty cases receiving

platelet inhibitor therapy are more

expensive than those not receiving

platelet inhibitors. According to the

commenter, the approximate average

standardized charges for the different

classes of patients are as follows:

• No drug, no stent: $19,877.

• No drug, with stent: $22,968.

• Drug, no stent: $26,389.

• Drug, stent: $30,139.

Using the 100 percent FY 1999

MedPAR file that contains discharges

through September 30, 1999, we

performed analysis of the cases for

which procedure code 99.20 was

reported. There were a total of 37,222

cases spread across 123 DRGs.

The majority of the platelet inhibitor

cases, 28,022 (75 percent of all platelet

inhibitor cases), are already assigned to

DRG 116. The average standardized

charges for these cases are

approximately $26,683, compared to

approximately $25,251 for DRG 116

overall. In DRG 112, there were 4,310

platelet inhibitor cases (12 percent of all

platelet inhibitor cases) assigned. The

average standardized charge for these

cases is approximately $22,786,

compared to approximately $20,224 for

DRG 112 overall. Although the platelet

inhibitor therapy cases that are

classified to DRG 112 do have somewhat

higher charges than the average case

assigned to this DRG (11 percent, or

$2,563), we found several procedures in

DRG 112 with average standardized

charges higher than the platelet

inhibitor cases. For example, there were

1,560 cases in which a single vessel

PTCA or coronary atherectomy with

thrombolytic agent (procedure code

36.02) was performed with an average

standardized charge of approximately

$25,181, and there were 4,951 cases in

which a multiple vessel PTCA or

coronary atherectomy was performed,

with or without a thrombolytic agent

(procedure code 36.05) with an average

standardized charge of approximately

$23,608.

We also noted that there are several

procedures assigned to DRG 112 that

have average standardized charges

lower than the average charges for all

cases in the DRG. For example, average

charges for cases with procedure code

37.34 (Catheter ablation of lesion or

tissues of heart) were $18,429. The

following chart illustrates the variation

among the average charges for DRG 112.

This chart shows that the average

charges for cases with procedure code

99.20 are well within the normal

variation of other procedures.

DRG 112 Cases Average standardized charges

Catheter ablation of lesion or tissues of heart (code 37.34) ....................................................................... 6,972 $18,429

All cases within DRG 112 ............................................................................................................................ 60,842 20,224

Injection or infusion of platelet inhibitor (code 99.20) ................................................................................. 4,310 22,786

Multiple vessel PTCA or coronary atherectomy with or without mention of thrombolytic agent (code

36.05) ....................................................................................................................................................... 4,951 23,608

Single vessel PTCA or coronary atherectomy with mention of thrombolytic agent (code 36.02) .............. 1,560 25,181

These examples indicate that there is

always some variation in charges within

a DRG. This difference in variations of

charges is within the normal range of

charge variations.

Clinical homogeneity within DRGs

has always been a fundamental

principle considered when assigning

codes to appropriate DRGs. Currently,

DRG 116 includes cases involving the

insertion of a pacemaker as well as the

insertion of coronary artery stents with

PTCA. On the other hand, cases

assigned to DRG 112 involve less

invasive operating room and, in some

cases, nonoperating room procedures.

The basis for DRG assignment has

generally been the diagnosis of the

patient or the procedures performed. To

the extent the use of a particular

technology becomes prevalent in the

treatment of a particular type of case,

the DRG system is designed to account

for any increases or decreases in costs

through recalibration. Hospitals

frequently benefit from this process

while efficiency-enhancing technology

is being introduced. We believe that the

update factors established in section

1886(b)(3)(B)(i) of the Act, combined

with the potential for continuing

improvements in hospital productivity,

and annual recalibration of the DRG

26288 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

weights, are adequate to finance

appropriate care of Medicare patients.

We also received a comment from

another manufacturer of platelet

inhibitors whose therapy is targeted on

acute coronary syndrome patients

without coronary intervention. These

cases are assigned to DRG 124

(Circulatory Disorders Except Acute

Myocardial Infarction with Cardiac

Catheterization and Complex Diagnosis)

or DRG 140 (Angina Pectoris). The

manufacturer’s concern is that both

types of cases, those performed in

conjunction with coronary intervention

and those without, be given an equal

focus in this evaluation.

Based on our analysis, we found 410

platelet inhibitor cases (1 percent)

assigned to DRG 124. This is a small

percentage of cases in comparison to the

overall total of 134,759 cases assigned to

this DRG. The platelet inhibitor cases

had an average standardized charge of

approximately $17,378 compared to

approximately $14,730 for DRG 124

overall. As we have illustrated above,

there is always some variation in

charges within a DRG and this

difference is within normal variation.

There were 66 platelet inhibitor cases

(0.2 percent) assigned to DRG 140. The

average standardized charge for these

cases is higher than the overall DRG

charge, approximately $8,992 and

$5,657, respectively. However, it

represents a small percentage of the

total (76,913) cases assigned to DRG

140.

In summary, currently 75 percent of

cases where code 99.20 is present are

assigned to DRG 116. The next most

common DRG where these cases are

assigned is DRG 112 (12 percent). Cases

assigned to DRG 116 generally involve

implantation of a pacemaker or artery

stent, while cases assigned to DRG 112

involve percutaneous cardiovascular

procedures. Our analysis found a $3,897

difference between cases involving

platelet inhibitor therapy that were

assigned to DRG 116 and cases assigned

to DRG 112, indicating a clinical

distinction between the cases grouping

to the two DRGs. Finally, among platelet

inhibitor therapy cases that are assigned

to DRG 112, our analysis found that the

average charges are well within the

normal variation around the overall

average charges within the DRG. Based

on these findings, we do not believe it

would be appropriate to assign all cases

where procedure code 99.20 is present

to DRG 116. Therefore, we are not

proposing to change to our current

policy which specifies that assignment

of cases to this code does not affect the

DRG assignment.

d. Extracorporeal Membrane

Oxygenation

Extracorporeal Membrane

Oxygenation (ECMO) is a

cardiopulmonary bypass technique that

provides long-term cardiopulmonary

support to patients who have reversible

cardiopulmonary insufficiency that has

not responded to conventional

management. It involves passing a

patient’s blood through an

extracorporeal membrane oxygenator

which adds oxygen and removes carbon

dioxide. The oxygenated blood then is

passed through a heat exchanger to

warm it to body temperature prior to

returning it to the patient. The process

and equipment are similar to those used

in open heart surgery, but are continued

over prolonged periods of time. ECMO

attempts to provide the patient with

artificial cardiopulmonary function

while his or her own cardiopulmonary

functions are incapable of sustaining

life.

Since ECMO involves the use of a

device that sustains cardiopulmonary

function while the underlying condition

is being treated, it is important to

identify and treat underlying conditions

leading to cardiopulmonary failure if

the patient is to return to normal

cardiopulmonary function.

ECMO is assigned to procedure code

39.65 (Extracorporeal membrane

oxygenation (ECMO)). This code is not

recognized as an OR procedure within

the DRG system and, therefore, does not

affect payment. To evaluate the

appropriateness of payment under the

current DRG assignment, we have

reviewed a 10-percent sample of

Medicare claims in the FY 1999

MedPAR file and found only 4 cases in

which ECMO was used. The charges for

these cases ranged from $16,006 to

$198,014. Since medical literature

indicates that ECMO is predominately

used on newborns and pediatric cases,

this low number of claims is not

surprising. Only in recent years have

some hospitals started to use ECMO on

adults. It is reserved for cases facing

almost certain mortality.

Because ECMO is a procedure

clinically similar to a heart assist

device, we are proposing that procedure

code 39.65 be classified as an OR

procedure and be classified in DRGs 104

and 105 along with the heart assist

system procedures (as discussed in

section II.B.2.b. of this preamble). Those

cases in which ECMO was provided, but

for which the principal diagnosis is not

classified to MDC 5, would then be

assigned to DRG 468 (Extensive OR

Procedure Unrelated to Principal

Diagnosis). This would be appropriate

since it is possible that secondary

conditions or complications may arise

during hospitalization that would

require the use of ECMO. The relatively

high weight of DRG 468 would be

appropriate for these cases.

3. MDC 15 (Newborns and Other

Neonates With Conditions Originating

in the Perinatal Period)

a. V05.8 (Vaccination for Disease, NEC)

DRG 390 (Neonate with Other

Significant Problems) contains newborn

or neonate cases with other significant

problems, not assigned to DRGs 385

through 389, DRG 391, or DRG 469. In

order to be classified into DRG 391

(Normal Newborn), the neonate must

have a principal diagnosis as listed

under DRG 391 and either no secondary

diagnosis or a secondary diagnosis as

listed under DRG 391. Neonates with a

secondary diagnosis of V05.8

(Vaccination for disease, NEC) are

currently classified to DRG 390.

Although it would seem that healthy

newborns who receive vaccinations and

have no other problems should be

classified to DRG 391, code V05.8 was

not included as one of the secondary

diagnoses under DRG 391, and therefore

the case would not be classified as a

normal newborn (DRG 391). Code V05.8

is assigned to DRG 390 as a default,

since it is not included under another

complicated neonate DRG or the normal

newborn DRG.

Based on inquiries we have received,

we reviewed the appropriateness of

including diagnosis code V05.8 on the

list of acceptable secondary diagnoses

under DRG 390. It was pointed out that

by including V05.8 on the acceptable

secondary diagnosis list for DRG 390,

newborns who receive vaccinations are

classified as having significant health

problems. The inquirers believed this

incorrectly labels an otherwise healthy

newborn as having a significant medical

condition. Providing a vaccination to a

newborn is performed to prevent the

infant from contracting a disease.

We agree with the inquirers that,

absent any evidence of disease, a

newborn should not be considered as

having a significant problem simply

because a preventative vaccination was

provided. Therefore, we are proposing

that V05.8 be removed from the list of

acceptable secondary diagnoses under

DRG 390 and assigned as a secondary

diagnosis under DRG 39l. In doing so,

these cases would no longer be

classified to DRG 390.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26289

b. Diagnosis Code 666.02 (Third-stage

Postpartum Hemorrhage, Delivered

With Postpartum Complication)

Diagnosis code 666.02 is assigned to

DRG 373 (Vaginal Delivery without

Complicating Diagnosis). This DRG was

created for uncomplicated vaginal

deliveries. However, code 666.22

(Delayed and secondary postpartum

hemorrhage, delivered with postpartum

complication) is assigned to DRG 372

(Vaginal Delivery with Complicating

Diagnoses). This means that mothers

who had a delayed and secondary

postpartum hemorrhage would be

assigned to DRG 372, while mothers

who had a third-stage postpartum

hemorrhage would not be considered as

a complicated delivery.

We believe a third-stage postpartum

hemorrhage should be considered a

complicating diagnosis and, in order to

more appropriately categorize these

cases, we are proposing that diagnosis

code 666.02 be removed from DRG 373

and assigned as a complicating

diagnosis under DRG 372.

c. Diagnosis Code 759.89 (Specified

Congenital Anomalies, NEC) (Alport’s

Syndrome)

Alport’s Syndrome (also referred to as

hereditary nephritis) is an inherited

disorder involving damage to the

kidney, blood in the urine, and, in some

cases, loss of hearing. It may also

include loss of vision. Patients who are

not treated early enough or who do not

respond to treatment may progress to

renal failure. A kidney transplant is one

treatment option for these cases. As

with many of the congenital anomalies,

there is no unique ICD–9–CM code for

this condition. Alport’s Syndrome,

along with many other rare and diverse

congenital anomalies, is assigned to the

rather nonspecific diagnosis code

759.89 (Specific congenital anomalies,

NEC). Examples include William

Syndrome, Brachio-Oto-Renal

Syndrome, and Costello’s Syndrome.

Each of these is a unique hereditary

disorder affecting a variety of body

systems.

Patients can be diagnosed and treated

for congenital anomalies throughout

their lives; treatment is not restricted to

the neonatal period. In our GROUPER,

however, each diagnosis code is

assigned to just one MDC. In this case,

diagnosis code 759.89 is assigned to

MDC 15 (Newborns and Other Neonates

with Conditions Originating in the

Perinatal Period) even though the

patient may be an adult.

We have received a request from a

physician concerning renal transplants

for patients with Alport’s Syndrome.

The physician pointed out that when a

patient with Alport’s Syndrome is

admitted for a kidney transplant, the

case is assigned to DRG 390 (Neonate

with Other Significant Problems). In

these instances, when the principal

diagnosis is code 759.89, the case is

classified to MDC 15 even though the

patient may no longer be a newborn.

The physician believed that these cases

should be assigned to DRG 302 (Kidney

Transplant).

The inquirer suggested moving

diagnosis code 759.89 to MDC 11

(Diseases and Disorders of the Kidney

and Urinary Tract) so that when a

kidney transplant is performed, it will

be assigned to DRG 302. Although this

seems quite appropriate for patients

with Alport’s Syndrome found in

diagnosis code 759.89, it does not work

well for the wide variety of patients also

described by this code. Many others

would be inappropriately classified to

MDC 11.

Alport’s Syndrome cases with code

759.89 as a principal diagnosis who

receive a kidney transplant are assigned

to DRG 468 (Extensive OR Procedure

Unrelated to Principal Diagnosis). This

DRG has a FY 2000 relative weight of

3.6400. Also for FY 2000, DRG 302

(Kidney Transplant) has a relative

weight of 3.5669. Therefore, the

payment amounts are in fact

comparable.

There are several options for resolving

this issue:

(1) If the case is assigned a principal

diagnosis code of renal failure with

Alport’s Syndrome as a secondary

diagnosis, the case could be assigned to

DRG 302. As this option would

represent a change in the sequencing of

congenital anomaly codes and related

complications, it would have to be

evaluated and subsequently approved

by the Editorial Advisory Board for

Coding Clinic for ICD–9–CM. This

Editorial Advisory Board contains

representatives from the physician,

coding, and hospital industry. Final

decisions on coding policy issues are

made by the representatives from the

American Hospital Association, the

American Health Information

Management Association, the National

Center for Health Statistics, and HCFA.

Since a change in sequencing of

congenital anomaly codes and their

manifestations and complications

would require a change of coding

policy, this issue was brought to the

Editorial Advisory Board, which is

currently evaluating it. A final decision

on any proposed policy change would

not be finalized and published in time

for either this proposed rule or the final

rule. Therefore, this option would not

assist in immediately addressing the

issue at hand.

(2) A unique ICD–9–CM diagnosis

code could be created for Alport’s

Syndrome that could then be evaluated

for possible assignment within MDC 11.

This issue has been referred to the

National Center for Health Statistics for

consideration as a future coding

modification.

One difficulty with this option is the

large number of congenital anomalies

and the limited number of unused codes

in this section of ICD–9–CM. Each new

code must be carefully evaluated for

appropriateness.

(3) A third option, which was already

addressed, involves moving diagnosis

code 759.89 to MDC 11. The problem

with this approach is that many cases

would then be misassigned to MDC 11

because the congenital anomaly would

not involve diseases of the kidney and

urinary tract.

(4) A fourth option would be to leave

the coding and DRG assignment as they

currently exist. Since few cases exist,

the overall impact may be minimal.

To evaluate the impact of leaving the

DRG assignment as it currently exists,

we examined data from a 10-percent

sample of Medicare cases in the FY

1999 MedPAR file. There were 95 cases

assigned to a wide range of DRGs with

code 759.89 as a secondary diagnosis.

There was only one case assigned to

MDC 15 with a principal diagnosis of

code 759.89.

We are recommending that diagnosis

code 759.89 remain in MDC 15, since it

encompasses such a wide variety of

conditions. In addition, we are not

proposing a change in the DRG

assignment because the payment impact

would be minimal and the cases few.

We will continue to pursue the

possibility of modifying the ICD–9–CM

code as well as evaluating the coding

rules.

4. MDC 17 (Myeloproliferative Diseases

and Disorders and Poorly Differentiated

Neoplasm)

Diagnosis code 273.8 (Disorders of

plasma protein metabolism, NEC) is

assigned to DRG 403 (Lymphoma and

Nonacute Leukemia with CC) and DRG

404 (Lymphoma and Nonacute

Leukemia without CC). A disorder of

plasma protein metabolism does not

mean one has a lymphoma with

nonacute leukemia. An individual can

have a disorder of plasma protein

metabolism without having a lymphoma

or leukemia.

We have received an inquiry on the

appropriateness of including diagnosis

code 273.8 in DRGs 403 and 404. The

inquirer pointed out that disorders of

26290 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

plasma protein metabolism are not

lymphomas or leukemia. We agree that

diagnosis code 273.8 is not a lymphoma

or leukemia and is more closely related

to DRG 413 (Other Myeloproliferative

Disorders or Poorly Differentiated

Neoplasm Diagnoses with CC) and DRG

414 (Other Myeloproliferative Disorders

or Poorly Differentiated Neoplasm

Diagnoses without CC).

We examined charge data drawn from

cases assigned to diagnosis code 273.8

in a 10-percent sample of Medicare

cases in the FY 1999 MedPAR file and

found that the average charges for these

cases were also more closely related to

DRGs 413 and 414 than to DRGs 403

and 404, as demonstrated in the

following chart.

DRGs 403/404 all cases in 10-percent sample DRGs 413/414 all cases in 10-percent sample

DRG Count Average

charge DRG Count Averagecharge

403 ............................................................ 2,107 $17,617 413 ........................................................... 387 $12,278

404 ............................................................ 296 8,063 414 ........................................................... 47 5,906

Code DRG Count Average

charge Code DRG Count Averagecharge

273.8 403 ................................... 17 $8,573 273.8 404 ................................... 3 $6,644

Therefore, we are proposing to move

diagnosis code 273.8 from DRGs 403

and 404 to DRGs 413 and 414.

Diagnosis code 273.8 is also included

in the following surgical DRGs that are

performed on patients with lymphoma

or leukemia:

• DRG 400 (Lymphoma and Leukemia

with Major OR Procedure).

• DRG 401 (Lymphoma and Nonacute

Leukemia with Other OR Procedure

with CC).

• DRG 402 (Lymphoma and Nonacute

Leukemia with Other OR Procedure

without CC).

The same clinical issue would apply

to these surgical DRGS performed on

patients with lymphoma and leukemia.

Code 273.8 should be assigned to the

surgical DRGs for myeloproliferative

disorders since the cases are clinically

similar and, as stated before, code 273.8

is not clinically similar to lymphomas

and leukemias. Therefore, we are also

proposing that code 273.8 be removed

from the surgical DRGs related to

lymphoma and leukemia (DRGS 400,

401, and 402) and assigned to the

following myeloproliferative surgical

DRGS, based on the procedure

performed:

• DRG 406 (Myeloproliferative

Disorders or Poorly Differentiated

Neoplasms with Major OR Procedures

with CC).

• DRG 407 (Myeloproliferative

Disorders Or Poorly Differentiated

Neoplasms with Major OR Procedures

without CC).

• DRG 408 (Myeloproliferative

Disorders or Poorly Differentiated

Neoplasms with Other OR Procedures).

5. Surgical Hierarchies

Some inpatient stays entail multiple

surgical procedures, each one of which,

occurring by itself, could result in

assignment of the case to a different

DRG within the MDC to which the

principal diagnosis is assigned.

Therefore, it is necessary to have a

decision rule by which these cases are

assigned to a single DRG. The surgical

hierarchy, an ordering of surgical

classes from most to least resource

intensive, performs that function. Its

application ensures that cases involving

multiple surgical procedures are

assigned to the DRG associated with the

most resource-intensive surgical class.

Because the relative resource intensity

of surgical classes can shift as a function

of DRG reclassification and

recalibration, we reviewed the surgical

hierarchy of each MDC, as we have for

previous reclassifications, to determine

if the ordering of classes coincided with

the intensity of resource utilization, as

measured by the same billing data used

to compute the DRG relative weights.

A surgical class can be composed of

one or more DRGs. For example, in

MDC 11, the surgical class ‘‘kidney

transplant’’ consists of a single DRG

(DRG 302) and the class ‘‘kidney, ureter

and major bladder procedures’’ consists

of three DRGs (DRGs 303, 304, and 305).

Consequently, in many cases, the

surgical hierarchy has an impact on

more than one DRG. The methodology

for determining the most resourceintensive surgical class involves

weighting each DRG for frequency to

determine the average resources for each

surgical class. For example, assume

surgical class A includes DRGs 1 and 2

and surgical class B includes DRGs 3, 4,

and 5. Assume also that the average

charge of DRG 1 is higher than that of

DRG 3, but the average charges of DRGs

4 and 5 are higher than the average

charge of DRG 2. To determine whether

surgical class A should be higher or

lower than surgical class B in the

surgical hierarchy, we would weight the

average charge of each DRG by

frequency (that is, by the number of

cases in the DRG) to determine average

resource consumption for the surgical

class. The surgical classes would then

be ordered from the class with the

highest average resource utilization to

that with the lowest, with the exception

of ‘‘other OR procedures’’ as discussed

below.

This methodology may occasionally

result in a case involving multiple

procedures being assigned to the lowerweighted DRG (in the highest, most

resource-intensive surgical class) of the

available alternatives. However, given

that the logic underlying the surgical

hierarchy provides that the GROUPER

searches for the procedure in the most

resource-intensive surgical class, this

result is unavoidable.

We note that, notwithstanding the

foregoing discussion, there are a few

instances when a surgical class with a

lower average relative weight is ordered

above a surgical class with a higher

average relative weight. For example,

the ‘‘other OR procedures’’ surgical

class is uniformly ordered last in the

surgical hierarchy of each MDC in

which it occurs, regardless of the fact

that the relative weight for the DRG or

DRGs in that surgical class may be

higher than that for other surgical

classes in the MDC. The ‘‘other OR

procedures’’ class is a group of

procedures that are least likely to be

related to the diagnoses in the MDC but

are occasionally performed on patients

with these diagnoses. Therefore, these

procedures should only be considered if

no other procedure more closely related

to the diagnoses in the MDC has been

performed.

A second example occurs when the

difference between the average weights

for two surgical classes is very small.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26291

We have found that small differences

generally do not warrant reordering of

the hierarchy since, by virtue of the

hierarchy change, the relative weights

are likely to shift such that the higherordered surgical class has a lower

average weight than the class ordered

below it.

Based on the preliminary

recalibration of the DRGs, we are

proposing to modify the surgical

hierarchy as set forth below. As we

stated in the September 1, 1989 final

rule (54 FR 36457), we are unable to test

the effects of proposed revisions to the

surgical hierarchy and to reflect these

changes in the proposed relative

weights due to the unavailability of the

revised GROUPER software at the time

the proposed rule is prepared. Rather,

we simulate most major classification

changes to approximate the placement

of cases under the proposed

reclassification and then determine the

average charge for each DRG. These

average charges then serve as our best

estimate of relative resource use for each

surgical class. We test the proposed

surgical hierarchy changes after the

revised GROUPER is received and

reflect the final changes in the DRG

relative weights in the final rule.

Further, as discussed in section II.C of

this preamble, we anticipate that the

final recalibrated weights will be

somewhat different from those

proposed, since they will be based on

more complete data. Consequently,

further revision of the hierarchy, using

the above principles, may be necessary

in the final rule.

At this time, we are proposing to

revise the surgical hierarchy for the preMDC DRGs, MDC 8 (Diseases and

Disorders of the Musculoskeletal System

and Connective Tissue), and MDC 10

(Endocrine, Nutritional, and Metabolic

Diseases and Disorders) as follows:

• In the pre-MDC DRGs, as we stated

previously, we are proposing to move

DRG 103 (Heart Transplant) from MDC

5 to pre-MDC. We are proposing to

reorder DRG 103 (Heart Transplant)

above DRG 483 (Tracheostomy Except

for Face, Mouth, and Neck Diagnoses).

• In the pre-MDC DRGs, we are

proposing to reorder DRG 481 (Bone

Marrow Transplant) above DRG 495

(Lung Transplant).

• In MDC 8, we are proposing to

reorder DRG 230 (Local Excision and

Removal of Internal Fixation Devices of

Hip and Femur) above DRG 226 (Soft

Tissue Procedures with CC) and DRG

227 (Soft Tissue Procedures without

CC).

• In MDC 10, we are proposing to

reorder DRG 288 (OR Procedures for

Obesity) above DRG 285 (Amputation of

Lower Limb for Endocrine, Nutritional,

and Metabolic Disorders).

6. Refinement of Complications and

Comorbidities (CC) List

In the September 1, 1987 final notice

(52 FR 33143) concerning changes to the

DRG classification system, we modified

the GROUPER logic so that certain

diagnoses included on the standard list

of CCs would not be considered a valid

CC in combination with a particular

principal diagnosis. Thus, we created

the CC Exclusions List. We made these

changes for the following reasons: (1) To

preclude coding of CCs for closely

related conditions; (2) to preclude

duplicative coding or inconsistent

coding from being treated as CCs; and

(3) to ensure that cases are appropriately

classified between the complicated and

uncomplicated DRGs in a pair. We

developed this standard list of

diagnoses using physician panels to

include those diagnoses that, when

present as a secondary condition, would

be considered a substantial

complication or comorbidity. In

previous years, we have made changes

to the standard list of CCs, either by

adding new CCs or deleting CCs already

on the list. At this time, we do not

propose to delete any of the diagnosis

codes on the CC list.

In the May 19, 1987 proposed notice

(52 FR 18877) concerning changes to the

DRG classification system, we explained

that the excluded secondary diagnoses

were established using the following

five principles:

• Chronic and acute manifestations of

the same condition should not be

considered CCs for one another (as

subsequently corrected in the

September 1, 1987 final notice (52 FR

33154)).

• Specific and nonspecific (that is,

not otherwise specified (NOS))

diagnosis codes for a condition should

not be considered CCs for one another.

• Conditions that may not coexist,

such as partial/total, unilateral/bilateral,

obstructed/unobstructed, and benign/

malignant, should not be considered

CCs for one another.

• The same condition in anatomically

proximal sites should not be considered

CCs for one another.

• Closely related conditions should

not be considered CCs for one another.

The creation of the CC Exclusions List

was a major project involving hundreds

of codes. The FY 1988 revisions were

intended only as a first step toward

refinement of the CC list in that the

criteria used for eliminating certain

diagnoses from consideration as CCs

were intended to identify only the most

obvious diagnoses that should not be

considered complications or

comorbidities of another diagnosis. For

that reason, and in light of comments

and questions on the CC list, we have

continued to review the remaining CCs

to identify additional exclusions and to

remove diagnoses from the master list

that have been shown not to meet the

definition of a CC. (See the September

30, 1988 final rule (53 FR 38485) for the

revision made for the discharges

occurring in FY 1989; the September 1,

1989 final rule (54 FR 36552) for the FY

1990 revision; the September 4, 1990

final rule (55 FR 36126) for the FY 1991

revision; the August 30, 1991 final rule

(56 FR 43209) for the FY 1992 revision;

the September 1, 1992 final rule (57 FR

39753) for the FY 1993 revision; the

September 1, 1993 final rule (58 FR

46278) for the FY 1994 revisions; the

September 1, 1994 final rule (59 FR

45334) for the FY 1995 revisions; the

September 1, 1995 final rule (60 FR

45782) for the FY 1996 revisions; the

August 30, 1996 final rule (61 FR 46171)

for the FY 1997 revisions; the August

29, 1997 final rule (62 FR 45966) for the

FY 1998 revisions; and the July 31, 1998

final rule (63 FR 40954) for the FY 1999

revisions. In the July 30, 1999 final rule

(64 FR 41490) we did not modify the CC

Exclusions List for FY 2000 because we

did not make any changes to the ICD–

9–CM codes for FY 2000.

We are proposing a limited revision of

the CC Exclusions List to take into

account the changes that will be made

in the ICD–9–CM diagnosis coding

system effective October 1, 2000. (See

section II.B.8. below, for a discussion of

ICD–9–CM changes.) These proposed

changes are being made in accordance

with the principles established when we

created the CC Exclusions List in 1987.

Tables 6F and 6G in section V. of the

Addendum to this proposed rule

contain the proposed revisions to the CC

Exclusions List that would be effective

for discharges occurring on or after

October 1, 2000. Each table shows the

principal diagnoses with proposed

changes to the excluded CCs. Each of

these principal diagnoses is shown with

an asterisk and the additions or

deletions to the CC Exclusions List are

provided in an indented column

immediately following the affected

principal diagnosis.

CCs that are added to the list are in

Table 6F—Additions to the CC

Exclusions List. Beginning with

discharges on or after October 1, 2000,

the indented diagnoses will not be

recognized by the GROUPER as valid

CCs for the asterisked principal

diagnosis.

CCs that are deleted from the list are

in Table 6G—Deletions from the CC

26292 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Exclusions List. Beginning with

discharges on or after October 1, 2000,

the indented diagnoses will be

recognized by the GROUPER as valid

CCs for the asterisked principal

diagnosis.

Copies of the original CC Exclusions

List applicable to FY 1988 can be

obtained from the National Technical

Information Service (NTIS) of the

Department of Commerce. It is available

in hard copy for $92.00 plus $6.00

shipping and handling and on

microfiche for $20.50, plus $4.00 for

shipping and handling. A request for the

FY 1988 CC Exclusions List (which

should include the identification

accession number (PB) 88–133970)

should be made to the following

address: National Technical Information

Service, United States Department of

Commerce, 5285 Port Royal Road,

Springfield, Virginia 22161; or by

calling (703) 487–4650.

Users should be aware of the fact that

all revisions to the CC Exclusions List

(FYs 1989, 1990, 1991, 1992, 1993,

1994, 1995, 1996, 1997, 1998, and 1999)

and those in Tables 6F and 6G of this

document must be incorporated into the

list purchased from NTIS in order to

obtain the CC Exclusions List applicable

for discharges occurring on or after

October 1, 2000. (Note: There was no CC

Exclusions List in FY 2000 because we

did not make changes to the ICD–9–CM

codes for FY 2000.)

Alternatively, the complete

documentation of the GROUPER logic,

including the current CC Exclusions

List, is available from 3M/Health

Information Systems (HIS), which,

under contract with HCFA, is

responsible for updating and

maintaining the GROUPER program.

The current DRG Definitions Manual,

Version 17.0, is available for $225.00,

which includes $15.00 for shipping and

handling. Version 18.0 of this manual,

which includes the final FY 2001 DRG

changes, will be available in October

2000 for $225.00. These manuals may be

obtained by writing 3M/HIS at the

following address: 100 Barnes Road,

Wallingford, Connecticut 06492; or by

calling (203) 949–0303. Please specify

the revision or revisions requested.

7. Review of Procedure Codes in DRGs

468, 476, and 477

Each year, we review cases assigned

to DRG 468 (Extensive OR Procedure

Unrelated to Principal Diagnosis), DRG

476 (Prostatic OR Procedure Unrelated

to Principal Diagnosis), and DRG 477

(Nonextensive OR Procedure Unrelated

to Principal Diagnosis) to determine

whether it would be appropriate to

change the procedures assigned among

these DRGs.

DRGs 468, 476, and 477 are reserved

for those cases in which none of the OR

procedures performed is related to the

principal diagnosis. These DRGs are

intended to capture atypical cases, that

is, those cases not occurring with

sufficient frequency to represent a

distinct, recognizable clinical group.

DRG 476 is assigned to those discharges

in which one or more of the following

prostatic procedures are performed and

are unrelated to the principal diagnosis:

60.0 Incision of prostate

60.12 Open biopsy of prostate

60.15 Biopsy of periprostatic tissue

60.18 Other diagnostic procedures on

prostate and periprostatic tissue

60.21 Transurethral prostatectomy

60.29 Other transurethral

prostatectomy

60.61 Local excision of lesion of

prostate

60.69 Prostatectomy NEC

60.81 Incision of periprostatic tissue

60.82 Excision of periprostatic tissue

60.93 Repair of prostate

60.94 Control of (postoperative)

hemorrhage of prostate

60.95 Transurethral balloon dilation of

the prostatic urethra

60.99 Other operations on prostate

All remaining OR procedures are

assigned to DRGs 468 and 477, with

DRG 477 assigned to those discharges in

which the only procedures performed

are nonextensive procedures that are

unrelated to the principal diagnosis.

The original list of the ICD–9–CM

procedure codes for the procedures we

consider nonextensive procedures, if

performed with an unrelated principal

diagnosis, was published in Table 6C in

section IV. of the Addendum to the

September 30, 1988 final rule (53 FR

38591). As part of the final rules

published on September 4, 1990 (55 FR

36135), August 30, 1991 (56 FR 43212),

September 1, 1992 (57 FR 23625),

September 1, 1993 (58 FR 46279),

September 1, 1994 (59 FR 45336),

September 1, 1995 (60 FR 45783),

August 30, 1996 (61 FR 46173), and

August 29, 1997 (62 FR 45981), we

moved several other procedures from

DRG 468 to 477, and some procedures

from DRG 477 to 468. No procedures

were moved in FY 1999, as noted in the

July 31, 1998 final rule (63 FR 40962),

or in FY 2000, as noted in the July 30,

1999 final rule (64 FR 41496).

a. Moving Procedure Codes From DRGs

468 or 477 to MDCs

We annually conduct a review of

procedures producing assignment to

DRG 468 or DRG 477 on the basis of

volume, by procedure, to see if it would

be appropriate to move procedure codes

out of these DRGs into one of the

surgical DRGs for the MDC into which

the principal diagnosis falls. The data

are arrayed two ways for comparison

purposes. We look at a frequency count

of each major operative procedure code.

We also compare procedures across

MDCs by volume of procedure codes

within each MDC. That is, using

procedure code 57.49 (Other

transurethral excision or destruction of

lesion or tissue of bladder) as an

example, we determined that this

particular code accounted for the

highest number of major operative

procedures (162 cases, or 9.8 percent of

all cases) reported in the sample of DRG

477. In addition, we determined that

procedure code 57.49 appeared in MDC

4 (Diseases and Disorders of the

Respiratory System) 28 times as well as

in 9 other MDCs.

Using a 10-percent sample of the FY

1999 MedPAR file, we determined that

the quantity of cases in DRG 477 totaled

1,650. There were 106 instances where

the major operative procedure appeared

only once (6.4 percent of the time),

resulting in assignment to DRG 477.

Using the same 10-percent sample of

the FY 1999 MedPAR file, we reviewed

DRG 468. There were a total of 3,858

cases, with one major operative code

causing the DRG assignment 311 times

(or 8 percent) and 230 instances where

the major operative procedure appeared

only once (or 6 percent of the time).

Our medical consultants then

identified those procedures occurring in

conjunction with certain principal

diagnoses with sufficient frequency to

justify adding them to one of the

surgical DRGs for the MDC in which the

diagnosis falls. Based on this year’s

review, we did not identify any

necessary changes in procedures under

either DRG 468 or 477 and, therefore,

are not proposing to move any

procedures from either DRG 468 or DRG

477 to one of the surgical DRGs.

b. Reassignment of Procedures Among

DRGs 468, 476, and 477

We also annually review the list of

ICD–9–CM procedures that, when in

combination with their principal

diagnosis code, result in assignment to

DRGs 468, 476, and 477, to ascertain if

any of those procedures should be

moved from one of these DRGs to

another of these DRGs based on average

charges and length of stay. We look at

the data for trends such as shifts in

treatment practice or reporting practice

that would make the resulting DRG

assignment illogical. If our medical

consultants were to find these shifts, we

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26293

would propose moving cases to keep the

DRGs clinically similar or to provide

payment for the cases in a similar

manner. Generally, we move only those

procedures for which we have an

adequate number of discharges to

analyze the data. Based on our review

this year, we are not proposing to move

any procedures from DRG 468 to DRGs

476 or 477, from DRG 476 to DRGs 468

or 477, or from DRG 477 to DRGs 468

or 476.

c. Adding Diagnosis Codes to MDCs

It has been brought to our attention

that an ICD–9–CM diagnosis code

should be added to DRG 482

(Tracheostomy for Face, Mouth and

Neck Diagnoses) to preserve clinical

coherence and homogeneity of the

system. In the case of a patient who has

a facial infection (diagnosis code 682.0

(Other cellulitis and abscess, Face)), the

face may become extremely swollen and

the patient’s ability to breathe might be

impaired. It might be deemed medically

necessary to perform a temporary

tracheostomy (procedure code 31.1) on

the patient until the swelling subsides

enough for the patient to once again

breathe on his or her own.

The combination of diagnosis code

682.0 and procedure code 31.1 results in

assignment to DRG 483 (Tracheostomy

Except for Face, Mouth and Neck

Diagnoses). The absence of diagnosis

code 682.0 in DRG 483 forces the

GROUPER algorithm to assign the case

based solely on the procedure code,

without taking this diagnosis into

account. Clearly this was not the intent,

as diagnosis code 682.0 should be

included with other face, mouth and

neck diagnosis. We believe that cases

such as these would appropriately be

assigned to DRG 482. Therefore, we are

proposing to add diagnosis code 682.0

to the list of other face, mouth and neck

diagnoses already in the principal

diagnosis list in DRG 482.

8. Changes to the ICD–9–CM Coding

System

As described in section II.B.1 of this

preamble, the ICD–9–CM is a coding

system that is used for the reporting of

diagnoses and procedures performed on

a patient. In September 1985, the ICD–

9–CM Coordination and Maintenance

Committee was formed. This is a

Federal interdepartmental committee,

co-chaired by the National Center for

Health Statistics (NCHS) and HCFA,

charged with maintaining and updating

the ICD–9–CM system. The Committee

is jointly responsible 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 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 HCFA has lead

responsibility for the ICD–9–CM

procedure codes included in the

Tabular List and Alphabetic Index for

Procedures.

The Committee encourages

participation in the above process by

health-related organizations. In this

regard, the Committee holds public

meetings for discussion of educational

issues and proposed coding changes.

These meetings provide an opportunity

for representatives of recognized

organizations in the coding field, such

as the American Health Information

Management Association (AHIMA)

(formerly American Medical Record

Association (AMRA)), the American

Hospital Association (AHA), and

various physician specialty groups as

well as physicians, medical record

administrators, health information

management professionals, and other

members of the public to contribute

ideas on coding matters. After

considering the opinions expressed at

the public meetings and in writing, the

Committee formulates

recommendations, which then must be

approved by the agencies.

The Committee presented proposals

for coding changes for FY 2000 at public

meetings held on June 4, 1998 and

November 2, 1998. Even though the

Committee conducted public meetings

and considered approval of coding

changes for FY 2000 implementation,

we did not implement any changes to

ICD–9–CM codes for FY 2000 because of

our major efforts to ensure that all of the

Medicare computer systems were

compliant with the year 2000.

Therefore, the code proposals presented

at the public meetings held on June 4,

1998 and November 2, 1998, that (if

approved) ordinarily would have been

included as new codes for October 1,

1999, were held for consideration for

inclusion in this proposed annual

update for FY 2001.

The Committee also presented

proposals for coding changes for

implementation in FY 2001 at public

meetings held on May 13, 1999 and

November 12, 1999, and finalized the

coding changes after consideration of

comments received at the meetings and

in writing by January 7, 2000.

Copies of the Coordination and

Maintenance Committee minutes of the

1999 meetings can be obtained from the

HCFA Home Page by typing http://

www.hcfa.gov/medicare/icd9cm.htm.

Paper copies of these minutes are no

longer available and the mailing list has

been discontinued. We encourage

commenters to address suggestions on

coding issues involving diagnosis codes

to: Donna Pickett, Co-Chairperson; ICD–

9–CM Coordination and Maintenance

Committee; NCHS; Room 1100; 6525

Belcrest Road; Hyattsville, Maryland

20782. Comments may be sent by E-mail

to: dfp4@cdc.gov.

Questions and comments concerning

the procedure codes should be

addressed to: Patricia E. Brooks, CoChairperson; ICD–9–CM Coordination

and Maintenance Committee; HCFA,

Center for Health Plans and Providers,

Purchasing Policy Group, Division of

Acute Care; C4–07–07; 7500 Security

Boulevard; Baltimore, Maryland 21244–

1850. Comments may be sent by E-mail

to: pbrooks@hcfa.gov.

The ICD–9–CM code changes that

have been approved will become

effective October 1, 2000. The new ICD–

9–CM codes are listed, along with their

proposed DRG classifications, in Tables

6A and 6B (New Diagnosis Codes and

New Procedure Codes, respectively) in

section VI. of the Addendum to this

proposed rule. As we stated above, the

code numbers and their titles were

presented for public comment at the

ICD–9–CM Coordination and

Maintenance Committee meetings. Both

oral and written comments were

considered before the codes were

approved. Therefore, we are soliciting

comments only on the proposed DRG

classification of these new codes.

Further, the Committee has approved

the expansion of certain ICD–9–CM

codes to require an additional digit for

valid code assignment. Diagnosis codes

that have been replaced by expanded

codes or other codes, or have been

deleted are in Table 6C (Invalid

Diagnosis Codes). These invalid

diagnosis codes will not be recognized

by the GROUPER beginning with

discharges occurring on or after October

1, 2000. For codes that have been

replaced by new or expanded codes, the

corresponding new or expanded

diagnosis codes are included in Table

6A (New Diagnosis Codes). There were

no procedure codes that were replaced

by expanded codes or other codes, or

were deleted. Revisions to diagnosis

code titles are in Table 6D (Revised

Diagnosis Code Titles), which also

include the proposed DRG assignments

26294 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

for these revised codes. Revisions to

procedure code titles are in Table 6E

(Revised Procedure Codes Titles).

9. Other Issues

a. Immunotherapy

Effective October 1, 1994, procedure

code 99.28 (Injection or infusion of

biologic response modifier (BRM) as an

antineoplastic agent) was created and

designated as a non-OR procedure that

does not affect DRG assignment. This

cancer treatment involving biological

response modifiers is also known as

BRM therapy or immunotherapy.

In response to a comment on the May

7, 1999 proposed rule, for the FY 2000

final rule we performed analysis of

cases for which procedure code 99.28

was reported using the 100 percent FY

1998 MedPAR file. The commenter

requested that we create a new DRG for

BRM therapy or assign cases in which

BRM therapy is performed to an existing

DRG with a high relative weight. The

commenter suggested that DRG 403

(Lymphoma and Nonacute Leukemia

with CC) would be an appropriate DRG.

Based on the commenter’s request, we

examined cases only for hospitals that

use the particular drug manufactured by

the commenter. We concluded that due

to the variation of charges across the

cases and the limited number of cases

distributed across 19 different DRGs, it

would be inappropriate to classify these

cases to a single DRG. For example, it

would be inappropriate to classify these

cases into DRG 403 because only a few

cases were coded with a principal

diagnosis assigned to MDC 17

(Myeloproliferative Diseases and

Disorders, and Poorly Differentiated

Neoplasm), the MDC that includes DRG

403. We stated in the July 30, 1999 final

rule (64 FR 41497) that we would

perform a full analysis of

immunotherapy cases using the FY 1999

MedPAR data to determine if changes

are needed.

Using 100 percent of the data in the

FY 1999 MedPAR file, we performed an

analysis of all cases for which procedure

code 99.28 was reported. We identified

1,179 cases in 136 DRGs in 22 MDCs.

No more than 141 cases were assigned

to any one particular DRG.

Of the 1,179 cases, 141 cases

(approximately 12 percent) were

assigned to DRG 403 in MDC 17. We

found approximately one-half of these

cases had other procedures performed

in addition to receiving

immunotherapy, such as chemotherapy,

bone marrow biopsy, insertion of totally

implantable vascular access device,

thoracentesis, or percutaneous

abdominal drainage, which may account

for the increased charges. There were

123 immunotherapy cases assigned to

DRG 82 (Respiratory Neoplasms) in

MDC 4 (Diseases and Disorders of the

Respiratory System). We noted that, in

some cases, in addition to

immunotherapy, other procedures were

performed, such as insertion of an

intercostal catheter for drainage,

thoracentesis, or chemotherapy.

There were 84 cases assigned to DRG

416 (Septicemia, Age >17) in MDC 18

(Infectious and Parasitic Diseases

(Systemic or Unspecified Sites)). The

principal diagnosis for this DRG is

septicemia and, in addition to receiving

treatment for septicemia,

immunotherapy was also given. There

were 79 cases assigned to DRG 410

(Chemotherapy without Acute

Leukemia as Secondary Diagnosis) in

MDC 17.

The cost of immunotherapy is

averaged into the weight for these DRGS

and, based on our analysis, we do not

believe a reclassification of these cases

is warranted. Due to the limited number

of cases that were distributed

throughout 136 DRGs in 22 MDCs and

the variation of charges, we concluded

that it would be inappropriate to

classify these cases into a single DRG.

Although there were 141 cases

assigned to DRG 403, it would be

inappropriate to place all

immunotherapy cases, regardless of

diagnosis, into a DRG that is designated

for lymphoma and nonacute leukemia.

We establish DRGs based on clinical

coherence and resource utilization. Each

DRG encompasses a variety of cases,

reflecting a range of services and a range

of resources. Generally, then, each DRG

reflects some higher cost cases and some

lower cost cases. To the extent a new

technology is extremely costly relative

to the cases reflected in the DRG relative

weight, the hospital might qualify for

outlier payments, that is, additional

payments over and above the standard

prospective payment rate. We have not

received any comments from hospitals

regarding payment for immunotherapy

cases.

b. Pancreas Transplant

Effective July 1, 1999, Medicare

covers whole organ pancreas

transplantation if the transplantation is

performed simultaneously with or after

a kidney transplant (procedure codes

55.69, Other kidney transplantation, and

V42.0, Organ or tissue replaced by

transplant, Kidney) (Transmittal No.

115, April 1999). We note that when we

published the notification of this

coverage in the July 30, 1999 final rule

(64 FR 41497), we inadvertently made

an error in announcing the covered

codes. We cited the incorrect codes for

pancreas transplantation as procedure

code 52.80 (Pancreatic transplant, not

otherwise specified) and 52.83

(Heterotransplant of pancreas). The

correct procedure codes for pancreas

transplantation are 52.80 (Pancreatic

transplant, not otherwise specified) and

52.82 (Homotransplant of pancreas). We

will revise the Coverage Issues Manual

to reflect this correction.

Pancreas transplantation is generally

limited to those patients with severe

secondary complications of diabetes,

including kidney failure. However,

pancreas transplantation is sometimes

performed on patients with labile

diabetes and hypoglycemic

unawareness. Pancreas transplantation

for diabetic patients who have not

experienced end-stage renal failure

secondary to diabetes is excluded from

coverage. Medicare also excludes

coverage of transplantation of partial

pancreatic tissue or islet cells.

In the July 30, 1999 final rule (64 FR

41497), we indicated that we planned to

review discharge data to determine

whether a new DRG should be created,

or existing DRGs modified, to further

classify pancreas transplantation in

combination with kidney

transplantation.

Under the current DRG classification,

if a kidney transplant and a pancreas

transplant are performed

simultaneously on a patient with

chronic renal failure secondary to

diabetes with renal manifestations

(diagnosis codes 250.40 through

250.43), the case is assigned to DRG 302

(Kidney Transplant) in MDC 11

(Diseases and Disorders of the Kidney

and Urinary Tract). If a pancreas

transplant is performed following a

kidney transplant (that is, during a

different hospital admission) on a

patient with chronic renal failure

secondary to diabetes with renal

manifestations, the case is assigned to

DRG 468 (Extensive OR Procedure

Unrelated to Principal Diagnosis). This

is because pancreas transplant is not

assigned to MDC 11, the MDC to which

a principal diagnosis of chronic renal

failure secondary to diabetes is

assigned.

Using 100 percent of the data in the

FY 1999 MedPAR file (which contains

hospital bills through December 31,

1999), we performed an analysis of the

cases for which procedure codes 52.80

and 52.83 were reported. We identified

a total of 79 cases in 8 DRGs, in 3 MDCs,

and in 1 pre-MDC. Of the 79 cases

identified, 49 cases were assigned to

DRG 302, 14 cases were assigned to DRG

468, and 8 cases were assigned to DRG

191 (Pancreas, Liver and Shunt

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26295

Procedures with CC). The additional 8

cases were distributed over 5 other

assorted DRGs, and due to their

disparity, were not considered in our

evaluation.

We examined our data to determine

whether we should propose a new

kidney and pancreas transplant DRG at

this time. We identified 49 such dual

transplant cases in the FY 1999

MedPAR file. We do not believe this is

a sufficient sample size to warrant the

creation of a new DRG. Furthermore, we

would note that nearly half of these

cases occurred at a hospital in

Maryland, which is not paid under the

prospective payment system. The rest of

the cases are spread across multiple

hospitals, with no single hospital having

more than 5 cases in the FY 1999

MedPAR.

C. Recalibration of DRG Weights.

We are proposing to use the same

basic methodology for the FY 2001

recalibration as we did for FY 2000 (July

30, 1999 final rule (64 FR 41498)). That

is, we would recalibrate the weights

based on charge data for Medicare

discharges. However, we propose to use

the most current charge information

available, the FY 1999 MedPAR file.

(For the FY 2000 recalibration, we used

the FY 1998 MedPAR file.) The

MedPAR file is based on fully coded

diagnostic and procedure data for all

Medicare inpatient hospital bills.

The proposed recalibrated DRG

relative weights are constructed from FY

1999 MedPAR data (discharges

occurring between October 1, 1998 and

September 30, 1999), based on bills

received by HCFA through December

31, 1999, from all hospitals subject to

the prospective payment system and

short-term acute care hospitals in

waiver States. The FY 1999 MedPAR

file includes data for approximately

11,059,625 Medicare discharges.

The methodology used to calculate

the proposed DRG relative weights from

the FY 1999 MedPAR file is as follows:

• To the extent possible, all the

claims were regrouped using the

proposed DRG classification revisions

discussed in section II.B of this

preamble. As noted in section II.B.5,

due to the unavailability of the revised

GROUPER software, we simulated most

major classification changes to

approximate the placement of cases

under the proposed reclassification.

However, there are some changes that

cannot be modeled.

• Charges were standardized to

remove the effects of differences in area

wage levels, indirect medical education

and disproportionate share payments,

and, for hospitals in Alaska and Hawaii,

the applicable cost-of-living adjustment.

• The average standardized charge

per DRG was calculated by summing the

standardized charges for all cases in the

DRG and dividing that amount by the

number of cases classified in the DRG.

• We then eliminated statistical

outliers, using the same criteria used in

computing the current weights. That is,

all cases that are outside of 3.0 standard

deviations from the mean of the log

distribution of both the charges per case

and the charges per day for each DRG

are eliminated.

• The average charge for each DRG

was then recomputed (excluding the

statistical outliers) and divided by the

national average standardized charge

per case to determine the relative

weight. A transfer case is counted as a

fraction of a case based on the ratio of

its transfer payment under the per diem

payment methodology to the full DRG

payment for nontransfer cases. That is,

transfer cases paid under the transfer

methodology equal to half of what the

case would receive as a nontransfer

would be counted as 0.5 of a total case.

• We established the relative weight

for heart and heart-lung, liver, and lung

transplants (DRGs 103, 480, and 495) in

a manner consistent with the

methodology for all other DRGs except

that the transplant cases that were used

to establish the weights were limited to

those Medicare-approved heart, heartlung, liver, and lung transplant centers

that have cases in the FY 1999 MedPAR

file. (Medicare coverage for heart, heartlung, liver, and lung transplants is

limited to those facilities that have

received approval from HCFA as

transplant centers.)

• Acquisition costs for kidney, heart,

heart-lung, liver, and lung transplants

continue to be paid on a reasonable cost

basis. Unlike other excluded costs, the

acquisition costs are concentrated in

specific DRGs (DRG 302 (Kidney

Transplant); DRG 103 (Heart

Transplant); DRG 480 (Liver

Transplant); and DRG 495 (Lung

Transplant)). Because these costs are

paid separately from the prospective

payment rate, it is necessary to make an

adjustment to prevent the relative

weights for these DRGs from including

the acquisition costs. Therefore, we

subtracted the acquisition charges from

the total charges on each transplant bill

that showed acquisition charges before

computing the average charge for the

DRG and before eliminating statistical

outliers.

When we recalibrated the DRG

weights for previous years, we set a

threshold of 10 cases as the minimum

number of cases required to compute a

reasonable weight. We propose to use

that same case threshold in recalibrating

the DRG weights for FY 2001. Using the

FY 1999 MedPAR data set, there are 40

DRGs that contain fewer than 10 cases.

We computed the weights for these 40

low-volume DRGs by adjusting the FY

2000 weights of these DRGs by the

percentage change in the average weight

of the cases in the other DRGs.

The weights developed according to

the methodology described above, using

the proposed DRG classification

changes, result in an average case

weight that is different from the average

case weight before recalibration.

Therefore, the new weights are

normalized by an adjustment factor

(1.45431) so that the average case weight

after recalibration is equal to the average

case weight before recalibration. This

adjustment is intended to ensure that

recalibration by itself neither increases

nor decreases total payments under the

prospective payment system.

Section 1886(d)(4)(C)(iii) of the Act

requires that, beginning with FY 1991,

reclassification and recalibration

changes be made in a manner that

assures that the aggregate payments are

neither greater than nor less than the

aggregate payments that would have

been made without the changes.

Although normalization is intended to

achieve this effect, equating the average

case weight after recalibration to the

average case weight before recalibration

does not necessarily achieve budget

neutrality with respect to aggregate

payments to hospitals because payment

to hospitals is affected by factors other

than average case weight. Therefore, as

we have done in past years and as

discussed in section II.A.4.b. of the

Addendum to this proposed rule, we are

proposing to make a budget neutrality

adjustment to assure that the

requirement of section 1886(d)(4)(C)(iii)

of the Act is met.

III. Proposed Changes to the Hospital

Wage Index

A. Background

Section 1886(d)(3)(E) of the Act

requires that, as part of the methodology

for determining prospective payments to

hospitals, the Secretary must adjust the

standardized amounts ‘‘for area

differences in hospital wage levels by a

factor (established by the Secretary)

reflecting the relative hospital wage

level in the geographic area of the

hospital compared to the national

average hospital wage level.’’ In

accordance with the broad discretion

conferred under the Act, we currently

define hospital labor market areas based

on the definitions of Metropolitan

26296 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Statistical Areas (MSAs), Primary MSAs

(PMSAs), and New England County

Metropolitan Areas (NECMAs) issued by

the Office of Management and Budget

(OMB). The OMB also designates

Consolidated MSAs (CMSAs). A CMSA

is a metropolitan area with a population

of one million or more, comprising two

or more PMSAs (identified by their

separate economic and social character).

For purposes of the hospital wage index,

we use the PMSAs rather than CMSAs

since they allow a more precise

breakdown of labor costs. If a

metropolitan area is not designated as

part of a PMSA, we use the applicable

MSA. Rural areas are areas outside a

designated MSA, PMSA, or NECMA.

For purposes of the wage index, we

combine all of the rural counties in a

State to calculate a rural wage index for

that State.

We note that effective April 1, 1990,

the term Metropolitan Area (MA)

replaced the term MSA (which had been

used since June 30, 1983) to describe the

set of metropolitan areas consisting of

MSAs, PMSAs, and CMSAs. The

terminology was changed by OMB in

the March 30, 1990 Federal Register to

distinguish between the individual

metropolitan areas known as MSAs and

the set of all metropolitan areas (MSAs,

PMSAs, and CMSAs) (55 FR 12154). For

purposes of the prospective payment

system, we will continue to refer to

these areas as MSAs.

Beginning October 1, 1993, section

1886(d)(3)(E) of the Act requires that we

update the wage index annually.

Furthermore, this section provides that

the Secretary base the update on a

survey of wages and wage-related costs

of short-term, acute care hospitals. The

survey should measure, to the extent

feasible, the earnings and paid hours of

employment by occupational category,

and must exclude the wages and wagerelated costs incurred in furnishing

skilled nursing services. As discussed

below in section III.F of this preamble,

we also take into account the geographic

reclassification of hospitals in

accordance with sections 1886(d)(8)(B)

and 1886(d)(10) of the Act when

calculating the wage index.

B. FY 2001 Wage Index Update

The proposed FY 2001 wage index

values in section VI of the Addendum

to this proposed rule (effective for

hospital discharges occurring on or after

October 1, 2000 and before October 1,

2001) are based on the data collected

from the Medicare cost reports

submitted by hospitals for cost reporting

periods beginning in FY 1997 (the FY

2000 wage index was based on FY 1996

wage data).

The proposed FY 2001 wage index

includes the following categories of data

associated with costs paid under the

hospital inpatient prospective payment

system (as well as outpatient costs),

which were also included in the FY

2000 wage index:

• Salaries and hours from short-term,

acute care hospitals.

• Home office costs and hours.

• Certain contract labor costs and

hours.

• Wage-related costs.

Consistent with the wage index

methodology for FY 2000, the proposed

wage index for FY 2001 also continues

to exclude the direct and overhead

salaries and hours for services not paid

through the inpatient prospective

payment system such as skilled nursing

facility services, home health services,

or other subprovider components that

are not subject to the prospective

payment system.

We calculate a separate Puerto Ricospecific wage index and apply it to the

Puerto Rico standardized amount. (See

62 FR 45984 and 46041.) This wage

index is based solely on Puerto Rico’s

data. Finally, section 4410 of Public

Law 105–33 provides that, for

discharges on or after October 1, 1997,

the area wage index applicable to any

hospital that is not located in a rural

area may not be less than the area wage

index applicable to hospitals located in

rural areas in that State.

C. FY 2001 Wage Index Proposal

Because it is used to adjust payments

to hospitals under the prospective

payment system, the hospital wage

index should, to the extent possible,

reflect the wage costs associated with

the areas of the hospital included under

the hospital inpatient prospective

payment system. In response to

concerns within the hospital

community related to the removal from

the wage index calculation costs related

to graduate medical education (GME)

(teaching physicians and residents), and

certified registered nurse anesthetists

(CRNAs), which are paid by Medicare

separately from the prospective

payment system, the American Hospital

Association (AHA) convened a

workgroup to develop a consensus

recommendation on this issue. The

workgroup recommended that costs

related to GME and CRNAs be phased

out of the wage index calculation over

a 5-year period. Based upon our analysis

of hospitals’ FY 1996 wage data, and

consistent with the AHA workgroup’s

recommendation, we specified in the

July 30, 1999 final rule (64 FR 41505)

that we would phase-out these costs

from the calculation of the wage index

over a 5-year period, beginning in FY

2000. In keeping with the decision to

phase-out costs related to GME and

CRNAs, the proposed FY 2001 wage

index is based on a blend of 60 percent

of an average hourly wage including

these costs, and 40 percent of an average

hourly wage excluding these costs.

1. Teaching Physician Costs and Hours

Survey

As discussed in the July 30, 1999 final

rule, because the FY 1996 cost reporting

data did not separate teaching physician

costs from other physician Part A costs,

we instructed our fiscal intermediaries

to survey teaching hospitals to collect

data on teaching physician costs and

hours payable under the per resident

amounts (§ 413.86) and reported on

Worksheet A, Line 23 of the hospitals’

cost report.

The FY 1997 cost reports also do not

separately report teaching physician

costs. Therefore, we once again

conducted a special survey to collect

data on these costs. (For the FY 1998

cost reports, we have revised the

Worksheet S–3, Part II so that hospitals

can separately report teaching physician

Part A costs. Therefore, after this year,

it will no longer be necessary for us to

conduct this special survey.)

The survey data collected as of midJanuary 2000 were included in the

preliminary public use data file made

available on the Internet in February

2000 at HCFA’s home page (http://

www.hcfa.gov). At that time, we had

received teaching physician data for 459

out of 770 teaching hospitals reporting

physician Part A costs on their

Worksheet S–3, Part II. Also, in some

cases, intermediaries reported that

teaching hospitals did not incur

teaching physician costs. In early

January 2000, we instructed

intermediaries to review the survey data

for consistency with the Supplemental

Worksheet A–8–2 of the hospitals’ cost

reports. Supplemental Worksheet A–8–

2 is used to apply the reasonable

compensation equivalency limits to the

costs of provider-based physicians,

itemizing these costs by the

corresponding line number on

Worksheet A.

When we notified the hospitals,

through our fiscal intermediaries, that

they could review the survey data on

the Internet, we also notified hospitals

that requests for changes to the teaching

survey data must be submitted by March

6, 2000. We instructed fiscal

intermediaries to review the requests for

changes received from hospitals and

submit necessary data revisions to

HCFA by April 3, 2000.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26297

We removed from the wage data the

physician Part A teaching costs and

hours reported on the survey form for

every hospital that completed the

survey. These data had been verified by

the fiscal intermediary before

submission to HCFA. We have

identified 42 teaching hospitals in our

database that reported physician Part A

costs on Line 4 of their Worksheet S–3

and teaching-related costs on Line 23 of

Worksheet A, Column 1, but for which

we do not have teaching physician costs

from the survey because the hospitals

failed to complete the survey. As we did

in the case of such hospitals in

calculating the FY 2000 wage index, for

purposes of calculating the FY 2001

wage index, we propose to subtract the

costs reported on Line 23 of the

Worksheet A, Column 1 (GME Other

Program Costs) from Line 1 of the

Worksheet S–3. These costs (from Line

23, Column 1 of Worksheet A) are

included in Line 1 of the Worksheet

S–3, which is the sum of Column 1,

Worksheet A. They also represent costs

for which the hospital is paid through

the per resident amount under the direct

GME payment. To determine the hours

to be removed, the costs reported on

Line 23 of the Worksheet A, Column 1

would be divided by the national

average hourly wage for teaching

physicians based upon the survey of

$65.62.

For the FY 2000 wage index, the AHA

workgroup recommended that, if

reliable teaching physician data were

not available for removing teaching

costs from hospitals’ total physician Part

A costs, HCFA should remove 80

percent of the costs and hours reported

by hospitals attributable to physicians’

Part A services. In calculating the FY

2000 wage index, if we did not receive

survey data for a teaching hospital, we

removed 80 percent of the hospital’s

reported total physician Part A costs

and hours from the calculation. For the

FY 2001 wage index, we are proposing

a different approach. In some instances,

fiscal intermediaries have verified that

teaching hospitals do not have teaching

physician costs; for these hospitals, it is

not necessary to adjust the hospitals’

physician Part A costs. We are actively

conferring with the fiscal intermediaries

to distinguish teaching hospitals that do

not have teaching physician costs from

teaching hospitals that have not

identified the portion of their physician

Part A costs associated with teaching

physicians (that is, hospitals that did

not complete the teaching survey and

did not report teaching-related costs on

Worksheet A, Line 23). We propose to

remove 100 percent of the physician

Part A costs and hours (reported on

Worksheet S–3, Lines 4, 10, 12, and 18)

in the FY 2001 wage index calculation

for those hospitals where the fiscal

intermediary verifies that the hospital

has otherwise unidentified teaching

physician costs included in physician

Part A costs and hours.

It should be noted that Line 23 of

Worksheet A, Column 1, flows directly

into hospitals’ total salaries on

Worksheet S–3, Part II. Line 23 contains

GME costs not directly attributable to

residents’ salaries or fringe benefits.

Therefore, these costs tend to be costs

associated with teaching physicians. To

the extent a hospital fails to separately

identify the proportion of its Line 23

Worksheet A costs associated with

teaching physicians, we believe it is

reasonable to remove all of these costs

under the presumption that they are all

associated with teaching physicians.

Thus, for the proposed wage index,

we are either using the data submitted

on the teaching physician survey or, in

the absence of such data, removing the

amount reported on Line 23 of

Worksheet A, Column 1 or removing

100 percent of physician Part A costs

reported on Worksheet S–3.

2. Nurse Practitioner and Clinical Nurse

Specialist Costs

The current wage index includes

salaries and wage-related costs for nurse

practitioners (NPs) and clinical nurse

specialists (CNSs) who, similar to

physician assistants and CRNAs (unless

at hospitals under the rural passthrough exception for CRNAs), are paid

under the physician fee schedule. Over

the past year, we have received several

inquiries from hospitals and fiscal

intermediaries regarding NP costs and

how they should be handled for

purposes of the hospital wage index.

Because Medicare generally pays for NP

and CNS costs under Part B outside the

hospital prospective payment system,

removing NP and CNS Part B costs from

the wage index calculation would be

consistent with our general policy to

exclude, to the extent possible, costs

that are not paid through the hospital

prospective payment system. Because

NP and CNS costs are not separately

reported on the Worksheet S–3 for FYs

1997, 1998, and 1999, the FY 2000

Worksheet S–3 and cost reporting

instructions will be revised to allow for

separate reporting of NP and CNS Part

A and Part B costs. We will exclude the

Part B costs beginning with the FY 2004

wage index. These services are

pervasive in both rural and urban

settings. As such, we believe there will

be no significant overall impact

resulting from the removal of Part B

costs for NPs and CNSs.

3. Severance and Bonus Pay Costs

On October 6, 1999, we issued a

memorandum to hospitals and

intermediaries regarding our policy on

treatment of severance and bonus pay

costs in developing the wage index,

effective beginning with the FY 2001

wage index. (The hospital cost report

instructions also will be amended to

reflect our policy on these costs.) We

stated that severance pay costs may be

included on Worksheet S–3 as salaries

on Part II, Line 1, only if the associated

hours are included. If the hospital has

no accounting of the hours, or if the

costs are not based on hours, the

severance pay costs may not be

included in the wage index. On the

other hand, bonus pay costs may be

included in the cost report on Line 1 of

Worksheet S–3 with no corresponding

hours. Due to the inquiries we continue

to receive from hospitals regarding the

inclusion of severance pay costs on cost

reports, we are clarifying our policy in

this proposed rule.

Hospitals vary in their accounting of

severance pay costs. Some hospitals

base the amounts to be paid on hours,

for example, 80 hours worth of pay.

Others do not; for example, a 15-year

employee may be offered a $25,000

buyout package. Some hospitals record

associated hours; others do not. The

Wage Index Workgroup has suggested

that we not include any severance pay

costs in the wage index calculation, that

these costs are for terminated

employees, and, therefore, they should

be considered an administrative rather

than a salary expense.

Severance pay costs can be substantial

amounts, particularly in periods of

downsizing. We believe that, if

severance pay costs are included with

no associated hours, the wage index,

which is a relative measure of wage

costs across labor market areas, would

be distorted.

Severance pay costs are included in

the proposed FY 2001 wage index as a

salary cost to the extent that associated

hours are also reported. However, we

are soliciting public comments on this

issue.

4. Health Insurance and Health-Related

Costs

In the September 1, 1994 final rule (59

FR 45356), we stated that health

insurance, purchased or self-insurance,

is a core wage-related cost. Over the past

year, we have received several inquiries

from hospitals and hospital associations

requesting that we define ‘‘purchased

health insurance costs.’’ In response, in

26298 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

this proposed rule, we are clarifying

that, for wage index purposes, we define

‘‘purchased health insurance costs’’ as

the premiums and administrative costs

a hospital pays on behalf of its

employees for health insurance

coverage. ‘‘Self-insurance’’ includes the

hospital’s costs (not charges) for covered

services delivered to its employees, less

any amounts paid by the employees,

and less the personnel costs for hospital

staff who delivered the services (these

costs are already included in the wage

index). For purchased health insurance

and self-health insurance, the included

costs must be for services covered in a

health insurance plan.

Also, in the September 1, 1994 final

rule (59 FR 45357), we addressed a

comment about the inclusion of healthrelated costs in the calculation of the

wage index. Such health-related costs

include employee physical

examinations, flu shots, and clinic

visits, and other services that are not

covered by employees’ health insurance

plans but are provided at no cost or at

discounted rates to employees of the

hospital. We are clarifying that the costs

for these services may be included as an

‘‘other’’ wage-related cost if (among

other criteria), when all such healthrelated costs are combined, the total of

such costs is greater than 1 percent of

the hospital’s total salaries (less

excluded area salaries). As discussed in

the September 1, 1994 final rule (59 FR

45357), a cost may be allowable as an

‘‘other wage-related cost’’ if it meets

certain criteria. Under one criterion, the

wage-related cost must be greater than 1

percent of total salaries (less excluded

area salaries). For purposes of applying

this 1-percent test with respect to the

health-related costs at issue here, we

look at the combined total of the healthrelated costs (not charges) for services

delivered to its employees, less any

amounts employees paid, and less the

personnel costs for hospital staff who

delivered the services (as these costs are

already included in the wage index).

5. Elimination of Wage Costs Associated

With Rural Health Clinics and Federally

Qualified Health Centers

The current hospital wage index

includes the salaries and wage-related

costs of hospital-based rural health

clinics (RHCs) and federally qualified

health centers (FQHCs). However,

Medicare pays for these costs outside

the hospital inpatient prospective

payment system. Effective January 1,

1998, under section 1833(f) of the Act,

as amended by section 4205 of Public

Law 105–33, Medicare pays both

hospital-based and freestanding RHCs

and FQHCs on a cost-per-visit basis.

Medicare cost reporting forms for RHCs

and FQHCs were revised to reflect this

legislative change, beginning with cost

reporting periods ending on or after

September 30, 1998 (the FY 1998 cost

report). Other cost-reimbursed

outpatient departments, such as

ambulatory surgical centers, community

mental health centers, and

comprehensive outpatient rehabilitation

facilities, are presently excluded from

the wage index. Therefore, consistent

with our wage index refinements that

exclude, to the extent possible, costs

associated with services not paid under

the hospital inpatient prospective

payment system, we believe it would be

appropriate to exclude all salary costs

associated with RHCs and FQHCs from

the wage index calculation if we had

feasible, reliable data for such

exclusion.

Because RHC and FQHC costs are not

separately reported on the Worksheet S–

3 for FYs 1997, 1998, and 1999, we

cannot exclude these costs from the FY

2001, FY 2002, or FY 2003 wage

indexes. Therefore, we will revise the

FY 2000 Worksheet S–3 to begin

providing for the separate reporting of

RHC and FQHC salaries, wage-related

costs, and hours. We will evaluate the

wage data for RHCs and FQHCs in

developing the FY 2004 wage index.

D. Verification of Wage Data From the

Medicare Cost Report

The data for the proposed FY 2001

wage index were obtained from

Worksheet S–3, Parts II and III of the FY

1997 Medicare cost reports. The data

file used to construct the proposed wage

index includes FY 1997 data submitted

to HCFA as of mid-February 2000. As in

past years, we performed an intensive

review of the wage data, mostly through

the use of edits designed to identify

aberrant data.

We asked our fiscal intermediaries to

revise or verify data elements that

resulted in specific edit failures. Some

unresolved data elements are included

in the calculation of the proposed FY

2001 wage index pending their

resolution before calculation of the final

FY 2001 wage index. We have

instructed the intermediaries to

complete their verification of

questionable data elements and to

transmit any changes to the wage data

(through HCRIS) no later than April 3,

2000. We expect that all unresolved data

elements will be resolved by that date.

The revised data will be reflected in the

final rule.

Also, as part of our editing process,

we removed data for 19 hospitals that

failed edits. For two of these hospitals,

we were unable to obtain sufficient

documentation to verify or revise the

data because the hospitals are no longer

participating in the Medicare program

or are in bankruptcy status. Four

hospitals had negative average hourly

wages after allocating overhead to their

excluded areas and, therefore, were

removed from the calculation. The data

from the remaining 13 hospitals also

failed the edits and were removed. The

data for these hospitals will be included

in the final wage index if we receive

corrected data that pass our edits. As a

result, the proposed FY 2001 wage

index is calculated based on FY 1997

wage data for 4,926 hospitals.

E. Computation of the Proposed FY

2001 Wage Index

The method used to compute the

proposed FY 2001 wage index is as

follows:

Step 1—As noted above, we are

proposing to base the FY 2001 wage

index on wage data reported on the FY

1997 Medicare cost reports. We gathered

data from each of the non-Federal,

short-term, acute care hospitals for

which data were reported on the

Worksheet S–3, Parts II and III of the

Medicare cost report for the hospital’s

cost reporting period beginning on or

after October 1, 1996 and before October

1, 1997. In addition, we included data

from a few hospitals that had cost

reporting periods beginning in

September 1996 and reported a cost

reporting period exceeding 52 weeks.

These data were included because no

other data from these hospitals would

be available for the cost reporting period

described above, and because particular

labor market areas might be affected due

to the omission of these hospitals.

However, we generally describe these

wage data as FY 1997 data. We note

that, if a hospital had more than one

cost reporting period beginning during

FY 1997 (for example, a hospital had

two short cost reporting periods

beginning on or after October 1, 1996

and before October 1, 1997), we

included wage data from only one of the

cost reporting periods, the longest, in

the wage index calculation. If there was

more than one cost reporting period and

the periods were equal in length, we

included the wage data from the latest

period in the wage index calculation.

Step 2—Salaries—The method used to

compute a hospital’s average hourly

wage is a blend of 60 percent of the

hospital’s average hourly wage

including all GME and CRNA costs, and

40 percent of the hospital’s average

hourly wage after eliminating all GME

and CRNA costs.

In calculating a hospital’s average

salaries plus wage-related costs,

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26299

including all GME and CRNA costs, we

subtracted from Line 1 (total salaries)

the Part B salaries reported on Lines 3

and 5, home office salaries reported on

Line 7, and excluded salaries reported

on Lines 8 and 8.01 (that is, direct

salaries attributable to skilled nursing

facility services, home health services,

and other subprovider components not

subject to the prospective payment

system). We also subtracted from Line 1

the salaries for which no hours were

reported on Lines 2, 4, and 6. To

determine total salaries plus wagerelated costs, we added to the net

hospital salaries the costs of contract

labor for direct patient care, certain top

management, and physician Part A

services (Lines 9 and 10), home office

salaries and wage-related costs reported

by the hospital on Lines 11 and 12, and

nonexcluded area wage-related costs

(Lines 13, 14, 16, 18, and 20).

We note that contract labor and home

office salaries for which no

corresponding hours are reported were

not included. In addition, wage-related

costs for specific categories of

employees (Lines 16, 18, and 20) are

excluded if no corresponding salaries

are reported for those employees (Lines

2, 4, and 6, respectively).

We then calculated a hospital’s

salaries plus wage-related costs by

subtracting from total salaries the

salaries plus wage-related costs for

teaching physicians, Part A CRNAs

(Lines 2 and 16), and residents (Lines 6

and 20).

Step 3—Hours—With the exception of

wage-related costs, for which there are

no associated hours, we computed total

hours using the same methods as

described for salaries in Step 2.

Step 4—For each hospital reporting

both total overhead salaries and total

overhead hours greater than zero, we

then allocated overhead costs. First, we

determined the ratio of excluded area

hours (sum of Lines 8 and 8.01 of

Worksheet S–3, Part II) to revised total

hours (Line 1 minus the sum of Part II,

Lines 3, 5, and 7 and Part III, Line 13

of Worksheet S–3). We then computed

the amounts of overhead salaries and

hours to be allocated to excluded areas

by multiplying the above ratio by the

total overhead salaries and hours

reported on Line 13 of Worksheet S–3,

Part III. Finally, we subtracted the

computed overhead salaries and hours

associated with excluded areas from the

total salaries and hours derived in Steps

2 and 3.

Step 5—For each hospital, we

adjusted the total salaries plus wagerelated costs to a common period to

determine total adjusted salaries plus

wage-related costs. To make the wage

adjustment, we estimated the percentage

change in the employment cost index

(ECI) for compensation for each 30-day

increment from October 14, 1996

through April 15, 1998 for private

industry hospital workers from the

Bureau of Labor Statistics’

Compensation and Working Conditions.

We use the ECI because it reflects the

price increase associated with total

compensation (salaries plus fringes)

rather than just the increase in salaries.

In addition, the ECI includes managers

as well as other hospital workers. This

methodology to compute the monthly

update factors uses actual quarterly ECI

data and assures that the update factors

match the actual quarterly and annual

percent changes. The factors used to

adjust the hospital’s data were based on

the midpoint of the cost reporting

period, as indicated below.

MIDPOINT OF COST REPORTING

PERIOD

After Before Adjustment

factor

10/14/96 ....... 11/15/96 ....... 1.02848

11/14/96 ....... 12/15/96 ....... 1.02748

12/14/96 ....... 01/15/97 ....... 1.02641

01/14/97 ....... 02/15/97 ....... 1.02521

02/14/97 ....... 03/15/97 ....... 1.02387

03/14/97 ....... 04/15/97 ....... 1.02236

04/14/97 ....... 05/15/97 ....... 1.02068

05/14/97 ....... 06/15/97 ....... 1.01883

06/14/97 ....... 07/15/97 ....... 1.01695

07/14/97 ....... 08/15/97 ....... 1.01520

08/14/97 ....... 09/15/97 ....... 1.01357

09/14/97 ....... 10/15/97 ....... 1.01182

10/14/97 ....... 11/15/97 ....... 1.00966

11/14/97 ....... 12/15/97 ....... 1.00712

12/14/97 ....... 01/15/98 ....... 1.00451

01/14/98 ....... 02/15/98 ....... 1.00213

02/14/98 ....... 03/15/98 ....... 1.00000

03/14/98 ....... 04/15/98 ....... 0.99798

For example, the midpoint of a cost

reporting period beginning January 1,

1997 and ending December 31, 1997 is

June 30, 1997. An adjustment factor of

1.01695 would be applied to the wages

of a hospital with such a cost reporting

period. In addition, for the data for any

cost reporting period that began in FY

1997 and covers a period of less than

360 days or more than 370 days, we

annualized the data to reflect a 1-year

cost report. Annualization is

accomplished by dividing the data by

the number of days in the cost report

and then multiplying the results by 365.

Step 6—Each hospital was assigned to

its appropriate urban or rural labor

market area before any reclassifications

under section 1886(d)(8)(B) or section

1886(d)(10) of the Act. Within each

urban or rural labor market area, we

added the total adjusted salaries plus

wage-related costs obtained in Step 5

(with and without GME and CRNA

costs) for all hospitals in that area to

determine the total adjusted salaries

plus wage-related costs for the labor

market area.

Step 7—We divided the total adjusted

salaries plus wage-related costs obtained

under both methods in Step 6 by the

sum of the corresponding total hours

(from Step 4) for all hospitals in each

labor market area to determine an

average hourly wage for the area.

Because the proposed FY 2001 wage

index is based on a blend of average

hourly wages, we then added 60 percent

of the average hourly wage calculated

without removing GME and CRNA

costs, and 40 percent of the average

hourly wage calculated with these costs

excluded.

Step 8—We added the total adjusted

salaries plus wage-related costs obtained

in Step 5 for all hospitals in the nation

and then divided the sum by the

national sum of total hours from Step 4

to arrive at a national average hourly

wage (using the same blending

methodology described in Step 7). Using

the data as described above, the national

average hourly wage is $21.6988.

Step 9—For each urban or rural labor

market area, we calculated the hospital

wage index value by dividing the area

average hourly wage obtained in Step 7

by the national average hourly wage

computed in Step 8.

Step 10—Following the process set

forth above, we developed a separate

Puerto Rico-specific wage index for

purposes of adjusting the Puerto Rico

standardized amounts. (The national

Puerto Rico standardized amount is

adjusted by a wage index calculated for

all Puerto Rico labor market areas based

on the national average hourly wage as

described above.) We added the total

adjusted salaries plus wage-related costs

(as calculated in Step 5) for all hospitals

in Puerto Rico and divided the sum by

the total hours for Puerto Rico (as

calculated in Step 4) to arrive at an

overall average hourly wage of $9.9667

for Puerto Rico. For each labor market

area in Puerto Rico, we calculated the

Puerto Rico-specific wage index value

by dividing the area average hourly

wage (as calculated in Step 7) by the

overall Puerto Rico average hourly

wage.

Step 11—Section 4410 of Public Law

105–33 provides that, for discharges on

or after October 1, 1997, the area wage

index applicable to any hospital that is

located in an urban area may not be less

than the area wage index applicable to

hospitals located in rural areas in that

State. Furthermore, this wage index

floor is to be implemented in such a

manner as to assure that aggregate

26300 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

prospective payment system payments

are not greater or less than those that

would have been made in the year if

this section did not apply. For FY 2001,

this change affects 241 hospitals in 41

MSAs. The MSAs affected by this

provision are identified in Table 4A by

a footnote.

F. Revisions to the Wage Index Based on

Hospital Redesignation

Under section 1886(d)(8)(B) of the

Act, hospitals in certain rural counties

adjacent to one or more MSAs are

considered to be located in one of the

adjacent MSAs if certain standards are

met. Under section 1886(d)(10) of the

Act, the Medicare Geographic

Classification Review Board (MGCRB)

considers applications by hospitals for

geographic reclassification for purposes

of payment under the prospective

payment system.

Under section 152 of Public Law 106–

113, hospitals in certain counties are

deemed to be located in specified areas

for purposes of payment under the

hospital inpatient prospective payment

system, for discharges occurring on or

after October 1, 2000. For payment

purposes, these hospitals are to be

treated as though they were reclassified

for purposes of both the standardized

amount and the wage index. We are

proposing to calculate FY 2001 wage

indexes for hospitals in the affected

counties as if they were reclassified to

the specified area.

For purposes of making payments

under section 1886(d) of the Act for FY

2001, section 152 provides the

following:

• Iredell County, North Carolina is

deemed to be located in the CharlotteGastonia-Rock Hill, North CarolinaSouth Carolina MSA;

• Orange County, New York is

deemed to be located in the New York,

New York MSA;

• Lake County, Indiana and Lee

County, Illinois are deemed to be

located in the Chicago, Illinois MSA;

• Hamilton-Middletown, Ohio is

deemed to be located in the Cincinnati,

Ohio-Kentucky-Indiana MSA;

• Brazoria County, Texas is deemed

to be located in the Houston, Texas

MSA;

• Chittenden County, Vermont is

deemed to be located in the BostonWorcester-Lawrence-Lowell-Brockton,

Massachusetts-New Hampshire MSA.

Section 152 also requires that these

reclassifications be treated for FY 2001

as though they are reclassification

decisions by the MGCRB. Therefore, the

proposed wage indexes for the areas to

which these hospitals are reclassifying,

as well as the wage indexes for the areas

in which they are located, are subject to

all of the normal rules for calculating

wage indexes for hospitals affected by

reclassification decisions by the

MGCRB, as described below.

In addition, we would note that the

reclassifications enacted by section 152

pertain only to the hospitals located in

the specified counties, not to hospitals

in other counties within the MSA or

hospitals reclassified into the MSA by

the MGCRB.

Under section 154 of Public Law 106–

113, the Allentown-Bethlehem-Easton,

Pennsylvania MSA wage index will be

calculated including the wage data for

Lehigh Valley Hospital. Section 154

states that, for FY 2001,

‘‘[n]otwithstanding any other provision

of section 1886(d) of the Social Security

Act (42 U.S.C. 1395ww(d)), in

calculating and applying the wage

indices under that section for discharges

occurring during fiscal year 2001,

Lehigh Valley Hospital shall be treated

as being classified in the AllentownBethlehem-Easton Metropolitan

Statistical Area.’’ This statutory

language directs us to include Lehigh

Valley Hospital’s wage data in the wage

index calculation for the AllentownBethlehem-Easton MSA for FY 2000 and

FY 2001, and to apply the AllentownBethlehem-Easton MSA wage index to

Lehigh Valley Hospital for discharges

occurring during FY 2001.

Section 1886(d)(8)(B) of the Act

established that a hospital located in a

rural county adjacent to one or more

urban areas is treated as being located

in the MSA to which the greatest

number of workers in the county

commute, if the rural county would

otherwise be considered part of an MSA

(or NECMAs), if the commuting rates

used in determining outlying counties

were determined on the basis of the

aggregate number of resident workers

who commute to (and, if applicable

under the standards, from) the central

county or counties of all contiguous

MSAs. Through FY 2000, hospitals are

required to use standards published in

the Federal Register on January 3, 1980,

by the Office of Management and

Budget. For FY 2000, there were 26

hospitals affected by this provision.

Section 402 of Public Law 106–113

amended section 1886(d)(8)(B) of the

Act to allow hospitals to elect to use the

standards published in the Federal

Register on January 3, 1980 (1980

decennial census data) or March 30,

1990 (1990 decennial census data)

during FY 2001 and FY 2002. As of FY

2003, hospitals will be required to use

the standards published in the Federal

Register by the Director of the Office of

Management and Budget based on the

most recent available decennial

population data.

We are in the process of working with

the Office of Management and Budget to

identify the hospitals that would be

affected by this amendment. We refer

the reader to the September 30, 1988

final rule (53 FR 38499) for a complete

discussion of our approach to identify

the outlying counties using the

standards published in the January 3,

1980 Federal Register.

The methodology for determining the

wage index values for redesignated

hospitals is applied jointly to the

hospitals located in those rural counties

that were deemed urban under section

1886(d)(8)(B) of the Act and those

hospitals that were reclassified as a

result of the MGCRB decisions under

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

1886(d)(8)(C) of the Act provides that

the application of the wage index to

redesignated hospitals is dependent on

the hypothetical impact that the wage

data from these hospitals would have on

the wage index value for the area to

which they have been redesignated.

Therefore, as provided in section

1886(d)(8)(C) of the Act, the wage index

values were determined by considering

the following:

• If including the wage data for the

redesignated hospitals would reduce the

wage index value for the area to which

the hospitals are redesignated by 1

percentage point or less, the area wage

index value determined exclusive of the

wage data for the redesignated hospitals

applies to the redesignated hospitals.

• If including the wage data for the

redesignated hospitals reduces the wage

index value for the area to which the

hospitals are redesignated by more than

1 percentage point, the redesignated

hospitals are subject to that combined

wage index value.

• If including the wage data for the

redesignated hospitals increases the

wage index value for the area to which

the hospitals are redesignated, both the

area and the redesignated hospitals

receive the combined wage index value.

• The wage index value for a

redesignated urban or rural hospital

cannot be reduced below the wage

index value for the rural areas of the

State in which the hospital is located.

• Rural areas whose wage index

values would be reduced by excluding

the wage data for hospitals that have

been redesignated to another area

continue to have their wage index

values calculated as if no redesignation

had occurred.

• Rural areas whose wage index

values increase as a result of excluding

the wage data for the hospitals that have

been redesignated to another area have

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26301

their wage index values calculated

exclusive of the wage data of the

redesignated hospitals.

• The wage index value for an urban

area is calculated exclusive of the wage

data for hospitals that have been

reclassified to another area. However,

geographic reclassification may not

reduce the wage index value for an

urban area below the statewide rural

wage index value.

We note that, except for those rural

areas in which redesignation would

reduce the rural wage index value, the

wage index value for each area is

computed exclusive of the wage data for

hospitals that have been redesignated

from the area for purposes of their wage

index. As a result, several urban areas

listed in Table 4A have no hospitals

remaining in the area. This is because

all the hospitals originally in these

urban areas have been reclassified to

another area by the MGCRB. These areas

with no remaining hospitals receive the

prereclassified wage index value. The

prereclassified wage index value will

apply as long as the area remains empty.

The proposed wage index values for

FY 2001 are shown in Tables 4A, 4B,

4C, and 4F in the Addendum to this

proposed rule. Hospitals that are

redesignated should use the wage index

values shown in Table 4C. Areas in

Table 4C may have more than one wage

index value because the wage index

value for a redesignated urban or rural

hospital cannot be reduced below the

wage index value for the rural areas of

the State in which the hospital is

located. When the wage index value of

the area to which a hospital is

redesignated is lower than the wage

index value for the rural areas of the

State in which the hospital is located,

the redesignated hospital receives the

higher wage index value; that is, the

wage index value for the rural areas of

the State in which it is located, rather

than the wage index value otherwise

applicable to the redesignated hospitals.

Tables 4D and 4E list the average

hourly wage for each labor market area,

before the redesignation of hospitals,

based on the FY 1997 wage data. In

addition, Table 3C in the Addendum to

this proposed rule includes the adjusted

average hourly wage for each hospital

based on the preliminary FY 1997 data

as of February 25, 2000 (reflecting the

phase-out of GME and CRNA wages as

described at section III.C of this

preamble). The MGCRB will use the

average hourly wage published in the

final rule to evaluate a hospital’s

application for reclassification for FY

2002 (unless that average hourly wage is

later revised in accordance with the

wage data correction policy described in

§ 412.63(w)(2)). We note that in

adjudicating these wage index

reclassifications the MGCRB will use

the average hourly wages for each

hospital and labor market area that are

reflected in the final FY 2001 wage

index.

At the time this proposed wage index

was constructed, the MGCRB had

completed its review of FY 2001

reclassification requests. The proposed

FY 2001 wage index values incorporate

all 586 hospitals redesignated for

purposes of the wage index (hospitals

redesignated under section

1886(d)(8)(B) or 1886(d)(10) of the Act,

and section 152 Public Law 106–113)

for FY 2001. The final number of

reclassifications may vary because some

MGCRB decisions are still under review

by the Administrator and because some

hospitals may withdraw their requests

for reclassification.

Any changes to the wage index that

result from withdrawals of requests for

reclassification, wage index corrections,

appeals, and the Administrator’s review

process will be incorporated into the

wage index values published in the final

rule following this proposed rule. The

changes may affect not only the wage

index value for specific geographic

areas, but also the wage index value

redesignated hospitals receive; that is,

whether they receive the wage index

value for the area to which they are

redesignated, or a wage index value that

includes the data for both the hospitals

already in the area and the redesignated

hospitals. Further, the wage index value

for the area from which the hospitals are

redesignated may be affected.

Under § 412.273, hospitals that have

been reclassified by the MGCRB are

permitted to withdraw their

applications within 45 days of the

publication of this proposed rule in the

Federal Register. The request for

withdrawal of an application for

reclassification that would be effective

in FY 2001 must be received by the

MGCRB by June 19, 2000. A hospital

that requests to withdraw its application

may not later request that the MGCRB

decision be reinstated.

G. Requests for Wage Data Corrections

To allow hospitals time to evaluate

the wage data used to construct the

proposed FY 2001 hospital wage index,

we made available to the public a data

file containing the FY 1997 hospital

wage data. As stated in section II.D of

this preamble, the data file used to

construct the proposed wage index

includes FY 1997 data submitted to

HCFA as of mid-February 2000. In a

memorandum dated January 28, 2000,

we instructed all Medicare

intermediaries to inform the prospective

payment hospitals that they service of

the availability of the wage data file and

the process and timeframe for

requesting revisions. The wage data file

was made available on February 7, 2000

through the Internet at HCFA’s home

page (http://www.hcfa.gov). We also

instructed the intermediaries to advise

hospitals of the availability of these data

either through their representative

hospital organizations or directly from

HCFA. Additional details on ordering

this data file are discussed in section

IX.A of this preamble, ‘‘Requests for

Data from the Public.’’

In addition, Table 3C in the

Addendum to this proposed rule

contains each hospital’s adjusted

average hourly wage used to construct

the proposed wage index values. It

should be noted that the hospital

average hourly wages shown in Table

3C may not reflect any changes made to

a hospital’s data after February 7, 2000.

Changes approved by a hospital’s fiscal

intermediary and forwarded to HCFA by

April 3, 2000 will be reflected on the

final public use wage data file

scheduled to be made available on May

5, 2000.

We believe hospitals have sufficient

time to ensure the accuracy of their FY

1997 wage data. Moreover, the ultimate

responsibility for accurately completing

the cost report rests with the hospital,

which must attest to the accuracy of the

data at the time the cost report is filed.

However, if, after review of the wage

data file released February 4, 2000, a

hospital believed that its FY 1997 wage

data were incorrectly reported, the

hospital was to submit corrections along

with complete, detailed supporting

documentation to its intermediary by

March 6, 2000. Hospitals were notified

of this deadline, and of all other

possible deadlines and requirements,

through written communications from

their fiscal intermediaries in late

January 2000.

After reviewing requested changes

submitted by hospitals, intermediaries

transmitted any revised cost reports to

HCFA and forwarded a copy of the

revised Worksheet S–3, Parts II and III

to the hospitals. In addition, fiscal

intermediaries were to notify hospitals

of the changes or the reasons that

changes were not accepted. This

procedure ensures that hospitals have

every opportunity to verify the data that

will be used to construct their wage

index values. We believe that fiscal

intermediaries are generally in the best

position to make evaluations regarding

the appropriateness of a particular cost

and whether it should be included in

the wage index data. However, if a

26302 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

hospital disagrees with the

intermediary’s resolution of a requested

change, the hospital may contact HCFA

in an effort to resolve policy disputes.

We note that the April 3, 2000 deadline

also applies to these requested changes.

We will not consider factual

determinations at this time, as these

should have been resolved earlier in the

process.

Any wage data corrections to be

reflected in the final wage index must

have been reviewed and verified by the

intermediary and transmitted to HCFA

on or before April 3, 2000. (The

deadline for hospitals to request

changes from their fiscal intermediaries

was March 6, 2000.) These deadlines are

necessary to allow sufficient time to

review and process the data so that the

final wage index calculation can be

completed for development of the final

prospective payment rates to be

published by August 1, 2000.

We have created the process

described above to resolve all

substantive wage data correction

disputes before we finalize the wage

data for the FY 2001 payment rates.

Accordingly, hospitals that do not meet

the procedural deadlines set forth above

will not be afforded a later opportunity

to submit wage data corrections or to

dispute the intermediary’s decision with

respect to requested changes.

The final wage data public use file

will be released by May 5, 2000.

Hospitals should examine both Table 3C

of this proposed rule and the May 5

final public use wage data file (which

reflects revisions to the data used to

calculate the values in Table 3C) to

verify the data HCFA is using to

calculate the wage index. Hospitals will

have until June 5, 2000, to submit

requests to correct errors in the final

wage data due to data entry or

tabulation errors by the intermediary or

HCFA. The correction requests that will

be considered at that time will be

limited to errors in the entry or

tabulation of the final wage data that the

hospital could not have known about

before the release of the final wage data

public use file.

As noted above in section III.C of this

preamble, the final wage data file

released on May 5, 2000 will include

hospitals’ teaching survey data as well

as cost report data. As with the file

made available in February 2000, HCFA

will make the final wage data file

released in May 2000 available to

hospital associations and the public on

the Internet. However, this file is being

made available solely for the limited

purpose of identifying any potential

errors made by HCFA or the

intermediary in the entry of the final

wage data that result from the correction

process described above (with the

March 6 deadline). Hospitals are

encouraged to review their hospital

wage data promptly after the release of

the final file because data presented at

this time cannot be used by hospitals to

initiate new wage data correction

requests.

If, after reviewing the final file, a

hospital believes that its wage data are

incorrect due to a fiscal intermediary or

HCFA error in the entry or tabulation of

the final wage data, it should send a

letter to both its fiscal intermediary and

HCFA. The letters should outline why

the hospital believes an error exists and

provide all supporting information,

including dates. These requests must be

received by HCFA and the

intermediaries no later than June 5,

2000. Requests mailed to HCFA should

be sent to: Health Care Financing

Administration; Center for Health Plans

and Providers; Attention: Wage Index

Team, Division of Acute Care; C4–07–

07; 7500 Security Boulevard; Baltimore,

MD 21244–1850. Each request must also

be sent to the hospital’s fiscal

intermediary. The intermediary will

review requests upon receipt and

contact HCFA immediately to discuss

its findings.

At this point in the process, changes

to the hospital wage data will only be

made in those very limited situations

involving an error by the intermediary

or HCFA that the hospital could not

have known about before its review of

the final wage data file. Specifically,

neither the intermediary nor HCFA will

accept the following types of requests at

this stage of the process:

• Requests for wage data corrections

that were submitted too late to be

included in the data transmitted to

HCFA on or before April 3, 2000.

• Requests for correction of errors

that were not, but could have been,

identified during the hospital’s review

of the February 2000 wage data file.

• Requests to revisit factual

determinations or policy interpretations

made by the intermediary or HCFA

during the wage data correction process.

Verified corrections to the wage index

received timely (that is, by June 5, 2000)

will be incorporated into the final wage

index to be published by August 1, 2000

and effective October 1, 2000.

Again, we believe the wage data

correction process described above

provides hospitals with sufficient

opportunity to bring errors in their wage

data to the intermediary’s attention.

Moreover, because hospitals will have

access to the final wage data by early

May 2000, they will have the

opportunity to detect any data entry or

tabulation errors made by the

intermediary or HCFA before the

development and publication of the FY

2001 wage index by August 1, 2000 and

the implementation of the FY 2001 wage

index on October 1, 2000. If hospitals

avail themselves of this opportunity, the

wage index implemented on October 1,

should be virtually error free.

Nevertheless, in the unlikely event that

errors should occur after that date, we

retain the right to make midyear

changes to the wage index under very

limited circumstances.

Specifically, in accordance with

§ 412.63(w)(2), we may make midyear

corrections to the wage index only in

those limited circumstances in which a

hospital can show (1) that the

intermediary or HCFA made an error in

tabulating its data; and (2) that the

hospital could not have known about

the error, or did not have an opportunity

to correct the error, before the beginning

of FY 2001 (that is, by the June 5, 2000

deadline). As indicated earlier, since a

hospital will have the opportunity to

verify its data, and the intermediary will

notify the hospital of any changes, we

do not foresee any specific

circumstances under which midyear

corrections would be necessary.

However, should a midyear correction

be necessary, the wage index change for

the affected area will be effective

prospectively from the date the

correction is made.

IV. Other Decisions and Proposed

Changes to the Prospective Payment

System for Inpatient Operating Costs

and Graduate Medical Education Costs

A. Expanding the Transfer Definition to

Include Postacute Care Discharges

(§ 412.4)

In accordance with section

1886(d)(5)(I) of the Act, the prospective

payment system distinguishes between

‘‘discharges,’’ situations in which a

patient leaves an acute care (prospective

payment) hospital after receiving

complete acute care treatment, and

‘‘transfers,’’ situations in which the

patient is transferred to another acute

care hospital for related care. Our

policy, as set forth in the regulations at

§ 412.4, provides that, in a transfer

situation, full payment is made to the

final discharging hospital and each

transferring hospital is paid a per diem

rate for each day of the stay, not to

exceed the full DRG payment that

would have been made if the patient

had been discharged without being

transferred.

Effective with discharges on or after

October 1, 1998, section 1886(d)(5)(J) of

the Act required the Secretary to define

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and pay as transfers all cases assigned

to one of 10 DRGs (identified below)

selected by the Secretary if the

individuals are discharged to one of the

following settings:

• A hospital or hospital unit that is

not a subsection 1886(d) hospital.

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

identifies the hospitals and hospital

units that are excluded from the term

‘‘subsection(d) hospital’’ as psychiatric

hospitals and units, rehabilitation

hospitals and units, children’s hospitals,

long-term care hospitals, and cancer

hospitals.)

• A skilled nursing facility (as

defined at section 1819(a) of the Act).

• Home health services provided by a

home health agency, if the services

relate to the condition or diagnosis for

which the individual received inpatient

hospital services, and if the home health

services are provided within an

appropriate period (as determined by

the Secretary).

Therefore, any discharge from a

prospective payment hospital from one

of the selected 10 DRGs that is admitted

to a hospital excluded from the

prospective payment system on the date

of discharge from the acute care

hospital, on or after October 1, 1998,

would be considered a transfer and paid

accordingly under the prospective

payment systems (operating and capital)

for inpatient hospital services.

Similarly, a discharge from an acute

care inpatient hospital paid under the

prospective payment system to a skilled

nursing facility on the same date would

be defined as a transfer and paid as

such. This would include cases

discharged from one of the 10 selected

DRGs to a designated swing bed for

skilled nursing care. We consider

situations in which home health

services related to the condition or

diagnosis of the inpatient admission are

received within 3 days after the

discharge as a transfer.

The statute specifies that the

Secretary select 10 DRGs based upon a

high volume of discharges to postacute

care and a disproportionate use of

postacute care services. We identified

the following DRGs with the highest

percentage of postacute care:

• DRG 14 (Specific Cerebrovascular

Disorders Except Transient Ischemic

Attack (Medical)).

• DRG 113 (Amputation for

Circulatory System Disorders Except

Upper Limb and Toe (Surgical)).

• DRG 209 (Major Joint Limb

Reattachment Procedures of Lower

Extremity (Surgical)).

• DRG 210 (Hip and Femur

Procedures Except Major Joint

Procedures Age >17 with CC (Surgical)).

• DRG 211 (Hip and Femur

Procedures Except Major Joint

Procedures Age >17 without CC

(Surgical)).

• DRG 236 (Fractures of Hip and

Pelvis (Medical)).

• DRG 263 (Skin Graft and/or

Debridement for Skin Ulcer or Cellulitis

with CC (Surgical))

• DRG 264 (Skin Graft and/or

Debridement for Skin Ulcer or Cellulitis

without CC (Surgical))

• DRG 429 (Organic Disturbances and

Mental Retardation (Medical))

• DRG 483 (Tracheostomy Except for

Face, Mouth and Neck Diagnoses

(Surgical)).

Generally, we pay for transfers based

on a per diem payment, determined by

dividing the DRG payment by the

average length of stay for that DRG. The

transferring hospital receives twice the

per diem rate the first day and the per

diem rate for each following day, up to

the full DRG payment. Of the 10

selected DRGs, 7 are paid under this

method. However, three DRGs exhibit a

disproportionate share of costs very

early in the hospital stay. For these

three DRGs, hospitals receive one-half of

the DRG payment for the first day of the

stay and one-half of the payment they

would receive under the current transfer

payment method, up to the full DRG

payment.

Section 1886(d)(5)(J)(iv) of the Act

requires the Secretary to include in the

FY 2001 proposed rule a description of

the effect of the provision to treat as

transfers cases that are assigned to one

of the 10 selected DRGs and receive

postacute care upon their discharge

from the hospital. Under contract with

HCFA (Contract No. 500–95–0006),

Health Economics Research, Inc. (HER)

conducted an analysis of the impact on

hospitals and hospital payments of the

postacute transfer provision. The

analysis sought to obtain information on

four primary areas: how hospitals

responded in terms of their transfer

practices; a comparison of payments

and costs for these cases; whether

hospitals are attempting to circumvent

the policy by delaying postacute care or

coding the patient’s discharge status as

something other than a transfer; and

what the next possible step is for

expanding the transfer payment policy

beyond the current 10 selected DRGs or

the current postacute destinations.

Section 1886(d)(5)(J)(iv)(I) authorizes

the Secretary to include in the proposed

rule for FY 2001 a description of other

post-discharge services that should be

added to this postacute care transfer

provision. Since FY 1999 was the first

year this policy was effective and

because of pending changes to payment

policies for other postacute care settings

such as hospital outpatient departments,

we have limited data to assess whether

additional postacute care settings

should be included. We will continue to

closely monitor this issue as more data

become available.

In its analysis, HER relied on HCFA’s

Standard Analytic Files containing

claims submission data through

September 1999. However, the second

and third quarter submissions for

calendar year 1999 were not complete.

It was decided that transfer cases would

be identified by linking acute hospital

discharges with postacute records based

on Medicare beneficiary numbers and

dates of discharge from the acute

hospital with dates of admission or

provision of service by the postacute

provider. This method was used rather

than selecting cases based on the

discharge status code on the claim even

though this code is being used for

payment to these cases because we

wanted to also assess how accurately

hospitals are coding this status.

However, the need to link acute and

postacute episodes further limited the

analytic data, due to the greater time lag

for collecting postacute records.

Therefore, much of HER’s analysis

focused on only the first two quarters of

FY 1998. The two preceding fiscal years

served as a baseline for purposes of

comparison.

HER looked at the 10 DRGs included

under the transfer payment policy and

identified a slight decrease in the

percentage of short-stay postacute

transfers. Short-stay transfers were

defined as those with a length of stay at

least one day below the geometric mean

length of stay for the DRG. Comparing

the share of short-stay postacute

transfers to total discharges shows that

during the first two quarters of FY 1998,

the resulting percentage was 34 percent.

The same comparison during the first

two quarters of FY 1999 yielded 33

percent. When HER examined the share

of short-stay postacute transfers relative

to all short-stay cases, it found that the

percentage fell from 59 percent in FY

1998 to 58 percent in FY 1999.

According to HER, ‘‘[t]hese figures

suggest that the policy change resulted

in a moderate decline in the number of

postacute care transfers paid for under

the lower per diem methodology.’’

Evidence also suggests that hospitals

are keeping patients in these 10 DRGs

longer prior to transfer. The mean length

of stay of short-stay postacute transfers

remained fairly constant prior to the

change and after the change, declining

less than one-half percent. On the other

hand, the mean length of stay of

nontransfer short-stay patients fell by

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1.8 percent. By comparison, the mean

length of stay of long-stay postacute

transfers fell by 3.4 percent, while it fell

only 2.1 percent for long-stay

nontransfers. The report suggests ‘‘[t]he

relative decline in the length of stay of

transfers among all long-stay cases

suggests that (prospective payment

system) hospitals may have responded

to the policy change by holding such

patients until they exceeded the

geometric mean minus one day

threshold prior to post-discharge

referral.’’

We believe these marginal reactions

by hospitals to the postacute transfer

policy suggest that the increase in the

rate of postacute transfers over the past

several years has been due to a number

of factors, of which Medicare payment

policy has been only one. As indicated

in the Conference report accompanying

Public Law 105–33 (H.R. Conf. Rept. No.

105–217, 105th Cong., 1st Sess., at 740

(1997)), Congress’ intent was to

‘‘continue to provide hospitals with

strong incentives to treat patients in the

most effective and efficient manner,

while at the same time, adjust PPS

payments in a manner that accounts for

reduced hospital lengths of stay because

of a discharge to another setting.’’ The

preliminary results of HER’s report

suggest that the policy resulting from

Public Law 105–33 has not had a

disruptive impact on existing clinical

practices.

To assess the adequacy of payments

under the new policy, HER examined

average profits per case prior to and

after the policy change. Prior to the

policy change, HER found average

profits for short-stay transfers in the 10

DRGs to be $2,454 per case. Across the

10 DRGs the average profits ranged from

$32,007 per case for DRG 483 to minus

$26 per case for DRG 211 (the only one

of the 10 DRGs with a negative profit

margin prior to implementing the

policy). After the policy change, the

average profit per case was $1,180 per

case. However, 3 of the 10 DRGs had

negative average profits after

implementation of the policy. The

average margin for DRG 483 declined to

$16,672 per case.

The study also attempted to ascertain

whether there was any concerted effort

to circumvent the policy by delaying

transfers to avoid having a case defined

as a transfer, or by not coding the case

correctly on the discharge status

indicator on the bill. To assess whether

postacute care was being delayed, HER

considered, for the periods preceding

and subsequent to the policy change,

the number and percent of cases

admitted to either a hospital or distinctpart unit of a hospital excluded from the

prospective payment system or to a

skilled nursing facility 2 or 3 days

following the discharge, and the number

and percent of patients who received

services from a home health agency 4 or

5 days after discharge from an acute care

hospital. The percentages are based on

the share of transferred patients falling

into the time windows described above

relative to all such transfers.

The analysis identified 699 patients

transferred to an excluded hospital or

unit 2 or 3 days following discharge

from an acute care hospital during the

first two quarters of FY 1998, and 660

such cases during the first two quarters

of FY 1999. Similarly, there were 2,219

transfers to skilled nursing facilities 2 or

3 days after discharge during the first

two quarters of FY 1998, and 1,759

during the first two quarters of FY 1999.

The percentage of such transfers was

constant for both excluded hospitals

and units and for skilled nursing

facilities. The analysis found that home

health referral on the 4th or 5th day

following discharge fell from 17.5

percent to 16.5 percent between the two

study periods, from 12,667 cases to

9,745 cases. On the basis of these

findings, HER believes ‘‘[t]hese results

do not support the contention that

(prospective payment system) hospitals

(would) circumvent the lower per diem

payments by delaying the date of

postacute care admission or visit.’’

The study also examined the

discharge destination codes as reported

on the acute care hospital claims against

postacute care transfers identified on

the basis of a postacute care claim

indicating the patient qualifies as a

transfer. This analysis found that in

1998, only 74 percent of transfer cases

had discharge destination codes on the

acute care hospital claim that were

consistent with whether there was a

postacute care claim for the case

matching the date of discharge. In FY

1999, the year the postacute care

transfer policy went into effect, this rate

rose to 79 percent. This indicates that

hospitals are improving the accuracy of

coding transfer cases.

Transfers to hospitals or units

excluded from the prospective payment

system must have a discharge

destination code (Patient Status) of 05.

Transfers to a skilled nursing facility

must have a discharge destination code

of 03. Transfers to a home health agency

must have a discharge destination code

of 06. If the hospital’s continuing care

plan for the patient is not related to the

purpose of the inpatient hospital

admission, a condition code 42 must be

entered on the claim. If the continuing

care plan is related to the purpose of the

inpatient hospital admission, but care

did not start within 3 days after the date

of discharge, a condition code 43 must

be entered on the claim. The presence

of either of these condition codes in

conjunction with discharge destination

code 06 will result in full payment

rather than the transfer payment

amount. We intend to closely monitor

the accuracy of hospitals’ discharge

destination coding in this regard and

take whatever steps are necessary to

ensure that accurate payment is made

under this policy.

Section 1886(d)(5)(J)(iv)(II) of the Act

authorized but did not require the

Secretary to include as part of this

proposed rule additional DRGs to

include under the postacute care

transfer provision. As part of ‘‘The

President’s Plan to Modernize and

Strengthen Medicare for the 21st

Century’’ (July 2, 1999), the

Administration committed to not

expanding the number of DRGs

included in the policy until FY 2003.

Therefore, we are not proposing any

change to the postacute care settings or

the 10 DRGs.

HER did undertake an analysis of how

additional DRGs might be considered

for inclusion under the policy. The

analysis supports the initial 10 DRGs

selected as being consistent with the

nature of the Congressional mandate.

According to HER, ‘‘[t]he top 10 DRGs

chosen initially by HCFA exhibit very

large PAC [postacute care] levels and

PAC discharge rates (except for DRG

264, Skin Graft and/or Debridement for

Skin Ulcer or Cellulitis without CC,

which was paired with DRG 263). All 10

appear to be excellent choices based on

the other criteria as well. Most have

fairly high short-stay PAC rates (except

possibly for Strokes, DRG 14, and

Mental Retardation, DRG 429).’’

Extending the policy beyond these

initial DRGs, however, may well require

more extensive analysis and grouping of

like-DRGs. One concern raised in the

analysis relates to single DRGs

including multiple procedures with

varying lengths of stay. Because the

transfer payment methodology only

considers the DRG overall geometric

mean length of stay for a DRG, certain

procedures with short lengths of stay

relative to other procedures in the same

DRG may be more likely to be treated as

transfers. The analysis also considers

pairs of DRGs, such as DRGs 263 and

264, as well as larger bundles of DRGs

(grouped by common elements such as

trauma, infections, and major organ

procedures). According to HER, ‘‘[i]n

extending the PAC transfer policy, it is

necessary to go beyond the flawed

concept of a single DRG to discover

multiple DRGs with a common link that

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exhibit similar PAC statistics.

Aggregation of this sort provides a

logical bridge in expanding the PAC

transfer policy that is easily justified to

Congress and that avoids unintended

inequities in the way DRGs—and

potentially hospitals—are treated under

this policy. Hospitals can be

inadvertently penalized or not under the

current implementation criteria due to

systematic differences in the DRG mix.’’

Finally, the HER report concludes

with a discussion of the issues related

to potentially expanding the postacute

care transfer policy to all DRGs. On the

positive side, HER points to the benefits

of expanding the policy to include all

DRGs:

• A simple, uniform formula-driven

policy;

• Same policy rationale exists for all

DRGs—the statutory provision requiring

the Secretary to select only 10 DRGs was

a political compromise;

• DRGs with little utilization of shortstay postacute care would not be

harmed by the policy;

• Less confusion in discharge

destination coding; and

• Hospitals that happen to be

disproportionately treating the current

10 DRGs may be harmed more than

hospitals with an aggressive short-stay

postacute care transfer policy for other

DRGs.

According to HER, the negative

implications of expanding the policy to

all DRGs include:

• The postacute care transfer policy is

irrelevant for many DRGs;

• Added burden for the fiscal

intermediaries to verify discharge

destination codes;

• Diluted program savings beyond the

initial 10 DRGs;

• Difficult to identify ongoing

postacute care that resumes after

discharge; and

• Heterogeneous procedures within

single DRGs having varying lengths of

stay.

At the time we developed this

proposed rule, HER’s report was not yet

in final format. We anticipate that, by

the time the final FY 2001 rule is

published, this report will be available

in final format. We will announce in

that rule how to attain copies of the

complete report.

B. Sole Community Hospitals (SCHs)

(412.63, 412.73, and 413.75, Proposed

New § 412.77, and § 412.92)

Under the hospital inpatient

prospective payment system, special

payment protections are provided to

sole community hospitals (SCHs).

Section 1886(d)(5)(D)(iii) of the Act

defines an SCH as, among other things,

a hospital that, by reason of factors such

as isolated location, weather conditions,

travel conditions, or absence of other

hospitals (as determined by the

Secretary), is the sole source of inpatient

hospital services reasonably available to

Medicare beneficiaries. The regulations

that set forth the criteria a hospital must

meet to be classified as an SCH are

located at § 412.92(a).

Currently SCHs are paid based on

whichever of the following rates yields

the greatest aggregate payment to the

hospital for the cost reporting period:

the Federal national rate applicable to

the hospital; or the hospital’s ‘‘target

amount’’;—that is, either the updated

hospital-specific rate based on FY 1982

costs per discharge, or the updated

hospital-specific rate based on FY 1987

costs per discharge.

Section 405 of Public Law 106–113,

which amended section 1886(b)(3) of

the Act, provides that an SCH that was

paid for its cost reporting period

beginning during 1999 on the basis of

either its FY 1982 or FY 1987 target

amount (the hospital-specific rate as

opposed to the Federal rate) may elect

to receive payment under a

methodology using a third hospitalspecific rate based on the hospital’s FY

1996 costs per discharge. This

amendment to the statute means that,

for discharges occurring in FY 2001,

eligible SCHs can elect to use the

allowable FY 1996 operating costs for

inpatient hospital services as the basis

for their target amount, rather than

either their FY 1982 or FY 1987 costs.

We are aware that language in the

Conference Report accompanying Public

Law 106–113 indicates that the House

bill (H.R. 3075) would have permitted

SCHs that were being paid the Federal

rate to rebase, not SCHs that were paid

on the basis of either their FY 1982 or

FY 1987 target amount (H.R. Conf. Rep.

No. 106–479, 106th Cong., 1st Sess. at

890 (1999)). The language of the section

405 amendment to section 1886(b)(3)

(which added new subparagraph (I)(ii))

clearly limits the option to substitute

the FY 1996 base year to SCHs that were

paid for their cost reporting periods

beginning during 1999 on the basis of

the target amount applicable to the

hospital under section 1886(b)(3)(C).

When calculating an eligible SCH’s

FY 1996 hospital-specific rate, we

propose to utilize the same basic

methodology used to calculate FY 1982

and FY 1987 bases. That methodology is

set forth in §§ 412.71 through 412.75 of

the regulations and discussed in detail

in several prospective payment system

documents published in the Federal

Register on September 1, 1983 (48 FR

3977); January 3, 1984 (49 FR 256); June

1, 1984 (49 FR 23010); and April 20,

1990 (55 FR 15150).

Since we anticipate that eligible

hospitals will elect the option to rebase

using their FY 1996 cost reporting

periods, we are instructing our fiscal

intermediaries to identify those SCHs

that were paid for their cost reporting

periods beginning during 1999 on the

basis of their target amounts. For these

hospitals, fiscal intermediaries will

calculate the FY 1996 hospital-specific

rate as described below in this section

IV.B. If this rate exceeds a hospital’s

current target amount based on the

greater of the FY 1982 or FY 1987

hospital-specific rate, the hospital will

receive payment based on the FY 1996

hospital-specific rate (based on the

blended amounts described at section

1886(b)(3)(I)(i) of the Act) unless the

hospital notifies its fiscal intermediary

in writing prior to the end of the cost

reporting period that it does not wish to

be paid on the basis of the FY 1996

hospital-specific rate. Thus, if a hospital

does not notify its fiscal intermediary

before the end of the cost reporting

period that it declines the rebasing

option, we will deem the lack of such

notification as an election to have

section 1886(b)(3)(I) of the Act apply to

the hospital.

An SCH’s decision to decline this

option for a cost reporting period will

remain in effect for subsequent periods

until such time as the hospital notifies

its fiscal intermediary otherwise.

The FY 1996 hospital-specific rate

will be based on FY 1996 cost reporting

periods beginning on or after October 1,

1995 and before October 1, 1996, that

are 12 months or longer. If the hospital’s

last cost reporting period ending on or

before September 30, 1996 is less than

12 months, the hospital’s most recent

12-month or longer cost reporting

period ending before the short period

report would be utilized in the

computations. If a hospital has no cost

reporting period beginning in FY 1996,

it would not have a hospital-specific

rate based on FY 1996.

For each hospital eligible for FY 1996

rebasing, the fiscal intermediary would

calculate a hospital-specific rate based

on the hospital’s FY 1996 cost report as

follows:

• Determine the hospital’s total

allowable Medicare inpatient operating

cost, as stated on the FY 1996 cost

report.

• Divide the total Medicare operating

cost by the number of Medicare

discharges in the cost reporting period

to determine the FY 1996 base period

cost per case. For this purpose, transfers

are considered to be discharges.

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• In order to take into consideration

the hospital’s individual case-mix,

divide the base year cost per case by the

hospital’s case-mix index applicable to

the FY 1996 cost reporting period. This

step is necessary to standardize the

hospital’s base period cost for case-mix

and is consistent with our treatment of

both FY 1982 and FY 1987 base-period

costs per case. A hospital’s case-mix is

computed based on its Medicare patient

discharges subject to DRG-based

payment.

The fiscal intermediary will notify

eligible hospitals of their FY 1996

hospital-specific rate prior to October 1,

2000. Consistent with our policies

relating to FY 1982 and FY 1987

hospital-specific rates, we propose to

permit hospitals to appeal a fiscal

intermediary’s determination of the FY

1996 hospital-specific rate under the

procedures set forth in 42 CFR part 405,

subpart R, which concern provider

payment determinations and appeals. In

the event of a modification of base

period costs for FY 1996 rebasing due to

a final nonappealable court judgment or

certain administrative actions (as

defined in § 412.72(a)(3)(i)), the

adjustment would be retroactive to the

time of the intermediary’s initial

calculation of the base period costs,

consistent with the policy for rates

based on FY 1982 and FY 1987 costs.

Section 405 prescribes the following

formula to determine the payment for

SCHs that elect rebasing:

For discharges during FY 2001:

• 75 percent of the updated FY 1982

or FY 1987 former target (identified in

the statute as the ‘‘subparagraph (C)

target amount’’), plus

• 25 percent of the updated FY 1996

amount (identified in the statute as the

‘‘’’rebased target amount’’).

For discharges during FY 2002:

• 50 percent of the updated FY 1982

or FY 1987 former target, plus

• 50 percent of the updated FY 1996

amount.

For discharges during FY 2003:

• 25 percent of the updated FY 1982

or FY 1987 former target, plus

• 75 percent of the updated FY 1996

amount.

For discharges during FY 2004 or any

subsequent fiscal year, the hospitalspecific rate would be determined based

on 100 percent of the updated FY 1996

amount.

We are proposing to add a new

§ 412.77 and amend § 412.92(d) to

incorporate the provisions of section

1886(b)(3)(I) of the Act, as added by

section 405 of Public Law 106–113.

Section 406 of Public Law 106–113

amended section 1886(b)(3)(B)(i)(XVI) of

the Act to provide, for fiscal year 2001,

for full market basket updates to both

the Federal and hospital-specific

payment rates applicable to sole

community hospitals. We are proposing

to amend § § 412.63, 412.73, and 412.75

to incorporate the amendment made by

section 406 of Public Law 106–113.

C. Rural Referral Centers (§ 412.96)

Under the authority of section

1886(d)(5)(C)(i) of the Act, the

regulations at § 412.96 set forth the

criteria a hospital must meet in order to

receive special treatment under the

prospective payment system as a rural

referral center. For discharges occurring

before October 1, 1994, rural referral

centers received the benefit of payment

based on the other urban amount rather

than the rural standardized amount.

Although the other urban and rural

standardized amounts were the same for

discharges beginning with that date,

rural referral centers would continue to

receive special treatment under both the

disproportionate share hospital (DSH)

payment adjustment and the criteria for

geographic reclassification.

As discussed in 62 FR 45999 and 63

FR 26317, under section 4202 of Public

Law 105–33, a hospital that was

classified as a rural referral center for

FY 1991 is to be classified as a rural

referral center for FY 1998 and later

years so long as that hospital continued

to be located in a rural area and did not

voluntarily terminate its rural referral

center status. Otherwise, a hospital

seeking rural referral center status must

satisfy applicable criteria. One of the

criteria under which a hospital may

qualify as a rural referral center is to

have 275 or more beds available for use.

A rural hospital that does not meet the

bed size requirement can qualify as a

rural referral center if the hospital meets

two mandatory prerequisites (specifying

a minimum case-mix index and a

minimum number of discharges) and at

least one of three optional criteria

(relating to specialty composition of

medical staff, source of inpatients, or

referral volume). With respect to the two

mandatory prerequisites, a hospital may

be classified as a rural referral center if

its—

• Case-mix index is at least equal to

the lower of the median case-mix index

for urban hospitals in its census region,

excluding hospitals with approved

teaching programs, or the median casemix index for all urban hospitals

nationally; and

• Number of discharges is at least

5,000 per year, or if fewer, the median

number of discharges for urban

hospitals in the census region in which

the hospital is located. (The number of

discharges criterion for an osteopathic

hospital is at least 3,000 discharges per

year.)

1. Case-Mix Index

Section 412.96(c)(1) provides that

HCFA will establish updated national

and regional case-mix index values in

each year’s annual notice of prospective

payment rates for purposes of

determining rural referral center status.

The methodology we use to determine

the proposed national and regional casemix index values is set forth in

regulations at § 412.96(c)(1)(ii). The

proposed national case-mix index value

includes all urban hospitals nationwide,

and the proposed regional values are the

median values of urban hospitals within

each census region, excluding those

with approved teaching programs (that

is, those hospitals receiving indirect

medical education payments as

provided in § 412.105). These values are

based on discharges occurring during

FY 1999 (October 1, 1998 through

September 30, 1999) and include bills

posted to HCFA’s records through

December 1999.

We are proposing that, in addition to

meeting other criteria, hospitals with

fewer than 275 beds, if they are to

qualify for initial rural referral center

status for cost reporting periods

beginning on or after October 1, 2000,

must have a case-mix index value for FY

1999 that is at least—

• 1.3401; or

• The median case-mix index value

for urban hospitals (excluding hospitals

with approved teaching programs as

identified in § 412.105) calculated by

HCFA for the census region in which

the hospital is located.

The median case-mix values by region

are set forth in the following table:

Region Case-mix

index value

1. New England (CT, ME, MA,

NH, RI, VT) ........................... 1.2291

2. Middle Atlantic (PA, NJ, NY) 1.2387

3. South Atlantic (DE, DC, FL,

GA, MD, NC, SC, VA, WV) .. 1.3116

4. East North Central (IL, IN,

MI, OH, WI) ........................... 1.2602

5. East South Central (AL, KY,

MS, TN) ................................. 1.2692

6. West North Central (IA, KS,

MN, MO, NE, ND, SD) .......... 1.1881

7. West South Central (AR, LA,

OK, TX) ................................. 1.2800

8. Mountain (AZ, CO, ID, MT,

NV, NM, UT, WY) ................. 1.3302

9. Pacific (AK, CA, HI, OR,

WA) ....................................... 1.3076

The preceding numbers will be

revised in the final rule to the extent

required to reflect the updated FY 1999

MedPAR file, which will contain data

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26307

from additional bills received through

March 31, 2000.

For the benefit of hospitals seeking to

qualify as rural referral centers or those

wishing to know how their case-mix

index value compares to the criteria, we

are publishing each hospital’s FY 1999

case-mix index value in Table 3C in

section VI. of the Addendum to this

proposed rule. In keeping with our

policy on discharges, these case-mix

index values are computed based on all

Medicare patient discharges subject to

DRG-based payment.

2. Discharges

Section 412.96(c)(2)(i) provides that

HCFA will set forth the national and

regional numbers of discharges in each

year’s annual notice of prospective

payment rates for purposes of

determining rural referral center status.

As specified in section 1886(d)(5)(C)(ii)

of the Act, the national standard is set

at 5,000 discharges. We are proposing to

update the regional standards based on

discharges for urban hospitals’ cost

reporting periods that began during FY

1998 (that is, October 1, 1997 through

September 30, 1998). That is the latest

year for which we have complete

discharge data available.

Therefore, we are proposing that, in

addition to meeting other criteria, a

hospital, if it is to qualify for initial

rural referral center status for cost

reporting periods beginning on or after

October 1, 2000, must have as the

number of discharges for its cost

reporting period that began during FY

1999 a figure that is at least—

• 5,000; or

• The median number of discharges

for urban hospitals in the census region

in which the hospital is located, as

indicated in the following table:

Region Number of

discharges

1. New England (CT, ME, MA,

NH, RI, VT) ........................... 6,733

2. Middle Atlantic (PA, NJ, NY) 8,681

3. South Atlantic (DE, DC, FL,

GA, MD, NC, SC, VA, WV) .. 7,845

4. East North Central (IL, IN,

MI, OH, WI) ........................... 7,526

5. East South Central (AL, KY,

MS, TN) ................................. 6,852

6. West North Central (IA, KS,

MN, MO, NE, ND, SD) .......... 5,346

7. West South Central (AR, LA,

OK, TX) ................................. 5,380

8. Mountain (AZ, CO, ID, MT,

NV, NM, UT, WY) ................. 8,026

9. Pacific (AK, CA, HI, OR,

WA) ....................................... 6,160

We note that the number of discharges

for hospitals in each census region is

greater than the national standard of

5,000 discharges. Therefore, 5,000

discharges is the minimum criterion for

all hospitals. These numbers will be

revised in the final rule based on the

latest FY 1998 cost report data.

We reiterate that an osteopathic

hospital, if it is to qualify for rural

referral center status for cost reporting

periods beginning on or after October 1,

2000, must have at least 3,000

discharges for its cost reporting period

that began during FY 1999.

D. Indirect Medical Education (IME)

Adjustment (§ 412.105)

Section 1886(d)(5)(B) of the Act

provides that prospective payment

hospitals that have residents in an

approved graduate medical education

(GME) program receive an additional

payment to reflect the higher indirect

operating costs associated with GME.

The regulations regarding the

calculation of this additional payment,

known as the indirect medical

education (IME) adjustment, are located

at § 412.105.

Section 111 of Public Law 106–113

modified the transition for the IME

adjustment that was established by

Public Law 105–33. We will publish

these changes in a separate interim final

rule with comment period. However, for

discharges occurring during FY 2001,

the adjustment formula equation used to

calculate the IME adjustment factor is

1.54 × [(1 + r) .405 ¥1]. (The variable r

represents the hospital’s resident-to-bed

ratio.)

In the July 30, 1999 final rule (64 FR

41517), we set forth certain policies that

affected payment for both direct and

indirect GME. These policies related to

adjustments to full-time equivalent

(FTE) resident caps for new medical

residency programs affecting both direct

and indirect GME programs; the

adjustment to GME caps for certain

hospitals under construction prior to

August 5, 1997 (the enactment date of

Public Law 105–33) to account for

residents in new medical residency

training programs; and the temporary

adjustment to FTE caps to reflect

residents affected by hospital closures.

When we amended the regulations

under § 413.86 for direct GME, we

inadvertently did not make the

corresponding changes in § 412.105 for

IME. We are proposing to make the

following conforming changes:

• To amend § 412.105(f)(1)(vii) to

provide for an adjustment to the FTE

caps for new medical residency

programs as specified under

§ 413.86(g)(6).

• To add a new § 412.105(f)(1)(viii)

related to the adjustment to the FTE

caps for newly constructed hospitals

that sponsor new residency programs in

effect on or after January 1, 1995, and

on or before August 5, 1997, that either

received initial accreditation by the

appropriate accrediting body or

temporarily trained residents at another

hospital(s) until the facility was

completed, to conform to the provisions

of § 413.86(g)(7).

• To add a new § 412.105(f)(1)(ix) to

specify that a hospital may receive a

temporary adjustment to its FTE cap to

take into account residents added

because of another hospital’s closure if

the hospital meets the criteria listed

under § 413.86(g)(8).

In addition, we are proposing to add

a cross-reference to ‘‘§ 413.86(d)(3)(i)

through (v)’’ in § 412.105(g), and to

correct the applicable period in both

§§ 412.105(g) and 413.86(d)(3) by

revising the phrase ‘‘For portions of cost

reporting periods beginning on or after

January 1, 1998’’ to read ‘‘For portions

of cost reporting periods occurring on or

after January 1, 1998’’.

E. Payments to Disproportionate Share

Hospitals (§ 412.106)

Effective for discharges beginning on

or after May 1, 1986, hospitals that treat

a disproportionately large number of

low-income patients (as defined in

section 1886(d)(5)(F) of the Act) receive

additional payments through the DSH

adjustment. Section 4403(a) of Public

Law 105–33 amended section

1886(d)(5)(F) of the Act to reduce the

payment a hospital would otherwise

receive under the current

disproportionate share formula by 1

percent for FY 1998, 2 percent for FY

1999, 3 percent for FY 2000, 4 percent

for FY 2001, 5 percent for 2002, and 0

percent for FY 2003 and each

subsequent fiscal year. Subsequently,

section 112 of Public Law 106–113

modified the amount of the reductions

under Public Law 105–33 by changing

the reduction to 3 percent for FY 2001

and 4 percent for FY 2002. The

reduction continues to be 0 percent for

FY 2003 and each subsequent fiscal

year. We are proposing to revise

§ 412.106(e) to reflect the changes in the

statute made by Public Law 106–113.

Section 112 of Public Law 106–113

also directs the Secretary to require

prospective payment system hospitals to

submit data on the costs incurred by the

hospitals for providing inpatient and

outpatient hospital services for which

the hospitals are not compensated,

including non-Medicare bad debt,

charity care, and charges for medical

and indigent care to the Secretary as

part of hospitals’ cost reports. These

data are required for cost reporting

periods beginning on or after October 1,

26308 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

2001. We will be revising our

instructions to hospitals for cost reports

for FY 2002 to capture these data.

F. Medicare Geographic Classification

Review Board (§§ 412.256 and 412.276)

With the creation of the Medicare

Geographic Classification Review Board

(MGCRB), beginning in FY 1991, under

section 1886(d)(10) of the Act, hospitals

could request reclassification from one

geographic location to another for the

purpose of using the other area’s

standardized amount for inpatient

operating costs or the wage index value,

or both (September 6, 1990 interim final

rule with comment period (55 FR

36754), June 4, 1991 final rule with

comment period (56 FR 25458), and

June 4, 1992 proposed rule (57 FR

23631)). Implementing regulations in

Subpart L of Part 412 (412.230 et seq.)

set forth criteria and conditions for

redesignations from rural to urban, rural

to rural, or from an urban area to

another urban area with special rules for

SCHs and rural referral centers.

1. Provisions of Public Law 106–113

Section 401 of Public Law 106–113

amended section 1886(d)(8) of the Act

by adding subparagraph (E), which

creates a mechanism, separate and apart

from the MGCRB, permitting an urban

hospital to apply to the Secretary to be

treated as being located in the rural area

of the State in which the hospital is

located. The statute directs the Secretary

to treat a qualifying hospital as being

located in a rural area for purposes of

provisions under section 1886(d) of the

Act. In addition, section 401 of Public

Law 106–113 went on to incorporate the

effects of such reclassifications from

urban to rural for purposes of Medicare

payments to outpatient departments and

to hospitals that would qualify to

become critical access hospitals.

Regulations implementing section

1886(d)(8)(E) of the Act are currently

under development and will be

published in a separate document.

However, we note that the statutory

language of section 1886(d)(8)(E) of the

Act does not address the issue of

interactions between changes in

classification under section

1886(d)(8)(E) of the Act and the MGCRB

reclassification process under section

1886(d)(10) of the Act. The Secretary

has extremely broad authority under

section 1886(d)(10) of the Act to

establish criteria for reclassification

under the MGCRB process. Section 401

of Public Law 106–113 does not amend

section 1886(d)(10) of the Act to limit

the agency’s discretion under the

provision in any way, nor does section

1886(d)(8)(E) of the Act (as added by

section 401) refer to section 1886(d)(10)

of the Act. However, we note that in the

Conference Report accompanying Public

Law 106–113, the language discussing

the House bill (H.R. 3075, as passed)

indicated that: ‘‘[H]ospitals qualifying

under this section shall be eligible to

qualify for all categories and

designations available to rural hospitals,

including sole community, Medicare

dependent, critical access, and referral

centers. Additionally, qualifying

hospitals shall be eligible to apply to the

Medicare Geographic Reclassification

Review Board for geographic

reclassification to another area’’.

We are concerned that section

1886(d)(8)(E) might create an

opportunity for some urban hospitals to

take advantage of the MGCRB process

by first seeking to be reclassified as rural

under section 1886(d)(8)(E) (and

receiving the benefits afforded to rural

hospitals) and in turn seek

reclassification through the MGCRB

back to the urban area for purposes of

their standardized amount and wage

index (and thus also receive the higher

payments that might result from being

treated as being located in an urban

area). That is, we are concerned that

some hospitals might inappropriately

seek to be treated as being located in a

rural area for some purposes and as

being located in an urban area for other

purposes. In light of the Conference

Report language noted above discussing

the House bill on the one hand, and the

potential for inappropriately

inconsistent treatment of the same

hospital on the other hand, we are

seeking public comment on this issue,

and indicating our position that we may

impose a limitation on such MGCRB

reclassifications in the final rule for FY

2001, if such action appears warranted.

We also are seeking specific comments

on how such a limitation, if any, should

be imposed.

For example, it could be argued that

if a hospital has applied to be treated as

being located in a rural area under

section 1886(d)(8)(E) of the Act, then the

hospital should be treated as rural for all

purposes under section 1886(d), and it

would be inappropriate to permit the

hospital to be reclassified back to an

urban area for any purpose. Under this

approach, hospitals seeking

reclassification under section

1886(d)(8)(E) of the Act would be

treated as rural for all purposes under

section 1886(d) and would be able to

benefit from special provisions that

apply to rural hospitals. They would

not, however, be eligible for

reclassification back to an urban area for

either the wage index or the

standardized amount. This would apply

to hospitals seeking to reclassify either

to their original MSA or to another

MSA.

Under an alternative approach,

hospitals reclassifying from urban to

rural under section 1886(d)(8)(E) of the

Act would be eligible to apply and be

reclassified by the MGCRB like any

other rural hospital (as long as

applicable regulations governing

MGCRB are met). This might allow

hospitals to effectively pick from an

array of urban and rural payment

policies to maximize their Medicare

payments. It could be argued that this

would be the policy most consistent

with the Conference Report language

but we believe that it might lead to

inappropriate, inconsistent

classifications.

We are very concerned that the effect

of unlimited MGCRB reclassifications

back to the area from which a hospital

was reclassified under section

1886(d)(8)(E) of the Act could have

implications beyond those envisioned

by Congress when it passed Public Law

106–113. However, in light of the

Conference Report language, we are

seeking comments on this issue. In the

final rule, we might adopt one of the

approaches discussed above or some

other approach for addressing this issue.

Under section 152 of Public Law 106–

113, certain counties are deemed to be

located in specified areas for purposes

of payment under the hospital inpatient

prospective payment system, effective

for discharges occurring on or after

October 1, 2000. For payment purposes,

these hospitals are to be treated as

though they were reclassified for

purposes of both the standardized

amount and the wage index. These

provisions are addressed in section III.B.

of this preamble, as they relate to

calculation of the FY 2001 wage indexes

for hospitals in the affected counties as

if they were reclassified to the specified

area; and in the Addendum to this

preamble as they relate to the

standardized amounts.

2. Revised Thresholds Applicable to

Rural Hospitals for Wage Index

Reclassifications

Existing §§ 412.230(e)(1)(iii) and

(e)(1)(iv) provide that hospitals may

obtain reclassification to another area

for purposes of calculating and applying

the wage index if the hospital’s average

hourly wages are at least 108 percent of

the average hourly wages in the area

where it is physically located, and at

least 84 percent of the average hourly

wages in a proximate area to which the

hospital seeks reclassification. These

thresholds apply equally to urban and

rural hospitals seeking reclassification.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26309

Historically, the financial

performance of rural hospitals under the

prospective payment system has lagged

behind that of urban hospitals. Despite

an overall increase in recent years of

Medicare inpatient operating profit

margins, some rural hospitals continue

to struggle financially (as measured by

Medicare inpatient operating

prospective payment system payments

minus costs, divided by payments). For

example, during FY 1997, while the

national average hospital margin was

15.1 percent, it was 8.9 percent for rural

hospitals. In addition, approximately

one-third of rural hospitals continue to

experience negative Medicare inpatient

margins despite this relatively high

average margin.

In response to the lower margins of

rural hospitals and the potential for a

negative impact on beneficiaries’ access

to care if these hospitals were to close,

we considered potential administrative

changes that could help improve

payments for rural hospitals. One

approach in that regard would be to

make it easier for rural hospitals to

reclassify for purposes of receiving a

higher wage index. The current

thresholds for applying for wage index

reclassification are based on our

previous analysis showing the average

hospital wage as a percentage of its area

wage was 96 percent, and one standard

deviation from that average was equal to

12 percentage points (see the June 4,

1992 proposed rule (57 FR 23635) and

the September 1, 1992 final rule (57 FR

39770)). Because rural hospitals’

financial performance has consistently

remained below that of urban hospitals,

we now believe that rural hospitals

merit special dispensation with respect

to qualifying for reclassification for

purposes of the wage index. Therefore,

we are proposing to change those

average wage threshold percentages so

more rural hospitals can be reclassified.

Specifically, we are proposing to lower

the upper threshold for rural hospitals

to 106 percent and the lower threshold

to 82 percent. The thresholds for urban

hospitals seeking reclassification for

purposes of the wage index would be

unchanged. We would note that rural

hospitals comprised nearly 90 percent

of FY 2000 wage index reclassifications.

Under this proposal, beginning October

1, 2000, rural hospitals would be able to

reclassify for the wage index if, among

other things, their average hourly wages

are at least 106 percent of the area in

which they are physically located, and

at least 82 percent of the average hourly

wages in the proximate area to which it

seeks reclassification.

Although it is difficult to estimate

precisely how many additional

hospitals might qualify by lowering the

thresholds because we do not have data

indicating which hospitals meet all of

the other reclassification criteria (e.g.,

proximity), our analysis indicates that,

if we were to raise the 108 percent

threshold to 109 percent, approximately

20 rural hospitals would no longer

qualify. If the upper threshold were to

be raised to 110 percent, another 16

hospitals would not qualify. On the

other hand, increasing the lower

threshold from 84 percent to 85 percent

would result in only 2 rural hospitals

becoming ineligible to reclassify. Only 1

additional hospital would be affected by

raising the threshold to 86 percent.

Based on this analysis, we anticipate

approximately 50 rural hospitals are

likely to benefit from this proposed

change.

We believe this proposal achieves an

appropriate balance between allowing

certain hospitals that are currently just

below the thresholds to become eligible

for reclassification, while not

liberalizing the criteria so much that an

excessive number of hospitals begin to

reclassify. Because these

reclassifications are budget neutral,

nonreclassified hospitals’ payments are

negatively impacted by reclassification.

We believe there are many factors

associated with lower margins among

rural hospitals. We would note that

section 410 of Public Law 106–113

requires the Comptroller General of the

United States to ‘‘conduct a study of the

current laws and regulations for

geographic reclassification of hospitals

to determine whether such

reclassification is appropriate for

purposes of applying wage indices.’’ In

addition, section 411 of Public Law

106–113 requires MedPAC to conduct a

study on the adequacy and

appropriateness of the special payment

categories and methodologies

established for rural hospitals. We

anticipate that the results of these

studies will help identify other areas to

help improve payments for rural

hospitals, either through

reclassifications or other means.

G. Payment for Direct Costs of Graduate

Medical Education (§ 413.86)

1. Background

Under section 1886(h) of the Act,

Medicare pays hospitals for the direct

costs of graduate medical education

(GME). The payments are based on the

number of residents trained by the

hospital. Section 1886(h) of the Act, as

amended by section 4623 of Public Law

105–33, caps the number of residents

that hospitals may count for direct GME.

Section 9202 of the Consolidated

Omnibus Reconciliation Act (COBRA)

of 1985 (Public Law 99–272) established

a methodology for determining

payments to hospitals for the costs of

approved GME programs at section

1886(h)(2) of the Act. Section 1886(h)(2)

of the Act, as implemented in

regulations at § 413.86(e), sets forth a

payment methodology for the

determination of a hospital-specific,

base-period per resident amount (PRA)

that is calculated by dividing a

hospital’s allowable costs of GME for a

base period by its number of residents

in the base period. The base period is,

for most hospitals, the hospital’s cost

reporting period beginning in FY 1984

(that is, the period of October 1, 1983

through September 30, 1984). The PRA

is multiplied by the number of full-time

equivalent (FTE) residents working in

all areas of the hospital complex (or

non-hospital sites, when applicable),

and the hospital’s Medicare share of

total inpatient days to determine

Medicare’s direct GME payments. In

addition, as specified in section

1886(h)(2)(D)(ii) of the Act, for cost

reporting periods beginning on or after

October 1, 1993, through September 30,

1995, each hospital’s PRA for the

previous cost reporting period is not

adjusted for any FTE residents who are

not either a primary care or an obstetrics

and gynecology resident. As a result,

hospitals with both primary care/

obstetrics and gynecology residents and

non-primary care residents have two

separate PRAs for FY 1994 and,

thereafter, one for primary care and one

for non-primary care. (Thus, for

purposes of this proposed rule, when

we refer to a hospital’s PRA, this

amount is inclusive of any CPI–U

adjustments the hospital may have

received since the hospital’s base-year,

including any CPI-U adjustments the

hospital may have received because the

hospital trains primary care/nonprimary care residents, as specified

under existing § 413.86(e)(3)(ii)).

2. Use of National Average Per Resident

Amount Methodology in Computing

Direct GME Payments

Section 311 of Public Law 106–113

amended section 1886(h)(2) of the Act

to establish a methodology for the use

of a national average PRA in computing

direct GME payments for cost reporting

periods beginning on or after October 1,

2000 and on or before September 30,

2005. Generally, section 311 establishes

a ‘‘floor’’ and a ‘‘ceiling’’ based on a

locality-adjusted, updated, weighted

average PRA. Each hospital’s PRA is

compared to the floor and ceiling to

determine whether its PRA should be

26310 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

revised. Accordingly, we are proposing

to implement section 311 by setting

forth the prescribed methodology for

calculation of the weighted average

PRA. We then discuss the proposed

steps for determining whether a

hospital’s PRA will be adjusted based

upon the proposed calculated weighted

average PRA, in accordance with the

methodology specified under section

311 of Public Law 106–113.

We propose to calculate the weighted

average PRA based upon data from

hospitals’ cost reporting periods ending

during FY 1997 (October 1, 1996

through September 30, 1997), as

directed by section 311 of Public Law

106–113. We accessed these FY 1997

cost reporting data from the Hospital

Cost Report Information System (HCRIS)

and also obtained the necessary data for

those hospitals that are not included in

HCRIS (because they file manual cost

reports), from those hospitals’ fiscal

intermediaries. If a hospital had more

than one cost reporting period ending in

FY 1997, we propose to include all of

its cost reports ending in FY 1997 in our

calculations. However, if a hospital did

not have a cost reporting period ending

in FY 1997, such as a hospital with a

long cost reporting period beginning in

FY 1996 and ending in FY 1998, the

hospital is excluded from our

calculations. One hospital is excluded

from our calculation even though it did

have a cost reporting period ending

during FY 1997 because, at that time, it

was a new teaching hospital with no

established PRA (the first year of

training for a new teaching hospital is

paid for by Medicare on a cost basis; a

PRA is applied in calculating a

hospital’s payment beginning with the

hospital’s second year of residency

training). The total number of hospitals

that we include in our calculation is

1,235. Thirty-five of these hospitals are

hospitals with more than one cost

report.

In accordance with section 311 of

Public Law 106–113, we propose to

calculate the weighted average PRA in

the following manner:

Step 1: We determine each hospital’s

single PRA by adding each hospital’s

primary care and non-primary care

PRAs, weighted by its respective FTEs,

and dividing by the sum of the FTEs for

primary care and non-primary care

residents.

Step 2: We standardize each hospital’s

single PRA by dividing it by the 1999

geographic adjustment factor (GAF)

(which is an average of the three

geographic index values (weighted by

the national average weight for the work

component, practice expense

component, and malpractice

component)) in accordance with section

1848(e) of the Act and 42 CFR 414.26

(which is used to adjust physician

payments for the different wage areas),

for the physician fee schedule area in

which the hospital is located.

Step 3: We add all the standardized

hospital PRAs (as calculated in Step 2),

each weighted by hospitals’ respective

FTEs, and then divide by the total

number of FTEs.

Based upon this three-step

calculation, we have determined the

proposed weighted average PRA (for

cost reporting periods ending during FY

1997) to be $68,487.

For cost reporting periods beginning

on or after October 1, 2000 and on or

before September 30, 2005 (FY 2001

through FY 2005), the national average

PRA is applied using the following three

steps:

Step 1: Update the weighted average

PRA for inflation. Under section

1886(h)(2) of the Act, as amended by

section 311 of Public Law 106–113, the

weighted average PRA is updated by the

estimated percentage increase in the

consumer price index for all urban

consumers (CPI–U) during the period

beginning with the month that

represents the midpoint of the cost

reporting periods ending during FY

1997 and ending with the midpoint of

the hospital’s cost reporting period that

begins in FY 2001. Therefore, the

weighted average standardized PRA

($68,487) would be updated by the

increase in CPI–U for the period

beginning with the midpoint of all cost

reporting periods for hospitals with cost

reporting periods ending during FY

1997 (October 1, 1996), and ending with

the midpoint of the individual hospital’s

cost reporting period that begins during

FY 2001.

For example, Hospital A has a

calendar year cost reporting period.

Thus, for Hospital A, the weighted

average PRA is updated from October 1,

1996 to July 1, 2001, because July 1 is

the midpoint of its cost reporting period

beginning on or after October 1, 2000.

Or, for example, if Hospital B has a cost

reporting period starting October 1, the

weighted average PRA is updated from

October 1, 1996 to April 1, 2001, the

midpoint of the cost reporting period for

Hospital B. Therefore, the starting point

for updating the weighted average PRA

is the same date for all hospitals

(October 1, 1996), but the ending date is

different because it is dependent upon

the cost reporting period for each

hospital.

Step 2: Adjust for locality. In

accordance with section 1886(h)(2) of

the Act, as amended by section 311 of

Public Law 106–113, once the weighted

average PRA is updated according to

each hospital’s cost reporting period,

the updated weighted average PRA (the

national average PRA) would be further

adjusted to calculate a locality-adjusted

national average PRA for each hospital.

This is done by multiplying the updated

national average PRA by the 1999 GAF

(as specified in the October 31, 1997

Federal Register (62 FR 59257)) for the

fee schedule area in which the hospital

is located.

Step 3: Determine possible revisions

to the PRA. For cost reporting periods

beginning on or after October 1, 2000

and on or before September 30, 2005,

the locality-adjusted national average

PRA, as calculated in Step 2, is then

compared to the hospital’s individual

PRA. Based upon the provisions of

section 1886(h)(2) of the Act, as

amended by section 311 of Public Law

106–113, a hospital’s PRA would be

revised, if appropriate, according to the

following:

• Floor—For cost reporting periods

beginning in FY 2001, to determine

which PRAs (primary care and nonprimary care separately) are below the

70 percent floor, a hospital’s localityadjusted national average PRA is

multiplied by 70 percent. This resulting

number is then compared to the

hospital’s PRA that is updated for

inflation to the current cost reporting

period. If the hospital’s PRA would be

less than 70 percent of the localityadjusted national average PRA, the

individual PRA is replaced by 70

percent of the locality-adjusted national

average PRA for that cost reporting

period and would be updated for

inflation in future years by the CPI–U.

We note that there may be some

hospitals with primary care and nonprimary care PRAs where both PRAs are

replaced by 70 percent of the localityadjusted national average PRA. In these

situations, the hospital would receive

identical PRAs; no distinction in PRAs

would be made for differences in

inflation (because a hospital has both

primary care and non-primary care

PRAs, each of which is updated as

described in § 413.86(e)(3)(ii)) as of cost

reporting periods beginning on or after

October 1, 2000.

For example, if the FY 2001 localityadjusted national average PRA for Area

X is $100,000, then 70 percent of that

amount is $70,000. If, in Area X,

Hospital A has a primary care FY 2001

PRA of $69,000 and a non-primary care

FY 2001 PRA of $67,000, both of

Hospital A’s FY 2001 PRAs are replaced

by the $70,000 floor. Thus, $70,000 is

the amount that would be used to

determine Hospital A’s direct GME

payments for both primary care and

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26311

non-primary care FTEs in its cost

reporting period beginning in FY 2001,

and the $70,000 PRA would be updated

for inflation by the CPI–U in subsequent

years.

• Ceiling—For cost reporting periods

beginning on or after October 1, 2000

and on or before September 30, 2005

(FY 2001 through FY 2005), a ceiling

that is equal to 140 percent of each

locality-adjusted national average PRA

would be calculated and compared to

each individual hospital’s PRA. If the

hospital’s PRA is greater than 140

percent of the locality-adjusted national

average PRA, the PRA would be

adjusted depending on the fiscal year as

follows:

a. FY 2001

For cost reporting periods beginning

in FY 2001, each hospital’s PRA from

the preceding cost reporting period (that

is, FY 2000) is compared to the FY 2001

locality-adjusted national average PRA.

If the individual hospital’s FY 2000 PRA

exceeds 140 percent of the FY 2001

locality-adjusted national average PRA,

the PRA is frozen at the FY 2000 PRA,

and is not updated in FY 2001 by the

CPI–U factor, subject to the limitation in

section IV.G.2.d. of this preamble.

For example, if the FY 2001 localityadjusted national average PRA ‘‘ceiling’’

for Area Y is $140,000 (that is, 140

percent of $100,000, the hypothetical

locality-adjusted national average PRA),

and if, in this area, Hospital B has a FY

2000 PRA of $140,001, then for FY

2001, Hospital B’s PRA is frozen at

$140,001 and is not updated by the CPI–

U for FY 2001.

b. FY 2002

For cost reporting periods beginning

in FY 2002, the methodology used to

calculate each hospital’s individual PRA

would be the same as described in

section IV.G.2.a. above for FY 2001.

Each hospital’s PRA from the preceding

cost reporting period (that is, FY 2001)

is compared to the FY 2002 localityadjusted national average PRA. If the

individual hospital’s FY 2001 PRA

exceeds 140 percent of the FY 2002

locality-adjusted national average PRA,

the PRA is frozen at the FY 2001 PRA,

and is not updated in FY 2002 by the

CPI–U factor, subject to the limitation in

section IV.G.2.d. of this preamble.

c. FY 2003, FY 2004, and FY 2005

For cost reporting periods beginning

in FY 2003, FY 2004, and FY 2005, if

the hospital’s PRA for the previous cost

reporting period is greater than 140

percent of the locality-adjusted national

average PRA for that same previous cost

reporting period (for example, for the

cost reporting period beginning in FY

2003, compare the hospital’s PRA from

the FY 2002 cost reporting period to the

locality-adjusted national average PRA

from FY 2002), then, subject to the

limitation in section IV.G.2.d. of this

preamble, the hospital’s PRA is updated

in accordance with section

1886(h)(2)(D)(i) of the Act, except that

the CPI–U applied is reduced (but not

below zero) by 2 percentage points.

For example, for purposes of Hospital

A’s FY 2003 cost report, Hospital A’s

PRA for FY 2002 is compared to

Hospital A’s locality-adjusted national

average PRA ceiling for FY 2002. If, in

FY 2002, Hospital A’s PRA is $100,001

and the FY 2002 locality-adjusted

national average PRA ceiling is

$100,000, then for FY 2003, Hospital A’s

PRA is updated with the FY 2003 CPI–

U minus 2 percent. If, in this scenario,

the CPI–U for FY 2003 is 1.024, Hospital

A would update its PRA in FY 2003 by

1.004 (the CPI–U minus 2 percentage

points). However, if the CPI–U factor for

FY 2003 is 1.01 and subtracting 2

percentage points of 1.01 yields 0.99,

the PRA for FY 2003 would not be

updated, and would remain $100,001.

We note that, while the language in

section 1886(h)(2)(D)(iv)(I) and in

section 1886(h)(2)(D)(iv)(II) of the Act

(the sections that describe the

adjustments to PRAs for hospitals that

exceed 140 percent of the localityadjusted national average PRA) is very

similar, the language does differ.

Section 1886(h)(2)(D)(iv)(I) of the Act

states that for a cost reporting period

beginning during FY 2000 or FY 2001,

‘‘if the approved FTE resident amount

for a hospital for the preceding cost

reporting period exceeds 140 percent of

the locality-adjusted national average

per resident amount * * * for that

hospital and period * * *, the

approved FTE resident amount for the

period involved shall be the same as the

approved FTE resident amount for such

preceding cost reporting period.’’

(Emphasis added.) Section

1886(h)(2)(D)(iv)(II) of the Act states that

for a cost reporting period beginning

during FY 2003, FY 2004, or FY 2005,

‘‘if the approved FTE resident amount

for a hospital for the preceding cost

reporting period exceeds 140 percent of

the locality-adjusted national average

per resident amount * * * for that

hospital and preceding period, the

approved FTE resident amount for the

period involved shall be updated

* * . *.’’ (Emphasis added.)

Accordingly, for FYs 2001 and 2002, a

hospital’s PRA from the previous cost

reporting period is compared to the

locality-adjusted national average PRA

of the current cost reporting period. For

FY 2003, FY 2004, or FY 2005, a

hospital’s PRA from the previous cost

reporting period is compared to the

locality-adjusted national average PRA

from the previous cost reporting period.

d. General Rule for Hospitals That

Exceed the Ceiling

For cost reporting periods beginning

in FY 2001 through FY 2005, if a

hospital’s PRA exceeds 140 percent of

the locality-adjusted national average

PRA and it is adjusted under any of the

above criteria, the current year PRA

cannot be reduced below 140 percent of

the locality-adjusted national average

PRA.

For example, to determine the PRA of

Hospital A, in FY 2003, Hospital A had

a FY 2002 PRA of $100,001 and the FY

2002 locality-adjusted national average

PRA ceiling is $100,000. For FY 2003,

applying an update of the CPI–U factor

minus 2 percentage points (for example,

1.024 ¥ .02 = 1.004 would yield an

updated PRA of $100,401) while the

locality-adjusted national average PRA

(before calculation of the ceiling) is

updated for FY 2003 with the full CPI–

U factor (1.024) so that the ceiling of

$100,000 is now increased to $102,400

(that is, $100,000 × 1.024 = $102,400).

Therefore, applying the adjustment

would result in a PRA of $100,401,

which is under the ceiling of $102,400

for FY 2003. In this situation, for

purposes of the FY 2003 cost report,

Hospital A’s PRA equals $102,400.

We note that if the hospital’s PRA

does not exceed 140 percent of the

locality-adjusted national average PRA,

the PRA is updated by the CPI–U for the

respective fiscal year. If a hospital’s PRA

is updated by the CPI–U because it is

less than 140 percent of the localityadjusted national average PRA for a

respective fiscal year, and once updated,

the PRA exceeds the 140 percent ceiling

for the respective fiscal year, the

updated PRA would still be used to

calculate the hospital’s direct GME

payments. Whether a hospital’s PRA

exceeds the ceiling is determined before

the application of the update factors; if

a hospital’s PRA exceeds the ceiling

only because of the application of the

update factors, the hospital’s PRA

would retain the CPI–U factors.

For example, if, in FY 2001, the

locality-adjusted national average PRA

ceiling for Area Y is $140,000, and if, in

this area, Hospital B has a FY 2000 PRA

of $139,000, then for FY 2001, Hospital

B’s PRA is updated for inflation for FY

2001 because the PRA is below the

ceiling. However, once the update

factors are applied, Hospital B’s PRA is

now $142,000 (that is, above the

$140,000 ceiling). In this scenario,

26312 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Hospital B’s inflated PRA would be

used to calculate its direct GME

payments because Hospital B has only

exceeded the ceiling after the

application of the inflation factors.

• PRAs greater than or equal to the

floor and less than or equal to the

ceiling. For cost reporting periods

beginning in FY 2001 through FY 2005,

if a hospital’s PRA is greater than or

equal to 70 percent and less than or

equal to 140 percent of the localityadjusted national average PRA, the

hospital’s PRA is updated using the

existing methodology specified in

§ 413.86(e)(3)(i).

For cost reporting periods beginning

in FY 2006 and thereafter, a hospital’s

PRA for its preceding cost reporting

period would be updated using the

existing methodology specified in

§ 413.86(e)(3)(i).

We are proposing to redesignate the

existing § 413.86(e)(4) as § 413.86(e)(5)

and add the rules implementing section

1886(h)(2) of the Act, as amended by

section 311 of Public Law 106–113, in

the vacated § 413.86(e)(4). Because we

are proposing to apply the methodology

for updating the PRA for inflation that

is described in existing § 413.86(e)(3),

we also are proposing to amend

§ 413.86(e)(3) to make those rules

applicable to the cost reporting periods

(FY 2001 through FY 2005) specified in

the proposed § 413.86(e)(4), and in

subsequent cost reporting periods.

In addition, we are proposing to make

a conforming change by amending

proposed redesignated § 413.86(e)(5) to

account for situations in which

hospitals do not have a 1984 base period

and establish a PRA in a cost reporting

period beginning on or after October 1,

2000. We believe there are two factors

to consider when a new teaching

hospital establishes its PRA under

proposed redesignated § 413.86(e)(5).

First, for example, when calculating the

weighted mean value of PRAs of

hospitals located in the same geographic

area or the weighted mean of the PRAs

in the hospital’s census region (as

specified in § 412.62(f)(1)(i)), the

hospitals’ PRAs used to calculate the

weighted mean values are subject to the

provisions of proposed § 413.86(e)(4),

the national average PRA methodology.

Second, the resulting PRA established

under proposed redesignated

§ 413.86(e)(5) also would be subject to

the national average PRA methodology

specified in proposed § 413.86(e)(4).

We also are making a clarifying

amendment to the proposed

redesignated § 413.86(e)(5)(i)(B) to

account for an oversight in the

regulations text when we amended our

regulations on August 29, 1997 (62 FR

46004). In the preamble of the August

29, 1997 final rule, in setting forth our

policy on the determination of per

resident amounts for hospitals that did

not have residents in the 1984 GME base

period, we stated that we would use a

‘‘weighted’’ average of the per resident

amounts for hospitals located in the

same geographic area. However, we

inadvertently did not include a specific

reference to ‘‘weighted’’ in the language

of the regulation text. Therefore, we are

proposing to specify that the ‘‘weighted

mean value’’ of per resident amounts of

hospitals located in the same geographic

wage area is used for determining the

base period for certain hospitals for cost

reporting periods beginning in the same

fiscal years.

H. Outliers: Miscellaneous Change

Under the provisions of section

1886(d)(5)(A)(i) of the Act, the Secretary

does not pay for day outliers for

discharges from hospitals paid under

the prospective payment systems that

occur after September 30, 1997. We are

proposing to make a conforming change

to § 412.2(a) by deleting the reference to

an additional payment for both

inpatient operating and inpatient

capital-related costs for cases that have

an atypically long length of stay.

V. The Prospective Payment System for

Capital-Related Costs: The Last Year of

the Transition Period

Since FY 2001 is the last year of the

10-year transition period established to

phase in the prospective payment

system for hospital capital-related costs,

for the readers’ benefit, we are providing

a summary of the statutory basis for the

system, the development and evolution

of the system, the methodology used to

determine capital-related payments to

hospitals, and the policy for providing

exceptions payments during the

transition period.

Section 1886(g) of the Act requires the

Secretary to pay for the capital-related

costs of inpatient hospital services ‘‘in

accordance with a prospective payment

system established by the Secretary.’’

Under the statute, the Secretary has

broad authority in establishing and

implementing the capital prospective

payment system. We initially

implemented the capital prospective

payment system in the August 30, 1991

final rule (56 FR 43409), in which we

established a 10-year transition period

to change the payment methodology for

Medicare inpatient capital-related costs

from a reasonable cost-based

methodology to a prospective

methodology (based fully on the Federal

rate).

The 10-year transition period

established to phase in the prospective

payment system for capital-related costs

is effective for discharges occurring on

or after October 1, 1991 (FY 1992)

through discharges occurring on or

before September 30, 2001. For FY 2001,

hospitals paid under the fully

prospective transition period

methodology will be paid 100 percent of

the Federal rate and zero percent of

their hospital-specific rate, while

hospitals paid under the hold-harmless

transition period methodology will be

paid 85 percent of their allowable old

capital costs (100 percent for sole

community hospitals) plus a payment

for new capital costs based on the

Federal rate. Fiscal year 2001 is the final

year of the capital transition period and,

therefore, the last fiscal year for which

a portion of a hold-harmless hospital’s

capital costs per discharge will be paid

on a cost basis (except for new

hospitals). Also, since fully prospective

hospitals will be paid based on 100

percent of the Federal rate and zero

percent of their hospital-specific rate,

we will not determine a hospitalspecific rate update for FY 2001 in

section IV of the Addendum of this

proposed rule. Beginning with

discharges occurring on or after October

1, 2001 (FY 2002), payment for capitalrelated costs will be determined based

solely on the capital standard Federal

rate. Hospitals that were defined as

‘‘Anew’’ for the purposes of capital

payments during the transition period

(§ 412.30(b)) will continue to be paid

according to the applicable payment

methodology outlined in § 412.324.

Generally, during the transition

period, inpatient capital-related costs

are paid on a per discharge basis, and

the amount of payment depends on the

relationship between the hospitalspecific rate and the Federal rate during

the hospital’s base year. A hospital with

a base year hospital-specific rate lower

than the Federal rate is paid under the

fully prospective payment methodology

during the transition period. This

method is based on a dynamic blend

percentage of the hospital’s hospitalspecific rate and the applicable Federal

rate for each year during the transition

period. A hospital with a base period

hospital-specific rate greater than the

Federal rate is paid under the holdharmless payment methodology during

the transition period. A hospital paid

under the hold-harmless payment

methodology receives the higher of (1)

a blended payment of 85 percent of

reasonable cost for old capital plus an

amount for new capital based on a

portion of the Federal rate or (2) a

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26313

payment based on 100 percent of the

adjusted Federal rate. The amount

recognized as old capital is generally

limited to the allowable Medicare

capital-related costs that were in use for

patient care as of December 31, 1990.

Under limited circumstances, capitalrelated costs for assets obligated as of

December 31, 1990, but put in use for

patient care after December 31, 1990,

also may be recognized as old capital if

certain conditions are met. These costs

are known as obligated capital costs.

New capital costs are generally defined

as allowable Medicare capital-related

costs for assets put in use for patient

care after December 31, 1990. Beginning

in FY 2001, at the conclusion of the

transition period for the capital

prospective payment system, capital

payments will be based solely on the

Federal rate for the vast majority of

hospitals.

During the transition period, new

hospitals are exempt from the

prospective payment system for capitalrelated costs for their first 2 years of

operation and are paid 85 percent of

their reasonable cost during that period.

The hospital’s first 12-month cost

reporting period (or combination of cost

reporting periods covering at least 12

months) beginning at least 1 year after

the hospital accepts its first patient

serves as the hospital’s base period.

Those base year costs qualify as old

capital and are used to establish its

hospital-specific rate used to determine

its payment methodology under the

capital prospective payment system.

Effective with the third year of

operation, the hospital is paid under

either the fully prospective

methodology or the hold-harmless

methodology. If the fully prospective

methodology is applicable, the hospital

is paid using the appropriate transition

blend of its hospital-specific rate and

the Federal rate for that fiscal year until

the conclusion of the transition period,

at which time the hospital will be paid

based on 100 percent of the Federal rate.

If the hold-harmless methodology is

applicable, the hospital will receive

hold-harmless payment for assets in use

during the base period for 8 years,

which may extend beyond the transition

period.

The basic methodology for

determining capital prospective

payments based on the Federal rate is

set forth in § 412.312. For the purpose

of calculating payments for each

discharge, the standard Federal rate is

adjusted as follows:

(Standard Federal Rate) × (DRG Weight)

× (GAF) × (Large Urban Add-on, if

applicable) x (COLA Adjustment for

Hospitals Located in Alaska and

Hawaii) × (1 + DSH Adjustment

Factor + IME Adjustment Factor).

Hospitals may also receive outlier

payments for those cases that qualify

under the thresholds established for

each fiscal year. Section 412.312(c)

provides for a single set of thresholds to

identify outlier cases for both inpatient

operating and inpatient capital-related

payments.

During the capital prospective

payment system transition period, a

hospital may also receive an additional

payment under an exceptions process if

its total inpatient capital-related

payments are less than a minimum

percentage of its allowable Medicare

inpatient capital-related costs for

qualifying classes of hospitals. For up to

10 years after the conclusion of the

transition period, a hospital may also

receive an additional payment under a

special exceptions process if certain

qualifying criteria are met and its total

inpatient capital-related payments are

less than the 70 percent minimum

percentage of its allowable Medicare

inpatient capital-related costs.

In accordance with section

1886(d)(9)(A) of the Act, under the

prospective payment system for

inpatient operating costs, hospitals

located in Puerto Rico are paid for

operating costs under a special payment

formula. Prior to FY 1998, hospitals in

Puerto Rico were paid a blended rate

that consisted of 75 percent of the

applicable standardized amount specific

to Puerto Rico hospitals and 25 percent

of the applicable national average

standardized amount. However,

effective October 1, 1997, under

amendments to the Act enacted by

section 4406 of Public Law 105–33,

operating payments to hospitals in

Puerto Rico are based on a blend of 50

percent of the applicable standardized

amount specific to Puerto Rico hospitals

and 50 percent of the applicable

national average standardized amount.

In conjunction with this change to the

operating blend percentage, effective

with discharges on or after October 1,

1997, we compute capital payments to

hospitals in Puerto Rico based on a

blend of 50 percent of the Puerto Rico

rate and 50 percent of the Federal rate.

Section 412.374 provides for the use of

this blended payment system for

payments to Puerto Rico hospitals under

the prospective payment system for

inpatient capital-related costs.

Accordingly, for capital-related costs,

we compute a separate payment rate

specific to Puerto Rico hospitals using

the same methodology used to compute

the national Federal rate for capitalrelated costs.

In the August 30, 1991 final rule, we

established a capital exceptions policy,

which provides for exceptions payments

during the transition period (§ 412.348).

Section 412.348 provides that, during

the transition period, a hospital may

receive additional payment under an

exceptions process when its regular

payments are less than a minimum

percentage, established by class of

hospital, of the hospital’s reasonable

capital-related costs. The amount of the

exceptions payment is the difference

between the hospital’s minimum

payment level and the payments the

hospital would receive under the capital

prospective payment system in the

absence of an exceptions payment. The

comparison is made on a cumulative

basis for all cost reporting periods

during which the hospital is subject to

the capital prospective payment

transition rules. The minimum payment

percentages for regular capital

exceptions payments by class of

hospitals for FY 2001 are:

• For sole community hospitals, 90

percent;

• For urban hospitals with at least

100 beds that have a disproportionate

share patient percentage of at least 20.2

percent or that received more than 30

percent of their net inpatient care

revenues from State or local

governments for indigent care, 80

percent;

• For all other hospitals, 70 percent of

the hospital’s reasonable inpatient

capital-related costs.

The provision for regular exceptions

payments will expire at the end of the

transition period. Payments will no

longer be adjusted to reflect regular

exceptions payments at § 412.348.

Accordingly, for cost reporting periods

beginning on or after October 1, 2001,

hospitals will receive only the per

discharge payment based on the Federal

rate for capital costs (plus any

applicable DSH or IME and outlier

adjustments) unless a hospital qualifies

for a special exceptions payment under

§ 412.348(g).

Under the special exceptions

provision at § 412.348(g), an additional

payment may be made for up to 10 years

beyond the end of the capital

prospective payment system transition

period for eligible hospitals. The capital

special exceptions process is budget

neutral; that is, even after the end of the

capital prospective payment system

transition, we will continue to make an

adjustment to the capital Federal rate in

a budget neutral manner to pay for

exceptions, as long as an exceptions

policy is in force. Currently, the limited

26314 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

special exceptions policy will allow for

exceptions payments for 10 years

beyond the conclusion of the 10-year

capital transition period or through

September 30, 2011.

VI. Proposed Changes for Hospitals and

Hospital Units Excluded From the

Prospective Payment System

A. Limits on and Adjustments to the

Target Amounts for Excluded Hospitals

and Units (§ 413.40(b)(4) and (g))

1. Updated Caps

Section 1886(b)(3) of the Act (as

amended by section 4414 of Public Law

105–33) establishes caps on the target

amounts for certain existing excluded

hospitals and units for cost reporting

periods beginning on or after October 1,

1997 through September 30, 2002. The

caps on the target amounts apply to the

following three classes of excluded

hospitals: Psychiatric hospitals and

units, rehabilitation hospitals and units,

and long-term care hospitals.

A discussion of how the caps on the

target amounts were calculated can be

found in the August 29, 1997 final rule

with comment period (62 FR 46018); the

May 12, 1998 final rule (63 FR 26344);

the July 31, 1998 final rule (63 FR

41000), and the July 30, 1999 final rule

(64 FR 41529). For purposes of

calculating the caps on existing

facilities, the statute required us to

calculate the national 75th percentile of

the target amounts for each class of

hospital (psychiatric, rehabilitation, or

long-term care) for cost reporting

periods ending during FY 1996. Under

section 1886(b)(3)(H)(iii) of the Act, the

resulting amounts are updated by the

market basket percentage to the

applicable fiscal year. However, section

121 of Public Law 106–113 amended

section 1886(b)(3)(H) of the Act to

provide for an appropriate wage

adjustment to the caps on the target

amounts for psychiatric hospitals and

units, rehabilitation hospitals and units,

and long-term care hospitals, effective

for cost reporting periods beginning on

or after October 1, 1999, through

September 30, 2002. We intend to

publish an interim final rule with

comment period implementing this

provision for cost reporting periods

beginning on or after October 1, 1999

and before October 1, 2000. This

proposed rule addresses the wage

adjustment to the caps for cost reporting

periods beginning on or after October 1,

2000.

For purposes of calculating the caps,

section 1886(b)(3)(H)(ii) of the Act

requires the Secretary to first ‘‘estimate

the 75th percentile of the target amounts

for such hospitals within such class for

cost reporting periods ending during

fiscal year 1996.’’ Furthermore, section

1886(b)(3)(H)(iii), as added by Public

Law 106–113, requires the Secretary to

provide for ‘‘an appropriate adjustment

to the labor-related portion of the

amount determined under such

subparagraph to take into account the

differences between average wagerelated costs in the area of the hospital

and the national average of such costs

within the same class of hospital.’’

Consistent with the broad authority

conferred on the Secretary by section

1886(b)(3)(H)(iii) of the Act to determine

the appropriate wage adjustment, we

propose to account for differences in

wage-related costs by adjusting the caps

to account for the following:

First, we would adjust each hospital’s

target amount to account for area

differences in wage-related costs. For

each class of hospitals (psychiatric,

rehabilitation, and long-term care), we

would determine the labor-related

portion of each hospital’s FY 1996 target

amount by multiplying its target amount

by the actuarial estimate of the laborrelated portion of costs (or 0.71553).

Similarly, we would determine the

nonlabor-related portion of each

hospital’s FY 1996 target amount by

multiplying its target amount by the

actuarial estimate of the nonlaborrelated portion of costs (or 0.28447).

Next, we would account for wage

differences among hospitals within each

class by dividing the labor-related

portion of each hospital’s target amount

by the hospital’s FY 1998 hospital wage

index under the hospital inpatient

prospective payment system (see

§ 412.63), as shown in Tables 4A and 4B

of the August 29, 1997 final rule (62 FR

46070). Within each class, each

hospital’s wage-adjusted target amount

would be calculated by adding the

wage-adjusted labor-related portion of

its target amount and the nonlaborrelated portion of its target amount.

Then, the wage-adjusted target amounts

for hospitals within each class would be

arrayed in order to determine the

national 75th percentile caps on the

target amounts for each class.

This adjustment methodology for the

national 75th percentile of the target

amounts is identical to the methodology

we utilized for the wage index

adjustment described in the August 29,

1997 final rule (62 FR 46020) to

calculate the wage-adjusted 110 percent

of the national median target amounts

for new excluded hospitals and units.

Again, we recognize that wages may

differ for prospective payment hospitals

and excluded hospitals, but we believe

that the wage data reflect area

differences in wage-related costs.

Moreover, in light of the short

timeframe for implementing this

provision, we would use the wage data

for acute hospitals since they are the

most feasible data source.

In the July 30, 1999 final rule (64 FR

41529), we established the FY 2000 caps

on the target amounts as follows:

• Psychiatric hospitals and units:

$11,110.

• Rehabilitation hospitals and units:

$20,129.

• Long-term care hospitals: $39,712.

Therefore, based on these previously

calculated caps on the target amounts

and consistent with the broad authority

conferred on the Secretary by section

1886(b)(3)(H)(iii) of the Act to determine

the appropriate wage adjustment to the

caps, we have determined the laborrelated and nonlabor-related portions of

the proposed caps on the target amounts

for FY 2001 using the methodology

outlined above.

Class of excluded hospital

or unit

Laborrelated

share

Nonlaborrelated

share

Psychiatric ........ $8,106 $3,223

Rehabilitation .... 15,108 6,007

Long-Term Care 29,312 11,654

These labor-related and nonlaborrelated portions of the proposed caps on

the target amounts for FY 2001 are

based on the current estimate of the

market basket increase for excluded

hospitals and units for FY 2001 of 3.1

percent.

In the interim final rule with

comment period that we plan to

publish, we will revise §§ 413.40(c)(4)(i)

and (c)(4)(ii) to incorporate the changes

in the formula used to determine the

limitation on the target amounts for

excluded hospitals and units, as

provided for by section 121 of Public

Law 106–113.

Finally, to determine payments

described in § 413.40(c), the cap on the

hospital’s target amount per discharge is

determined by adding the hospital’s

nonlabor-related portion of the national

75th percentile cap to its wage-adjusted,

labor-related portion of the national

75th percentile cap. A hospital’s wageadjusted, labor-related portion of the

target amount is calculated by

multiplying the labor-related portion of

the national 75th percentile cap for the

hospital’s class by the hospital’s

applicable wage index. For FY 2001, a

hospital’s applicable wage index is the

wage index under the hospital inpatient

prospective payment system (see

§ 412.63), for cost reporting periods

beginning on or after October 1, 2000

and ending on or before September 30,

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26315

2001 as shown in Tables 4A and 4B of

this proposed rule. A hospital’s

applicable wage index corresponds to

the area in which the hospital or unit is

physically located (MSA or rural area)

and is not subject to prospective

payment system hospital reclassification

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

2. Updated Caps for New Excluded

Hospitals and Units (§ 413.40(f))

Section 1886(b)(7) of the Act

establishes a payment methodology for

new psychiatric hospitals and units,

rehabilitation hospitals and units, and

long-term care hospitals. Under the

statutory methodology, for a hospital

that is within a class of hospitals

specified in the statute and that first

receives payments as a hospital or unit

excluded from the prospective payment

system on or after October 1, 1997, the

amount of payment will be determined

as follows: For the first two 12-month

cost reporting periods, the amount of

payment is the lesser of (1) the operating

costs per case; or (2) 110 percent of the

national median of target amounts for

the same class of hospitals for cost

reporting periods ending during FY

1996, updated to the first cost reporting

period in which the hospital receives

payments and adjusted for differences

in area wage levels.

The proposed amounts included in

the following table reflect the updated

110 percent of the wage neutral national

median target amounts for each class of

excluded hospitals and units for cost

reporting periods beginning during FY

2001. These figures are updated to

reflect the projected market basket

increase of 3.1 percent. For a new

provider, the labor-related share of the

target amount is multiplied by the

appropriate geographic area wage index

and added to the nonlabor-related share

in order to determine the per case limit

on payment under the statutory

payment methodology for new

providers.

Class of excluded hospital

or unit

Laborrelated

share

Nonlaborrelated

share

Psychiatric ........ $6,592 $2,623

Rehabilitation .... 12,964 5,154

Long-Term Care 16,708 6,643

3. Development of Prospective Payment

System for Inpatient Rehabilitation

Hospitals and Units

Section 4421 of Public Law 105–33

added section 1886(j) to the Act. Section

1886(j) of the Act mandates the phasein of a case-mix adjusted prospective

payment system for inpatient

rehabilitation services (freestanding

hospitals and units) for cost reporting

periods beginning on or after October 1,

2000 and before October 1, 2002. The

prospective payment system will be

fully implemented for cost reporting

periods beginning on or after October 1,

2002. Section 1886(j) was amended by

section 125 of Public Law 106–113 to

require the Secretary to use the

discharge as the payment unit under the

prospective payment system for

inpatient rehabilitation services and to

establish classes of patient discharges by

functional-related groups.

We will issue a separate notice of

proposed rulemaking in the Federal

Register on the prospective payment

system for inpatient rehabilitation

facilities. That document will discuss

the requirements in section

1886(j)(1)(A)(i) of the Act for a transition

phase covering the first two cost

reporting periods under the prospective

payment system. During this transition

phase, inpatient rehabilitation facilities

will receive a payment rate comprised

of a blend of the facility specific rate

(the TEFRA percentage) based on the

amount that would have been paid

under Part A with respect to these costs

if the prospective payment system

would not be implemented and the

inpatient rehabilitation facility

prospective payment rate (prospective

payment percentage). As set forth in

sections 1886(j)(1)(C)(i) and (ii) of the

Act, the TEFRA percentage for a cost

reporting period beginning on or after

October 1, 2000, and before October 1,

2001, is 662⁄3 percent; the prospective

payment percentage is 331⁄3 percent. For

cost reporting periods beginning on or

after October 1, 2001 and before October

1, 2002, the TEFRA percentage is 331⁄3

percent and the prospective payment

percentage is 662⁄3 percent.

As provided in section 1886(j)(3)(A)

of the Act, the prospective payment

rates will be based on the average

inpatient operating and capital costs of

rehabilitation facilities and units.

Payments will be adjusted for case-mix

using patient classification groups, area

wages, inflation, outlier status and any

other factors the Secretary determines

necessary. We will propose to set

prospective payment amounts in effect

during FY 2001 so that total payments

under the system are projected to equal

98 percent of the amount of payments

that would have been made under the

current payment system. Outlier

payments in a fiscal year may not be

projected or estimated to exceed 5

percent of the total payments based on

the rates for that fiscal year.

4. Continuous Improvement Bonus

Payment

Under § 413.40(d)(4), for cost

reporting periods beginning on or after

October 1, 1997, an ‘‘eligible’’ hospital

may receive continuous improvement

bonus payments in addition to its

payment for inpatient operating costs

plus a percentage of the hospital’s rateof-increase ceiling (as specified in

§ 413.40(d)(2)). An eligible hospital is a

hospital that has been a provider

excluded from the prospective payment

system for at least three full cost

reporting periods prior to the applicable

period and the hospital’s operating costs

per discharge for the applicable period

are below the lowest of its target

amount, trended costs, or expected costs

for the applicable period. Prior to

enactment of Public Law 106–113, the

amount of the continuous improvement

bonus payment was equal to the lesser

of—

(a) 50 percent of the amount by which

operating costs were less than the

expected costs for the period; or

(b) 1 percent of the ceiling.

Section 122 of Public Law 106–113

amended section 1886(b)(2) of the Act to

provide, for cost reporting periods

beginning on or after October 1, 2000,

and before September 30, 2001, for an

increase in the continuous improvement

bonus payment for long-term care and

psychiatric hospitals and units. Under

section 1886(b)(2) of the Act, as

amended, a hospital that is within one

of these two classes of hospitals

(psychiatric hospitals or units and longterm-care hospitals) will receive the

lesser of 50 percent of the amount by

which the operating costs are less than

the expected costs for the period, or the

increased percentages mandated by

statute as follows:

(a) For a cost reporting period

beginning on or after October 1, 2000

and before September 30, 2001, 1.5

percent of the ceiling; and

(b) For a cost reporting period

beginning on or after October 1, 2001,

and before September 30, 2002, 2

percent of the ceiling.

We are proposing to revise

§ 413.40(d)(4) to incorporate this

provision of the statute.

B. Responsibility for Care of Patients in

Hospitals-Within-Hospitals

(§ 413.40(a)(3))

Effective October 1, 1999, for

hospitals-within-hospitals, we

implemented a policy that allows for a

5-percent threshold for cases in which

a patient discharged from an excluded

hospital-within-a-hospital and admitted

to the host hospital was subsequently

26316 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

readmitted to the excluded hospitalwithin-a-hospital. With respect to these

cases, if the excluded hospital exceeds

the 5-percent threshold, we do not

include any previous discharges to the

prospective payment hospital in

calculating the excluded hospital’s cost

per discharge. That is, the entire stay is

considered one Medicare ‘‘discharge’’

for purposes of payments to the

excluded hospital. The effect of this

rule, as explained more fully in the May

7, 1999 proposed rule (64 FR 24716) and

in the July 30, 1999 final rule (64 FR

41490), is to prevent inappropriate

Medicare payment to hospitals having a

large number of such stays.

In the existing regulations at

§ 413.40(a)(3), we state that the 5-

percent threshold is determined based

on the total number of discharges from

the hospital-within-a-hospital. We have

received questions as to whether, in

determining whether the threshold is

met, we consider Medicare patients only

or all patients (Medicare and nonMedicare). To avoid any further

misunderstanding, we are clarifying the

definition of ‘‘ceiling’’ in § 413.40(a)(3)

by specifying that the 5-percent

threshold is based on the Medicare

inpatients discharged from the hospitalwithin-a-hospital in a particular cost

reporting period, not on total Medicare

and non-Medicare inpatient discharges.

C. Critical Access Hospitals (CAHs)

1. Election of Payment Method

(§ 413.70)

Section 1834(g) of the Act, as in effect

before enactment of Public Law 106–

113, provided that the amount of

payment for outpatient CAH services is

the reasonable costs of the CAH in

providing such services. However, the

reasonable costs of the CAH’s services to

outpatients included only the CAH’s

costs of providing facility services, and

did not include any payment for

professional services. Physicians and

other practitioners who furnished

professional services to CAH outpatients

billed the Part B carrier for these

services and were paid under the

physician fee schedule in accordance

with the provisions of section 1848 of

the Act.

Section 403(d) of Public Law 106–113

amended section 1834(g) of the Act to

permit the CAH to elect to be paid for

its outpatient services under another

option. CAHs making this election

would be paid amounts equal to the

sum of the following, less the amount

that the hospital may charge as

described in section 1866(a)(2)(A) of the

Act (that is, Part A and Part B

deductibles and coinsurance):

(1) For facility services, not including

any services for which payment may be

made as outpatient professional

services, the reasonable costs of the

CAH in providing the services; and

(2) For professional services otherwise

included within outpatient CAH

services, the amounts that would

otherwise be paid under Medicare if the

services were not included in outpatient

CAH services.

Section 403(d) of Public Law 106–113

added section 1834(g)(3) to the Act to

further specify that payment amounts

under this election are be determined

without regard to the amount of the

customary or other charge.

The amendment made by section

403(d) is effective for cost reporting

periods beginning on or after October 1,

2000.

We are proposing to revise § 413.70 to

incorporate the provisions of section

403(d) of Public Law 106–113. The

existing § 413.70 specifies a single set of

reasonable cost basis payment rules

applicable to both inpatient and

outpatient services furnished by CAHs.

As section 403(d) of Public Law 106–

113 provides that CAHs may elect to be

paid on a reasonable cost basis for

facility services and on a fee schedule

basis for professional services, we are

proposing to revise the section to allow

for separate payment rules for CAH

inpatient and outpatient services.

We are proposing to place the

provisions of existing § 413.70(a) and (b)

that relate to payment on a reasonable

cost basis for inpatient services

furnished by a CAH under proposed

§ 413.70(a). Proposed § 413.70(a)(2)

would also state that payment to a CAH

for inpatient services does not include

professional services to CAH inpatients

and is subject to the Part A hospital

deductible and coinsurance determined

under 42 CFR part 409, Subpart G.

We are proposing to include under

§ 413.70(b) the payment rules for

outpatient services furnished by CAHs,

including the option for CAHs to elect

to be paid on the basis of reasonable

costs for facility services and on the

basis of the physician fee schedule for

professional services. Under proposed

§ 413.70(b)(2), we would retain the

existing provision that unless the CAH

elects the option provided for under

section 403 of Public Law 106–113,

payment for outpatient CAH services is

on a reasonable cost basis, as

determined in accordance with section

1861(v)(1)(A) of the Act and the

applicable principles of cost

reimbursement in Parts 413 and 415

(except for certain payment principles

that do not apply; that is, the lesser of

costs or charges, RCE limits, any type of

reduction to operating or capital costs

under § 413.124 or § 413.130(j)(7), and

blended payment amounts for

ambulatory surgical center services,

radiology services, and other diagnostic

services.

Under proposed § 413.70(b)(3), we

would specify that any CAH that elects

to be paid under the optional method

must make an annual request in writing,

and deliver the request for the election

to the fiscal intermediary at least 60

days before the start of the affected cost

reporting period. In addition, proposed

§ 413.70(b)(3) states that if a CAH elects

payment under this method, payment to

the CAH for each outpatient visit will be

the sum of the following two amounts:

• For facility services, not including

any outpatient professional services for

which payment may be made on a fee

schedule basis, the amount would be

the reasonable costs of the services as

determined in accordance with

applicable principles of cost

reimbursement in 42 CFR Parts 413 and

415, except for certain payment

principles that would not apply as

specified above; and

• For professional services, otherwise

payable to the physician or other

practitioner on a fee schedule basis, the

amounts would be those amounts that

would otherwise be paid for the services

if the CAH had not elected payment

under this method.

We would also specify that payment

to a CAH for outpatient services would

be subject to the Part B deductible and

coinsurance amounts, as determined

under §§ 410.152, 410.160, and 410.161.

Final payment to the CAH for its facility

services to inpatients and outpatients

furnished during a cost reporting would

be based on a cost report for that period,

as required under § 413.20(b).

2. Condition of Participation: Organ,

Tissue, and Eye Procurement (§ 485.643)

Sections 1820(c)(2)(B) and 1861(mm)

of the Act set forth the criteria for

designating a CAH. Under this

authority, the Secretary has established

in regulations the minimum

requirements a CAH must meet to

participate in Medicare (42 CFR part

485, Subpart F).

Section 1905(a) of the Act provides

that Medicaid payments may be made

for any other medical care, and any

other type of remedial care recognized

under State law, specified by the

Secretary. The Secretary has specified

CAH services as Medicaid services in

regulations, specifically, the regulations

at 42 CFR 440.170(g)(1)(i), and defined

CAH services under Medicaid as those

services furnished by a provider

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26317

meeting the Medicare conditions of

participation (CoP).

Section 1138 of the Act provides that

a CAH participating in Medicare must

establish written protocols to identify

potential organ donors that: (1) Assures

that potential donors and their families

are made aware of the full range of

options for organ or tissue donation as

well as their rights to decline donation;

(2) encourage discretion and sensitivity

with respect to the circumstances,

views, and beliefs of those families; and

(3) require that an organ procurement

agency designated by the Secretary be

notified of potential organ donors.

On June 22, 1998, as part of the

Medicare hospital conditions of

participation under Part 482, subpart C,

we added to the regulations at § 482.45,

a condition that specifically addressed

organ, tissue, and eye procurement.

However, Part 482 does not apply to

CAHs, as CAHs are a distinct type of

provider with separate CoP under Part

485. Therefore, we are proposing to add

a CoP for organ, tissue, and eye

procurement for CAHs at a new

§ 485.643 that generally parallels the

CoP at § 482.45 for all Medicare

hospitals with respect to the statutory

requirement in section 1138 of the Act

concerning organ donation. CAHs are

not full service hospitals and therefore

are not equipped to perform organ

transplantations. Therefore, we are not

including the standard applicable to

Medicare hospitals that CAHs must be

a member of the Organ Procurement and

Transplantation Network (OPTN), abide

by its rules and provide organ

transplant-related data to the OPTN, the

Scientific Registry, organ procurement

agencies, or directly to the Department

on request of the Secretary.

The proposed CoP for CAHs includes

several requirements designed to

increase organ donation. One of these

requirements is that a CAH must have

an agreement with the Organ

Procurement Organization (OPO)

designated by the Secretary, under

which the CAH will contact the OPO in

a timely manner about individuals who

die or whose death is imminent. The

OPO will then determine the

individual’s medical suitability for

donation. In addition, the CAH must

have an agreement with at least one

tissue bank and at least one eye bank to

cooperate in the retrieval, processing,

preservation, storage, and distribution of

tissues and eyes, as long as the

agreement does not interfere with organ

donation. The proposed CoP would

require a CAH to ensure, in

collaboration with the OPO with which

it has an agreement, that the family of

every potential donor is informed of its

option to either donate or not donate

organs, tissues, or eyes. The CAH may

choose to have OPO staff perform this

function, have CAH and OPO staff

jointly perform this function, or rely

exclusively on CAH staff. Research

indicates that consent to organ donation

is highest when the formal request is

made by OPO staff or by OPO staff and

hospital staff together. While we require

collaboration, we also recognize that

CAH staff may wish to perform this

function and may do so when properly

trained. Moreover, the CoP would

require the CAH to ensure that CAH

employees who initiate a request for

donation to the family of a potential

donor have been trained as designated

requestors.

Finally, the CoP would require the

CAH to work with the OPO and at least

one tissue bank and one eye bank in

educating staff on donation issues,

reviewing death records to improve

identification of potential donors, and

maintaining potential donors while

necessary testing and placement of

organs and tissues is underway.

We are sensitive to the possible

burden this proposed CoP may place on

CAHs. Therefore, we are particularly

interested in comments and information

concerning the following requirements:

(1) Developing written protocols for

donations; (2) developing agreements

with OPOs, tissue banks, and eye banks;

(3) referring all deaths to the OPO; (4)

working cooperatively with the

designated OPO, tissue bank, and eye

bank in educating staff on donation

issues, reviewing death records, and

maintaining potential donors. We note

that the proposed requirement allow

some degree of flexibility for the CAH.

For example, the CAH would have the

option of using an OPO-approved

education program to train its own

employees as routine requestors or

deferring requesting services to the

OPO, the tissue bank, or the eye bank

to provide requestors.

VII. MedPAC Recommendations

We have reviewed the March 1, 2000

report submitted by MedPAC to

Congress and have given it careful

consideration in conjunction with the

proposals set forth in this document.

MedPAC’s recommendations and our

responses are set forth below.

We note that MedPAC’s March 1,

2000 report did not contain a

recommendation concerning the update

factors for inpatient hospital operating

costs under the prospective payment

system or for hospitals and hospital

units excluded from the prospective

payment system. However, at its April

13, 2000 public meeting, MedPAC

announced that it was recommending a

combined update of between 3.5 percent

and 4.0 percent for operating and

capital-related payments for FY 2001.

This recommendation is higher than the

current law amount as prescribed by

Public Law 105–33 and proposed in this

rule. Because of the timing of MedPAC’s

announcement in relation to the

publication of this proposed rule, we

intend to respond to MedPAC’s

recommendation in the FY 2001 final

rule to be issued in August 2000 when

we will have had the opportunity to

review the data analyses that

substantiate MedPAC’s

recommendation.

A. Combined Operating and Capital

Prospective Payment Systems

(Recommendation 3J)

Recommendation: The Congress

should combine prospective payment

system operating and capital payment

rates to create a single prospective rate

for hospital inpatient care. This change

would require a single set of payment

adjustments—in particular, for indirect

medical education and disproportionate

share hospital payments—and a single

payment update.

Response: We responded to a similar

comment in the July 30, 1999 final rule

(64 FR 41552), the July 31, 1998 final

rule (63 FR 41013), and the September

1, 1995 final rule (60 FR 45816). In

those rules, we stated that our long-term

goal was to develop a single update

framework for operating and capital

prospective payments and that we

would begin development of a unified

framework. However, we have not yet

developed such a single framework as

the actual operating system update has

been determined by Congress through

FY 2002. In the meantime, we intend to

maintain as much consistency as

possible with the current operating

framework in order to facilitate the

eventual development of a unified

framework. We maintain our goal of

combining the update frameworks at the

end of the 10-year capital transition

period (the end of FY 2001) and may

examine combining the payment

systems post-transition. Because of the

similarity of the update frameworks, we

believe that they could be combined

with little difficulty.

In the discussion of its

recommendation, MedPAC notes that it

‘‘is examining broad reforms to the

prospective payment system, including

DRG refinement and modifications of

the graduate medical education

payment and the IME and DSH

adjustments. The Commission believes

that a combined hospital prospective

payment rate should be established

26318 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

whether or not broader reforms are

undertaken. However, if the Congress

acts on any or all of the Commission’s

recommendations, it should consider

combining operating and capital

payments as part of a larger package.’’

We agree that ultimately the operating

and capital prospective payment

systems should be combined into a

single system. However, we believe that,

because of MedPAC’s ongoing analysis

and the Administration’s pending DSH

report to Congress, any such unification

should occur within the context of other

system refinements.

B. Continuing Postacute Transfer

Payment Policy (Recommendation 3K)

Recommendation: The Commission

recommends continuing the existing

policy of adjusting per case payments

through an expanded transfer policy

when a short length of stay results from

a portion of the patient’s care being

provided in another setting.

Response: As noted in section IV.A. of

this preamble, we have undertaken

(through a contract with HER) an

analysis of the impact on hospitals and

hospital payments of the postacute

transfer provision. That analysis (based

on preliminary data covering only

approximately 6 months of discharge

data) showed a minimal impact on the

rate of short-stay postacute transfers

after implementation of the policy.

However, average profit margins as

measured by HER declined from $2,454

prior to implementation of the policy to

$1,180 after implementation. We believe

these preliminary findings demonstrate

that the postacute transfer provision has

had only marginal impact on existing

practice patterns while more closely

aligning the payments to hospitals for

these cases with the costs incurred.

Therefore, we agree with MedPAC’s

recommendation that the policy should

be continued.

C. Disproportionate Share Hospitals

(DSH) (Recommendations 3L and 3M)

Recommendation: To address

longstanding problems and current legal

and regulatory developments, Congress

should reform the disproportionate

share adjustment to: include the costs of

all poor patients in calculating lowincome shares used to distribute

disproportionate share payments, and

use the same formula to distribute

payments to all hospitals covered by

prospective payment.

Response: As we noted in section

IV.E. of this preamble, Public Law 106–

113 directed the Secretary to require

subsection (d) hospitals (as defined in

section 1886(d)(1)(B) of the Act) to

submit data on costs incurred for

providing inpatient and outpatient

hospital services for which the hospital

is not compensated, including nonMedicare bad debt, charity care, and

charges for Medicaid and indigent care.

These data must be reported on the

hospital’s cost reports for cost reporting

periods beginning on or after October 1,

2001, and will provide information that

will enable MedPAC and us to evaluate

potential refinements to the DSH

formula to address issues referred to by

MedPAC.

Medicare fiscal intermediaries will

audit these data to ensure their accuracy

and consistency. Our experience with

administering the current DSH formula

leads us to believe that this auditing

function would necessarily be

extensive, because the non-Medicare

data that would be collected have never

before been collected and reviewed by

Medicare’s fiscal intermediaries. The

data would have to be determined to be

accurate and usable, and corrected if

necessary.

We agree that the current statutory

payment formula could be improved,

largely because of different threshold

levels and different formula parameters

applicable to different groups of

hospitals. We are in the process of

preparing a report to Congress on the

Medicare DSH adjustment that includes

several options for amending the

statutory formula.

Recommendation: To provide further

protection for the primarily voluntary

hospitals with mid-level low-income

shares, the minimum value, or

threshold, for the low-income share that

a hospital must have before payment is

made should be set to make 60 percent

of hospitals eligible to receive

disproportionate share payments.

Response: Currently, approximately

less than 40 percent of all prospective

payment system hospitals receive DSH

payments. Therefore, this

recommendation would entail

significant redistributions of existing

DSH payments if implemented in a

budget neutral manner. We are

particularly concerned about the effect

of this recommendation on hospitals

receiving substantial DSH payments

currently, including major teaching

hospitals and public hospitals. The

analysis by MedPAC demonstrates that

these hospitals would be negatively

impacted if more hospitals were made

eligible for DSH payments.

VIII. Other Required Information

A. Requests for Data From the Public

In order to respond promptly to

public requests for data related to the

prospective payment system, we have

set up a process under which

commenters can gain access to the raw

data on an expedited basis. Generally,

the data are available in computer tape

or cartridge format; however, some files

are available on diskette as well as on

the Internet at http://www.hcfa.gov/

stats/pubfiles.html. Data files are listed

below with the cost of each. Anyone

wishing to purchase data tapes,

cartridges, or diskettes should submit a

written request along with a company

check or money order (payable to

HCFA–PUF) to cover the cost to the

following address: Health Care

Financing Administration, Public Use

Files, Accounting Division, P.O. Box

7520, Baltimore, Maryland 21207–0520,

(410) 786–3691. Files on the Internet

may be downloaded without charge.

1. Expanded Modified MedPARHospital (National)

The Medicare Provider Analysis and

Review (MedPAR) file contains records

for 100 percent of Medicare

beneficiaries using hospital inpatient

services in the United States. (The file

is a Federal fiscal year file, that is,

discharges occurring October 1 through

September 30 of the requested year.)

The records are stripped of most data

elements that would permit

identification of beneficiaries. The

hospital is identified by the 6-position

Medicare billing number. The file is

available to persons qualifying under

the terms of the Notice of Proposed New

Routine Uses for an Existing System of

Records published in the Federal

Register on December 24, 1984 (49 FR

49941), and amended by the July 2,

1985 notice (50 FR 27361). The national

file consists of approximately 11 million

records. Under the requirements of

these notices, an agreement for use of

HCFA Beneficiary Encrypted Files must

be signed by the purchaser before

release of these data. For all files

requiring a signed agreement, please

write or call to obtain a blank agreement

form before placing an order. Two

versions of this file are created each

year. They support the following:

• Notice of Proposed Rulemaking

(NPRM) published in the Federal

Register. This file, scheduled to be

available by the end of April, is derived

from the MedPAR file with a cutoff of

3 months after the end of the fiscal year

(December file).

• Final Rule published in the Federal

Register. The FY 1999 MedPAR file

used for the FY 2001 final rule will be

cut off 6 months after the end of the

fiscal year (March file) and is scheduled

to be available by the end of April.

Media: Tape/Cartridge

File Cost: $3,655.00 per fiscal year

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26319

Periods Available: FY 1988 through FY

1999

2. Expanded Modified MedPARHospital (State)

The State MedPAR file contains

records for 100 percent of Medicare

beneficiaries using hospital inpatient

services in a particular State. The

records are stripped of most data

elements that will permit identification

of beneficiaries. The hospital is

identified by the 6-position Medicare

billing number. The file is available to

persons qualifying under the terms of

the Notice of Proposed New Routine

Uses for an Existing System of Records

published in the December 24, 1984

Federal Register notice, and amended

by the July 2, 1985 notice. This file is

a subset of the Expanded Modified

MedPAR-Hospital (National) as

described above. Under the

requirements of these notices, an

agreement for use of HCFA Beneficiary

Encrypted Files must be signed by the

purchaser before release of these data.

Two versions of this file are created

each year. They support the following:

• NPRM published in the Federal

Register. This file, scheduled to be

available by the end of April, is derived

from the MedPAR file with a cutoff of

3 months after the end of the fiscal year

(December file).

• Final Rule published in the Federal

Register. The FY 1999 MedPAR file

used for the FY 2001 final rule will be

cut off 6 months after the end of the

fiscal year (March file) and is scheduled

to be available by the end of April.

Media: Tape/Cartridge

File Cost: $1,130.00 per State per year

Periods Available: FY 1988 through FY

1999

3. HCFA Wage Data

This file contains the hospital hours

and salaries for FY 1997 used to create

the proposed FY 2001 prospective

payment system wage index. The file

will be available by the beginning of

February for the NPRM and the

beginning of May for the final rule.

Processing

year

Wage data

year

PPS fiscal

year

2000 1997 2001

1999 1996 2000

1998 1995 1999

1997 1994 1998

1996 1993 1997

1995 1992 1996

1994 1991 1995

1993 1990 1994

1992 1989 1993

1991 1988 1992

These files support the following:

• NPRM published in the Federal

Register.

• Final Rule published in the Federal

Register.

Media: Diskette/most recent year on the

Internet

File Cost: $165.00 per year

Periods Available: FY 2001 PPS Update

4. HCFA Hospital Wages Indices

(Formerly: Urban and Rural Wage Index

Values Only)

This file contains a history of all wage

indices since October 1, 1983.

Media: Diskette/most recent year on the

Internet

File Cost: $165.00 per year

Periods Available: FY 2001 PPS Update

5. PPS SSA/FIPS MSA State and County

Crosswalk

This file contains a crosswalk of State

and county codes used by the Social

Security Administration (SSA) and the

Federal Information Processing

Standards (FIPS), county name, and a

historical list of Metropolitan Statistical

Area (MSA).

Media: Diskette/Internet

File Cost: $165.00 per year

Periods Available: FY 2001 PPS Update

6. Reclassified Hospitals New Wage

Index (Formerly: Reclassified Hospitals

by Provider Only)

This file contains a list of hospitals

that were reclassified for the purpose of

assigning a new wage index. Two

versions of these files are created each

year. They support the following:

• NPRM published in the Federal

Register.

• Final Rule published in the Federal

Register.

Media: Diskette/Internet

File Cost: $165.00 per year

Periods Available: FY 2001 PPS Update

7. PPS–IV to PPS–XII Minimum Data

Set

The Minimum Data Set contains cost,

statistical, financial, and other

information from Medicare hospital cost

reports. The data set includes only the

most current cost report (as submitted,

final settled, or reopened) submitted for

a Medicare participating hospital by the

Medicare fiscal intermediary to HCFA.

This data set is updated at the end of

each calendar quarter and is available

on the last day of the following month.

MEDIA: TAPE/CARTRIDGE

Periods

beginning

on or after

and before

PPS–IV ............. 10/01/86 10/01/87

PPS–V .............. 10/01/87 10/01/88

PPS–VI ............. 10/01/88 10/01/89

PPS–VII ............ 10/01/89 10/01/90

PPS–VIII ........... 10/01/90 10/01/91

PPS–IX ............. 10/01/91 10/01/92

PPS–X .............. 10/01/92 10/01/93

PPS–XI ............. 10/01/93 10/01/94

PPS–XIII ........... 10/01/94 10/01/95

(Note: The PPS–XIII, PPS–XIV, and PPS–

XV Minimum Data Sets are part of the PPS–

XIII, PPS–XIV, and PPS–XV Hospital Date Set

Files).

File Cost: $770.00 per year

8. PPS–IX to PPS–XII Capital Data Set

The Capital Data Set contains selected

data for capital-related costs, interest

expense and related information and

complete balance sheet data from the

Medicare hospital cost report. The data

set includes only the most current cost

report (as submitted, final settled or

reopened) submitted for a Medicare

certified hospital by the Medicare fiscal

intermediary to HCFA. This data set is

updated at the end of each calendar

quarter and is available on the last day

of the following month.

MEDIA: TAPE/CARTRIDGE

Periods

beginning

on or after

and before

PPS–IX ............. 10/01/91 10/01/92

PPS–X .............. 10/01/92 10/01/93

PPS–XI ............. 10/01/93 10/01/94

PPS–XII ............ 10/01/94 10/01/95

(Note: The PPS–XIII, PPS–XIV, and PPS–

XV Capital Data Sets are part of the PPS–XIII,

PPS–XIV, PPS–XV Hospital Data Set files.)

File Cost: $770.00 per year

9. PPS–XIII to PPS–XV Hospital Data

Set

The file contains cost, statistical,

financial, and other data from the

Medicare Hospital Cost Report. The data

set includes only the most current cost

report (as submitted, final settled, or

reopened) submitted for a Medicarecertified hospital by the Medicare fiscal

intermediary to HCFA. The data set are

updated at the end of each calendar

quarter and is available on the last day

of the following month.

Media: Diskette/Internet

File Cost: $2,500.00

26320 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Periods beginning on

or after

and before

PPS–XIII ........... 10/01/95 10/01/96

PPS–XIV ........... 10/01/96 10/01/97

PPS–XV ............ 10/01/97 10/01/98

10. Provider-Specific File

This file is a component of the

PRICER program used in the fiscal

intermediary’s system to compute DRG

payments for individual bills. The file

contains records for all prospective

payment system eligible hospitals,

including hospitals in waiver States,

and data elements used in the

prospective payment system

recalibration processes and related

activities. Beginning with December

1988, the individual records were

enlarged to include pass-through per

diems and other elements.

Media: Diskette/Internet

File Cost: $265.00

Periods Available: FY 2001 PPS Update

11. HCFA Medicare Case-Mix Index File

This file contains the Medicare casemix index by provider number as

published in each year’s update of the

Medicare hospital inpatient prospective

payment system. The case-mix index is

a measure of the costliness of cases

treated by a hospital relative to the cost

of the national average of all Medicare

hospital cases, using DRG weights as a

measure of relative costliness of cases.

Two versions of this file are created

each year. They support the following:

• NPRM published in the Federal

Register.

• Final rule published in the Federal

Register.

Media: Diskette/most recent year on

Internet

Price: $165.00 per year/per file

Periods Available: FY 1985 through FY

1999

12. DRG Relative Weights (Formerly

Table 5 DRG)

This file contains a listing of DRGs,

DRG narrative description, relative

weights, and geometric and arithmetic

mean lengths of stay as published in the

Federal Register. The hard copy image

has been copied to diskette. There are

two versions of this file as published in

the Federal Register:

• NPRM.

• Final rule.

Media: Diskette/Internet

File Cost: $165.00

Periods Available: FY 2001 PPS Update

13. PPS Payment Impact File

This file contains data used to

estimate payments under Medicare’s

hospital inpatient prospective payment

systems for operating and capital-related

costs. The data are taken from various

sources, including the Provider-Specific

File, Minimum Data Sets, and prior

impact files. The data set is abstracted

from an internal file used for the impact

analysis of the changes to the

prospective payment systems published

in the Federal Register. This file is

available for release 1 month after the

proposed and final rules are published

in the Federal Register.

Media: Diskette/Internet

File Cost: $165.00

Periods Available: FY 2001 PPS Update

14. AOR/BOR Tables

This file contains data used to

develop the DRG relative weights. It

contains mean, maximum, minimum,

standard deviation, and coefficient of

variation statistics by DRG for length of

stay and standardized charges. The BOR

tables are ‘‘Before Outliers Removed’’

and the AOR is ‘‘After Outliers

Removed.’’ (Outliers refers to statistical

outliers, not payment outliers.) Two

versions of this file are created each

year. They support the following:

• NPRM published in the Federal

Register.

• Final rule published in the Federal

Register.

Media: Diskette/Internet

File Cost: $165.00

Periods Available: FY 2001 PPS Update

For further information concerning

these data tapes, contact The HCFA

Public Use Files Hotline at (410) 786–

3691.

Commenters interested in obtaining or

discussing any other data used in

constructing this rule should contact

Stephen Phillips at (410) 786–4531.

B. Information Collection Requirements

Under the Paperwork Reduction Act

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 Paperwork

Reduction Act 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.

• We are soliciting public comment

on each of these issues for the sections

that contain information collection

requirements.

Section 412.77, Determination of the

Hospital-Specific Rate for Inpatient

Operating Costs for Certain Sole

Community Hospitals Based on a

Federal Fiscal Year 1996 Base Period,

and 412.92, Special Treatment: Sole

Community Hospitals

Sections 412.77(a)(2) and

412.92(d)(1)(ii) state that an otherwise

eligible hospital that elects not to

receive payment based on its hospitalspecific rate as determined under

§ 412.77 must notify its fiscal

intermediary of its decision prior to the

beginning of its cost reporting period

beginning on or after October 1, 2000.

We estimate that it will take each

hospital that notifies its intermediary of

its election not to receive payments

based on its hospital-specific rate as

determined under § 412.77 an hour to

draft and send its notice. However, we

are unable at this time to determine how

many hospitals will make this election

and, therefore, will need to notify their

intermediaries of their decision.

Section 485.643, Condition of

Participation: Organ, Tissue, and Eye

Procurement

It is important to note that because of

the inherent flexibility of this proposed

regulation, the extent of the information

collection requirements is dependent

upon decisions that will be made either

by the CAH or by the CAH in

conjunction with the OPO or the tissue

and eye banks, or both. Thus, the

paperwork burden on individual CAHs

will vary and is subject, in large part, to

their decisionmaking.

The burden associated with the

requirements of this section include: (1)

The requirement to maintain protocol

documentation demonstrating that the

five requirements of this section have

been met; (2) the requirement for a CAH

to notify an OPO, a tissue bank, or an

eye bank of any imminent or actual

death; and (3) the time required for a

hospital to document and maintain OPO

referral information.

We estimate that, on average, the

requirement to maintain protocol

documentation demonstrating that the

requirements of this section have been

met will impose one hour of burden on

each CAH (on 161 CAHs) on an annual

basis (a total of 161 annual burden

hours).

The CoP in this section would require

CAHs to notify the OPO about every

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26321

death that occurs in the CAH. The

average Medicare hospital has

approximately 165 beds and 200 deaths

per year. However, by statute and

regulation, CAHs may use no more than

15 beds for acute care services.

Assuming that the number of deaths in

a hospital is related to the number of

acute care beds, there should be

approximately 18 deaths per year in the

average CAH. We estimated that the

average notification telephone call to

the OPO takes 5 minutes. Based on this

estimate, a CAH would need

approximately 90 minutes per year to

notify the OPO about all deaths and

imminent deaths.

Under the proposed CoP, a CAH may

agree to have the OPO determine

medical suitability for tissue and eye

donation or may have alternative

arrangements with a tissue bank and an

eye bank. These alternative

arrangements could include the CAH’s

direct notification of the tissue and eye

bank of potential tissue and eye donors

or direct notification of all deaths. If a

CAH chose to contact both a tissue bank

and an eye bank directly on all deaths,

it would need an additional 6 hours per

year (that is, 5 minutes per call) in order

to call both the tissue and eye bank

directly. Again, the impact is small, and

the proposed regulation permits the

CAH to decide how this process will

take place. Note that many communities

already have a one-phone call system in

place. In addition, some OPOs are also

tissue banks or eye banks, or both. A

CAH that chose to use the OPO’s tissue

and eye bank services in these localities

would need to make only one telephone

call on every death.

We estimate that additional time

would be needed by the CAH to

annotate the patient record or fill out a

form regarding the disposition of a call

to the OPO or the tissue bank or the eye

bank, or both. This recordkeeping

should take no more than 5 minutes per

call. Therefore, the paperwork burden

associated with the call(s) would add up

to an additional 270 minutes per year

per CAH.

In summary, the information

collection requirements of this section

would be a range of from 3 to 9 hours

per CAH, or 483 to 1,449 hours annually

nationally.

If you comment on these information

collection and recordkeeping

requirements, please mail copies

directly to the following addresses:

Health Care Financing Administration,

Office of Information Services,

Security and Standards Group,

Division of HCFA Enterprise

Standards, Room N2–14–26, 7500

Security Boulevard, Baltimore,

Maryland 21244–1850. Attn: John

Burke HCFA–1118-P; and

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Room 3001, New Executive

Office Building, Washington, DC

20503. Attn: Allison Herron Eydt,

HCFA Desk Officer.

These new information collection and

recordkeeping requirements have been

submitted to the Office of Management

and Budget (OMB) for review under the

authority of PRA. We have submitted a

copy of the proposed rule to OMB for

its review of the information collection

requirements. These requirements will

not be effective until they have been

approved by OMB.

The requirements associated with a

hospital’s application for a geographic

redesignation, codified in Part 412, are

currently approved by OMB under OMB

approval number 0938–0573, with an

expiration date of September 30, 2002.

C. Public Comments

Because of the large number of items

of correspondence we normally receive

on a proposed rule, we are not able to

acknowledge or respond to them

individually. However, in preparing the

final rule, we will consider all

comments concerning the provisions of

this proposed rule that we receive by

the date and time specified in the DATES

section of this preamble and respond to

those comments in the preamble to that

rule. We emphasize that section

1886(e)(5) of the Act requires the final

rule for FY 2001 to be published by

August 1, 2000, and we will consider

only those comments that deal

specifically with the matters discussed

in this proposed rule.

List of Subjects

42 CFR Part 412

Administrative practice and

procedure, Health facilities, Medicare,

Puerto Rico, Reporting and

recordkeeping requirements.

42 CFR Part 413

Health facilities, Kidney diseases,

Medicare, Puerto Rico, Reporting and

recordkeeping requirements.

42 CFR Part 485

Grant programs—health, Health

facilities, Medicaid, Medicare,

Reporting and recordkeeping

requirements.

42 CFR Chapter IV is proposed to be

amended as set forth below:

PART 412—PROSPECTIVE PAYMENT

SYSTEMS FOR INPATIENT HOSPITAL

SERVICES

A. Part 412 is amended as follows:

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 412.2 is amended by

revising the last sentence of paragraph

(a) to read as follows:

§ 412.2 Basis of payment.

(a) Payment on a per discharge basis.

* * * An additional payment is made for

both inpatient operating and inpatient

capital-related costs, in accordance with

subpart F of this part, for cases that are

extraordinarily costly to treat.

* * * * *

§ 412.4 [Amended]

3. In § 412.4(f)(3), the reference to

‘‘§ 412.2(e)’’ is removed and ‘‘ 412.2(b)’’

is added in its place.

4. Section 412.63 is amended by:

a. Revising paragraph (s);

b. Redesignating paragraphs (t), (u),

(v), and (w) as paragraphs (u), (v), (w),

and (x) respectively; and

c. Adding a new paragraph (t), to read

as follows:

§ 412.63 Federal rates for inpatient

operating costs for fiscal years after

Federal fiscal year 1984.

* * * * *

(s) Applicable percentage change for

fiscal year 2001. The applicable

percentage change for fiscal year 2001 is

the percentage increase in the market

basket index for prospective payment

hospitals (as defined in § 413.40(a) of

this subchapter) for sole community

hospitals and the increase in the market

basket index minus 1.1 percentage

points for other hospitals in all areas.

(t) Applicable percentage change for

fiscal year 2002. The applicable

percentage change for fiscal year 2002 is

the percentage increase in the market

basket index for prospective payment

hospitals (as defined in § 413.40(a) of

this subchapter) minus 1.1 percentage

points for hospitals in all areas.

* * * * *

5. Section 412.73 is amended by

revising paragraph (c)(12) and adding

paragraphs (c)(13), (c)(14), and (c)(15),

to read as follows:

§ 412.73 Determination of the hospitalspecific rate based on a Federal fiscal year

1982 base period.

* * * * *

(c) Updating base-year costs ***

(12) For Federal fiscal years 1996

through 2000. For Federal fiscal years

26322 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

1996 through 2000, the update factor is

the applicable percentage change for

other prospective payment hospitals in

each respective year as set forth in

§§ 412.63(n) through (r).

(13) For Federal fiscal year 2001. For

Federal fiscal year 2001, the update

factor is the percentage increase in the

market basket index for prospective

payment hospitals (as defined in

§ 413.40(a) of this chapter).

(14) For Federal fiscal year 2002. For

Federal fiscal year 2002, the update

factor is the percentage increase in the

market basket index for prospective

payment hospitals (as defined in

§ 413.40(a) of this chapter) minus 1.1

percentage points.

(15) For Federal fiscal year 2003 and

for subsequent years. For Federal fiscal

year 2003 and subsequent years, the

update factor is the percentage increase

in the market basket index for

prospective payment hospitals (as

defined in § 413.40(a) of this chapter).

* * * * *

§ 412.75 [Amended]

6. In § 412.75(d), the cross reference

‘‘§ 412.73 (c)(5) through (c)(12)’’ is

removed and ‘‘§ 412.75(c)(15)’’ is added

in its place.

§ 412.76 [Redesignated]

7. Section 412.76 is redesignated as a

new § 412.78.

8. A new § 412.77 is added to read as

follows:

§ 412.77 Determination of the hospitalspecific rate for inpatient operating costs

for certain sole community hospitals based

on a Federal fiscal year 1996 base period.

(a) Applicability. (1) This section

applies to a hospital that has been

designated as a sole community

hospital, as described in § 412.72, that

received payment for its cost reporting

period beginning during 1999 based on

its hospital-specific rate for either fiscal

year 1982 under § 412.73 or fiscal year

1987 under § 412.75, and that elects

under paragraph (a)(2) of this section to

be paid based on a fiscal year 1996 base

period.

(2) Hospitals that are otherwise

eligible for but elect not to receive

payment on the basis of their Federal

fiscal year 1996 updated costs per case

must notify their fiscal intermediary of

this decision prior to the beginning of

their cost reporting period beginning on

or after October 1, 2000, for which such

payments would otherwise be made. If

a hospital does not make the

notification to its fiscal intermediary

before the end of the cost reporting

period, the hospital is deemed to have

elected to have section 1886(b)(3)(I) of

the Act apply to the hospital.

(3) This section applies only to cost

reporting periods beginning on or after

October 1, 2000.

(4) The formula for determining the

hospital-specific costs for hospitals

described under paragraph (a)(1) of this

section is set forth in paragraph (f) of

this section.

(b) Base-period costs for hospitals

subject to fiscal year 1996 rebasing. (1)

General rule. Except as provided in

paragraph (b)(2) of this section, for each

hospital eligible under paragraph (a) of

this section, the intermediary

determines the hospital’s Medicare Part

A allowable inpatient operating costs, as

described in § 412.2(c), for the 12-month

or longer cost reporting period ending

on or after September 30, 1996 and

before September 30, 1997, and

computes the hospital-specific rate for

purposes of determining prospective

payment rates for inpatient operating

costs as determined under § 412.92(d).

(2) Exceptions. (i) If the hospital’s last

cost reporting period ending before

September 30, 1997 is for less than 12

months, the base period is the hospital’s

most recent 12-month or longer cost

reporting period ending before the short

period report.

(ii) If the hospital does not have a cost

reporting period ending on or after

September 30, 1996 and before

September 30, 1997, and does have a

cost reporting period beginning on or

after October 1, 1995 and before October

1, 1996, that cost reporting period is the

base period unless the cost reporting

period is for less than 12 months. If that

cost reporting period is for less than 12

months, the base period is the hospital’s

most recent 12-month or longer cost

reporting period ending before the short

cost reporting period. If a hospital has

no cost reporting period beginning in

fiscal year 1996, the hospital will not

have a hospital-specific rate based on

fiscal year 1996.

(c) Costs on a per discharge basis. The

intermediary determines the hospital’s

average base-period operating cost per

discharge by dividing the total operating

costs by the number of discharges in the

base period. For purposes of this

section, a transfer as defined in

§ 412.4(b) is considered to be a

discharge.

(d) Case-mix adjustment. The

intermediary divides the average baseperiod cost per discharge by the

hospital’s case-mix index for the base

period.

(e) Updating base-period costs. For

purposes of determining the updated

base-period costs for cost reporting

periods beginning in Federal fiscal year

1996, the update factor is determined

using the methodology set forth in

§ 412.73(c)(12) through (c)(15).

(f) DRG adjustment. The applicable

hospital-specific cost per discharge is

multiplied by the appropriate DRG

weighting factor to determine the

hospital-specific base payment amount

(target amount) for a particular covered

discharge.

(g) Phase-in of fiscal year 1996 baseperiod rate. The intermediary calculates

the hospital-specific rates determined

on the basis of the fiscal year 1996 base

period rate as follows:

(1) For Federal fiscal year 2001, the

hospital-specific rate is the sum of 75

percent of the hospital-specific rate for

fiscal year 1982 or fiscal year 1987 (the

§ 412.73 or § 412.75 target amount), plus

25 percent of the hospital-specific rate

for fiscal year 1996 (the § 412.77 target

amount).

(2) For Federal fiscal year 2002, the

hospital-specific rate is the sum of 50

percent of the § 412.73 or § 412.75 target

amount and 50 percent of the § 412.77

target amount.

(3) For Federal fiscal year 2003, the

hospital-specific rate is the sum of 25

percent of the § 412.73 or § 412.75 target

amount and 75 percent of the § 412.77

target amount.

(4) For Federal fiscal year 2004 and

any subsequent fiscal years, the

hospital-specific rate is 100 percent of

the § 412.77 target amount.

(h) Notice of hospital-specific rates.

The intermediary furnishes a hospital

eligible for rebasing a notice of the

hospital-specific rate as computed in

accordance with this section. The notice

will contain a statement of the hospital’s

Medicare Part A allowable inpatient

operating costs, the number of Medicare

discharges, and the case-mix index

adjustment factor used to determine the

hospital’s cost per discharge for the

Federal fiscal year 1996 base period.

(i) Right to administrative and judicial

review. An intermediary’s determination

of the hospital-specific rate for a

hospital is subject to administrative and

judicial review. Review is available to a

hospital upon receipt of the notice of

the hospital-specific rate. This notice is

treated as a final intermediary

determination of the amount of program

reimbursement for purposes of subpart

R of part 405 of this chapter.

(j) Modification of hospital-specific

rate. (1) The intermediary recalculates

the hospital-specific rate to reflect the

following:

(i) Any modifications that are

determined as a result of administrative

or judicial review of the hospitalspecific rate determinations; or

(ii) Any additional costs that are

recognized as allowable costs for the

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26323

hospital’s base period as a result of

administrative or judicial review of the

base-period notice of amount of program

reimbursement.

(2) With respect to either the hospitalspecific rate determination or the

amount of program reimbursement

determination, the actions taken on

administrative or judicial review that

provide a basis for the recalculations of

the hospital-specific rate include the

following:

(i) A reopening and revision of the

hospital’s base-period notice of amount

of program reimbursement under

§§ 405.1885 through 405.1889 of this

chapter.

(ii) A prehearing order or finding

issued during the provider payment

appeals process by the appropriate

reviewing authority under § 405.1821 or

§ 405.1853 of this chapter that resolved

a matter at issue in the hospital’s baseperiod notice of amount of program

reimbursement.

(iii) An affirmation, modification, or

reversal of a Provider Reimbursement

Review Board decision by the

Administrator of HCFA under§ 405.1875

of this chapter that resolved a matter at

issue in the hospital’s base-period

notice of amount of program

reimbursement.

(iv) An administrative or judicial

review decision under § 405.1831,

§ 405.1871, or § 405.1877 of this chapter

that is final and no longer subject to

review under applicable law or

regulations by a higher reviewing

authority, and that resolved a matter at

issue in the hospital’s base-period

notice of amount of program

reimbursement.

(v) A final, nonappealable court

judgment relating to the base-period

costs.

(3) The adjustments to the hospitalspecific rate made under paragraphs

(i)(1) and (i)(2) of this section are

effective retroactively to the time of the

intermediary’s initial determination of

the rate.

9. Section 412.92 is amended by

revising paragraph (d)(1) to read as

follows:

§ 412.92 Special treatment: sole

community hospitals.

* * * * *

(d) Determining prospective payment

rates for inpatient operating costs for

sole community hospitals. (1) General

rules. (i) Except as provided in

paragraph (d)(1)(ii) of this section, for

cost reporting periods beginning on or

after April 1, 1990, a sole community

hospital is paid based on whichever of

the following amounts yields the

greatest aggregate payment for the cost

reporting period:

(A) The Federal payment rate

applicable to the hospitals as

determined under § 412.63.

(B) The hospital-specific rate as

determined under § 412.73.

(C) The hospital-specific rate as

determined under § 412.75.

(ii) For cost reporting periods

beginning on or after October 1, 2000, a

sole community hospital that was paid

for its cost reporting period beginning

during 1999 on the basis of the hospitalspecific rate specified in paragraph

(d)(1)(i)(B) or (d)(1)(i)(C) of this section,

may elect to use the hospital-specific

rate as determined under § 412.77.

* * * * *

10. Section 412.105 is amended by:

a. Revising paragraph (d)(3)(v);

b. Republishing paragraph (f)(1)

introductory text and revising paragraph

(f)(1)(vii);

c. Adding new paragraphs (f)(1)(viii)

and (f)(1)(ix); and

d. Revising paragraph (g), to read as

follows:

§ 412.105 Special treatment: Hospitals that

incur indirect costs for graduate medical

education programs.

* * * * *

(d) Determination of education

adjustment factor ***

(3) * * *

(v) For discharges occurring during

fiscal year 2001, 1.54.

* * * * *

(f) Determining the total number of

full-time equivalent residents for cost

reporting periods beginning on or after

July 1, 1991. (1) For cost reporting

periods beginning on or after July 1,

1991, the count of full-time equivalent

residents for the purpose of determining

the indirect medical education

adjustment is determined as follows:

* * * * *

(vii) If a hospital establishes a new

medical residency training program, as

defined in § 413.86(g)(9) of this

subchapter, the hospital’s full-time

equivalent cap may be adjusted in

accordance with the provisions of

§§ 413.86(g)(6) (i) through (iv) of this

subchapter.

(viii) A hospital that began

construction of its facility prior to

August 5, 1997, and sponsored new

medical residency training programs on

or after January 1, 1995 and on or before

August 5, 1997, that either received

initial accreditation by the appropriate

accrediting body or temporarily trained

residents at another hospital(s) until the

facility was completed, may receive an

adjustment to its full-time equivalent

cap in accordance with the provisions of

§ 413.86(g)(7) of this subchapter.

(ix) A hospital may receive a

temporary adjustment to its full-time

equivalent cap to reflect residents added

because of another hospital’s closure if

the hospital meets the criteria specified

in § 413.86(g)(8) of this subchapter.

* * * * *

(g) Indirect medical education

payment for managed care enrollees.

For portions of cost reporting periods

occurring on or after January 1, 1998, a

payment is made to a hospital for

indirect medical education costs, as

determined under paragraph (e) of this

section, for discharges associated with

individuals who are enrolled under a

risk-sharing contract with an eligible

organization under section 1876 of the

Act or with a Medicare+Choice

organization under title XVIII, Part C of

the Act during the period, according to

the applicable payment percentages

described in §§ 413.86(d)(3)(i) through

(d)(3)(v) of this subchapter.

11. In § 412.106, the introductory text

of paragraph (e) is republished and

paragraphs (e)(4) and (e)(5) are revised

to read as follows:

§ 412.106 Special treatment: Hospitals that

serve a disproportionate share of lowincome patients.

* * * * *

(e) Reduction in payment for FYs

1998 through 2002. The amounts

otherwise payable to a hospital under

paragraph (d) of this section are reduced

by the following:

* * * * *

(4) For FY 2001, 3 percent.

(5) For FY 2002, 4 percent.

* * * * *

12. Section 412.230 is amended by:

a. Republishing the introductory text

of paragraph (e)(1); and

b. Revising paragraph (e)(1)(iii) and

(e)(1)(iv)(A), to read as follows:

§ 412.230 Criteria for an individual hospital

seeking redesignation to another rural area

or an urban area.

* * * * *

(e) Use of urban or other rural area’s

wage index—(1) Criteria for use of

area’s wage index. Except as provided

in paragraphs (e)(3) and (e)(4) of this

section, to use an area’s wage index, a

hospital must demonstrate the

following:

* * * * *

(iii) The hospital’s average hourly

wage is, in the case of a hospital located

in a rural area, at least 106 percent, and,

in the case of a hospital located in an

urban area, at least 108 percent of the

average hourly wage of hospitals in the

26324 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

area in which the hospital is located;

and

(iv) * * *

(A) The hospital’s average hourly

wage is equal to, in the case of a

hospital located in a rural area, at least

82 percent, and in the case of a hospital

located in an urban area, at least 84

percent of the average hourly wage of

hospitals in the area to which it seeks

redesignation.

* * * * *

PART 413—PRINCIPLES OF

REASONABLE COST

REIMBURSEMENT; PAYMENT FOR

END-STAGE RENAL DISEASE

SERVICES; OPTIONAL

PROSPECTIVELY DETERMINED

PAYMENT RATES FOR SKILLED

NURSING FACILITIES

B. Part 413 is amended as follows:

1. The authority citation for Part 413

is revised to read as follows:

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

1815, 1833(a), (i), and (n), 1871, 1881, 1883,

and 1886 of the Social Security Act (42

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

1395l(a), (i), and (n), 1395hh, 1395rr, 1395tt,

and 1395ww).

2. In § 413.40, paragraph (a)(3) is

amended by revising paragraph (B) in

the definition of ‘‘ceiling’’ and

paragraph (d)(4) is revised, to read as

follows:

§ 413.40 Ceiling on the rate of increase in

hospital inpatient costs.

(a) Introduction. ***

(3) Definitions. ***

Ceiling. ***

(B) The hospital-within-a-hospital has

discharged to the other hospital and

subsequently readmitted more than 5

percent (that is, in excess of 5.0 percent)

of the total number of Medicare

inpatients discharged from the hospitalwithin-a-hospital in that cost reporting

period.

* * * * *

(d) Application of the target amount

in determining the amount of payment.

***

(4) Continuous improvement bonus

payments. (i) For cost reporting periods

beginning on or after October 1, 1997

and ending before October 1, 2000,

eligible hospitals (as defined in

paragraph (d)(5) of this section) receive

payments in addition to those in

paragraph (d)(2) of this section, as

applicable. These payments are equal to

the lesser of—

(A) 50 percent of the amount by

which the operating costs are less than

the expected costs for the period; or

(B) 1 percent of the ceiling.

(ii) For cost reporting periods

beginning on or after October 1, 2000,

and ending before October 1, 2001,

eligible psychiatric hospitals and units

and long-term care hospitals (as defined

in paragraph (d)(5) of this section)

receive payments in addition to those in

paragraph (d)(2) of this section, as

applicable. These payments are equal to

the lesser of—

(A) 50 percent of the amount by

which the operating costs are less than

the expected costs for the period; or

(B) 1.5 percent of the ceiling.

(iii) For cost reporting periods

beginning on or after October 1, 2001,

and ending before October 1, 2002,

eligible psychiatric hospitals and units

and long-term care hospitals receive

payments in addition to those in

paragraph (d)(5) of this section, as

applicable. These payments are equal to

the lesser of—

(A) 50 percent of the amount by

which the operating costs are less than

the expected costs for the periods; or

(B) 2 percent of the ceiling.

* * * * *

3. Section 413.70 is revised to read as

follows:

§ 413.70 Payment for services of a CAH.

(a) Payment for inpatient services

furnished by a CAH. (1) Payment for

inpatient services of a CAH is the

reasonable costs of the CAH in

providing CAH services to its inpatients,

as determined in accordance with

section 1861(v)(1)(A) of the Act and the

applicable principles of cost

reimbursement in this part and in Part

415 of this chapter, except that the

following payment principles are

excluded when determining payment

for CAH inpatient services:

(i) Lesser of cost or charges;

(ii) Ceilings on hospital operating

costs; and

(iii) Reasonable compensation

equivalent (RCE) limits for physician

services to providers.

(2) Payment to a CAH for inpatient

services does not include any costs of

physician services or other professional

services to CAH inpatients, and is

subject to the Part A hospital deductible

and coinsurance, as determined under

subpart G of part 409 of this chapter.

(b) Payment for outpatient services

furnished by a CAH. (1) General. Unless

the CAH elects to be paid for services

to its outpatients under the method

specified in paragraph (b)(3) of this

section, the amount of payment for

outpatient services of a CAH is the

amount determined under paragraph

(b)(2) of this section.

(2) Reasonable costs for facility

services. (i) Payment for outpatient

services of a CAH is the reasonable costs

of the CAH in providing CAH services

to its outpatients, as determined in

accordance with section 1861(v)(1)(A) of

the Act and the applicable principles of

cost reimbursement in this part and in

Part 415 of this chapter, except that the

following payment principles are

excluded when determining payment

for CAH outpatient services:

(A) Lesser of costs or charges;

(B) RCE limits;

(C) Any type of reduction to operating

or capital costs under § 413.124 or

§ 413.130(j)(7); and

(D) Blended payment amounts for

ambulatory surgical services, radiology

services, and other diagnostic services;

(ii) Payment to a CAH under

paragraph (b)(2) of this section does not

include any costs of physician services

or other professional services to CAH

outpatients, and is subject to the Part B

deductible and coinsurance amounts, as

determined under §§ 410.152(k),

410.160, and 410.161 of this chapter.

(3) Election to be paid reasonable

costs for facility services plus fee

schedule for professional services. (i) A

CAH may elect to be paid for outpatient

services in any cost reporting period

under the method described in

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

section. This election must be made in

writing, made on an annual basis, and

delivered to the intermediary at least 60

days before the start of each affected

cost reporting period. An election of this

payment method, once made for a cost

reporting period, remains in effect for

all of that period and applies to all

services furnished to outpatients during

that period.

(ii) If the CAH elects payment under

this method, payment to the CAH for

each outpatient visit will be the sum of

the following amounts:

(A) For facility services, not including

any services for which payment may be

made under paragraph (b)(3)(ii)(B) of

this section, the reasonable costs of the

services as determined under paragraph

(b)(2)(i) of this section; and

(B) For professional services

otherwise payable to the physician or

other practitioner on a fee schedule

basis, the amounts that otherwise would

be paid for the services if the CAH had

not elected payment under this method.

(iii) Payment to a CAH is subject to

the Part B deductible and coinsurance

amounts, as determined under

§§ 410.152, 410.160, and 410.161 of this

chapter.

(c) Final payment based on cost

report. Final payment to the CAH for

CAH facility services to inpatients and

outpatients furnished during a cost

reporting is based on a cost report for

that period, as required under

§ 413.20(b).

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26325

4. Section 413.86 is amended by:

a. Revising the first sentence of

paragraph (d)(3);

b. Revising the introductory text of

paragraph (e)(3);

c. Redesignating paragraph (e)(4) as

paragraph (e)(5);

d. Adding a new paragraph (e)(4);

e. Revising newly designated

paragraph (e)(5)(i)(B); and

f. Adding a new paragraph (e)(5)(iv),

to read as follows:

§ 413.86 Direct graduate medical

education payments.

* * * * *

(d) Calculating payment for graduate

medical education costs. ***

(3) Step Three. For portions of cost

reporting periods occurring on or after

January 1, 1998, the product derived in

step one is multiplied by the proportion

of the hospital’s inpatient days

attributable to individuals who are

enrolled under a risk-sharing contract

with an eligible organization under

section 1876 of the Act and who are

entitled to Medicare Part A or with a

Medicare+Choice organization under

Title XVIII, Part C of the Act. * * *

* * * * *

(e) Determining per resident amounts

for the base period. ***

(3) For cost reporting periods

beginning on or after July 1, 1986.

Subject to the provisions of paragraph

(e)(4) of this section, for cost reporting

periods beginning on or after July 1,

1986, a hospital’s base-period per

resident amount is adjusted as follows:

* * * * *

(4) For cost reporting periods

beginning on or after October 1, 2000

and ending on or before September 30,

2005. For cost reporting periods

beginning on or after October 1, 2000

and ending on or before September 30,

2005, a hospital’s per resident amount

for each fiscal year is adjusted in

accordance with the following

provisions:

(i) General provisions. For purposes of

§ 413.86(e)(4)—

(A) Weighted average per resident

amount. The weighted average per

resident amount is established as

follows:

(1) Using data from hospitals’ cost

reporting periods ending during FY

1997, HCFA calculates each hospital’s

single per resident amount by adding

each hospital’s primary care and nonprimary care per resident amounts,

weighted by its respective FTEs, and

dividing by the sum of the FTEs for

primary care and non-primary care

residents.

(2) Each hospital’s single per resident

amount calculated under paragraph

(e)(4)(i)(A)(1) of this section is

standardized by the 1999 geographic

adjustment factor for the physician fee

schedule area (as determined under

§ 414.26 of this chapter) in which the

hospital is located.

(3) HCFA calculates an average of all

hospitals’ standardized per resident

amounts that are determined under

paragraph (e)(4)(i)(A)(2) of this section.

The resulting amount is the weighted

average per resident amount.

(B) Primary care/obstetrics and

gynecology and non-primary care per

resident amounts. A hospital’s per

resident amount is an amount inclusive

of any CPI–U adjustments that the

hospital may have received since the

hospital’s base year, including any CPI–

U adjustments the hospital may have

received because the hospital trains

primary care/obstetrics and gynecology

residents and non-primary care

residents as specified under paragraph

(e)(3)(ii) of this section.

(ii) Adjustment beginning in FY 2001

and ending in FY 2005. For cost

reporting periods beginning on or after

October 1, 2000 and ending on or before

September 30, 2005, a hospital’s per

resident amount is adjusted in

accordance with paragraphs (e)(4)(ii)(A)

through (e)(4)(ii)(C) of this section, in

that order:

(A) Updating the weighted average

per resident amount for inflation. The

weighted average per resident amount

(as determined under paragraph

(e)(4)(i)(A) of this section) is updated by

the estimated percentage increase in the

CPI–U during the period beginning with

the month that represents the midpoint

of the cost reporting periods ending

during FY 1997 (that is, October 1,

1996) and ending with the midpoint of

the hospital’s cost reporting period that

begins in FY 2001.

(B) Adjusting for locality. The

updated weighted average per resident

amount determined under paragraph

(e)(4)(ii)(A) of this section (the national

average per resident amount) is adjusted

for the locality of each hospital by

multiplying the national average per

resident amount by the 1999 geographic

adjustment factor for the physician fee

schedule area in which each hospital is

located, established in accordance with

§ 414.26 of this subchapter.

(C) Determining necessary revisions to

the per resident amount. The localityadjusted national average per resident

amount, as calculated in accordance

with paragraph (e)(4)(ii)(B) of this

section, is compared to the hospital’s

per resident amount. Each hospital’s per

resident amount is revised, if

appropriate, according to the following

three categories:

(1) Floor. For cost reporting periods

beginning on or after October 1, 2000

and on or before September 30, 2001, if

the hospital’s per resident amount

would otherwise be less than 70 percent

of the locality-adjusted national average

per resident amount for FY 2001 (as

determined under paragraph (e)(4)(ii)(B)

of this section), the per resident amount

is equal to 70 percent of the localityadjusted national average per resident

amount for FY 2001. For subsequent

cost reporting periods, the hospital’s per

resident amount is updated using the

methodology specified under paragraph

(e)(3)(i) of this section.

(2) Ceiling. If the hospital’s per

resident amount is greater than 140

percent of the locality-adjusted national

average per resident amount, the per

resident amount is adjusted as follows

for FY 2001 through FY 2005:

(i) FY 2001. For cost reporting periods

beginning on or after October 1, 2000

and on or before September 30, 2001, if

the hospital’s FY 2000 per resident

amount exceeds 140 percent of the FY

2001 locality-adjusted national average

per resident amount (as calculated

under paragraph (e)(4)(ii)(B) of this

section), then, subject to the provision

stated in paragraph (e)(4)(ii)(C)(2)(iv) of

this section, the hospital’s per resident

amount is frozen at the FY 2000 per

resident amount and is not updated for

FY 2001 by the CPI–U factor.

(ii) FY 2002. For cost reporting

periods beginning on or after October 1,

2001 and on or before September 30,

2002, if the hospital’s FY 2001 per

resident amount exceeds 140 percent of

the FY 2002 locality-adjusted national

average per resident amount, then,

subject to the provision stated in

paragraph (e)(4)(ii)(C)(2)(iv) of this

section, the hospital’s per resident

amount is frozen at the FY 2001 per

resident amount and is not updated for

FY 2002 by the CPI–U factor.

(iii) FY 2003 through FY 2005. For

cost reporting periods beginning on or

after October 1, 2002 and on or before

September 30, 2005, if the hospital’s per

resident amount for the previous cost

reporting period is greater than 140

percent of the locality-adjusted national

average per resident amount for that

same previous cost reporting period (for

example, for cost reporting periods

beginning in FY 2003, compare the

hospital’s per resident amount from the

FY 2002 cost report to the hospital’s

locality-adjusted national average per

resident amount from FY 2002), then,

subject to the provision stated in

paragraph (e)(4)(ii)(C)(2)(iv) of this

section, the hospital’s per resident

amount is adjusted using the

methodology specified in paragraph

26326 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

(e)(3)(i) of this section, except that the

CPI–U applied for a 12-month period is

reduced (but not below zero) by 2

percentage points.

(iv) General rule for hospitals that

exceed the ceiling. For cost reporting

periods beginning on or after October 1,

2000 and on or before September 30,

2005, if a hospital’s per resident amount

exceeds 140 percent of the hospital’s

locality-adjusted national average per

resident amount and it is adjusted under

any of the criteria under paragraphs

(e)(4)(ii)(C)(2)(i) through (iii) of this

section, the current year per resident

amount resident amount cannot be

reduced below 140 percent of the

locality-adjusted national average per

resident amount.

(3) Per resident amounts greater than

or equal to the floor and less than or

equal to the ceiling. For cost reporting

periods beginning on or after October 1,

2000 and on or before September 30,

2005, if a hospital’s per resident amount

is greater than or equal to 70 percent

and less than or equal to 140 percent of

the hospital’s locality-adjusted national

average per resident amount for each

respective fiscal year, the hospital’s per

resident amount is updated using the

methodology specified in paragraph

(e)(3)(i) of this section.

(5) Exceptions—(i) Base period for

certain hospitals. * * *

(B) The weighted mean value of per

resident amounts of hospitals located in

the same geographic wage area, as that

term is used in the prospective payment

system under part 412 of this chapter,

for cost reporting periods beginning in

the same fiscal years. If there are fewer

than three amounts that can be used to

calculate the weighted mean value, the

calculation of the per resident amounts

includes all hospitals in the hospital’s

region as that term is used in

§ 412.62(f)(1)(i) of this chapter.

* * * * *

(iv) Effective October 1, 2000, the per

resident amounts established under

paragraphs (e)(5)(i) through (iii) of this

section are subject to the provisions of

paragraph (e)(4) of this section.

* * * * *

PART 485B—CONDITIONS OF

PARTICIPATION: SPECIALIZED

PROVIDERS

C. Part 485 is amended as follows:

1. The authority citation for part 485

continues to read as follows:

Authority: Sec. 1820 of the Act (42 U.S.C.

1395i–4), unless otherwise noted.

2. A new § 485.643 is added to

subpart F to read as follows:

§ 485.643 Condition of participation:

Organ, tissue, and eye procurement.

The CAH must have and implement

written protocols that:

(a) Incorporate an agreement with an

OPO designated under part 486 of this

chapter, under which it must notify, in

a timely manner, the OPO or a third

party designated by the OPO of

individuals whose death is imminent or

who have died in the CAH. The OPO

determines medical suitability for organ

donation and, in the absence of

alternative arrangements by the CAH,

the OPO determines medical suitability

for tissue and eye donation, using the

definition of potential tissue and eye

donor and the notification protocol

developed in consultation with the

tissue and eye banks identified by the

CAH for this purpose;

(b) Incorporate an agreement with at

least one tissue bank and at least one

eye bank to cooperate in the retrieval,

processing, preservation, storage and

distribution of tissues and eyes, as may

be appropriate to assure that all usable

tissues and eyes are obtained from

potential donors, insofar as such an

agreement does not interfere with organ

procurement;

(c) Ensure, in collaboration with the

designated OPO, that the family of each

potential donor is informed of its option

to either donate or not donate organs,

tissues, or eyes. The individual

designated by the CAH to initiate the

request to the family must be a

designated requestor. A designated

requestor is an individual who has

completed a course offered or approved

by the OPO and designed in conjunction

with the tissue and eye bank community

in the methodology for approaching

potential donor families and requesting

organ or tissue donation;

(d) Encourage discretion and

sensitivity with respect to the

circumstances, views, and beliefs of the

families of potential donors;

(e) Ensure that the CAH works

cooperatively with the designated OPO,

tissue bank and eye bank in educating

staff on donation issues, reviewing

death records to improve identification

of potential donors, and maintaining

potential donors while necessary testing

and placement of potential donated

organs, tissues, and eyes take place.

(f) For purposes of these standards,

the term ‘‘Organ’’ means a human

kidney, liver, heart, lung, or pancreas.

(Catalog of Federal Domestic Assistance

Program No. 93.773, Medicare—Hospital

Insurance)

Dated: April 14, 2000.

Nancy Ann Min DeParle,

Administrator, Health Care Financing

Administration

Dated: April 28, 2000.

Donna E. Shalala,

Secretary.

[Editorial Note: The following Addendum

and appendixes will not appear in the Code

of Federal Regulations.]

Addendum—Proposed Schedule of

Standardized Amounts Effective With

Discharges Occurring On or After

October 1, 2000 and Update Factors

and Rate-of-Increase Percentages

Effective With Cost Reporting Periods

Beginning On or After October 1, 2000

I. Summary and Background

In this Addendum, we are setting

forth the proposed amounts and factors

for determining prospective payment

rates for Medicare inpatient operating

costs and Medicare inpatient capitalrelated costs. We are also setting forth

proposed rate-of-increase percentages

for updating the target amounts for

hospitals and hospital units excluded

from the prospective payment system.

For discharges occurring on or after

October 1, 2000, except for sole

community hospitals, Medicaredependent, small rural hospitals, and

hospitals located in Puerto Rico, each

hospital’s payment per discharge under

the prospective payment system will be

based on 100 percent of the Federal

national rate.

Sole community hospitals are paid

based on whichever of the following

rates yields the greatest aggregate

payment: the Federal national rate, the

updated hospital-specific rate based on

FY 1982 cost per discharge, the updated

hospital-specific rate based on FY 1987

cost per discharge, or, if qualified, 25

percent of the updated hospital-specific

rate based on FY 1996 cost per

discharge, plus 75 percent of the

updated FY 1982 or FY 1987 hospitalspecific rate. Section 405 of Public Law

106–113 amended section 1886(b)(3) of

the Act to allow a sole community

hospital that was paid for its cost

reporting period beginning during FY

1999 on the basis of either its FY 1982

or FY 1987 hospital-specific rate to elect

to rebase its hospital-specific rate based

on its FY 1996 cost per discharge.

Section 404 of Public Law 106–113

amended section 1886(d)(5)(G) of the

Act to extend the special treatment for

Medicare-dependent, small rural

hospitals. Therefore, Medicaredependent, small rural hospitals are

paid based on the Federal national rate

or, if higher, the Federal national rate

plus 50 percent of the difference

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26327

between the Federal national rate and

the updated hospital-specific rate based

on FY 1982 or FY 1987 cost per

discharge, whichever is higher.

For hospitals in Puerto Rico, the

payment per discharge is based on the

sum of 50 percent of a Puerto Rico rate

and 50 percent of a Federal national

rate.

As discussed below in section II of

this Addendum, we are proposing to

make changes in the determination of

the prospective payment rates for

Medicare inpatient operating costs for

FY 2001. The changes, to be applied

prospectively, would affect the

calculation of the Federal rates. In

section III of this Addendum, we

discuss updates to the payments per

unit for blood clotting factor provided to

hospital inpatients who have

hemophilia. In section IV of this

Addendum, we discuss our proposed

changes for determining the prospective

payment rates for Medicare inpatient

capital-related costs for FY 2001.

Section V of this Addendum sets forth

our proposed changes for determining

the rate-of-increase limits for hospitals

excluded from the prospective payment

system for FY 2001. The tables to which

we refer in the preamble to this

proposed rule are presented at the end

of this Addendum in section VI.

II. Proposed Changes to Prospective

Payment Rates for Inpatient Operating

Costs for FY 2001

The basic methodology for

determining prospective payment rates

for inpatient operating costs is set forth

at § 412.63 for hospitals located outside

of Puerto Rico. The basic methodology

for determining the prospective

payment rates for inpatient operating

costs for hospitals located in Puerto

Rico is set forth at §§ 412.210 and

412.212. Below, we discuss the

proposed factors used for determining

the prospective payment rates. The

Federal and Puerto Rico rate changes,

once issued as final, will be effective

with discharges occurring on or after

October 1, 2000. As required by section

1886(d)(4)(C) of the Act, we must also

adjust the DRG classifications and

weighting factors for discharges in FY

2001.

In summary, the proposed

standardized amounts set forth in

Tables 1A and 1C of section VI of this

Addendum reflect—

• Updates of 2.0 percent for all areas

(that is, the market basket percentage

increase of 3.1 percent minus 1.1

percentage points);

• An adjustment to ensure budget

neutrality as provided for in sections

1886(d)(4)(C)(iii) and (d)(3)(E) of the Act

by applying new budget neutrality

adjustment factors to the large urban

and other standardized amounts;

• An adjustment to ensure budget

neutrality as provided for in section

1886(d)(8)(D) of the Act by removing the

FY 2000 budget neutrality factor and

applying a revised factor;

• An adjustment to apply the revised

outlier offset by removing the FY 2000

outlier offsets and applying a new offset;

and

• An adjustment in the Puerto Rico

standardized amounts to reflect the

application of a Puerto Rico-specific

wage index.

The standardized amounts set forth in

table 1E of section VI of this Addendum,

which apply to sole community

hospitals, reflect updates of 3.1 percent

(that is, the full market basket

percentage increase) as provided for in

section 406 of Public Law 106–113, but

otherwise reflect the same adjustments

as the national standardized amounts.

A. Calculation of Adjusted

Standardized Amounts

1. Standardization of Base-Year Costs or

Target Amounts

Section 1886(d)(2)(A) of the Act

required the establishment of base-year

cost data containing allowable operating

costs per discharge of inpatient hospital

services for each hospital. The preamble

to the September 1, 1983 interim final

rule (48 FR 39763) contains a detailed

explanation of how base-year cost data

were established in the initial

development of standardized amounts

for the prospective payment system and

how they are used in computing the

Federal rates.

Section 1886(d)(9)(B)(i) of the Act

required us to determine the Medicare

target amounts for each hospital located

in Puerto Rico for its cost reporting

period beginning in FY 1987. The

September 1, 1987 final rule (52 FR

33043, 33066) contains a detailed

explanation of how the target amounts

were determined and how they are used

in computing the Puerto Rico rates.

The standardized amounts are based

on per discharge averages of adjusted

hospital costs from a base period or, for

Puerto Rico, adjusted target amounts

from a base period, updated and

otherwise adjusted in accordance with

the provisions of section 1886(d) of the

Act. Sections 1886(d)(2)(B) and (d)(2)(C)

of the Act required us to update baseyear per discharge costs for FY 1984 and

then standardize the cost data in order

to remove the effects of certain sources

of cost variations among hospitals.

These effects include case-mix,

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

Hawaii, indirect medical education

costs, and payments to hospitals serving

a disproportionate share of low-income

patients.

Under sections 1886(d)(2)(H) and

(d)(3)(E) of the Act, in making payments

under the prospective payment system,

the Secretary estimates from time to

time the proportion of costs that are

wages and wage-related costs. Since

October 1, 1997, when the market basket

was last revised, we have considered

71.1 percent of costs to be labor-related

for purposes of the prospective payment

system. The average labor share in

Puerto Rico is 71.3 percent. We are

proposing to revise the dischargeweighted national standardized amount

for Puerto Rico to reflect the proportion

of discharges in large urban and other

areas from the FY 1999 MedPAR file.

2. Computing Large Urban and Other

Area Averages

Sections 1886(d)(2)(D) and (d)(3) of

the Act require the Secretary to compute

two average standardized amounts for

discharges occurring in a fiscal year: one

for hospitals located in large urban areas

and one for hospitals located in other

areas. In addition, under sections

1886(d)(9)(B)(iii) and (d)(9)(C)(i) of the

Act, the average standardized amount

per discharge must be determined for

hospitals located in urban and other

areas in Puerto Rico. Hospitals in Puerto

Rico are paid a blend of 50 percent of

the applicable Puerto Rico standardized

amount and 50 percent of a national

standardized payment amount.

Section 1886(d)(2)(D) of the Act

defines ‘‘urban area’’ as those areas

within a Metropolitan Statistical Area

(MSA). A ‘‘large urban area’’ is defined

as an urban area with a population of

more than 1 million. In addition, section

4009(i) of Public Law 100–203 provides

that a New England County

Metropolitan Area (NECMA) with a

population of more than 970,000 is

classified as a large urban area. As

required by section 1886(d)(2)(D) of the

Act, population size is determined by

the Secretary based on the latest

population data published by the

Bureau of the Census. Urban areas that

do not meet the definition of a ‘‘large

urban area’’ are referred to as ‘‘other

urban areas.’’ Areas that are not

included in MSAs are considered ‘‘rural

areas’’ under section 1886(d)(2)(D) of

the Act. Payment for discharges from

hospitals located in large urban areas

will be based on the large urban

standardized amount. Payment for

discharges from hospitals located in

other urban and rural areas will be

26328 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

based on the other standardized

amount.

Based on 1997 population estimates

published by the Bureau of the Census,

61 areas meet the criteria to be defined

as large urban areas for FY 2001. These

areas are identified by a footnote in

Table 4A.

3. Updating the Average Standardized

Amounts

Under section 1886(d)(3)(A) of the

Act, we update the area average

standardized amounts each year. In

accordance with section

1886(d)(3)(A)(iv) of the Act, we are

proposing to update the large urban

areas’ and the other areas’ average

standardized amounts for FY 2001 using

the applicable percentage increases

specified in section 1886(b)(3)(B)(i) of

the Act. Section 1886(b)(3)(B)(i)(XVI) of

the Act specifies that the update factor

for the standardized amounts for FY

2001 is equal to the market basket

percentage increase minus 1.1

percentage points for hospitals, except

sole community hospitals, in all areas.

The Act, as amended by section 406 of

Public Law 106–113, specifies an

update factor equal to the market basket

percentage increase for sole community

hospitals.

The percentage change in the market

basket reflects the average change in the

price of goods and services purchased

by hospitals to furnish inpatient care.

The most recent forecast of the hospital

market basket increase for FY 2001 is

3.1 percent. Thus, for FY 2001, the

proposed update to the average

standardized amounts equals 3.1

percent for sole community hospitals

and 2.0 percent for other hospitals.

As in the past, we are adjusting the

FY 2000 standardized amounts to

remove the effects of the FY 2000

geographic reclassifications and outlier

payments before applying the FY 2001

updates. That is, we are increasing the

standardized amounts to restore the

reductions that were made for the

effects of geographic reclassification and

outliers. We then apply the new offsets

to the standardized amounts for outliers

and geographic reclassifications for FY

2001.

Although the update factors for FY

2001 are set by law, we are required by

section 1886(e)(3) of the Act to report to

the Congress our initial

recommendation of update factors for

FY 2001 for both prospective payment

hospitals and hospitals excluded from

the prospective payment system. For

general information purposes, we have

included the report to Congress as

Appendix C to this proposed rule. Our

proposed recommendation on the

update factors (which is required by

sections 1886(e)(4)(A) and (e)(5)(A) of

the Act) is set forth as Appendix D to

this proposed rule.

4. Other Adjustments to the Average

Standardized Amounts

a. Recalibration of DRG Weights and

Updated Wage Index—Budget

Neutrality Adjustment

Section 1886(d)(4)(C)(iii) of the Act

specifies that, beginning in FY 1991, the

annual DRG reclassification and

recalibration of the relative weights

must be made in a manner that ensures

that aggregate payments to hospitals are

not affected. As discussed in section II

of the preamble, we normalized the

recalibrated DRG weights by an

adjustment factor, so that the average

case weight after recalibration is equal

to the average case weight prior to

recalibration.

Section 1886(d)(3)(E) of the Act

requires us to update the hospital wage

index on an annual basis beginning

October 1, 1993. This provision also

requires us to make any updates or

adjustments to the wage index in a

manner that ensures that aggregate

payments to hospitals are not affected

by the change in the wage index.

To comply with the requirement of

section 1886(d)(4)(C)(iii) of the Act that

DRG reclassification and recalibration of

the relative weights be budget neutral,

and the requirement in section

1886(d)(3)(E) of the Act that the updated

wage index be budget neutral, we used

historical discharge data to simulate

payments and compared aggregate

payments using the FY 2000 relative

weights and wage index to aggregate

payments using the proposed FY 2001

relative weights and wage index. The

same methodology was used for the FY

2000 budget neutrality adjustment. (See

the discussion in the September 1, 1992

final rule (57 FR 39832).) Based on this

comparison, we computed a budget

neutrality adjustment factor equal to

0.996506. We also adjust the Puerto

Rico-specific standardized amounts for

the effect of DRG reclassification and

recalibration. We computed a budget

neutrality adjustment factor for Puerto

Rico-specific standardized amounts

equal to 0.999753. These budget

neutrality adjustment factors are applied

to the standardized amounts without

removing the effects of the FY 2000

budget neutrality adjustments. We do

not remove the prior budget neutrality

adjustment because estimated aggregate

payments after the changes in the DRG

relative weights and wage index should

equal estimated aggregate payments

prior to the changes. If we removed the

prior year adjustment, we would not

satisfy this condition.

In addition, we are proposing to apply

these same adjustment factors to the

hospital-specific rates that are effective

for cost reporting periods beginning on

or after October 1, 2000. (See the

discussion in the September 4, 1990

final rule (55 FR 36073).)

b. Reclassified Hospitals—Budget

Neutrality Adjustment

Section 1886(d)(8)(B) of the Act

provides that, effective with discharges

occurring on or after October 1, 1988,

certain rural hospitals are deemed

urban. In addition, section 1886(d)(10)

of the Act provides for the

reclassification of hospitals based on

determinations by the Medicare

Geographic Classification Review Board

(MGCRB). Under section 1886(d)(10) of

the Act, a hospital may be reclassified

for purposes of the standardized amount

or the wage index, or both.

Under section 1886(d)(8)(D) of the

Act, the Secretary is required to adjust

the standardized amounts so as to

ensure that aggregate payments under

the prospective payment system after

implementation of the provisions of

sections 1886(d)(8)(B) and (C) and

1886(d)(10) of the Act are equal to the

aggregate prospective payments that

would have been made absent these

provisions. Section 152(b) of Public Law

106–113 requires reclassifications under

that subsection to be treated as

reclassifications under section

1886(d)(10) of the Act. To calculate this

budget neutrality factor, we used

historical discharge data to simulate

payments, and compared total

prospective payments (including IME

and DSH payments) prior to any

reclassifications to total prospective

payments after reclassifications. Based

on these simulations, we are applying

an adjustment factor of 0.994270 to

ensure that the effects of reclassification

are budget neutral.

The adjustment factor is applied to

the standardized amounts after

removing the effects of the FY 2000

budget neutrality adjustment factor. We

note that the proposed FY 2001

adjustment reflects wage index and

standardized amount reclassifications

approved by the MGCRB or the

Administrator as of February 29, 2000.

The effects of any additional

reclassification changes resulting from

appeals and reviews of the MGCRB

decisions for FY 2001 or from a

hospital’s request for the withdrawal of

a reclassification request will be

reflected in the final budget neutrality

adjustment published in the final rule

for FY 2001.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26329

c. Outliers

Section 1886(d)(5)(A) of the Act

provides for payments in addition to the

basic prospective payments for ‘‘outlier’’

cases, cases involving extraordinarily

high costs (cost outliers). Section

1886(d)(3)(B) of the Act requires the

Secretary to adjust both the large urban

and other area national standardized

amounts by the same factor to account

for the estimated proportion of total

DRG payments made to outlier cases.

Similarly, section 1886(d)(9)(B)(iv) of

the Act requires the Secretary to adjust

the large urban and other standardized

amounts applicable to hospitals in

Puerto Rico to account for the estimated

proportion of total DRG payments made

to outlier cases. Furthermore, under

section 1886(d)(5)(A)(iv) of the Act,

outlier payments for any year must be

projected to be not less than 5 percent

nor more than 6 percent of total

payments based on DRG prospective

payment rates.

i. FY 2001 outlier thresholds. For FY

2000, the fixed loss cost outlier

threshold was equal to the prospective

payment for the DRG plus $14,050

($12,827 for hospitals that have not yet

entered the prospective payment system

for capital-related costs). The marginal

cost factor for cost outliers (the percent

of costs paid after costs for the case

exceed the threshold) was 80 percent.

We applied an outlier adjustment to the

FY 2000 standardized amounts of

0.948859 for the large urban and other

areas rates and 0.9402 for the capital

Federal rate.

For FY 2001, we propose to establish

a fixed loss cost outlier threshold equal

to the prospective payment rate for the

DRG plus the IME and DSH payments

plus $17,250 ($15,763 for hospitals that

have not yet entered the prospective

payment system for capital-related

costs). In addition, we propose to

maintain the marginal cost factor for

cost outliers at 80 percent.

To calculate FY 2001 outlier

thresholds, we simulated payments by

applying FY 2001 rates and policies to

the December 1999 update of the FY

1999 MedPAR file and the December

1999 update of the provider-specific

file. As we have explained in the past,

to calculate outlier thresholds, we apply

a cost inflation factor to update costs for

the cases used to simulate payments.

For FY 1999, we used a cost inflation

factor of minus 1.724 percent. For FY

2000, we used a cost inflation factor (or

cost adjustment factor) of zero percent.

To set the proposed FY 2001 outlier

thresholds, we are using a cost inflation

factor of 1.0 percent. This factor reflects

our analysis of the best available cost

report data as well as calculations (using

the best available data) indicating that

the percentage of actual outlier

payments for FY 1999 is higher than we

projected before the beginning of FY

1999, and that the percentage of actual

outlier payments for FY 2000 will likely

be higher than we projected before the

beginning of FY 2000. The calculations

of ‘‘actual’’ outlier payments are

discussed further below.

ii. Other changes concerning outliers.

In accordance with section

1886(d)(5)(A)(iv) of the Act, we

calculated proposed outlier thresholds

so that outlier payments are projected to

equal 5.1 percent of total payments

based on DRG prospective payment

rates. In accordance with section

1886(d)(3)(E), we reduced the proposed

FY 2001 standardized amounts by the

same percentage to account for the

projected proportion of payments paid

to outliers.

As stated in the September 1, 1993

final rule (58 FR 46348), we establish

outlier thresholds that are applicable to

both inpatient operating costs and

inpatient capital-related costs. When we

modeled the combined operating and

capital outlier payments, we found that

using a common set of thresholds

resulted in a higher percentage of outlier

payments for capital-related costs than

for operating costs. We project that the

proposed thresholds for FY 2001 will

result in outlier payments equal to 5.1

percent of operating DRG payments and

5.8 percent of capital payments based

on the Federal rate.

The proposed outlier adjustment

factors to be applied to the standardized

amounts for FY 2001 are as follows:

Operating

standardized

amounts

Capital

federal

rate

National ......... 0.948865 0.9416

Puerto Rico ... 0.975408 0.9709

We apply the proposed outlier

adjustment factors after removing the

effects of the FY 2000 outlier adjustment

factors on the standardized amounts.

Table 8A in section VI of this

Addendum contains the updated

Statewide average operating cost-tocharge ratios for urban hospitals and for

rural hospitals to be used in calculating

cost outlier payments for those hospitals

for which the fiscal intermediary is

unable to compute a reasonable

hospital-specific cost-to-charge ratio.

These Statewide average ratios would

replace the ratios published in the July

30, 1999 final rule (64 FR 41620). Table

8B contains comparable Statewide

average capital cost-to-charge ratios.

These average ratios would be used to

calculate cost outlier payments for those

hospitals for which the fiscal

intermediary computes operating costto-charge ratios lower than 0.201132 or

greater than 1.308495 and capital costto-charge ratios lower than 0.01266 or

greater than 0.16901. This range

represents 3.0 standard deviations (plus

or minus) from the mean of the log

distribution of cost-to-charge ratios for

all hospitals. We note that the cost-tocharge ratios in Tables 8A and 8B would

be used during FY 2001 when hospitalspecific cost-to-charge ratios based on

the latest settled cost report are either

not available or outside the three

standard deviations range.

iii. FY 1999 and FY 2000 outlier

payments. In the July 30, 1999 final rule

(64 FR 41547), we stated that, based on

available data, we estimated that actual

FY 1999 outlier payments would be

approximately 6.3 percent of actual total

DRG payments. This was computed by

simulating payments using the March

1998 bill data available at the time. That

is, the estimate of actual outlier

payments did not reflect actual FY 1999

bills but instead reflected the

application of FY 1999 rates and

policies to available FY 1998 bills. Our

current estimate, using available FY

1999 bills, is that actual outlier

payments for FY 1999 were

approximately 7.5 percent of actual total

DRG payments. We note that the

MedPAR file for FY 1999 discharges

continues to be updated. Thus, the data

indicate that, for FY 1999, the

percentage of actual outlier payments

relative to actual total payments is

higher than we projected before FY 1999

(and thus exceeds the percentage by

which we reduced the standardized

amounts for FY 1999). In fact, the data

indicate that the proportion of actual

outlier payments for FY 1999 exceeds 6

percent. Nevertheless, consistent with

the policy and statutory interpretation

we have maintained since the inception

of the prospective payment system, we

do not plan to recoup money and make

retroactive adjustments to outlier

payments for FY 1999.

We currently estimate that actual

outlier payments for FY 2000 will be

approximately 6.1 percent of actual total

DRG payments, higher than the 5.1

percent we projected in setting outlier

policies for FY 2000. This estimate is

based on simulations using the

December 1999 update of the providerspecific file and the December 1999

update of the FY 1999 MedPAR file

(discharge data for FY 1999 bills). We

used these data to calculate an estimate

of the actual outlier percentage for FY

2000 by applying FY 2000 rates and

policies to available FY 1999 bills.

26330 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

5. FY 2001 Standardized Amounts

The adjusted standardized amounts

are divided into labor and nonlabor

portions. Table 1A (Table 1E for sole

community hospitals) contains the two

national standardized amounts that we

are proposing to be applicable to all

hospitals, except hospitals in Puerto

Rico. Under section 1886(d)(9)(A)(ii) of

the Act, the Federal portion of the

Puerto Rico payment rate is based on

the discharge-weighted average of the

national large urban standardized

amount and the national other

standardized amount (as set forth in

Table 1A). The labor and nonlabor

portions of the national average

standardized amounts for Puerto Rico

hospitals are set forth in Table 1C. This

table also includes the Puerto Rico

standardized amounts.

B. Adjustments for Area Wage Levels

and Cost of Living

Tables 1A, 1C and 1E, as set forth in

this Addendum, contain the proposed

labor-related and nonlabor-related

shares that would be used to calculate

the prospective payment rates for

hospitals located in the 50 States, the

District of Columbia, and Puerto Rico.

This section addresses two types of

adjustments to the standardized

amounts that are made in determining

the prospective payment rates as

described in this Addendum.

1. Adjustment for Area Wage Levels

Sections 1886(d)(3)(E) and

1886(d)(9)(C)(iv) of the Act require that

we make an adjustment to the laborrelated portion of the prospective

payment rates to account for area

differences in hospital wage levels. This

adjustment is made by multiplying the

labor-related portion of the adjusted

standardized amounts by the

appropriate wage index for the area in

which the hospital is located. In section

III of this preamble, we discuss the data

and methodology for the proposed FY

2001 wage index. The proposed wage

index is set forth in Tables 4A through

4F of this Addendum.

2. Adjustment for Cost-of-Living in

Alaska and Hawaii

Section 1886(d)(5)(H) of the Act

authorizes an adjustment to take into

account the unique circumstances of

hospitals in Alaska and Hawaii. Higher

labor-related costs for these two States

are taken into account in the adjustment

for area wages described above. For FY

2001, we propose to adjust the

payments for hospitals in Alaska and

Hawaii by multiplying the nonlabor

portion of the standardized amounts by

the appropriate adjustment factor

contained in the table below. If the

Office of Personnel Management

releases revised cost-of-living

adjustment factors before July 1, 2000,

we will publish them in the final rule

and use them in determining FY 2001

payments.

TABLE OF COST-OF-LIVING ADJUSTMENT FACTORS, ALASKA AND HAWAII

HOSPITALS

Alaska—All areas ............................... 1.25

Hawaii:

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

County of Hawaii ......................... 1.15

County of Kauai ........................... 1.225

County of Maui ............................ 1.225

County of Kalawao ...................... 1.225

(The above factors are based on data obtained from the U.S. Office of Personnel

Management.)

C. DRG Relative Weights

As discussed in section II of the

preamble, we have developed a

classification system for all hospital

discharges, assigning them into DRGs,

and have developed relative weights for

each DRG that reflect the resource

utilization of cases in each DRG relative

to Medicare cases in other DRGs. Table

5 of section VI of this Addendum

contains the relative weights that we are

proposing to use for discharges

occurring in FY 2001. These factors

have been recalibrated as explained in

section II of the preamble.

D. Calculation of Prospective Payment

Rates for FY 2001

General Formula for Calculation of

Prospective Payment Rates for FY 2001

Prospective payment rate for all

hospitals located outside of Puerto Rico

except sole community hospitals and

Medicare-dependent, small rural

hospitals = Federal rate.

Prospective payment rate for sole

community hospitals = Whichever of

the following rates yields the greatest

aggregate payment: the Federal national

rate, the updated hospital-specific rate

based on FY 1982 cost per discharge,

the updated hospital-specific rate based

on FY 1987 cost per discharge, or, if the

sole community hospital was paid for

its cost reporting period beginning

during FY 1999 on the basis of either its

FY 1982 or FY 1987 hospital-specific

rate and elects rebasing, 25 percent of its

updated hospital-specific rate based on

FY 1996 cost per discharge plus 75

percent of its updated FY 1982 or FY

1987 hospital-specific rate.

Prospective payment rate for

Medicare-dependent, small rural

hospitals = 100 percent of the Federal

rate, or, if the greater of the updated FY

1982 hospital-specific rate or the

updated FY 1987 hospital-specific rate

is higher than the Federal rate, 100

percent of the Federal rate plus 50

percent of the difference between the

applicable hospital-specific rate and the

Federal rate.

Prospective payment rate for Puerto

Rico = 50 percent of the Puerto Rico rate

+ 50 percent of a discharge-weighted

average of the national large urban

standardized amount and the Federal

national other standardized amount.

1. Federal Rate

For discharges occurring on or after

October 1, 2000 and before October 1,

2001, except for sole community

hospitals, Medicare-dependent, small

rural hospitals and hospitals in Puerto

Rico, the hospital’s payment is based

exclusively on the Federal national rate.

The payment amount is determined as

follows:

Step 1—Select the appropriate

national standardized amount

considering the type of hospital and

designation of the hospital as large

urban or other (see Table 1A or 1E in

section VI of this Addendum).

Step 2—Multiply the labor-related

portion of the standardized amount by

the applicable wage index for the

geographic area in which the hospital is

located (see Tables 4A, 4B, and 4C of

section VI of this Addendum).

Step 3—For hospitals in Alaska and

Hawaii, multiply the nonlabor-related

portion of the standardized amount by

the appropriate cost-of-living

adjustment factor.

Step 4—Add the amount from Step 2

and the nonlabor-related portion of the

standardized amount (adjusted, if

appropriate, under Step 3).

Step 5—Multiply the final amount

from Step 4 by the relative weight

corresponding to the appropriate DRG

(see Table 5 of section VI of this

Addendum).

2. Hospital-Specific Rate (Applicable

Only to Sole Community Hospitals and

Medicare-Dependent, Small Rural

Hospitals)

Section 1886(b)(3)(C) of the Act, as

amended by section 405 of Public Law

106–113, provides that sole community

hospitals are paid based on whichever

of the following rates yields the greatest

aggregate payment: the Federal national

rate, the updated hospital-specific rate

based on FY 1982 cost per discharge,

the updated hospital-specific rate based

on FY 1987 cost per discharge, or, if the

sole community hospital was paid for

its cost reporting period beginning

during FY 1999 on the basis of either its

FY 1982 or FY 1987 hospital-specific

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26331

rate and elects rebasing, 25 percent of its

updated hospital-specific rate based on

FY 1996 cost per discharge plus 75

percent of the updated FY 1982 or FY

1987 hospital-specific rate.

Section 1886(d)(5)(G) of the Act, as

amended by section 404 of Public Law

106–113, provides that Medicaredependent, small rural hospitals are

paid based on whichever of the

following rates yields the greatest

aggregate payment: the Federal rate or

the Federal rate plus 50 percent of the

difference between the Federal rate and

the greater of the updated hospitalspecific rate based on FY 1982 and FY

1987 cost per discharge.

Hospital-specific rates have been

determined for each of these hospitals

based on either the FY 1982 cost per

discharge, the FY 1987 cost per

discharge or, for qualifying sole

community hospitals, the FY 1996 cost

per discharge. For a more detailed

discussion of the calculation of the

hospital-specific rates, we refer the

reader to the September 1, 1983 interim

final rule (48 FR 39772); the April 20,

1990 final rule with comment (55 FR

15150); and the September 4, 1990 final

rule (55 FR 35994).

a. Updating the FY 1982 and FY 1987

Hospital-Specific Rates for FY 2001

We are proposing to increase the

hospital-specific rates by 3.1 percent

(the hospital market basket rate of

increase) for sole community hospitals

and by 2.0 percent (the hospital market

basket percentage increase minus 1.1

percentage points) for Medicaredependent, small rural hospitals for FY

2001. Section 1886(b)(3)(C)(iv) of the

Act provides that the update factor

applicable to the hospital-specific rates

for sole community hospitals equal the

update factor provided under section

1886(b)(3)(B)(iv) of the Act, which, for

sole community hospitals in FY 2001, is

the market basket rate of increase.

Section 1886(b)(3)(D) of the Act

provides that the update factor

applicable to the hospital-specific rates

for Medicare-dependent, small rural

hospitals equal the update factor

provided under section 1886(b)(3)(B)(iv)

of the Act, which, for FY 2001, is the

market basket rate of increase minus 1.1

percentage points.

b. Calculation of Hospital-Specific Rate

For sole community hospitals, the

applicable FY 2001 hospital-specific

rate would be the greater of the

following: the hospital-specific rate for

the preceding fiscal year, increased by

the applicable update factor (3.1

percent); or, if the hospital qualifies to

rebase its hospital-specific rate based on

cost per case in FY 1996 and elects

rebasing, 75 percent of the hospitalspecific rate for the preceding fiscal

year, increased by the applicable update

factor, plus 25 percent of its rebased FY

1996 hospital-specific rate updated

through FY 2001. For Medicaredependent, small rural hospitals, the

applicable FY 2001 hospital-specific

rate would be calculated by increasing

the hospital’s hospital-specific rate for

the preceding fiscal year by the

applicable update factor (2.0 percent),

which is the same as the update for all

prospective payment hospitals, except

sole community hospitals. In addition,

the hospital-specific rate would be

adjusted by the budget neutrality

adjustment factor (that is, 0.996506) as

discussed in section II.A.4.a. of this

Addendum. The resulting rate is used in

determining under which rate a sole

community hospital or Medicaredependent, small rural hospital is paid

for its discharges beginning on or after

October 1, 2000, based on the formula

set forth above.

3. General Formula for Calculation of

Prospective Payment Rates for Hospitals

Located in Puerto Rico Beginning On or

After October 1, 2000 and Before

October 1, 2001

a. Puerto Rico Rate

The Puerto Rico prospective payment

rate is determined as follows:

Step 1—Select the appropriate

adjusted average standardized amount

considering the large urban or other

designation of the hospital (see Table 1C

of section VI of the Addendum).

Step 2—Multiply the labor-related

portion of the standardized amount by

the appropriate Puerto Rico-specific

wage index (see Table 4F of section VI

of the Addendum).

Step 3—Add the amount from Step 2

and the nonlabor-related portion of the

standardized amount.

Step 4—Multiply the result in Step 3

by 50 percent.

Step 5—Multiply the amount from

Step 4 by the appropriate DRG relative

weight (see Table 5 of section VI of the

Addendum).

b. National Rate

The national prospective payment

rate is determined as follows:

Step 1—Multiply the labor-related

portion of the national average

standardized amount (see Table 1C of

section VI of the Addendum) by the

appropriate national wage index (see

Tables 4A and 4B of section VI of the

Addendum).

Step 2—Add the amount from Step 1

and the nonlabor-related portion of the

national average standardized amount.

Step 3—Multiply the result in Step 2

by 50 percent.

Step 4—Multiply the amount from

Step 3 by the appropriate DRG relative

weight (see Table 5 of section VI of the

Addendum).

The sum of the Puerto Rico rate and

the national rate computed above equals

the prospective payment for a given

discharge for a hospital located in

Puerto Rico.

III. Changes to the Payment Rates for

Blood Clotting Factor for Hemophilia

Inpatients

For the past 2 years in the Federal

Register (63 FR 41010 and 64 FR

41549), we have discussed section 4452

of Public Law 105–33, which amended

section 6011(d) of Public Law 101–239

to reinstate the add-on payment for the

costs of administering blood clotting

factor to Medicare beneficiaries who

have hemophilia and who are hospital

inpatients for discharges occurring on or

after October 1, 1997. In these prior

rules, we have described the payment

policy and specifically listed the

updated add-on payment amounts for

each clotting factor, as described by

HCFA’s Common Procedure Coding

System (HCPCS). Because we are not

changing the policy established 2 years

ago, we are proposing to discontinue

listing these amounts in the annual

proposed and final rules. Instead, the

program manuals will instruct fiscal

intermediaries to follow this policy and

obtain the average wholesale price

(AWP) for each relevant HCPCS from

either their corresponding local carrier

or the Medicare durable medical

equipment regional carrier (DMERC)

that has jurisdiction in their area.

Carriers already calculate the AWP

based on the median AWP of the several

products available in each category of

factor. The payment amount for clotting

factors covered by this inpatient benefit

is equal to 85 percent of the AWP,

subject to the Part A deductible and

coinsurance requirements.

The payment amounts will be

determined using the most recent AWP

data available to the carrier at the time

the intermediary performs these annual

update calculations. These amounts are

updated annually and are effective for

discharges beginning on or after October

1 of the current year through September

30 of the following year. Payment will

be made for blood clotting factor only if

there is an ICD–9–CM diagnosis code for

hemophilia included on the bill.

26332 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

IV. Proposed Changes to Payment Rates

for Inpatient Capital-Related Costs for

FY 2001

The prospective payment system for

hospital inpatient capital-related costs

was implemented for cost reporting

periods beginning on or after October 1,

1991. Effective with that cost reporting

period and during a 10-year transition

period extending through FY 2001,

hospital inpatient capital-related costs

are paid on the basis of an increasing

proportion of the capital prospective

payment system Federal rate and a

decreasing proportion of a hospital’s

historical costs for capital.

The basic methodology for

determining Federal capital prospective

rates is set forth at §§ 412.308 through

412.352. Below we discuss the factors

that we used to determine the proposed

Federal rate and the hospital-specific

rates for FY 2001. The rates will be

effective for discharges occurring on or

after October 1, 2000.

For FY 1992, we computed the

standard Federal payment rate for

capital-related costs under the

prospective payment system by

updating the FY 1989 Medicare

inpatient capital cost per case by an

actuarial estimate of the increase in

Medicare inpatient capital costs per

case. Each year after FY 1992, we

update the standard Federal rate, as

provided in § 412.308(c)(1), to account

for capital input price increases and

other factors. Also, § 412.308(c)(2)

provides that the Federal rate is

adjusted annually by a factor equal to

the estimated proportion of outlier

payments under the Federal rate to total

capital payments under the Federal rate.

In addition, § 412.308(c)(3) requires that

the Federal rate be reduced by an

adjustment factor equal to the estimated

proportion of payments for exceptions

under § 412.348. Furthermore,

§ 412.308(c)(4)(ii) requires that the

Federal rate be adjusted so that the

annual DRG reclassification and the

recalibration of DRG weights and

changes in the geographic adjustment

factor are budget neutral. For FYs 1992

through 1995, § 412.352 required that

the Federal rate also be adjusted by a

budget neutrality factor so that aggregate

payments for inpatient hospital capital

costs were projected to equal 90 percent

of the payments that would have been

made for capital-related costs on a

reasonable cost basis during the fiscal

year. That provision expired in FY 1996.

Section 412.308(b)(2) describes the 7.4

percent reduction to the rate that was

made in FY 1994, and § 412.308(b)(3)

describes the 0.28 percent reduction to

the rate made in FY 1996 as a result of

the revised policy of paying for

transfers. In the FY 1998 final rule with

comment period (62 FR 45966), we

implemented section 4402 of Public

Law 105–33, which requires that for

discharges occurring on or after October

1, 1997, and before October 1, 2002, the

unadjusted standard Federal rate is

reduced by 17.78 percent. A small part

of that reduction will be restored

effective October 1, 2002.

For each hospital, the hospitalspecific rate was calculated by dividing

the hospital’s Medicare inpatient

capital-related costs for a specified base

year by its Medicare discharges

(adjusted for transfers), and dividing the

result by the hospital’s case mix index

(also adjusted for transfers). The

resulting case-mix adjusted average cost

per discharge was then updated to FY

1992 based on the national average

increase in Medicare’s inpatient capital

cost per discharge and adjusted by the

exceptions payment adjustment factor

and the budget neutrality adjustment

factor to yield the FY 1992 hospitalspecific rate. Since FY 1992, the

hospital-specific rate has been updated

annually for inflation and for changes in

the exceptions payment adjustment

factor. For FYs 1992 through 1995, the

hospital-specific rate was also adjusted

by a budget neutrality adjustment factor.

For discharges occurring on or after

October 1, 1997, and before October 1,

2002, the unadjusted hospital-specific

rate is reduced by 17.78 percent. A

small part of this reduction will be

restored effective October 1, 2002.

To determine the appropriate budget

neutrality adjustment factor and the

exceptions payment adjustment factor,

we developed a dynamic model of

Medicare inpatient capital-related costs,

that is, a model that projects changes in

Medicare inpatient capital-related costs

over time. With the expiration of the

budget neutrality provision, the model

is still used to estimate the exceptions

payment adjustment and other factors.

The model and its application are

described in greater detail in Appendix

B of this proposed rule.

In accordance with section

1886(d)(9)(A) of the Act, under the

prospective payment system for

inpatient operating costs, hospitals

located in Puerto Rico are paid for

operating costs under a special payment

formula. Prior to FY 1998, hospitals in

Puerto Rico were paid a blended rate

that consisted of 75 percent of the

applicable standardized amount specific

to Puerto Rico hospitals and 25 percent

of the applicable national average

standardized amount. However,

effective October 1, 1997, as a result of

section 4406 of Public Law 105–33,

operating payments to hospitals in

Puerto Rico are based on a blend of 50

percent of the applicable standardized

amount specific to Puerto Rico hospitals

and 50 percent of the applicable

national average standardized amount.

In conjunction with this change to the

operating blend percentage, effective

with discharges on or after October 1,

1997, we compute capital payments to

hospitals in Puerto Rico based on a

blend of 50 percent of the Puerto Rico

rate and 50 percent of the Federal rate.

Section 412.374 provides for the use

of this blended payment system for

payments to Puerto Rico hospitals under

the prospective payment system for

inpatient capital-related costs.

Accordingly, for capital-related costs,

we compute a separate payment rate

specific to Puerto Rico hospitals using

the same methodology used to compute

the national Federal rate for capital.

A. Determination of Federal Inpatient

Capital-Related Prospective Payment

Rate Update

In the July 30, 1999 final rule (64 FR

41551), we established a Federal rate of

$377.03 for FY 2000. As a result of the

changes we are proposing to the factors

used to establish the Federal rate in this

addendum, the proposed FY 2001

Federal rate is $383.06.

In the discussion that follows, we

explain the factors that were used to

determine the proposed FY 2001

Federal rate. In particular, we explain

why the proposed FY 2001 Federal rate

has increased 1.60 percent compared to

the FY 2000 Federal rate. We also

estimate aggregate capital payments will

increase by 5.89 percent during this

same period. This increase is primarily

due to the increase in the number of

hospital admissions, the increase in

case-mix, and the increase in the

Federal blend percentage from 90 to 100

percent for fully prospective payment

hospitals.

Total payments to hospitals under the

prospective payment system are

relatively unaffected by changes in the

capital prospective payments. Since

capital payments constitute about 10

percent of hospital payments, a 1

percent change in the capital Federal

rate yields only about 0.1 percent

change in actual payments to hospitals.

Aggregate payments under the capital

prospective payment transition system

are estimated to increase in FY 2001

compared to FY 2000.

1. Standard Federal Rate Update

a. Description of the Update Framework

Under § 412.308(c)(1), the standard

Federal rate is updated on the basis of

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26333

an analytical framework that takes into

account changes in a capital input price

index and other factors. The update

framework consists of a capital input

price index (CIPI) and several policy

adjustment factors. Specifically, we

have adjusted the projected CIPI rate of

increase as appropriate each year for

case-mix index-related changes, for

intensity, and for errors in previous CIPI

forecasts. The proposed update factor

for FY 2001 under that framework is 0.9

percent. This proposal is based on a

projected 0.9 percent increase in the

CIPI, a 0.0 percent adjustment for

intensity, a 0.0 percent adjustment for

case-mix, a 0.0 percent adjustment for

the FY 1999 DRG reclassification and

recalibration, and a forecast error

correction of 0.0 percent. We explain

the basis for the FY 2001 CIPI projection

in section II.D of this Addendum. In this

section IV of the Addendum, we

describe the policy adjustments that

have been applied.

The case-mix index is the measure of

the average DRG weight for cases paid

under the prospective payment system.

Because the DRG weight determines the

prospective payment for each case, any

percentage increase in the case-mix

index corresponds to an equal

percentage increase in hospital

payments.

The case-mix index can change for

any of several reasons:

• The average resource use of

Medicare patients changes (‘‘real’’ casemix change);

• Changes in hospital coding of

patient records result in higher weight

DRG assignments (‘‘coding effects’’); and

• The annual DRG reclassification

and recalibration changes may not be

budget neutral (‘‘reclassification

effect’’).

We define real case-mix change as

actual changes in the mix (and resource

requirements) of Medicare patients as

opposed to changes in coding behavior

that result in assignment of cases to

higher weighted DRGs but do not reflect

higher resource requirements. In the

update framework for the prospective

payment system for operating costs, we

adjust the update upwards to allow for

real case-mix change, but remove the

effects of coding changes on the casemix index. We also remove the effect on

total payments of prior changes to the

DRG classifications and relative

weights, in order to retain budget

neutrality for all case-mix index-related

changes other than patient severity. (For

example, we adjusted for the effects of

the FY 1999 DRG reclassification and

recalibration as part of our FY 2001

update recommendation.) We have

adopted this case-mix index adjustment

in the capital update framework as well.

For FY 2001, we are projecting a 0.5

percent increase in the case-mix index.

We estimate that real case-mix increase

will equal 0.5 percent in FY 2001.

Therefore, the proposed net adjustment

for case-mix change in FY 2001 is 0.0

percentage points.

We estimate that FY 1999 DRG

reclassification and recalibration will

result in a 0.0 percent change in the

case-mix when compared with the casemix index that would have resulted if

we had not made the reclassification

and recalibration changes to the DRGs.

Therefore, we are making a 0.0 percent

adjustment for DRG reclassification and

recalibration in the update

recommendation for FY 2001.

The capital update framework

contains an adjustment for forecast

error. The input price index forecast is

based on historical trends and

relationships ascertainable at the time

the update factor is established for the

upcoming year. In any given year there

may be unanticipated price fluctuations

that may result in differences between

the actual increase in prices and the

forecast used in calculating the update

factors. In setting a prospective payment

rate under the framework, we make an

adjustment for forecast error only if our

estimate of the change in the capital

input price index for any year is off by

0.25 percentage points or more. There is

a 2-year lag between the forecast and the

measurement of the forecast error. A

forecast error of 0.0 percentage points

was calculated for the FY 1999 update.

That is, current historical data indicate

that the FY 1999 CIPI used in

calculating the forecasted FY 1999

update factor did not overstate or

understate realized price increases.

Therefore, we are making a 0.0 percent

adjustment for forecast error in the

update for FY 2001.

Under the capital prospective

payment system framework, we also

make an adjustment for changes in

intensity. We calculate this adjustment

using the same methodology and data as

in the framework for the operating

prospective payment system. The

intensity factor for the operating update

framework reflects how hospital

services are utilized to produce the final

product, that is, the discharge. This

component accounts for changes in the

use of quality-enhancing services,

changes in within-DRG severity, and

expected modification of practice

patterns to remove cost-ineffective

services.

We calculate case-mix constant

intensity as the change in total charges

per admission, adjusted for price level

changes (the CPI for hospital and related

services), and changes in real case-mix.

The use of total charges in the

calculation of the proposed intensity

factor makes it a total intensity factor,

that is, charges for capital services are

already built into the calculation of the

factor. Therefore, we have incorporated

the intensity adjustment from the

operating update framework into the

capital update framework. Without

reliable estimates of the proportions of

the overall annual intensity increases

that are due, respectively, to ineffective

practice patterns and to the combination

of quality-enhancing new technologies

and within-DRG complexity, we

assume, as in the revised operating

update framework, that one-half of the

annual increase is due to each of these

factors. The capital update framework

thus provides an add-on to the input

price index rate of increase of one-half

of the estimated annual increase in

intensity to allow for within-DRG

severity increases and the adoption of

quality-enhancing technology.

For FY 2001, we have developed a

Medicare-specific intensity measure

based on a 5-year average using FY 1995

through 1999 data. In determining casemix constant intensity, we found that

observed case-mix increase was 1.7

percent in FY 1995, 1.6 percent in FY

1996, 0.3 percent in FY 1997,¥0.4

percent in FY 1998, and ¥0.3 in FY

1999. For FY 1995 and FY 1996, we

estimate that real case-mix increase was

1.0 to 1.4 percent each year. The

estimate for those years is supported by

past studies of case-mix change by the

RAND Corporation. The most recent

study was ‘‘Has DRG Creep Crept Up?

Decomposing the Case Mix Index

Change Between 1987 and 1988’’ by

G.M. Carter, J.P. Newhouse, and D.A.

Relles, R–4098–HCFA/ProPAC (1991).

The study suggested that real case-mix

change was not dependent on total

change, but was usually a fairly steady

1.0 to 1.5 percent per year. We use 1.4

percent as the upper bound because the

RAND study did not take into account

that hospitals may have induced doctors

to document medical records more

completely in order to improve

payment. Following that study, we

consider up to 1.4 percent of observed

case-mix change as real for FY 1995

through FY 1999. Based on this

analysis, we believe that all of the

observed case-mix increase for FY 1997,

FY 1998, and FY 1999 is real. The

increases for FY 1995 and FY 1996 were

in excess of our estimate of real casemix increase.

We calculate case-mix constant

intensity as the change in total charges

per admission, adjusted for price level

26334 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

changes (the CPI for hospital and related

services), and changes in real case-mix.

Given estimates of real case-mix of 1.0

percent for FY 1995, 1.0 percent for FY

1996, 0.3 percent for FY 1997, ¥0.4 for

FY 1998, and ¥0.3 for FY 1999, we

estimate that case-mix constant

intensity declined by an average 0.7

percent during FYs 1995 through 1999,

for a cumulative decrease of 3.6 percent.

If we assume that real case-mix increase

was 1.4 percent for FY 1995, 1.4 percent

for FY 1996, 0.3 percent for FY 1997,

¥0.4 for FY 1998, and ¥0.3 for FY

1999, we estimate that case-mix

constant intensity declined by an

average 0.9 percent during FYs 1995

through 1999, for a cumulative decrease

of 4.5 percent. Since we estimate that

intensity has declined during that

period, we are recommending a 0.0

percent intensity adjustment for FY

2001. We note that the operating

recommendation addressed in

Appendix D of this proposed rule

reflects the possible range that a

negative adjustment could span (¥0.6

percent to 0.0 percent adjustment) based

on our analyses that intensity has

declined during that 5-year period.

While the calculation of the adjustment

for intensity is identical in both the

capital and the operating update

frameworks, consistent with past capital

update recommendations and the FY

2001 proposed operating

recommendation, we are not making a

negative adjustment for intensity in the

FY 2001 proposed capital update.

b. Comparison of HCFA and MedPAC

Update Recommendations

MedPAC’s FY 2001 update

recommendation for capital prospective

payments was not included in its March

2000 Report to Congress. However,

MedPAC did announce at its April 13,

2000 public meeting that it was

recommending a combined update of

between 3.5 percent and 4.0 percent for

operating and capital-related payments

for FY 2001. This recommendation is

higher than the current law amount as

prescribed by Public Law 105–33.

Because of the timing of the

announcement and our need for ample

time to perform a proper analysis of the

recommendation, we will address the

comparison of HCFA’s update

recommendation and MedPAC’s update

recommendation in the FY 2001 final

rule in August 2000 when we will have

had the opportunity to review the data

analyses that substantiate MedPAC’s

recommendation.

In section IV.A.l.a. of this Addendum,

we describe the basis of the components

used to develop our proposed 0.9

percent FY 2001 capital update factor as

shown in Table 1 below.

TABLE 1.—HCFA’S PROPOSED FY

2001 CAPITAL UPDATE FACTOR

Capital Input Price Index .............. 0.9

Intensity ........................................ 0.0

Case-Mix Adjustment Factors:

Projected Case-Mix Change ¥0.5

Real Across DRG Change .... 0.5

Subtotal .......................... 0.0

Effect of FY 1999 Reclassification

and Recalibration ...................... 0.0

Forecast Error Correction ............. 0.0

Total Update ................................. 0.9

2. Outlier Payment Adjustment Factor

Section 412.312(c) establishes a

unified outlier methodology for

inpatient operating and inpatient

capital-related costs. A single set of

thresholds is used to identify outlier

cases for both inpatient operating and

inpatient capital-related payments.

Outlier payments are made only on the

portion of the Federal rate that is used

to calculate the hospital’s inpatient

capital-related payments (for example,

100 percent for cost reporting periods

beginning in FY 2001 for hospitals paid

under the fully prospective payment

methodology). Section 412.308(c)(2)

provides that the standard Federal rate

for inpatient capital-related costs be

reduced by an adjustment factor equal

to the estimated proportion of outlier

payments under the Federal rate to total

inpatient capital-related payments

under the Federal rate. The outlier

thresholds are set so that operating

outlier payments are projected to be 5.1

percent of total operating DRG

payments. The inpatient capital-related

outlier reduction factor reflects the

inpatient capital-related outlier

payments that would be made if all

hospitals were paid 100 percent of the

Federal rate. For purposes of calculating

the outlier thresholds and the outlier

reduction factor, we model payments as

if all hospitals were paid 100 percent of

the Federal rate because, as explained

above, outlier payments are made only

on the portion of the Federal rate that

is included in the hospital’s inpatient

capital-related payments.

In the July 30, 1999 final rule, we

estimated that outlier payments for

capital in FY 2000 would equal 5.98

percent of inpatient capital-related

payments based on the Federal rate (64

FR 41553). Accordingly, we applied an

outlier adjustment factor of 0.9402 to

the Federal rate. Based on the

thresholds as set forth in section

II.A.4.d. of this Addendum, we estimate

that outlier payments for capital will

equal 5.84 percent of inpatient capitalrelated payments based on the Federal

rate in FY 2001. Therefore, we are

proposing an outlier adjustment factor

of 0.9416 to the Federal rate. Thus, the

projected percentage of capital outlier

payments to total capital standard

payments for FY 2001 is lower than the

percentage for FY 2000.

The outlier reduction factors are not

built permanently into the rates; that is,

they are not applied cumulatively in

determining the Federal rate. Therefore,

the proposed net change in the outlier

adjustment to the Federal rate for FY

2001 is 1.0015 (0.9416/0.9402). The

outlier adjustment increases the FY

2001 Federal rate by 0.15 percent

compared with the FY 2000 outlier

adjustment.

3. Budget Neutrality Adjustment Factor

for Changes in DRG Classifications and

Weights and the Geographic Adjustment

Factor

Section 412.308(c)(4)(ii) requires that

the Federal rate be adjusted so that

aggregate payments for the fiscal year

based on the Federal rate after any

changes resulting from the annual DRG

reclassification and recalibration and

changes in the GAF are projected to

equal aggregate payments that would

have been made on the basis of the

Federal rate without such changes. We

use the actuarial model, described in

Appendix B of this proposed rule, to

estimate the aggregate payments that

would have been made on the basis of

the Federal rate without changes in the

DRG classifications and weights and in

the GAF. We also use the model to

estimate aggregate payments that would

be made on the basis of the Federal rate

as a result of those changes. We then use

these figures to compute the adjustment

required to maintain budget neutrality

for changes in DRG weights and in the

GAF.

For FY 2000, we calculated a GAF/

DRG budget neutrality factor of 0.9985.

For FY 2001, we are proposing a GAF/

DRG budget neutrality factor of 0.9986.

The GAF/DRG budget neutrality factors

are built permanently into the rates; that

is, they are applied cumulatively in

determining the Federal rate. This

follows from the requirement that

estimated aggregate payments each year

be no more than they would have been

in the absence of the annual DRG

reclassification and recalibration and

changes in the GAF. The proposed

incremental change in the adjustment

from FY 2000 to FY 2001 is 0.9986. The

proposed cumulative change in the rate

due to this adjustment is 1.0060 (the

product of the incremental factors for

FY 1993, FY 1994, FY 1995, FY 1996,

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26335

FY 1997, FY 1998, FY 1999, FY 2000,

and the proposed incremental factor for

FY 2001:

0.9980 × 1.0053 × 0.9998

× 0.9994 × 0.9987 × 0.9989

× 1.0028 × 0.9985 × 0.9986 = 1.0000).

This proposed factor accounts for

DRG reclassifications and recalibration

and for changes in the GAF. It also

incorporates the effects on the GAF of

FY 2001 geographic reclassification

decisions made by the MGCRB

compared to FY 2000 decisions.

However, it does not account for

changes in payments due to changes in

the DSH and IME adjustment factors or

in the large urban add-on.

4. Exceptions Payment Adjustment

Factor

Section 412.308(c)(3) requires that the

standard Federal rate for inpatient

capital-related costs be reduced by an

adjustment factor equal to the estimated

proportion of additional payments for

exceptions under § 412.348 relative to

total payments under the hospitalspecific rate and Federal rate. We use

the model originally developed for

determining the budget neutrality

adjustment factor to determine the

exceptions payment adjustment factor.

We describe that model in Appendix B

to this proposed rule.

For FY 2000, we estimated that

exceptions payments would equal 2.70

percent of aggregate payments based on

the Federal rate and the hospitalspecific rate. Therefore, we applied an

exceptions reduction factor of 0.9730

(1¥0.0270) in determining the Federal

rate. For this proposed rule, we estimate

that exceptions payments for FY 2001

will equal 2.04 percent of aggregate

payments based on the Federal rate and

the hospital-specific rate. Therefore, we

are proposing an exceptions payment

reduction factor of 0.9796 to the Federal

rate for FY 2001. The proposed

exceptions reduction factor for FY 2001

is 0.68 percent higher than the factor for

FY 2000.

The exceptions reduction factors are

not built permanently into the rates; that

is, the factors are not applied

cumulatively in determining the Federal

rate. Therefore, the proposed net

adjustment to the FY 2001 Federal rate

is 0.9796/0.9730, or 1.0068.

5. Standard Capital Federal Rate for FY

2001

For FY 2000, the capital Federal rate

was $377.03. As a result of changes we

are proposing to the factors used to

establish the Federal rate, the proposed

FY 2001 Federal rate is $383.06. The

proposed Federal rate for FY 2001 was

calculated as follows:

• The proposed FY 2001 update

factor is 1.0090; that is, the proposed

update is 0.90 percent.

• The proposed FY 2001 budget

neutrality adjustment factor that is

applied to the standard Federal payment

rate for changes in the DRG relative

weights and in the GAF is 0.9986.

• The proposed FY 2001 outlier

adjustment factor is 0.9416.

• The proposed FY 2001 exceptions

payments adjustment factor is 0.9796.

Since the Federal rate has already

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

medical education costs, and payments

to hospitals serving a disproportionate

share of low-income patients, we

propose to make no additional

adjustments in the standard Federal rate

for these factors other than the budget

neutrality factor for changes in the DRG

relative weights and the GAF.

We are providing a chart that shows

how each of the factors and adjustments

for FY 2001 affected the computation of

the proposed FY 2001 Federal rate in

comparison to the FY 2000 Federal rate.

The proposed FY 2001 update factor has

the effect of increasing the Federal rate

by 0.90 percent compared to the rate in

FY 2000, while the proposed geographic

and DRG budget neutrality factor has

the effect of decreasing the Federal rate

by 0.14 percent. The proposed FY 2001

outlier adjustment factor has the effect

of increasing the Federal rate by 0.15

percent compared to FY 2000. The

proposed FY 2001 exceptions reduction

factor has the effect of increasing the

Federal rate by 0.68 percent compared

to the exceptions reduction for FY 2000.

The combined effect of all the proposed

changes is to increase the proposed

Federal rate by 1.60 percent compared

to the Federal rate for FY 2000.

COMPARISON OF FACTORS AND ADJUSTMENTS: FY 2000 FEDERAL RATE AND PROPOSED FY 2001 FEDERAL RATE

FY 2000 Proposed

FY 2001 Change Percentchange

Update factor 1 ................................................................................................. 1.0030 1.0090 1.0090 0.90

GAF/DRG Adjustment Factor1 ......................................................................... 0.9985 0.9986 0.9986 ¥0.14

Outlier Adjustment Factor2 .............................................................................. 0.9402 0.9416 1.0015 0.15

Exceptions Adjustment Factor2 ....................................................................... 0.9730 0.9796 1.0068 0.68

Federal Rate .................................................................................................... $377.03 $383.06 1.0160 1.60

1The update factor and the GAF/DRG budget neutrality factors are built permanently into the rates. Thus, for example, the incremental change

from FY 2000 to FY 2001 resulting from the application of the 0.9986 GAF/DRG budget neutrality factor for FY 2001 is 0.9986. 2The outlier reduction factor and the exceptions reduction factor are not built permanently into the rates; that is, these factors are not applied

cumulatively in determining the rates. Thus, for example, the net change resulting from the application of the FY 2001 outlier reduction factor is

0.9416/0.9402, or 1.0015.

6. Special Rate for Puerto Rico

Hospitals

As explained at the beginning of

section IV of this Addendum, hospitals

in Puerto Rico are paid based on 50

percent of the Puerto Rico rate and 50

percent of the Federal rate. The Puerto

Rico rate is derived from the costs of

Puerto Rico hospitals only, while the

Federal rate is derived from the costs of

all acute care hospitals participating in

the prospective payment system

(including Puerto Rico). To adjust

hospitals’ capital payments for

geographic variations in capital costs,

we apply a geographic adjustment factor

(GAF) to both portions of the blended

rate. The GAF is calculated using the

operating prospective payment system

wage index and varies depending on the

MSA or rural area in which the hospital

is located. We use the Puerto Rico wage

index to determine the GAF for the

Puerto Rico part of the capital-blended

rate and the national wage index to

determine the GAF for the national part

of the blended rate.

Since we implemented a separate

GAF for Puerto Rico in FY 1998, we also

apply separate budget neutrality

adjustments for the national GAF and

for the Puerto Rico GAF. However, we

apply the same budget neutrality factor

for DRG reclassifications and

recalibration nationally and for Puerto

Rico. The Puerto Rico GAF budget

26336 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

neutrality factor is 1.0031, while the

DRG adjustment is 1.0002, for a

combined cumulative adjustment of

1.0033.

In computing the payment for a

particular Puerto Rico hospital, the

Puerto Rico portion of the rate (50

percent) is multiplied by the Puerto

Rico-specific GAF for the MSA in which

the hospital is located, and the national

portion of the rate (50 percent) is

multiplied by the national GAF for the

MSA in which the hospital is located

(which is computed from national data

for all hospitals in the United States and

Puerto Rico). In FY 1998, we

implemented a 17.78 percent reduction

to the Puerto Rico rate as a result of

Public Law 105–33.

For FY 2000, before application of the

GAF, the special rate for Puerto Rico

hospitals was $174.81. With the changes

we are proposing to the factors used to

determine the rate, the proposed FY

2001 special rate for Puerto Rico is

$185.38.

B. Calculation of Inpatient CapitalRelated Prospective Payments for FY

2001

During the capital prospective

payment system transition period, a

hospital is paid for the inpatient capitalrelated costs under one of two payment

methodologies—the fully prospective

payment methodology or the holdharmless methodology. The payment

methodology applicable to a particular

hospital is determined when a hospital

comes under the prospective payment

system for capital-related costs by

comparing its hospital-specific rate to

the Federal rate applicable to the

hospital’s first cost reporting period

under the prospective payment system.

The applicable Federal rate was

determined by making adjustments as

follows:

• For outliers, by dividing the

standard Federal rate by the outlier

reduction factor for that fiscal year; and

• For the payment adjustments

applicable to the hospital, by

multiplying the hospital’s GAF,

disproportionate share adjustment

factor, and IME adjustment factor, when

appropriate.

If the hospital-specific rate is above

the applicable Federal rate, the hospital

is paid under the hold-harmless

methodology. If the hospital-specific

rate is below the applicable Federal rate,

the hospital is paid under the fully

prospective methodology.

For purposes of calculating payments

for each discharge under both the holdharmless payment methodology and the

fully prospective payment methodology,

the standard Federal rate is adjusted as

follows: (Standard Federal Rate) × (DRG

weight) × (GAF) × (Large Urban Add-on,

if applicable) × (COLA adjustment for

hospitals located in Alaska and Hawaii)

× (1 + Disproportionate Share

Adjustment Factor + IME Adjustment

Factor, if applicable).

The result is the adjusted Federal rate.

Payments under the hold-harmless

methodology are determined under one

of two formulas. A hold-harmless

hospital is paid the higher of the

following:

• 100 percent of the adjusted Federal

rate for each discharge; or

• An old capital payment equal to 85

percent (100 percent for sole community

hospitals) of the hospital’s allowable

Medicare inpatient old capital costs per

discharge for the cost reporting period

plus a new capital payment based on a

percentage of the adjusted Federal rate

for each discharge. The percentage of

the adjusted Federal rate equals the ratio

of the hospital’s allowable Medicare

new capital costs to its total Medicare

inpatient capital-related costs in the cost

reporting period.

Once a hospital receives payment

based on 100 percent of the adjusted

Federal rate in a cost reporting period

beginning on or after October 1, 1994 (or

the first cost reporting period after

obligated capital that is recognized as

old capital under § 412.302(c) is put in

use for patient care, if later), the hospital

continues to receive capital prospective

payment system payments on that basis

for the remainder of the transition

period.

Payment for each discharge under the

fully prospective methodology is based

on the applicable transition blend

percentage of the hospital-specific rate

and the adjusted Federal rate.

Thus, for FY 2001 payments under

the fully prospective methodology will

be based on 100 percent of the adjusted

Federal rate and zero percent of the

hospital-specific rate.

Hospitals also may receive outlier

payments for those cases that qualify

under the thresholds established for

each fiscal year. Section 412.312(c)

provides for a single set of thresholds to

identify outlier cases for both inpatient

operating and inpatient capital-related

payments. Outlier payments are made

only on that portion of the Federal rate

that is used to calculate the hospital’s

inpatient capital-related payments. For

fully prospective hospitals, that portion

is 100 percent of the Federal rate for

discharges occurring in cost reporting

periods beginning during FY 2001.

Thus, a fully prospective hospital will

receive 100 percent of the capitalrelated outlier payment calculated for

the case for discharges occurring in cost

reporting periods beginning in FY 2001.

For hold-harmless hospitals that are

paid 85 percent of their reasonable costs

for old inpatient capital, the portion of

the Federal rate that is included in the

hospital’s outlier payments is based on

the hospital’s ratio of Medicare

inpatient costs for new capital to total

Medicare inpatient capital costs. For

hold-harmless hospitals that are paid

100 percent of the Federal rate, 100

percent of the Federal rate is included

in the hospital’s outlier payments.

The proposed outlier thresholds for

FY 2001 are in section II.A.4.c. of this

Addendum. For FY 2001, a case

qualifies as a cost outlier if the cost for

the case (after standardization for the

indirect teaching adjustment and

disproportionate share adjustment) is

greater than the prospective payment

rate for the DRG plus $17,250.

During the capital prospective

payment system transition period, a

hospital also may receive an additional

payment under an exceptions process if

its total inpatient capital-related

payments are less than a minimum

percentage of its allowable Medicare

inpatient capital-related costs. The

minimum payment level is established

by class of hospital under § 412.348.

The proposed minimum payment levels

for portions of cost reporting periods

occurring in FY 2001 are:

• Sole community hospitals (located

in either an urban or rural area), 90

percent;

• Urban hospitals with at least 100

beds and a disproportionate share

patient percentage of at least 20.2

percent or that receive more than 30

percent of their net inpatient care

revenues from State or local

governments for indigent care, 80

percent; and

• All other hospitals, 70 percent.

Under § 412.348(d), the amount of the

exceptions payment is determined by

comparing the cumulative payments

made to the hospital under the capital

prospective payment system to the

cumulative minimum payment levels

applicable to the hospital for each cost

reporting period subject to that system.

Any amount by which the hospital’s

cumulative payments exceed its

cumulative minimum payment is

deducted from the additional payment

that would otherwise be payable for a

cost reporting period. New hospitals are

exempted from the capital prospective

payment system for their first 2 years of

operation and are paid 85 percent of

their reasonable costs during that

period. A new hospital’s old capital

costs are its allowable costs for capital

assets that were put in use for patient

care on or before the later of December

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26337

31, 1990, or the last day of the hospital’s

base year cost reporting period, and are

subject to the rules pertaining to old

capital and obligated capital as of the

applicable date. Effective with the third

year of operation, we will pay the

hospital under either the fully

prospective methodology, using the

appropriate transition blend in that

Federal fiscal year, or the hold-harmless

methodology. If the hold-harmless

methodology is applicable, the holdharmless payment for assets in use

during the base period would extend for

8 years, even if the hold-harmless

payments extend beyond the normal

transition period.

C. Capital Input Price Index

1. Background

Like the operating input price index,

the capital input price index (CIPI) is a

fixed-weight price index that measures

the price changes associated with costs

during a given year. The CIPI differs

from the operating input price index in

one important aspect—the CIPI reflects

the vintage nature of capital, which is

the acquisition and use of capital over

time. Capital expenses in any given year

are determined by the stock of capital in

that year (that is, capital that remains on

hand from all current and prior capital

acquisitions). An index measuring

capital price changes needs to reflect

this vintage nature of capital. Therefore,

the CIPI was developed to capture the

vintage nature of capital by using a

weighted-average of past capital

purchase prices up to and including the

current year.

Using Medicare cost reports,

American Hospital Association (AHA)

data, and Securities Data Company data,

a vintage-weighted price index was

developed to measure price increases

associated with capital expenses. We

periodically update the base year for the

operating and capital input prices to

reflect the changing composition of

inputs for operating and capital

expenses. Currently, the CIPI is based to

FY 1992 and was last rebased in 1997.

The most recent explanation of the CIPI

was discussed in the final rule with

comment period for FY 1998 published

on August 29, 1997 (62 FR 46050).

2. Forecast of the CIPI for Federal Fiscal

Year 2001

We are forecasting the CIPI to increase

0.9 percent for FY 2001. This reflects a

projected 1.5 percent increase in

vintage-weighted depreciation prices

(building and fixed equipment, and

movable equipment) and a 3.5 percent

increase in other capital expense prices

in FY 2001, partially offset by a 1.3

percent decline in vintage-weighted

interest rates in FY 2001. The weighted

average of these three factors produces

the 0.9 percent increase for the CIPI as

a whole.

V. Proposed Changes to Payment Rates

for Excluded Hospitals and Hospital

Units: Rate-of-Increase Percentages

The inpatient operating costs of

hospitals and hospital units excluded

from the prospective payment system

are subject to rate-of-increase limits

established under the authority of

section 1886(b) of the Act, which is

implemented in regulations at § 413.40.

Under these limits, a hospital-specific

target amount (expressed in terms of the

inpatient operating cost per discharge)

is set for each hospital, based on the

hospital’s own historical cost

experience trended forward by the

applicable rate-of-increase percentages

(update factors). In the case of a

psychiatric hospital or hospital unit, a

rehabilitation hospital or hospital unit,

or a long-term care hospital, the target

amount may not exceed the updated

figure for the 75th percentile of target

amounts adjusted to take into account

differences between average wagerelated costs in the area of the hospital

and the national average of such costs

within the same class of hospital for

hospitals and units in the same class

(psychiatric, rehabilitation, and longterm care) for cost reporting periods

ending during FY 1996. The target

amount is multiplied by the number of

Medicare discharges in a hospital’s cost

reporting period, yielding the ceiling on

aggregate Medicare inpatient operating

costs for the cost reporting period.

Each hospital-specific target amount

is adjusted annually, at the beginning of

each hospital’s cost reporting period, by

an applicable update factor.

Section 1886(b)(3)(B) of the Act,

which is implemented in regulations at

§ 413.40(c)(3)(vii), provides that for cost

reporting periods beginning on or after

October 1, 1998 and before October 1,

2002, the update factor for a hospital or

unit depends on the hospital’s or

hospital unit’s costs in relation to the

ceiling for the most recent cost reporting

period for which information is

available. For hospitals with costs

exceeding the ceiling by 10 percent or

more, the update factor is the market

basket increase. For hospitals with costs

exceeding the ceiling by less than 10

percent, the update factor is the market

basket minus .25 percent for each

percentage point by which costs are less

than 10 percent over the ceiling. For

hospitals with costs equal to or less than

the ceiling but greater than 66.7 percent

of the ceiling, the update factor is the

greater of 0 percent or the market basket

minus 2.5 percent. For hospitals with

costs that do not exceed 66.7 percent of

the ceiling, the update factor is 0.

The most recent forecast of the market

basket increase for FY 2001 for hospitals

and hospital units excluded from the

prospective payment system is 3.1

percent. Therefore, the update to a

hospital’s target amount for its cost

reporting period beginning in FY 2001

would be between 0.6 and 3.1 percent,

or 0 percent, depending on the

hospital’s or unit’s costs in relation to

its rate-of-increase limit.

In addition, § 413.40(c)(4)(iii) requires

that for cost reporting periods beginning

on or after October 1, 1998 and before

October 1, 2002, the target amount for

each psychiatric hospital or hospital

unit, rehabilitation hospital or hospital

unit, and long-term care hospital cannot

exceed a cap on the target amounts for

hospitals in the same class.

Section 121 of Public Law 106–113

amended section 1886(b)(3)(H) of the

Act to provide for an appropriate wage

adjustment to the caps on the target

amounts for psychiatric hospitals and

units, rehabilitation hospitals and units,

and long-term care hospitals, effective

for cost reporting periods beginning on

or after October 1, 1999, through

September 30, 2002. We intend to

publish an interim final rule with

comment period implementing this

provision for cost reporting periods

beginning on or after October 1, 1999

and before October 1, 2000. This

proposed rule addresses the wage

adjustment to the caps for cost reporting

periods beginning on or after October 1,

2000.

As discussed in section VI. of the

preamble of this proposed rule, under

section 121 of Public Law 106–113, the

cap on the target amount per discharge

is determined by adding the hospital’s

nonlabor-related portion of the national

75th percentile cap to its wage-adjusted,

labor-related portion of the national

75th percentile cap (the labor-related

portion of costs equals 0.71553 and the

nonlabor-related portion of costs equals

0.28447). A hospital’s wage-adjusted,

labor-related portion of the target

amount is calculated by multiplying the

labor-related portion of the national

75th percentile cap for the hospital’s

class by the wage index under the

hospital inpatient prospective payment

system (see § 412.63), without taking

into account reclassifications under

sections 1886(a)(10) and (d)(8)(B) of the

Act.

For cost reporting periods beginning

in FY 2001, the proposed caps are as

follows:

26338 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Class of excluded hospital

or unit

Laborrelated

share

Nonlaborrelated

share

Psychiatric ........ $8,106 $3,223

Rehabilitation .... 15,108 6,007

Long-Term Care 29,312 11,654

Regulations at § 413.40(d) specify the

formulas for determining bonus and

relief payments for excluded hospitals

and specify established criteria for an

additional bonus payment for

continuous improvement. Regulations at

§413.40(f)(2)(ii) specify the payment

methodology for new hospitals and

hospital units (psychiatric,

rehabilitation, and long-term care)

effective October 1, 1997.

VI. Tables

This section contains the tables

referred to throughout the preamble to

this proposed rule and in this

Addendum. For purposes of this

proposed rule, and to avoid confusion,

we have retained the designations of

Tables 1 through 5 that were first used

in the September 1, 1983 initial

prospective payment final rule (48 FR

39844). Tables 1A, 1C, 1D, 1E (a new

table, as described in section II of this

Addendum), 3C, 4A, 4B, 4C, 4D, 4E, 4F,

5, 6A, 6B, 6C, 6D, 6E, 6F, 6G, 7A, 7B,

8A, and 8B are presented below. The

tables presented below are as follows:

Table 1A—National Adjusted Operating

Standardized Amounts, Labor/

Nonlabor

Table 1C—Adjusted Operating

Standardized Amounts for Puerto

Rico, Labor/Nonlabor

Table 1D—Capital Standard Federal

Payment Rate

Table 1E—National Adjusted Operating

Standardized Amounts for Sole

Community Hospitals, Labor/

Nonlabor

Table 3C—Hospital Case Mix Indexes

for Discharges Occurring in Federal

Fiscal Year 1999 and Hospital

Average Hourly Wage for Federal

Fiscal Year 2001 Wage Index

Table 4A—Wage Index and Capital

Geographic Adjustment Factor

(GAF) for Urban Areas

Table 4B—Wage Index and Capital

Geographic Adjustment Factor

(GAF) for Rural Areas

Table 4C—Wage Index and Capital

Geographic Adjustment Factor

(GAF) for Hospitals That Are

Reclassified

Table 4D—Average Hourly Wage for

Urban Areas

Table 4E—Average Hourly Wage for

Rural Areas

Table 4F—Puerto Rico Wage Index and

Capital Geographic Adjustment

Factor (GAF)

Table 5—List of Diagnosis Related

Groups (DRGs), Relative Weighting

Factors, Geometric Mean Length of

Stay, and Arithmetic Mean Length

of Stay Points Used in the

Prospective Payment System

Table 6A—New Diagnosis Codes

Table 6B—New Procedure Codes

Table 6C—Invalid Diagnosis Codes

Table 6D—Revised Diagnosis Code

Titles

Table 6E—Revised Procedure Codes

Table 6F—Additions to the CC

Exclusions List

Table 6G—Deletions to the CC

Exclusions List

Table 7A—Medicare Prospective

Payment System Selected Percentile

Lengths of Stay FY 99 MEDPAR

Update 12/99 GROUPER V17.0

Table 7B—Medicare Prospective

Payment System Selected Percentile

Lengths of Stay FY 99 MEDPAR

Update 12/99 GROUPER V18.0

Table 8A—Statewide Average Operating

Cost-to-Charge Ratios for Urban and

Rural Hospitals (Case Weighted)

March 2000

Table 8B—Statewide Average Capital

Cost-to-Charge Ratios (Case

Weighted) March 2000

TABLE 1A.—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR

Large urban areas Other areas

Labor-related Nonlabor-related Labor-related Nonlabor related

$2,856.71 $1,161.17 $2,811.49 $1,142.79

TABLE 1C.—ADJUSTED OPERATING STANDARDIZED AMOUNTS FOR PUERTO RICO, LABOR/NONLABOR

Large urban areas Other areas

Labor Nonlabor Labor Nonlabor

National ............................................................................................................ $2,832.11 $1,151.16 $2,832.11 $1,151.16

Puerto Rico ...................................................................................................... 1,373.19 552.74 1,351.45 543.99

TABLE 1D.—CAPITAL STANDARD FEDERAL PAYMENT RATE

Rate

National .................................................................................................................................................................................................... $383.06

Puerto Rico .............................................................................................................................................................................................. 185.38

TABLE 1E.—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS FOR SOLE COMMUNITY HOSPITALS, LABOR/

NONLABOR

Large urban areas Other areas

Labor-related Nonlabor-related Labor-related Nonlabor-related

$2,887.52 $1,173.69 $2,841.81 $1,155.11

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TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS

Urban area

(constituent counties)

Wage

index GAF

0040 Abilene, TX ....... 0.8318 0.8815

Taylor, TX

0060 Aguadilla, PR .... 0.4826 0.6072

Aguada, PR

Aguadilla, PR

Moca, PR

0080 Akron, OH ......... 1.0557 1.0378

Portage, OH

Summit, OH

0120 Albany, GA ........ 1.1854 1.1235

Dougherty, GA

Lee, GA

0160 Albany-Schenectady-Troy, NY ............ 0.8563 0.8992

Albany, NY

Montgomery, NY

Rensselaer, NY

Saratoga, NY

Schenectady, NY

Schoharie, NY

0200 Albuquerque,

NM ............................. 0.9365 0.9561

Bernalillo, NM

Sandoval, NM

Valencia, NM

0220 Alexandria, LA ... 0.8262 0.8774

Rapides, LA

0240 Allentown-Bethlehem-Easton, PA ..... 0.9849 0.9896

Carbon, PA

Lehigh, PA

Northampton, PA

0280 Altoona, PA ....... 0.9262 0.9489

Blair, PA

0320 Amarillo, TX Potter, TX ....................... 0.8663 0.9064

Randall, TX

0380 Anchorage, AK .. 1.2967 1.1947

Anchorage, AK

0440 Ann Arbor, MI .... 1.1283 1.0862

Lenawee, MI

Livingston, MI

Washtenaw, MI

0450 Anniston, AL ...... 0.8331 0.8825

Calhoun, AL

0460 Appleton-Oshkosh-Neenah, WI ...... 0.9101 0.9375

Calumet, WI

Outagamie, WI

Winnebago, WI

0470 Arecibo, PR ....... 0.4540 0.5823

Arecibo, PR

Camuy, PR

Hatillo, PR

0480 Asheville, NC .... 0.9527 0.9674

Buncombe, NC

Madison, NC

0500 Athens, GA ........ 0.9829 0.9883

Clarke, GA

Madison, GA

Oconee, GA

0520 1Atlanta, GA ..... 0.9945 0.9962

Barrow, GA

Bartow, GA

Carroll, GA

Cherokee, GA

Clayton, GA

Cobb, GA

Coweta, GA

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

DeKalb, GA

Douglas, GA

Fayette, GA

Forsyth, GA

Fulton, GA

Gwinnett, GA

Henry, GA

Newton, GA

Paulding, GA

Pickens, GA

Rockdale, GA

Spalding, GA

Walton, GA

0560 Atlantic-Cape

May, NJ ..................... 1.1220 1.0820

Atlantic, NJ

Cape May, NJ

0580 Auburn-Opelika,

AL .............................. 0.8170 0.8707

Lee, AL

0600 Augusta-Aiken,

GA–SC ...................... 0.9226 0.9463

Columbia, GA

McDuffie, GA

Richmond, GA

Aiken, SC

Edgefield, SC

0640 1Austin-San

Marcos, TX ................ 0.9436 0.9610

Bastrop, TX

Caldwell, TX

Hays, TX

Travis, TX

Williamson, TX

0680 2Bakersfield, CA 0.9966 0.9977

Kern, CA

0720 1Baltimore, MD 0.9485 0.9644

Anne Arundel, MD

Baltimore, MD

Baltimore City, MD

Carroll, MD

Harford, MD

Howard, MD

Queen Anne’s, MD

0733 Bangor, ME ....... 0.9613 0.9733

Penobscot, ME

0743 BarnstableYarmouth, MA ........... 1.3938 1.2553

Barnstable, MA

0760 Baton Rouge, LA 0.8964 0.9278

Ascension, LA

East Baton Rouge,

LA

Livingston, LA

West Baton Rouge,

LA

0840 Beaumont-Port

Arthur, TX .................. 0.8361 0.8846

Hardin, TX

Jefferson, TX

Orange, TX

0860 Bellingham, WA 1.1491 1.0998

Whatcom, WA

0870 2Benton Harbor,

MI .............................. 0.9133 0.9398

Berrien, MI

0875 1Bergen-Passaic, NJ ..................... 1.1727 1.1153

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Bergen, NJ

Passaic, NJ

0880 Billings, MT ....... 0.9577 0.9708

Yellowstone, MT

0920 Biloxi-GulfportPascagoula, MS ........ 0.8282 0.8789

Hancock, MS

Harrison, MS

Jackson, MS

0960 Binghamton, NY 0.8723 0.9107

Broome, NY

Tioga, NY

1000 Birmingham, AL 0.8574 0.9000

Blount, AL

Jefferson, AL

St. Clair, AL

Shelby, AL

1010 Bismarck, ND .... 0.8016 0.8595

Burleigh, ND

Morton, ND

1020 BloomingtonNormal, IL ................. 0.8854 0.9200

Monroe, IN

1040 BloomingtonNormal, IL ................. 0.9294 0.9511

McLean, IL

1080 Boise City, ID .... 0.9133 0.9398

Ada, ID

Canyon, ID

1123 1 2BostonWorcester-LawrenceLowell-Brockton, MA–

NH (MA Hospitals) .... 1.1348 1.0905

Bristol, MA

Essex, MA

Middlesex, MA

Norfolk, MA

Plymouth, MA

Suffolk, MA

Worcester, MA

Hillsborough, NH

Merrimack, NH

Rockingham, NH

Strafford, NH

1123 1BostonWorcester-LawrenceLowell-Brockton, MA–

NH (NH Hospitals) .... 1.1239 1.0833

Bristol, MA

Essex, MA

Middlesex, MA

Norfolk, MA

Plymouth, MA

Suffolk, MA

Worcester, MA

Hillsborough, NH

Merrimack, NH

Rockingham, NH

Strafford, NH

1125 BoulderLongmont, CO ........... 0.9798 0.9861

Boulder, CO

1145 Brazoria, TX ...... 0.8751 0.9127

Brazoria, TX

1150 Bremerton, WA 1.1069 1.0720

Kitsap, WA

1240 Brownsville-Harlingen-San Benito, TX 0.8794 0.9158

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26363

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Cameron, TX

1260 Bryan-College

Station, TX ................ 0.8306 0.8806

Brazos, TX

1280 1Buffalo-Niagara

Falls, NY ................... 0.9566 0.9701

Erie, NY

Niagara, NY

1303 Burlington, VT ... 0.9624 0.9741

Chittenden, VT

Franklin, VT

Grand Isle, VT

1310 Caguas, PR ....... 0.4591 0.5868

Caguas, PR

Cayey, PR

Cidra, PR

Gurabo, PR

San Lorenzo, PR

1320 2 CantonMassillon, OH ............ 0.8778 0.9146

Carroll, OH

Stark, OH

1350 2 Casper, WY .... 0.9046 0.9336

Natrona, WY

1360 Cedar Rapids, IA 0.8396 0.8872

Linn, IA

1400 Champaign-Urbana, IL ..................... 0.9353 0.9552

Champaign, IL

1440 Charleston-North

Charleston, SC .......... 0.9094 0.9370

Berkeley, SC

Charleston, SC

Dorchester, SC

1480 Charleston, WV 0.9324 0.9532

Kanawha, WV

Putnam, WV

1520 1 Charlotte-Gastonia-Rock Hill, NC–

SC ............................. 0.9307 0.9520

Cabarrus, NC

Gaston, NC

Lincoln, NC

Mecklenburg, NC

Rowan, NC

Stanly, NC

Union, NC

York, SC

1540 Charlottesville,

VA ............................. 1.0744 1.0504

Albemarle, VA

Charlottesville City,

VA

Fluvanna, VA

Greene, VA

1560 Chattanooga,

TN–GA ...................... 1.0083 1.0057

Catoosa, GA

Dade, GA

Walker, GA

Hamilton, TN

Marion, TN

1580 2 Cheyenne, WY 0.9046 0.9336

Laramie, WY

1600 1 Chicago, IL ...... 1.1027 1.0692

Cook, IL

DeKalb, IL

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

DuPage, IL

Grundy, IL

Kane, IL

Kendall, IL

Lake, IL

McHenry, IL

Will, IL

1620 Chico-Paradise,

CA ............................. 1.0684 1.0464

Butte, CA

1640 1Cincinnati, OH–

KY–IN ........................ 0.9330 0.9536

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 ........ 0.8393 0.8869

Christian, KY

Montgomery, TN

1680 1 Cleveland-Lorain-Elyria, OH .......... 0.9649 0.9758

Ashtabula, OH

Cuyahoga, OH

Geauga, OH

Lake, OH

Lorain, OH

Medina, OH

1720 Colorado

Springs, CO .............. 0.9770 0.9842

El Paso, CO

1740 Columbia, MO ... 0.8600 0.9019

Boone, MO

1760 Columbia, SC .... 0.9641 0.9753

Lexington, SC

Richland, SC

1800 Columbus, GA–

AL .............................. 0.8607 0.9024

Russell, AL

Chattahoochee, GA

Harris, GA

Muscogee, GA

1840 1 Columbus, OH 0.9741 0.9822

Delaware, OH

Fairfield, OH

Franklin, OH

Licking, OH

Madison, OH

Pickaway, OH

1880 Corpus Christi,

TX .............................. 0.8496 0.8944

Nueces, TX

San Patricio, TX

1890 Corvallis, OR ..... 1.1439 1.0964

Benton, OR

1900 2 Cumberland,

MD–WV (MD Hospitals) ......................... 0.8717 0.9103

Allegany, MD

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Mineral, WV

1900 Cumberland,

MD–WV (WV Hospital) .......................... 0.8437 0.8901

Allegany, MD

Mineral, WV

1920 1 Dallas, TX ....... 0.9220 0.9459

Collin, TX

Dallas, TX

Denton, TX

Ellis, TX

Henderson, TX

Hunt, TX

Kaufman, TX

Rockwall, TX

1950 Danville, VA ...... 0.8527 0.8966

Danville City, VA

Pittsylvania, VA

1960 Davenport-Moline-Rock Island, IA–

IL ............................... 0.9021 0.9319

Scott, IA

Henry, IL

Rock Island, IL

2000 Dayton-Springfield, OH .................... 0.9519 0.9668

Clark, OH

Greene, OH

Miami, OH

Montgomery, OH

2020 Daytona Beach,

FL .............................. 0.9179 0.9430

Flagler, FL

Volusia, FL

2030 Decatur, AL ....... 0.8627 0.9038

Lawrence, AL

Morgan, AL

2040 Decatur, IL ........ 0.8601 0.9019

Macon, IL

2080 1 Denver, CO ..... 1.0032 1.0022

Adams, CO

Arapahoe, CO

Denver, CO

Douglas, CO

Jefferson, CO

2120 Des Moines, IA 0.9211 0.9453

Dallas, IA

Polk, IA

Warren, IA

2160 1 Detroit, MI ....... 1.0057 1.0039

Lapeer, MI

Macomb, MI

Monroe, MI

Oakland, MI

St. Clair, MI

Wayne, MI

2180 Dothan, AL ........ 0.8105 0.8660

Dale, AL

Houston, AL

2190 Dover, DE ......... 1.1032 1.0696

Kent, DE

2200 Dubuque, IA ...... 0.8928 0.9253

Dubuque, IA

2240 Duluth-Superior,

MN–WI ...................... 1.0201 1.0137

St. Louis, MN

Douglas, WI

26364 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

2281 Dutchess County, NY ........................ 0.9599 0.9724

Dutchess, NY

2290 2Eau Claire, WI 0.9073 0.9356

Chippewa, WI

Eau Claire, WI

2320 El Paso, TX ....... 0.9215 0.9456

El Paso, TX

2330 Elkhart-Goshen,

IN ............................... 0.9549 0.9689

Elkhart, IN

2335 Elmira, NY ......... 0.8645 0.9051

Chemung, NY

2340 Enid, OK ............ 0.8781 0.9148

Garfield, OK

2360 Erie, PA ............. 0.9021 0.9319

Erie, PA

2400 Eugene-Springfield, OR .................... 1.1026 1.0692

Lane, OR

2440 2Evansville-Henderson, IN–KY (IN

Hospitals) .................. 0.8807 0.9167

Posey, IN

Vanderburgh, IN

Warrick, IN

Henderson, KY

2440 Evansville-Henderson, IN–KY (KY

Hospitals) .................. 0.8018 0.8596

Posey, IN

Vanderburgh, IN

Warrick, IN

Henderson, KY

2520 Fargo-Moorhead,

ND–MN ..................... 0.8830 0.9183

Clay, MN

Cass, ND

2560 Fayetteville, NC 0.8638 0.9046

Cumberland, NC

2580 FayettevilleSpringdale-Rogers,

AR ............................. 0.7999 0.8582

Benton, AR

Washington, AR

2620 Flagstaff, AZ–UT 1.0844 1.0571

Coconino, AZ

Kane, UT

2640 Flint, MI ............. 1.1189 1.0800

Genesee, MI

2650 Florence, AL ...... 0.7621 0.8302

Colbert, AL

Lauderdale, AL

2655 Florence, SC ..... 0.8838 0.9189

Florence, SC

2670 Fort CollinsLoveland, CO ............ 1.1005 1.0678

Larimer, CO

2680 1Ft. Lauderdale,

FL .............................. 1.0228 1.0156

Broward, FL

2700 Fort Myers-Cape

Coral, FL ................... 0.9112 0.9383

Lee, FL

2710 Fort Pierce-Port

St. Lucie, FL .............. 0.9672 0.9774

Martin, FL

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

St. Lucie, FL

2720 Fort Smith, AR–

OK ............................. 0.8858 0.9203

Crawford, AR

Sebastian, AR

Sequoyah, OK

2750 Fort Walton

Beach, FL .................. 0.9351 0.9551

Okaloosa, FL

2760 2Fort Wayne, IN 0.8807 0.9167

Adams, IN

Allen, IN

De Kalb, IN

Huntington, IN

Wells, IN

Whitley, IN

2800 1Forth Worth-Arlington, TX ................. 0.9442 0.9614

Hood, TX

Johnson, TX

Parker, TX

Tarrant, TX

2840 Fresno, CA ........ 1.0184 1.0126

Fresno, CA

Madera, CA

2880 Gadsden, AL ..... 0.8491 0.8940

Etowah, AL

2900 Gainesville, FL .. 1.0286 1.0195

Alachua, FL

2920 Galveston-Texas

City, TX ..................... 1.0284 1.0194

Galveston, TX

2960 Gary, IN ............. 0.9454 0.9623

Lake, IN

Porter, IN

2975 2Glens Falls, NY 0.8558 0.8989

Warren, NY

Washington, NY

2980 2Goldsboro, NC 0.8553 0.8985

Wayne, NC

2985 Grand Forks,

ND–MN ..................... 1.0207 1.0141

Polk, MN

Grand Forks, ND

2995 Grand Junction,

CO ............................. 0.9601 0.9725

Mesa, CO

3000 1Grand RapidsMuskegon-Holland,

MI .............................. 1.0256 1.0175

Allegan, MI

Kent, MI

Muskegon, MI

Ottawa, MI

3040 Great Falls, MT 0.9447 0.9618

Cascade, MT

3060 Greeley, CO ...... 0.9908 0.9937

Weld, CO

3080 Green Bay, WI .. 0.9359 0.9556

Brown, WI

3120 1GreensboroWinston-Salem-High

Point, NC ................... 0.9187 0.9436

Alamance, NC

Davidson, NC

Davie, NC

Forsyth, NC

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Guilford, NC

Randolph, NC

Stokes, NC

Yadkin, NC

3150 Greenville, NC ... 0.9454 0.9623

Pitt, NC

3160 GreenvilleSpartanburg-Anderson, SC ..................... 0.9160 0.9417

Anderson, SC

Cherokee, SC

Greenville, SC

Pickens, SC

Spartanburg, SC

3180 Hagerstown, MD 0.9647 0.9757

Washington, MD

3200 Hamilton-Middletown, OH ................... 0.8892 0.9227

Butler, OH

3240 Harrisburg-Lebanon-Carlisle, PA ...... 0.9467 0.9632

Cumberland, PA

Dauphin, PA

Lebanon, PA

Perry, PA

3283 1 2 Hartford, CT .. 1.1798 1.1199

Hartford, CT

Litchfield, CT

Middlesex, CT

Tolland, CT

3285 2 Hattiesburg,

MS ............................. 0.7608 0.8293

Forrest, MS

Lamar, MS

3290 Hickory-Morganton-Lenoir, NC ..... 0.8989 0.9296

Alexander, NC

Burke, NC

Caldwell, NC

Catawba, NC

3320 Honolulu, HI ...... 1.1905 1.1268

Honolulu, HI

3350 Houma, LA ........ 0.8218 0.8742

Lafourche, LA

Terrebonne, LA

3360 1 Houston, TX .... 0.9661 0.9767

Chambers, TX

Fort Bend, TX

Harris, TX

Liberty, TX

Montgomery, TX

Waller, TX

3400 Huntington-Ashland, WV–KY–OH ..... 0.9961 0.9973

Boyd, KY

Carter, KY

Greenup, KY

Lawrence, OH

Cabell, WV

Wayne, WV

3440 Huntsville, AL .... 0.9089 0.9367

Limestone, AL

Madison, AL

3480 1 Indianapolis, IN 0.9314 0.9525

Boone, IN

Hamilton, IN

Hancock, IN

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26365

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Hendricks, IN

Johnson, IN

Madison, IN

Marion, IN

Morgan, IN

Shelby, IN

3500 Iowa City, IA ...... 0.9749 0.9827

Johnson, IA

3520 2 Jackson, MI ..... 0.9133 0.9398

Jackson, MI

3560 Jackson, MS ..... 0.8890 0.9226

Hinds, MS

Madison, MS

Rankin, MS

3580 Jackson, TN ...... 0.8939 0.9261

Madison, TN

Chester, TN

3600 1 Jacksonville,

FL .............................. 0.8995 0.9300

Clay, FL

Duval, FL

Nassau, FL

St. Johns, FL

3605 2 Jacksonville,

NC ............................. 0.8553 0.8985

Onslow, NC

3610 2 Jamestown, NY 0.8558 0.8989

Chautauqua, NY

3620 Janesville-Beloit,

WI .............................. 0.9856 0.9901

Rock, WI

3640 Jersey City, NJ .. 1.0985 1.0664

Hudson, NJ

3660 Johnson CityKingsport-Bristol, TN–

VA ............................. 0.8412 0.8883

Carter, TN

Hawkins, TN

Sullivan, TN

Unicoi, TN

Washington, TN

Bristol City, VA

Scott, VA

Washington, VA

3680 Johnstown, PA .. 0.8686 0.9080

Cambria, PA

Somerset, PA

3700 Jonesboro, AR .. 0.8587 0.9009

Craighead, AR

3710 Joplin, MO ......... 0.7924 0.8527

Jasper, MO

Newton, MO

3720 KalamazooBattlecreek, MI .......... 1.0247 1.0168

Calhoun, MI

Kalamazoo, MI

Van Buren, MI

3740 Kankakee, IL ..... 0.8954 0.9271

Kankakee, IL

3760 1Kansas City,

KS–MO ...................... 0.9629 0.9744

Johnson, KS

Leavenworth, KS

Miami, KS

Wyandotte, KS

Cass, MO

Clay, MO

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Clinton, MO

Jackson, MO

Lafayette, MO

Platte, MO

Ray, MO

3800 Kenosha, WI ..... 0.9703 0.9796

Kenosha, WI

3810 Killeen-Temple,

TX .............................. 1.0321 1.0219

Bell, TX

Coryell, TX

3840 Knoxville, TN ..... 0.8422 0.8890

Anderson, TN

Blount, TN

Knox, TN

Loudon, TN

Sevier, TN

Union, TN

3850 Kokomo, IN ....... 0.9190 0.9438

Howard, IN

Tipton, IN

3870 La Crosse, WI–

MN ............................. 0.9442 0.9614

Houston, MN

La Crosse, WI

3880 Lafayette, LA ..... 0.8852 0.9199

Acadia, LA

Lafayette, LA

St. Landry, LA

St. Martin, LA

3920 Lafayette, IN ...... 0.9091 0.9368

Clinton, IN

Tippecanoe, IN

3960 2 Lake Charles,

LA .............................. 0.7921 0.8525

Calcasieu, LA

3980 Lakeland-Winter

Haven, FL ................. 0.8904 0.9236

Polk, FL

4000 Lancaster, PA ... 0.9274 0.9497

Lancaster, PA

4040 Lansing-East

Lansing, MI ............... 0.9873 0.9913

Clinton, MI

Eaton, MI

Ingham, MI

4080 Laredo, TX ........ 0.7637 0.8314

Webb, TX

4100 Las Cruces, NM 0.8744 0.9122

Dona Ana, NM

4120 1 Las Vegas,

NV–AZ ....................... 1.0876 1.0592

Mohave, AZ

Clark, NV

Nye, NV

4150 Lawrence, KS .... 0.8272 0.8782

Douglas, KS

4200 Lawton, OK ....... 0.9156 0.9414

Comanche, OK

4243 Lewiston-Auburn, ME ................... 0.9064 0.9349

Androscoggin, ME

4280 Lexington, KY .... 0.8921 0.9248

Bourbon, KY

Clark, KY

Fayette, KY

Jessamine, KY

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Madison, KY

Scott, KY

Woodford, KY

4320 Lima, OH ........... 0.9634 0.9748

Allen, OH

Auglaize, OH

4360 Lincoln, NE ........ 0.9808 0.9868

Lancaster, NE

4400 Little Rock-North

Little Rock, AR .......... 0.8959 0.9275

Faulkner, AR

Lonoke, AR

Pulaski, AR

Saline, AR

4420 Longview-Marshall, TX .................... 0.8816 0.9173

Gregg, TX

Harrison, TX

Upshur, TX

4480 1 Los AngelesLong Beach, CA ........ 1.1955 1.1301

Los Angeles, CA

4520 Louisville, KY–IN 0.9395 0.9582

Clark, IN

Floyd, IN

Harrison, IN

Scott, IN

Bullitt, KY

Jefferson, KY

Oldham, KY

4600 Lubbock, TX ...... 0.8828 0.9182

Lubbock, TX

4640 Lynchburg, VA .. 0.9218 0.9458

Amherst, VA

Bedford, VA

Bedford City, VA

Campbell, VA

Lynchburg City, VA

4680 Macon, GA ........ 0.9046 0.9336

Bibb, GA

Houston, GA

Jones, GA

Peach, GA

Twiggs, GA

4720 Madison, WI ...... 1.0354 1.0241

Dane, WI

4800 2 Mansfield, OH 0.8778 0.9146

Crawford, OH

Richland, OH

4840 Mayaguez, PR .. 0.4617 0.5891

Anasco, PR

Cabo Rojo, PR

Hormigueros, PR

Mayaguez, PR

Sabana Grande, PR

San German, PR

4880 McAllen-Edinburg-Mission, TX ....... 0.8403 0.8877

Hidalgo, TX

4890 Medford-Ashland, OR .................... 1.0438 1.0298

Jackson, OR

4900 MelbourneTitusville-Palm Bay,

FL .............................. 0.9713 0.9803

Brevard, Fl

26366 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

4920 1 2 Memphis, TN–

AR–MS (TN Hospitals) ......................... 0.7980 0.8568

Crittenden, AR

DeSoto, MS

Fayette, TN

Shelby, TN

Tipton, TN

4920 1 2 Memphis, TN–

AR–MS (AR Hospitals) ......................... 0.7538 0.8240

Crittenden, AR

DeSoto, MS

Fayette, TN

Shelby, TN

Tipton, TN

4920 1 2 Memphis, TN–

AR–MS (MS Hospitals) ......................... 0.7608 0.8293

Crittenden, AR

DeSoto, MS

Fayette, TN

Shelby, TN

Tipton, TN

4940 2 Merced, CA ..... 0.9966 0.9977

Merced, CA

5000 1 Miami, FL ........ 1.0148 1.0101

Dade, FL

5015 1 MiddlesexSomerset-Hunterdon,

NJ .............................. 1.0342 1.0233

Hunterdon, NJ

Middlesex, NJ

Somerset, NJ

5080 1 MilwaukeeWaukesha, WI ........... 0.9803 0.9865

Milwaukee, WI

Ozaukee, WI

Washington, WI

Waukesha, WI

5120 1 Minneapolis-St.

Paul, MN–WI ............. 1.1118 1.0753

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 ..... 0.9462 0.9628

Missoula, MT

5160 Mobile, AL ......... 0.8205 0.8733

Baldwin, AL

Mobile, AL

5170 Modesto, CA ..... 1.0481 1.0327

Stanislaus, CA

5190 1 MonmouthOcean, NJ ................. 1.1552 1.1038

Monmouth, NJ

Ocean, NJ

5200 Monroe, LA ....... 0.8467 0.8923

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Ouachita, LA

5240 2 Montgomery,

AL .............................. 0.7610 0.8294

Autauga, AL

Elmore, AL

Montgomery, AL

5280 Muncie, IN ......... 1.0734 1.0497

Delaware, IN

5330 Myrtle Beach,

SC ............................. 0.8658 0.9060

Horry, SC

5345 Naples, FL ......... 0.9396 0.9582

Collier, FL

5360 1 Nashville, TN .. 0.9201 0.9446

Cheatham, TN

Davidson, TN

Dickson, TN

Robertson, TN

Rutherford TN

Sumner, TN

Williamson, TN

Wilson, TN

5380 1 Nassau-Suffolk,

NY ............................. 1.3089 1.2024

Nassau, NY

Suffolk, NY

5483 1 New HavenBridgeport-StamfordWaterbury-Danbury,

CT ............................. 1.2135 1.1417

Fairfield, CT

New Haven, CT

5523 New LondonNorwich, CT .............. 1.1984 1.1319

New London, CT

5560 1 New Orleans,

LA .............................. 0.9283 0.9503

Jefferson, LA

Orleans, LA

Plaquemines, LA

St. Bernard, LA

St. Charles, LA

St. James, LA

St. John The Baptist,

LA

St. Tammany, LA

5600 1 New York, NY 1.4445 1.2864

Bronx, NY

Kings, NY

New York, NY

Putnam, NY

Queens, NY

Richmond, NY

Rockland, NY

Westchester, NY

5640 1 Newark, NJ ..... 1.0717 1.0486

Essex, NJ

Morris, NJ

Sussex, NJ

Union, NJ

Warren, NJ

5660 Newburgh, NY–

PA ............................. 1.0946 1.0639

Orange, NY

Pike, PA

5720 1 Norfolk-Virginia

Beach-Newport

News, VA–NC ........... 0.8429 0.8896

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

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 1Oakland, CA ... 1.5051 1.3231

Alameda, CA

Contra Costa, CA

5790 Ocala, FL .......... 0.8904 0.9236

Marion, FL

5800 Odessa-Midland,

TX .............................. 0.9168 0.9422

Ector, TX

Midland, TX

5880 1Oklahoma City,

OK ............................. 0.8910 0.9240

Canadian, OK

Cleveland, OK

Logan, OK

McClain, OK

Oklahoma, OK

Pottawatomie, OK

5910 Olympia, WA ..... 1.0787 1.0532

Thurston, WA

5920 Omaha, NE–IA .. 0.9707 0.9798

Pottawattamie, IA

Cass, NE

Douglas, NE

Sarpy, NE

Washington, NE

5945 1Orange County,

CA ............................. 1.1560 1.1044

Orange, CA

5960 1Orlando, FL ..... 0.9959 0.9972

Lake, FL

Orange, FL

Osceola, FL

Seminole, FL

5990 2Owensboro, KY 0.8017 0.8595

Daviess, KY

6015 Panama City, FL 0.9129 0.9395

Bay, FL

6020 2ParkersburgMarietta, WV–OH

(WV Hospitals) .......... 0.8321 0.8817

Washington, OH

Wood, WV

6020 2ParkersburgMarietta, WV–OH

(OH Hospitals) .......... 0.8778 0.9146

Washington, OH

Wood, WV

6080 2Pensacola, FL 0.8904 0.9236

Escambia, FL

Santa Rosa, FL

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26367

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

6120 Peoria-Pekin, IL 0.8687 0.9081

Peoria, IL

Tazewell, IL

Woodford, IL

6160 1Philadelphia,

PA–NJ ....................... 1.0660 1.0447

Burlington, NJ

Camden, NJ

Gloucester, NJ

Salem, NJ

Bucks, PA

Chester, PA

Delaware, PA

Montgomery, PA

Philadelphia, PA

6200 1Phoenix-Mesa,

AZ .............................. 0.9532 0.9677

Maricopa, AZ

Pinal, AZ

6240 Pine Bluff, AR ... 0.7866 0.8484

Jefferson, AR

6280 1Pittsburgh, PA 0.9818 0.9875

Allegheny, PA

Beaver, PA

Butler, PA

Fayette, PA

Washington, PA

Westmoreland, PA

6323 2Pittsfield, MA ... 1.1348 1.0905

Berkshire, MA

6340 Pocatello, ID ...... 1.0819 1.0554

Bannock, ID

6360 Ponce, PR ......... 0.4347 0.5652

Guayanilla, PR

Juana Diaz, PR

Penuelas, PR

Ponce, PR

Villalba, PR

Yauco, PR

6403 Portland, ME ..... 0.9779 0.9848

Cumberland, ME

Sagadahoc, ME

York, ME

6440 1Portland-Vancouver, OR–WA ........ 1.0928 1.0627

Clackamas, OR

Columbia, OR

Multnomah, OR

Washington, OR

Yamhill, OR

Clark, WA

6483 1ProvidenceWarwick-Pawtucket,

RI ............................... 1.0955 1.0645

Bristol, RI

Kent, RI

Newport, RI

Providence, RI

Washington, RI

6520 Provo-Orem, UT 0.9972 0.9981

Utah, UT

6560 2Pueblo, CO ..... 0.9179 0.9430

Pueblo, CO

6580 Punta Gorda, FL 0.9565 0.9700

Charlotte, FL

6600 Racine, WI ........ 0.9298 0.9514

Racine, WI

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

6640 1 Raleigh-Durham-Chapel Hill, NC 0.9749 0.9827

Chatham, NC

Durham, NC

Franklin, NC

Johnston, NC

Orange, NC

Wake, NC

6660 Rapid City, SD .. 0.8463 0.8920

Pennington, SD

6680 Reading, PA ...... 0.9203 0.9447

Berks, PA

6690 Redding, CA ...... 1.1795 1.1197

Shasta, CA

6720 Reno, NV .......... 1.0508 1.0345

Washoe, NV

6740 RichlandKennewick-Pasco,

WA ............................ 1.1564 1.1046

Benton, WA

Franklin, WA

6760 Richmond-Petersburg, VA .............. 0.9679 0.9779

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 1 Riverside-San

Bernardino, CA ......... 1.1159 1.0780

Riverside, CA

San Bernardino, CA

6800 Roanoke, VA ..... 0.9543 0.9685

Botetourt, VA

Roanoke, VA

Roanoke City, VA

Salem City, VA

6820 Rochester, MN .. 1.1361 1.0913

Olmsted, MN

6840 1 Rochester, NY 0.8846 0.9195

Genesee, NY

Livingston, NY

Monroe, NY

Ontario, NY

Orleans, NY

Wayne, NY

6880 Rockford, IL ....... 0.8904 0.9236

Boone, IL

Ogle, IL

Winnebago, IL

6895 Rocky Mount,

NC ............................. 0.8875 0.9215

Edgecombe, NC

Nash, NC

6920 1Sacramento,

CA ............................. 1.2003 1.1332

El Dorado, CA

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Placer, CA

Sacramento, CA

6960 Saginaw-Bay

City-Midland, MI ........ 0.9475 0.9637

Bay, MI

Midland, MI

Saginaw, MI

6980 St. Cloud, MN ... 1.0164 1.0112

Benton, MN

Stearns, MN

7000 St. Joseph, MO 0.9245 0.9477

Andrew, MO

Buchanan, MO

7040 1St. Louis, MO–

IL ............................... 0.9114 0.9384

Clinton, IL

Jersey, IL

Madison, IL

Monroe, IL

St. Clair, IL

Franklin, MO

Jefferson, MO

Lincoln, MO

St. Charles, MO

St. Louis, MO

St. Louis City, MO

Warren, MO

7080 2Salem, OR ...... 1.0300 1.0204

Marion, OR

Polk, OR

7120 Salinas, CA ....... 1.4649 1.2988

Monterey, CA

7160 1Salt Lake CityOgden, UT ................ 0.9661 0.9767

Davis, UT

Salt Lake, UT

Weber, UT

7200 San Angelo, TX 0.7747 0.8396

Tom Green, TX

7240 1San Antonio,

TX .............................. 0.8087 0.8647

Bexar, TX

Comal, TX

Guadalupe, TX

Wilson, TX

7320 1San Diego, CA 1.1901 1.1266

San Diego, CA

7360 1San Francisco,

CA ............................. 1.4433 1.2857

Marin, CA

San Francisco, CA

San Mateo, CA

7400 1San Jose, CA .. 1.4376 1.2822

Santa Clara, CA

7440 1San Juan-Bayamon, PR ................ 0.4691 0.5955

Aguas Buenas, PR

Barceloneta, PR

Bayamon, PR

Canovanas, PR

Carolina, PR

Catano, PR

Ceiba, PR

Comerio, PR

Corozal, PR

Dorado, PR

Fajardo, PR

26368 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

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-AtascaderoPaso Robles, CA ...... 1.0755 1.0511

San Luis Obispo, CA

7480 Santa BarbaraSanta Maria-Lompoc,

CA ............................. 1.0728 1.0493

Santa Barbara, CA

7485 Santa CruzWatsonville, CA ......... 1.4736 1.3041

Santa Cruz, CA

7490 Santa Fe, NM .... 0.9383 0.9573

Los Alamos, NM

Santa Fe, NM

7500 Santa Rosa, CA 1.3182 1.2083

Sonoma, CA

7510 Sarasota-Bradenton, FL ................. 0.9670 0.9773

Manatee, FL

Sarasota, FL

7520 Savannah, GA ... 0.8689 0.9083

Bryan, GA

Chatham, GA

Effingham, GA

7560 2ScrantonWilkes-Barre-Hazleton, PA ...................... 0.8686 0.9080

Columbia, PA

Lackawanna, PA

Luzerne, PA

Wyoming, PA

7600 1Seattle-Bellevue-Everett, WA ........ 1.1134 1.0763

Island, WA

King, WA

Snohomish, WA

7610 2Sharon, PA ..... 0.8686 0.9080

Mercer, PA

7620 2Sheboygan, WI 0.9073 0.9356

Sheboygan, WI

7640 ShermanDenison, TX .............. 0.8619 0.9032

Grayson, TX

7680 Shreveport-Bossier City, LA .............. 0.8853 0.9200

Bossier, LA

Caddo, LA

Webster, LA

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

7720 Sioux City, IA–

NE ............................. 0.8571 0.8998

Woodbury, IA

Dakota, NE

7760 Sioux Falls, SD 0.8890 0.9226

Lincoln, SD

Minnehaha, SD

7800 South Bend, IN 1.0233 1.0159

St. Joseph, IN

7840 Spokane, WA .... 1.1979 1.1316

Spokane, WA

7880 Springfield, IL .... 0.8744 0.9122

Menard, IL

Sangamon, IL

7920 Springfield, MO 0.8357 0.8843

Christian, MO

Greene, MO

Webster, MO

8003 2Springfield, MA 1.1348 1.0905

Hampden, MA

Hampshire, MA

8050 State College,

PA ............................. 0.9114 0.9384

Centre, PA

8080 2SteubenvilleWeirton, OH–WV (OH

Hospitals) .................. 0.8778 0.9146

Jefferson, OH

Brooke, WV

Hancock, WV

8080 SteubenvilleWeirton, OH–WV

(WV Hospitals) .......... 0.8658 0.9060

Jefferson, OH

Brooke, WV

Hancock, WV

8120 Stockton-Lodi,

CA ............................. 1.0711 1.0482

San Joaquin, CA

8140 2Sumter, SC ..... 0.8445 0.8907

Sumter, SC

8160 Syracuse, NY .... 0.9662 0.9767

Cayuga, NY

Madison, NY

Onondaga, NY

Oswego, NY

8200 Tacoma, WA ..... 1.1658 1.1108

Pierce, WA

8240 2Tallahassee,

FL .............................. 0.8904 0.9236

Gadsden, FL

Leon, FL

8280 1Tampa-St. Petersburg-Clearwater,

FL .............................. 0.9111 0.9382

Hernando, FL

Hillsborough, FL

Pasco, FL

Pinellas, FL

8320 2Terre Haute, IN 0.8807 0.9167

Clay, IN

Vermillion, IN

Vigo, IN

8360 Texarkana, ARTexarkana, TX .......... 0.7962 0.8555

Miller, AR

Bowie, TX

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

8400 Toledo, OH ........ 0.9705 0.9797

Fulton, OH

Lucas, OH

Wood, OH

8440 Topeka, KS ....... 0.9134 0.9399

Shawnee, KS

8480 Trenton, NJ ....... 0.9919 0.9944

Mercer, NJ

8520 Tucson, AZ ........ 0.8826 0.9180

Pima, AZ

8560 Tulsa, OK .......... 0.8698 0.9089

Creek, OK

Osage, OK

Rogers, OK

Tulsa, OK

Wagoner, OK

8600 Tuscaloosa, AL 0.8081 0.8642

Tuscaloosa, AL

8640 Tyler, TX ........... 0.9270 0.9494

Smith, TX

8680 2 Utica-Rome,

NY ............................. 0.8558 0.8989

Herkimer, NY

Oneida, NY

8720 Vallejo-FairfieldNapa, CA .................. 1.2672 1.1761

Napa, CA

Solano, CA

8735 Ventura, CA ...... 1.0586 1.0398

Ventura, CA

8750 Victoria, TX ....... 0.8133 0.8680

Victoria, TX

8760 Vineland-Millville-Bridgeton, NJ ..... 1.0462 1.0314

Cumberland, NJ

8780 2Visalia-TularePorterville, CA ........... 0.9966 0.9977

Tulare, CA

8800 Waco, TX .......... 0.8402 0.8876

McLennan, TX

8840 1Washington,

DC–MD–VA–WV ....... 1.0832 1.0563

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

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26369

TABLE 4A.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR URBAN AREAS—Continued

Urban area

(constituent counties)

Wage

index GAF

Warren, VA

Berkeley, WV

Jefferson, WV

8920 Waterloo-Cedar

Falls, IA ..................... 0.8932 0.9256

Black Hawk, IA

8940 Wausau, WI ...... 0.9511 0.9663

Marathon, WI

8960 1West Palm

Beach-Boca Raton,

FL .............................. 0.9658 0.9765

Palm Beach, FL

9000 2Wheeling, WV–

OH (WV Hospitals) ... 0.8321 0.8817

Belmont, OH

Marshall, WV

Ohio, WV

9000 2Wheeling, WV–

OH (OH Hospitals) .... 0.8778 0.9146

Belmont, OH

Marshall, WV

Ohio, WV

9040 Wichita, KS ....... 0.9574 0.9706

Butler, KS

Harvey, KS

Sedgwick, KS

9080 Wichita Falls, TX 0.7668 0.8337

Archer, TX

Wichita, TX

9140 2Williamsport,

PA ............................. 0.8686 0.9080

Lycoming, PA

9160 Wilmington-Newark, DE–MD .............. 1.1281 1.0860

New Castle, DE

Cecil, MD

9200 Wilmington, NC 0.9474 0.9637

New Hanover, NC

Brunswick, NC

9260 2Yakima, WA .... 1.0763 1.0516

Yakima, WA

9270 Yolo, CA ............ 1.0261 1.0178

Yolo, CA

9280 York, PA ............ 0.9427 0.9604

York, PA

9320 YoungstownWarren, OH ............... 0.9604 0.9727

Columbiana, OH

Mahoning, OH

Trumbull, OH

9340 Yuba City, CA ... 1.0820 1.0555

Sutter, CA

Yuba, CA

9360 Yuma, AZ .......... 0.9605 0.9728

Yuma, AZ

1 Large Urban Area

2 Hospitals geographically located in the

area are assigned the statewide rural wage

index for FY 2000.

TABLE 4B.—WAGE INDEX AND CAPITAL

GEOGRAPHIC ADJUSTMENT FACTOR

(GAF) FOR RURAL AREAS

Nonurban Area Wage

Index GAF

Alabama ........................ 0.7610 0.8294

Alaska ........................... 1.2681 1.1766

Arizona .......................... 0.8400 0.8875

Arkansas ....................... 0.7538 0.8240

California ....................... 0.9966 0.9977

Colorado ....................... 0.9179 0.9430

Connecticut ................... 1.1798 1.1199

Delaware ....................... 0.9349 0.9549

Florida ........................... 0.8904 0.9236

Georgia ......................... 0.8510 0.8954

Hawaii ........................... 1.1438 1.0964

Idaho ............................. 0.8831 0.9184

Illinois ............................ 0.8320 0.8817

Indiana .......................... 0.8807 0.9167

Iowa .............................. 0.8196 0.8726

Kansas .......................... 0.7710 0.8369

Kentucky ....................... 0.8017 0.8595

Louisiana ...................... 0.7921 0.8525

Maine ............................ 0.8813 0.9171

Maryland ....................... 0.8717 0.9103

Massachusetts .............. 1.1348 1.0905

Michigan ....................... 0.9133 0.9398

Minnesota ..................... 0.9116 0.9386

Mississippi .................... 0.7608 0.8293

Missouri ........................ 0.7766 0.8410

Montana ........................ 0.9017 0.9316

Nebraska ...................... 0.8265 0.8777

Nevada ......................... 0.9354 0.9553

New Hampshire ............ 0.9995 0.9997

New Jersey 1 ................. 0.0000 ..............

New Mexico .................. 0.8425 0.8893

New York ...................... 0.8558 0.8989

North Carolina .............. 0.8553 0.8985

North Dakota ................ 0.7698 0.8360

Ohio .............................. 0.8778 0.9146

Oklahoma ..................... 0.7622 0.8303

Oregon .......................... 1.0300 1.0204

Pennsylvania ................ 0.8686 0.9080

Puerto Rico ................... 0.4232 0.5550

Rhode Island 1 .............. 0.0000 ..............

South Carolina .............. 0.8445 0.8907

South Dakota ................ 0.7786 0.8425

Tennessee .................... 0.7980 0.8568

Texas ............................ 0.7523 0.8229

Utah .............................. 0.9182 0.9432

Vermont ........................ 0.9538 0.9681

Virginia .......................... 0.8361 0.8846

Washington ................... 1.0763 1.0516

West Virginia ................ 0.8321 0.8817

Wisconsin ..................... 0.9073 0.9356

Wyoming ....................... 0.9046 0.9336

1All counties within the State are classified

as urban.

TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT

FACTOR (GAF) FOR HOSPITALS

THAT ARE RECLASSIFIED

Area Wage

index GAF

Abilene, TX ................... 0.8318 0.8815

Akron, OH ..................... 1.0181 1.0124

Albany, GA ................... 1.0783 1.0530

Alexandria, LA .............. 0.8262 0.8774

Amarillo, TX .................. 0.8663 0.9064

TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT

FACTOR (GAF) FOR HOSPITALS

THAT ARE RECLASSIFIED—Continued

Area Wage

index GAF

Anchorage, AK ............. 1.2967 1.1947

Ann Arbor, MI ............... 1.1177 1.0792

Atlanta, GA ................... 0.9945 0.9962

Atlantic-Cape May, NJ .. 1.0998 1.0673

Augusta-Aiken, GA–SC 0.9226 0.9463

Baltimore, MD ............... 0.9485 0.9644

Barnstable-Yarmouth,

MA ............................. 1.3694 1.2402

Baton Rouge, LA .......... 0.8856 0.9202

Benton Harbor, MI ........ 0.9133 0.9398

Bergen-Passaic, NJ ...... 1.1727 1.1153

Billings, MT ................... 0.9577 0.9708

Binghamton, NY ........... 0.8723 0.9107

Birmingham, AL ............ 0.8574 0.9000

Bismarck, ND ................ 0.8016 0.8595

Bloomington, IN ............ 0.9294 0.9511

Boise City, ID ................ 0.9133 0.9398

Boston-Worcester-Lawrence-Lowell-Brockton, MA–NH (NH, RI,

and VT Hospitals) ..... 1.1239 1.0833

Bryan-College Station,

TX .............................. 0.8306 0.8806

Burlington, VT (VT Hospitals) ......................... 0.9538 0.9681

Burlington, VT (NY Hospital) .......................... 0.9238 0.9472

Casper, WY .................. 0.9046 0.9336

Champaign-Urbana, IL 0.9353 0.9552

Charleston-North

Charleston, SC .......... 0.9094 0.9370

Charleston, WV ............ 0.9003 0.9306

Charlotte-GastoniaRock Hill, NC–SC ..... 0.9307 0.9520

Chattanooga, TN–GA ... 0.9795 0.9859

Chicago, IL ................... 1.0902 1.0609

Cincinnati, OH–KY–IN .. 0.9330 0.9536

Clarksville-Hopkinsville,

TN–KY ....................... 0.8393 0.8869

Cleveland-Lorain-Elyria,

OH ............................. 0.9649 0.9758

Columbia, MO ............... 0.8600 0.9019

Columbia, SC ............... 0.9517 0.9667

Columbus, OH .............. 0.9741 0.9822

Dallas, TX ..................... 0.9220 0.9459

Danville, VA .................. 0.8361 0.8846

Davenport-Moline—

Rock Island, IA–IL ..... 0.9021 0.9319

Dayton-Springfield, OH 0.9519 0.9668

Denver, CO ................... 1.0032 1.0022

Des Moines, IA ............. 0.9087 0.9365

Dothan, AL .................... 0.8105 0.8660

Dover, DE ..................... 0.9349 0.9549

Duluth-Superior, MN–WI 1.0201 1.0137

Eau Claire, WI .............. 0.9073 0.9356

Erie, PA ........................ 0.9021 0.9319

Eugene-Springfield, OR 1.1026 1.0692

Fargo-Moorhead, ND–

MN (ND and SD Hospitals) ......................... 0.8597 0.9017

Fayetteville, NC ............ 0.8553 0.8985

Flagstaff, AZ–UT .......... 1.0678 1.0459

Flint, MI ......................... 1.1189 1.0800

Florence, AL ................. 0.7621 0.8302

Florence, SC ................. 0.8838 0.9189

26370 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT

FACTOR (GAF) FOR HOSPITALS

THAT ARE RECLASSIFIED—Continued

Area Wage

index GAF

Fort Collins-Loveland,

CO ............................. 1.1005 1.0678

Ft. Lauderdale, FL ........ 1.0228 1.0156

Fort Pierce-Port St.

Lucie, FL ................... 0.9672 0.9774

Fort Smith, AR–OK ....... 0.8634 0.9043

Fort Wayne, IN ............. 0.8807 0.9167

Forth Worth-Arlington,

TX .............................. 0.9442 0.9614

Gadsden, AL ................. 0.8491 0.8940

Grand Forks, ND–MN ... 1.0042 1.0029

Grand Junction, CO ...... 0.9601 0.9725

Grand Rapids-Muskegon-Holland, MI ..... 1.0150 1.0102

Great Falls, MT ............. 0.9447 0.9618

Greeley, CO .................. 0.9642 0.9753

Green Bay, WI .............. 0.9359 0.9556

Greensboro-WinstonSalem-High Point, NC 0.9187 0.9436

Greenville, NC .............. 0.9244 0.9476

Greenville-SpartanburgAnderson, SC ............ 0.9160 0.9417

Harrisburg-LebanonCarlisle, PA ............... 0.9360 0.9557

Hartford, CT (MA Hospital) .......................... 1.1530 1.1024

Hattiesburg, MS ............ 0.7608 0.8293

Hickory-MorgantonLenoir, NC ................. 0.8766 0.9138

Honolulu, HI .................. 1.1905 1.1268

Houston, TX .................. 0.9661 0.9767

Huntington-Ashland,

WV–KY–OH .............. 0.9721 0.9808

Huntsville, AL ................ 0.8882 0.9220

Indianapolis, IN ............. 0.9314 0.9525

Jackson, MS ................. 0.8776 0.9145

Jackson, TN .................. 0.8939 0.9261

Jacksonville, FL ............ 0.8995 0.9300

Jersey City, NJ ............. 1.0985 1.0664

Johnson City-KingsportBristol, TN–VA .......... 0.8412 0.8883

Joplin, MO .................... 0.7924 0.8527

Kalamazoo-Battlecreek,

MI .............................. 1.0144 1.0098

Kansas City, KS–MO .... 0.9629 0.9744

Knoxville, TN ................ 0.8422 0.8890

Kokomo, IN ................... 0.9190 0.9438

Lafayette, LA ................ 0.8852 0.9199

Lansing-East Lansing,

MI .............................. 0.9873 0.9913

Las Cruces, NM ............ 0.8623 0.9035

Las Vegas, NV–AZ ....... 1.0876 1.0592

Lexington, KY ............... 0.8769 0.9140

Lima, OH ...................... 0.9497 0.9653

Lincoln, NE ................... 0.9808 0.9868

Little Rock-North Little

Rock, AR ................... 0.8841 0.9191

Longview-Marshall, TX 0.8403 0.8877

Los Angeles-Long

Beach, CA ................. 1.1955 1.1301

Louisville, KY–IN .......... 0.9395 0.9582

Lynchburg, VA .............. 0.9090 0.9368

Macon, GA .................... 0.9046 0.9336

Madison, WI .................. 1.0354 1.0241

Mansfield, OH ............... 0.8778 0.9146

TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT

FACTOR (GAF) FOR HOSPITALS

THAT ARE RECLASSIFIED—Continued

Area Wage

index GAF

Memphis, TN–AR–MS

(AR Hospital) ............. 0.7538 0.8240

Memphis, TN–AR–MS

(MS Hospital) ............ 0.7608 0.8293

Milwaukee-Waukesha,

WI .............................. 0.9803 0.9865

Minneapolis-St. Paul,

MN–WI ...................... 1.1118 1.0753

Missoula, MT ................ 0.9462 0.9628

Mobile, AL ..................... 0.8205 0.8733

Monmouth-Ocean, NJ .. 1.1552 1.1038

Montgomery, AL ........... 0.7610 0.8294

Myrtle Beach, SC (NC

Hospital) .................... 0.8553 0.8985

Nashville, TN ................ 0.9078 0.9359

New Haven-BridgeportStamford-WaterburyDanbury, CT .............. 1.2135 1.1417

New London-Norwich,

CT ............................. 1.1861 1.1240

New Orleans, LA .......... 0.9283 0.9503

New York, NY ............... 1.4445 1.2864

Newburgh, NY–PA ....... 0.9919 0.9944

Norfolk-Virginia BeachNewport News, VA–

NC (NC Hospital) ...... 0.8553 0.8985

Oakland, CA ................. 1.5051 1.3231

Ocala, FL ...................... 0.8904 0.9236

Odessa-Midland, TX ..... 0.9058 0.9345

Oklahoma City, OK ....... 0.8910 0.9240

Omaha, NE–IA ............. 0.9707 0.9798

Orange County, CA ...... 1.1560 1.1044

Orlando, FL ................... 0.9856 0.9901

Peoria-Pekin, IL ............ 0.8687 0.9081

Pine Bluff, AR ............... 0.7762 0.8407

Pittsburgh, PA ............... 0.9713 0.9803

Pittsfield, MA (VT Hospital) .......................... 1.0032 1.0022

Pocatello, ID ................. 0.9265 0.9491

Portland, ME ................. 0.9622 0.9740

Portland-Vancouver,

ORWA ....................... 1.0928 1.0627

Provo-Orem, UT ........... 0.9972 0.9981

Raleigh-Durham-Chapel

Hill, NC ...................... 0.9749 0.9827

Rapid City, SD .............. 0.8463 0.8920

Redding, CA ................. 1.1795 1.1197

Reno, NV ...................... 1.0508 1.0345

Richland-KennewickPasco, WA ................ 1.1267 1.0851

Roanoke, VA ................ 0.9543 0.9685

Rochester, MN .............. 1.1361 1.0913

Rockford, IL .................. 0.8904 0.9236

Sacramento, CA ........... 1.2003 1.1332

Saginaw-Bay City-Midland, MI ..................... 0.9475 0.9637

St. Cloud, MN ............... 1.0164 1.0112

St. Joseph, MO ............. 0.9036 0.9329

St. Louis, MO–IL ........... 0.9114 0.9384

Salinas, CA ................... 1.4649 1.2988

Salt Lake City-Ogden,

UT ............................. 0.9661 0.9767

San Diego, CA .............. 1.1901 1.1266

Santa Cruz-Watsonville,

CA ............................. 1.2834 1.1863

Santa Fe, NM ............... 0.9383 0.9573

TABLE 4C.—WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT

FACTOR (GAF) FOR HOSPITALS

THAT ARE RECLASSIFIED—Continued

Area Wage

index GAF

Santa Rosa, CA ............ 1.2832 1.1862

Seattle-Bellevue-Everett, WA ...................... 1.1134 1.0763

Sherman-Denison, TX .. 0.8619 0.9032

Sioux City, IA–NE ......... 0.8571 0.8998

South Bend, IN ............. 1.0233 1.0159

Spokane, WA ................ 1.1608 1.1075

Springfield, IL ................ 0.8744 0.9122

Springfield, MO ............. 0.8089 0.8648

Syracuse, NY ................ 0.9662 0.9767

Tampa-St. PetersburgClearwater, FL .......... 0.9111 0.9382

Texarkana, AR-Texarkana, TX ................ 0.7962 0.8555

Toledo, OH ................... 0.9705 0.9797

Topeka, KS ................... 0.9134 0.9399

Tucson, AZ ................... 0.8826 0.9180

Tulsa, OK ...................... 0.8698 0.9089

Tuscaloosa, AL ............. 0.8081 0.8642

Tyler, TX ....................... 0.9077 0.9358

Victoria, TX ................... 0.8133 0.8680

Washington, DC–MD–

VA–WV ...................... 1.0832 1.0563

Waterloo-Cedar Falls,

IA ............................... 0.8932 0.9256

Wausau, WI .................. 0.9511 0.9663

Wichita, KS ................... 0.9290 0.9508

Rural Alabama .............. 0.7610 0.8294

Rural Florida ................. 0.8904 0.9236

Rural Illinois .................. 0.8320 0.8817

Rural Louisiana ............. 0.7921 0.8525

Rural Michigan .............. 0.9133 0.9398

Rural Minnesota ........... 0.9116 0.9386

Rural Missouri ............... 0.7766 0.8410

Rural Montana .............. 0.9017 0.9316

Rural Oregon ................ 1.0300 1.0204

Rural Texas (OK Hospital) .......................... 0.7622 0.8303

Rural Washington ......... 1.0763 1.0516

Rural West Virginia ....... 0.8321 0.8817

Rural Wisconsin ............ 0.9073 0.9356

Rural Wyoming ............. 0.8905 0.9237

TABLE 4D.—AVERAGE HOURLY WAGE

FOR URBAN AREAS

Urban area

Average

hourly

wage

Abilene, TX ................................... 18.0486

Aguadilla, PR ................................ 10.4725

Akron, OH ..................................... 22.9067

Albany, GA ................................... 25.7222

Albany-Schenectady-Troy, NY ..... 18.5809

Albuquerque, NM .......................... 20.3203

Alexandria, LA .............................. 17.8813

Allentown-Bethlehem-Easton, PA 21.3707

Altoona, PA ................................... 20.0974

Amarillo, TX .................................. 18.7968

Anchorage, AK ............................. 27.9780

Ann Arbor, MI ............................... 24.4830

Anniston, AL ................................. 18.0781

Appleton-Oshkosh-Neenah, WI .... 19.7485

Arecibo, PR .................................. 9.8505

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26371

TABLE 4D.—AVERAGE HOURLY WAGE

FOR URBAN AREAS—Continued

Urban area

Average

hourly

wage

Asheville, NC ................................ 20.6721

Athens, GA ................................... 21.3273

Atlanta, GA ................................... 21.5792

Atlantic-Cape May, NJ .................. 24.3464

Auburn-Opelika, AL ...................... 17.7284

Augusta-Aiken, GA–SC ................ 20.0184

Austin-San Marcos, TX ................ 20.4753

Bakersfield, CA ............................. 21.1738

Baltimore, MD ............................... 20.4985

Bangor, ME ................................... 20.8595

Barnstable-Yarmouth, MA ............ 30.2448

Baton Rouge, LA .......................... 19.4498

Beaumont-Port Arthur, TX ............ 18.1415

Bellingham, WA ............................ 24.9338

Benton Harbor, MI ........................ 19.0728

Bergen-Passaic, NJ ...................... 25.6998

Billings, MT ................................... 20.6821

Biloxi-Gulfport-Pascagoula, MS .... 17.9703

Binghamton, NY ........................... 18.9273

Birmingham, AL ............................ 18.5525

Bismarck, ND ................................ 17.1607

Bloomington,IN ............................. 19.2118

Bloomington-Normal, IL ................ 20.0254

Boise City, ID ................................ 19.7312

Boston-Worcester-Lawrence-Lowell-Brockton, MA–NH ................ 24.3877

Boulder-Longmont, CO ................. 21.2598

Brazoria, TX .................................. 18.9889

Bremerton, WA ............................. 24.0180

Brownsville-Harlingen-San Benito,

TX .............................................. 19.0812

Bryan-College Station, TX ............ 17.9622

Buffalo-Niagara Falls, NY ............. 20.7580

Burlington, VT ............................... 23.6135

Caguas, PR .................................. 9.9614

Canton-Massillon, OH .................. 18.8702

Casper, WY .................................. 19.0746

Cedar Rapids, IA .......................... 18.2191

Champaign-Urbana, IL ................. 20.1555

Charleston-North Charleston, SC 19.7335

Charleston, WV ............................ 20.2316

Charlotte-Gastonia-Rock Hill, NC–

SC ............................................. 20.1566

Charlottesville, VA ........................ 23.3140

Chattanooga, TN–GA ................... 21.8793

Cheyenne, WY ............................. 18.3270

Chicago, IL ................................... 23.9273

Chico-Paradise, CA ...................... 23.1834

Cincinnati, OH–KY–IN .................. 20.2453

Clarksville-Hopkinsville, TN–KY ... 17.9692

Cleveland-Lorain-Elyria, OH ......... 20.9457

Colorado Springs, CO .................. 21.1998

Columbia, MO ............................... 18.6606

Columbia, SC ............................... 20.9200

Columbus, GA-AL ......................... 18.6769

Columbus, OH .............................. 21.1363

Corpus Christi, TX ........................ 18.4356

Corvallis, OR ................................ 24.8210

Cumberland, MD-WV ................... 18.3080

Dallas, TX ..................................... 20.0063

Danville, VA .................................. 18.5023

Davenport-Moline-Rock Island,

IA–IL .......................................... 19.5749

Dayton-Springfield, OH ................. 20.6558

Daytona Beach, FL ....................... 20.0411

Decatur, AL ................................... 18.7206

Decatur, IL .................................... 18.6640

Denver, CO ................................... 21.7676

Des Moines, IA ............................. 19.9873

TABLE 4D.—AVERAGE HOURLY WAGE

FOR URBAN AREAS—Continued

Urban area

Average

hourly

wage

Detroit, MI ..................................... 21.8228

Dothan, AL .................................... 17.4329

Dover, DE ..................................... 23.9388

Dubuque, IA .................................. 19.3729

Duluth-Superior, MN–WI .............. 22.0638

Dutchess County, NY ................... 22.3565

Eau Claire, WI .............................. 17.5107

El Paso, TX .................................. 19.9962

Elkhart-Goshen, IN ....................... 20.7202

Elmira, NY .................................... 18.7582

Enid, OK ....................................... 19.0534

Erie, PA ........................................ 19.5749

Eugene-Springfield, OR ................ 23.9117

Evansville, Henderson, IN–KY ..... 17.3973

Fargo-Moorhead, ND-MN ............. 19.1596

Fayetteville, NC ............................ 18.7438

Fayetteville-Springdale-Rogers,

AR ............................................. 17.3575

Flagstaff, AZ–UT .......................... 23.5301

Flint, MI ......................................... 24.1126

Florence, AL ................................. 16.4548

Florence, SC ................................. 19.1780

Fort Collins-Loveland, CO ............ 23.3920

Fort Lauderdale, FL ...................... 22.1262

Fort Myers-Cape Coral, FL .......... 19.7718

Fort Pierce-Port St. Lucie, FL ...... 20.7352

Fort Smith, AR-OK ....................... 19.2209

Fort Walton Beach, FL ................. 20.2902

Fort Wayne, IN ............................. 18.9774

Fort Worth-Arlington, TX .............. 20.4871

Fresno, CA ................................... 22.0987

Gadsden, AL ................................. 18.4245

Gainesville, FL .............................. 22.3195

Galveston-Texas City, TX ............ 22.3151

Gary, IN ........................................ 20.4033

Glens Falls, NY ............................ 18.2226

Goldsboro, NC .............................. 18.4077

Grand Forks, ND–MN ................... 22.1477

Grand Junction, CO ...................... 20.0924

Grand Rapids-Muskegon-Holland,

MI .............................................. 22.2552

Great Falls, MT ............................. 19.9908

Greeley, CO .................................. 21.4997

Green Bay, WI .............................. 20.3069

Greensboro-Winston-Salem-High

Point, NC ................................... 19.9482

Greenville, NC .............................. 20.5145

Greenville-Spartanburg-Anderson,

SC ............................................. 19.8759

Hagerstown, MD ........................... 20.9333

Hamilton-Middletown, OH ............. 19.2938

Harrisburg-Lebanon-Carlisle, PA .. 20.5425

Hartford, CT .................................. 24.8641

Hattiesburg, MS ............................ 16.4489

Hickory-Morganton-Lenoir, NC ..... 19.9965

Honolulu, HI .................................. 25.7981

Houma, LA .................................... 17.8310

Houston, TX .................................. 20.9625

Huntington-Ashland, WV–KY–OH 21.6140

Huntsville, AL ................................ 19.7211

Indianapolis, IN ............................. 20.2095

Iowa City, IA ................................. 21.1537

Jackson, MI .................................. 19.4234

Jackson, MS ................................. 19.2901

Jackson, TN .................................. 19.3964

Jacksonville, FL ............................ 19.5189

Jacksonville, NC ........................... 17.0264

Jamestown, NY ............................ 17.1320

Janesville-Beloit, WI ..................... 21.3868

TABLE 4D.—AVERAGE HOURLY WAGE

FOR URBAN AREAS—Continued

Urban area

Average

hourly

wage

Jersey City, NJ ............................. 23.7469

Johnson City-Kingsport-Bristol,

TN–VA ....................................... 18.0944

Johnstown, PA .............................. 20.7614

Jonesboro, AR .............................. 18.6323

Joplin, MO .................................... 17.0944

Kalamazoo-Battlecreek, MI .......... 22.2348

Kankakee, IL ................................. 19.4290

Kansas City, KS–MO .................... 20.8941

Kenosha, WI ................................. 21.0547

Killeen-Temple, TX ....................... 22.3946

Knoxville, TN ................................ 18.1724

Kokomo, IN ................................... 19.8136

La Crosse, WI–MN ....................... 20.4875

Lafayette, LA ................................ 19.1482

Lafayette, IN ................................. 19.7271

Lake Charles, LA .......................... 16.2042

Lakeland-Winter Haven, FL .......... 20.7380

Lancaster, PA ............................... 20.1227

Lansing-East Lansing, MI ............. 21.4235

Laredo, TX .................................... 16.5720

Las Cruces, NM ............................ 18.9734

Las Vegas, NV-AZ ........................ 23.6000

Lawrence, KS ............................... 17.9498

Lawton, OK ................................... 19.8665

Lewiston-Auburn, ME ................... 19.6684

Lexington, KY ............................... 19.3574

Lima, OH ...................................... 20.9055

Lincoln, NE ................................... 21.1236

Little Rock-North Little Rock, AR 19.4396

Longview-Marshall, TX ................. 19.1300

Los Angeles-Long Beach, CA ...... 25.8459

Louisville, KY–IN .......................... 20.3861

Lubbock, TX ................................. 19.1566

Lynchburg, VA .............................. 20.0013

Macon, GA .................................... 19.6297

Madison, WI .................................. 22.4673

Mansfield, OH ............................... 19.0435

Mayaguez, PR .............................. 10.0185

McAllen-Edinburg-Mission, TX ..... 18.2331

Medford-Ashland, OR ................... 22.6499

Melbourne-Titusville-Palm Bay, FL 21.0752

Memphis, TN–AR–MS .................. 15.8781

Merced, CA ................................... 21.1426

Miami, FL ...................................... 22.0202

Middlesex-Somerset-Hunterdon,

NJ .............................................. 24.8629

Milwaukee-Waukesha, WI ............ 21.2711

Minneapolis-St. Paul, MN–WI ...... 24.1246

Missoula, MT ................................ 20.4135

Mobile, AL ..................................... 17.8029

Modesto, CA ................................. 22.7416

Monmouth-Ocean, NJ .................. 24.6814

Monroe, LA ................................... 18.3733

Montgomery, AL ........................... 16.4427

Muncie, IN .................................... 23.2904

Myrtle Beach, SC ......................... 18.7864

Naples, FL .................................... 20.3889

Nashville, TN ................................ 19.9647

Nassau-Suffolk, NY ...................... 30.5221

New Haven-Bridgeport-StamfordWaterbury-Danbury, CT ............ 26.9488

New London-Norwich, CT ............ 26.0037

New Orleans, LA .......................... 20.1432

New York, NY ............................... 31.3439

Newark, NJ ................................... 25.6220

Newburgh, NY-PA ........................ 23.7525

Norfolk-Virginia Beach-Newport

News, VA–NC ........................... 18.2637

26372 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 4D.—AVERAGE HOURLY WAGE

FOR URBAN AREAS—Continued

Urban area

Average

hourly

wage

Oakland, CA ................................. 32.6592

Ocala, FL ...................................... 19.2230

Odessa-Midland, TX ..................... 19.8941

Oklahoma City, OK ....................... 19.3346

Olympia, WA ................................. 23.4064

Omaha, NE-IA .............................. 21.0639

Orange County, CA ...................... 25.1808

Orlando, FL ................................... 21.6103

Owensboro, KY ............................ 16.7178

Panama City, FL ........................... 19.8085

Parkersburg-Marietta, WV–OH ..... 17.5453

Pensacola, FL ............................... 17.8738

Peoria-Pekin, IL ............................ 18.7922

Philadelphia, PA–NJ ..................... 23.1316

Phoenix-Mesa, AZ ........................ 20.6836

Pine Bluff, AR ............................... 17.0672

Pittsburgh, PA ............................... 21.3039

Pittsfield, MA ................................. 22.6239

Pocatello, ID ................................. 23.4749

Ponce, PR .................................... 9.4317

Portland, ME ................................. 21.2189

Portland-Vancouver, OR–WA ....... 23.7092

Providence-Warwick, RI ............... 23.7714

Provo-Orem, UT ........................... 21.5911

Pueblo, CO ................................... 18.5332

Punta Gorda, FL ........................... 20.7540

Racine, WI .................................... 20.1753

Raleigh-Durham-Chapel Hill, NC 21.1552

Rapid City, SD .............................. 18.3452

Reading, PA ................................. 19.9691

Redding, CA ................................. 25.5947

Reno, NV ...................................... 22.8021

Richland-Kennewick-Pasco, WA .. 25.0933

Richmond-Petersburg, VA ............ 21.0026

Riverside-San Bernardino, CA ..... 24.4131

Roanoke, VA ................................ 20.7061

Rochester, MN .............................. 24.6529

Rochester, NY .............................. 19.1942

Rockford, IL .................................. 19.3204

Rocky Mount, NC ......................... 19.2567

Sacramento, CA ........................... 26.0102

Saginaw-Bay City-Midland, MI ..... 20.5596

St. Cloud, MN ............................... 22.0551

St. Joseph, MO ............................. 20.0604

St. Louis, MO–IL ........................... 19.7758

Salem, OR .................................... 22.3396

Salinas, CA ................................... 31.7057

Salt Lake City-Ogden, UT ............ 20.9541

San Angelo, TX ............................ 16.8092

San Antonio, TX ........................... 17.5486

San Diego, CA .............................. 25.8245

San Francisco, CA ....................... 31.2006

San Jose, CA ............................... 31.3127

San Juan-Bayamon, PR ............... 10.1790

San Luis Obispo-AtascaderoPaso Robles, CA ...................... 23.3363

Santa Barbara-Santa MariaLompoc, CA .............................. 23.2791

Santa Cruz-Watsonville, CA ......... 31.9763

Santa Fe, NM ............................... 20.3593

Santa Rosa, CA ............................ 28.6042

TABLE 4D.—AVERAGE HOURLY WAGE

FOR URBAN AREAS—Continued

Urban area

Average

hourly

wage

Sarasota-Bradenton, FL ............... 20.9819

Savannah, GA .............................. 18.8537

Scranton-Wilkes Barre-Hazleton,

PA ............................................. 18.1723

Seattle-Bellevue-Everett, WA ....... 24.0236

Sharon, PA ................................... 17.3633

Sheboygan, WI ............................. 18.3680

Sherman-Denison, TX .................. 18.3921

Shreveport-Bossier City, LA ......... 19.2092

Sioux City, IA-NE .......................... 18.5977

Sioux Falls, SD ............................. 19.2902

South Bend, IN ............................. 22.2041

Spokane, WA ................................ 25.9937

Springfield, IL ................................ 18.9742

Springfield, MO ............................. 18.1326

Springfield, MA ............................. 23.4382

State College, PA ......................... 19.7770

Steubenville-Weirton, OH–WV ..... 18.7875

Stockton-Lodi, CA ......................... 23.2417

Sumter, SC ................................... 15.4277

Syracuse, NY ................................ 20.8181

Tacoma, WA ................................. 25.2962

Tallahassee, FL ............................ 18.6152

Tampa-St. Petersburg-Clearwater,

FL .............................................. 19.5050

Terre Haute, IN ............................. 15.3117

Texarkana, AR-Texarkana, TX ..... 17.0551

Toledo, OH ................................... 21.4500

Topeka, KS ................................... 19.8204

Trenton, NJ ................................... 21.5233

Tucson, AZ ................................... 19.0859

Tulsa, OK ...................................... 18.8729

Tuscaloosa, AL ............................. 17.5354

Tyler, TX ....................................... 20.1140

Utica-Rome, NY ............................ 18.2490

Vallejo-Fairfield-Napa, CA ............ 28.7082

Ventura, CA .................................. 24.1637

Victoria, TX ................................... 17.6229

Vineland-Millville-Bridgeton, NJ .... 22.7012

Visalia-Tulare-Porterville, CA ....... 21.2165

Waco, TX ...................................... 18.2321

Washington, DC–MD–VA–WV ..... 23.5031

Waterloo-Cedar Falls, IA .............. 18.4528

Wausau, WI .................................. 20.5783

West Palm Beach-Boca Raton,

FL .............................................. 21.1018

Wheeling, OH-WV ........................ 16.9649

Wichita, KS ................................... 20.7737

Wichita Falls, TX .......................... 16.6396

Williamsport, PA ........................... 18.2295

Wilmington-Newark, DE–MD ........ 24.4776

Wilmington, NC ............................. 20.5573

Yakima, WA .................................. 21.7819

Yolo, CA ....................................... 22.2646

York, PA ....................................... 20.4558

Youngstown-Warren, OH ............. 20.8393

Yuba City, CA ............................... 23.4776

Yuma, AZ ...................................... 20.8420

TABLE 4E.—AVERAGE HOURLY WAGE

FOR RURAL AREAS

Nonurban area

Average

hourly

wage

Alabama ........................................ 16.4226

Alaska ........................................... 27.5158

Arizona .......................................... 18.2279

Arkansas ....................................... 16.3570

California ....................................... 21.6246

Colorado ....................................... 19.9177

Connecticut ................................... 25.5994

Delaware ....................................... 20.2855

Florida ........................................... 19.2234

Georgia ......................................... 18.4650

Hawaii ........................................... 24.8190

Idaho ............................................. 19.1619

Illinois ............................................ 18.0540

Indiana .......................................... 19.1101

Iowa .............................................. 17.7834

Kansas .......................................... 16.7288

Kentucky ....................................... 17.3951

Louisiana ...................................... 17.1441

Maine ............................................ 19.1234

Maryland ....................................... 18.9146

Massachusetts .............................. 24.6234

Michigan ....................................... 19.7353

Minnesota ..................................... 19.7808

Mississippi .................................... 16.5082

Missouri ........................................ 16.8219

Montana ........................................ 19.5658

Nebraska ...................................... 17.9331

Nevada ......................................... 20.2962

New Hampshire ............................ 21.6890

New Jersey 1 ................................. ................

New Mexico .................................. 18.2818

New York ...................................... 18.5706

North Carolina .............................. 18.5592

North Dakota ................................ 16.7027

Ohio .............................................. 19.0464

Oklahoma ..................................... 16.5386

Oregon .......................................... 22.3491

Pennsylvania ................................ 18.8470

Puerto Rico ................................... 9.1823

Rhode Island 1 .............................. ................

South Carolina .............................. 18.3244

South Dakota ................................ 16.8938

Tennessee .................................... 17.3149

Texas ............................................ 16.3108

Utah .............................................. 19.9234

Vermont ........................................ 20.3374

Virginia .......................................... 18.1413

Washington ................................... 23.3538

West Virginia ................................ 18.0536

Wisconsin ..................................... 19.6848

Wyoming ....................................... 19.6292

1All counties within the State are classified

as urban.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26373

TABLE 4F.—PUERTO RICO WAGE INDEX AND CAPITAL GEOGRAPHIC ADJUSTMENT FACTOR (GAF)

Area Wage

index GAF

Wage

index—

reclass.

hospitals

GAF—

reclass.

hospitals

Aguadilla, PR ................................................................................................... 1.0507 1.0344 ........................ ........................

Arecibo, PR ...................................................................................................... 0.9883 0.9920 ........................ ........................

Caguas, PR ..................................................................................................... 0.9995 0.9997 ........................ ........................

Mayaguez, PR ................................................................................................. 1.0052 1.0036 ........................ ........................

Ponce, PR ........................................................................................................ 0.9463 0.9629 ........................ ........................

San Juan-Bayamon, PR .................................................................................. 1.0213 1.0145 ........................ ........................

Rural Puerto Rico ............................................................................................ 0.9213 0.9454 ........................ ........................

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

1 ....... 01 SURG CRANIOTOMY AGE >17 EXCEPT FOR TRAUMA ............................. 3.1023 6.3 9.1

2 ....... 01 SURG CRANIOTOMY FOR TRAUMA AGE >17 ............................................ 3.1157 7.3 9.7

3 ....... 01 SURG * CRANIOTOMY AGE 0–17 .................................................................. 1.9575 12.7 12.7

4 ....... 01 SURG SPINAL PROCEDURES ....................................................................... 2.2879 4.8 7.3

5 ....... 01 SURG EXTRACRANIAL VASCULAR PROCEDURES ................................... 1.4334 2.3 3.3

6 ....... 01 SURG CARPAL TUNNEL RELEASE .............................................................. .8265 2.2 3.2

7 ....... 01 SURG PERIPH & CRANIAL NERVE & OTHER NERV SYST PROC W CC 2.5918 6.9 10.3

8 ....... 01 SURG PERIPH & CRANIAL NERVE & OTHER NERV SYST PROC W/O

CC.

1.3987 2.1 3.0

9 ....... 01 MED SPINAL DISORDERS & INJURIES ..................................................... 1.3176 4.8 6.7

10 ..... 01 MED NERVOUS SYSTEM NEOPLASMS W CC .......................................... 1.2276 4.9 6.7

11 ..... 01 MED NERVOUS SYSTEM NEOPLASMS W/O CC ...................................... .8343 3.1 4.2

12 ..... 01 MED DEGENERATIVE NERVOUS SYSTEM DISORDERS ........................ .8916 4.5 6.1

13 ..... 01 MED MULTIPLE SCLEROSIS & CEREBELLAR ATAXIA ............................ .7675 4.1 5.1

14 ..... 01 MED SPECIFIC CEREBROVASCULAR DISORDERS EXCEPT TIA .......... 1.2205 4.8 6.2

15 ..... 01 MED TRANSIENT ISCHEMIC ATTACK & PRECEREBRAL OCCLUSIONS .7486 2.9 3.6

16 ..... 01 MED NONSPECIFIC CEREBROVASCULAR DISORDERS W CC ............. 1.1670 4.6 6.1

17 ..... 01 MED NONSPECIFIC CEREBROVASCULAR DISORDERS W/O CC .......... .6563 2.7 3.4

18 ..... 01 MED CRANIAL & PERIPHERAL NERVE DISORDERS W CC .................... .9616 4.3 5.6

19 ..... 01 MED CRANIAL & PERIPHERAL NERVE DISORDERS W/O CC ................ .6975 2.9 3.7

20 ..... 01 MED NERVOUS SYSTEM INFECTION EXCEPT VIRAL MENINGITIS ...... 2.7645 7.9 10.5

21 ..... 01 MED VIRAL MENINGITIS ............................................................................. 1.5003 5.2 6.9

22 ..... 01 MED HYPERTENSIVE ENCEPHALOPATHY ............................................... 1.0084 3.8 5.0

23 ..... 01 MED NONTRAUMATIC STUPOR & COMA ................................................. .8021 3.2 4.2

24 ..... 01 MED SEIZURE & HEADACHE AGE >17 W CC ........................................... .9925 3.7 5.0

25 ..... 01 MED SEIZURE & HEADACHE AGE >17 W/O CC ....................................... .6045 2.6 3.3

26 ..... 01 MED SEIZURE & HEADACHE AGE 0–17 .................................................... .6453 2.4 3.2

27 ..... 01 MED TRAUMATIC STUPOR & COMA, COMA >1 HR ................................. 1.2871 3.2 5.1

28 ..... 01 MED TRAUMATIC STUPOR & COMA, COMA <1 HR AGE 17 ≥ W CC .... 1.3124 4.5 6.3

29 ..... 01 MED TRAUMATIC STUPOR & COMA, COMA <1 HR AGE 17 ≥ W/O CC .7037 2.8 3.7

30 ..... 01 MED * TRAUMATIC STUPOR & COMA, COMA < 1 HR AGE 0–17 ........... .3311 2.0 2.0

31 ..... 01 MED CONCUSSION AGE >17 W CC ........................................................... .8655 3.1 4.2

32 ..... 01 MED CONCUSSION AGE >17 W/O CC ....................................................... .5374 2.1 2.7

33 ..... 01 MED * CONCUSSION AGE 0–17 .................................................................. .2080 1.6 1.6

34 ..... 01 MED OTHER DISORDERS OF NERVOUS SYSTEM W CC ....................... 1.0108 3.8 5.2

35 ..... 01 MED OTHER DISORDERS OF NERVOUS SYSTEM W/O CC ................... .6051 2.7 3.4

36 ..... 02 SURG RETINAL PROCEDURES .................................................................... .6636 1.2 1.4

37 ..... 02 SURG ORBITAL PROCEDURES .................................................................... 1.0020 2.6 3.7

38 ..... 02 SURG PRIMARY IRIS PROCEDURES ........................................................... .4832 1.8 2.5

39 ..... 02 SURG LENS PROCEDURES WITH OR WITHOUT VITRECTOMY .............. .5803 1.5 1.9

40 ..... 02 SURG EXTRAOCULAR PROCEDURES EXCEPT ORBIT AGE >17 ............. .8625 2.3 3.6

41 ..... 02 SURG * EXTRAOCULAR PROCEDURES EXCEPT ORBIT AGE 0–17 ......... .3370 1.6 1.6

42 ..... 02 SURG INTRAOCULAR PROCEDURES EXCEPT RETINA, IRIS & LENS .... .6472 1.6 2.2

43 ..... 02 MED HYPHEMA ............................................................................................ .5008 2.6 3.3

44 ..... 02 MED ACUTE MAJOR EYE INFECTIONS ..................................................... .6293 4.0 5.0

45 ..... 02 MED NEUROLOGICAL EYE DISORDERS .................................................. .7031 2.7 3.3

46 ..... 02 MED OTHER DISORDERS OF THE EYE AGE >17 W CC ......................... .7767 3.5 4.6

47 ..... 02 MED OTHER DISORDERS OF THE EYE AGE >17 W/O CC ..................... .4921 2.5 3.3

48 ..... 02 MED * OTHER DISORDERS OF THE EYE AGE 0–17 ................................ .2968 2.9 2.9

49 ..... 03 SURG MAJOR HEAD & NECK PROCEDURES ............................................. 1.8368 3.5 5.0

50 ..... 03 SURG SIALOADENECTOMY .......................................................................... .8531 1.6 2.0

51 ..... 03 SURG SALIVARY GLAND PROCEDURES EXCEPT SIALOADENECTOMY .7986 1.8 2.6

52 ..... 03 SURG CLEFT LIP & PALATE REPAIR ........................................................... .8428 1.6 2.1

53 ..... 03 SURG SINUS & MASTOID PROCEDURES AGE >17 ................................... 1.2137 2.3 3.7

26374 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

54 ..... 03 SURG * SINUS & MASTOID PROCEDURES AGE 0–17 ............................... .4812 3.2 3.2

55 ..... 03 SURG MISCELLANEOUS EAR, NOSE, MOUTH & THROAT PROCEDURES..9049 1.9 2.9

56 ..... 03 SURG RHINOPLASTY ..................................................................................... .9487 2.1 3.1

57 ..... 03 SURG T & A PROC, EXCEPT TONSILLECTOMY & /OR

ADENOIDECTOMY ONLY, AGE >17.

1.0775 2.6 4.0

58 ..... 03 SURG * T & A PROC, EXCEPT TONSILLECTOMY & /OR

ADENOIDECTOMY ONLY, AGE 0–17.

.2733 1.5 1.5

59 ..... 03 SURG TONSILLECTOMY & /OR ADENOIDECTOMY ONLY, AGE >17 ....... .6824 1.8 2.4

60 ..... 03 SURG * TONSILLECTOMY & /OR ADENOIDECTOMY ONLY, AGE 0–17 ... .2081 1.5 1.5

61 ..... 03 SURG MYRINGOTOMY W TUBE INSERTION AGE >17 .............................. 1.2708 2.8 4.9

62 ..... 03 SURG * MYRINGOTOMY W TUBE INSERTION AGE 0–17 .......................... .2946 1.3 1.3

63 ..... 03 SURG OTHER EAR, NOSE, MOUTH & THROAT O.R. PROCEDURES ...... 1.3393 3.0 4.3

64 ..... 03 MED EAR, NOSE, MOUTH & THROAT MALIGNANCY .............................. 1.2285 4.2 6.5

65 ..... 03 MED DYSEQUILIBRIUM ............................................................................... .5383 2.3 2.9

66 ..... 03 MED EPISTAXIS ........................................................................................... .5580 2.5 3.2

67 ..... 03 MED EPIGLOTTITIS ...................................................................................... .8088 2.8 3.5

68 ..... 03 MED OTITIS MEDIA & URI AGE >17 W CC ................................................ .6744 3.4 4.2

69 ..... 03 MED OTITIS MEDIA & URI AGE >17 W/O CC ............................................ .5114 2.7 3.3

70 ..... 03 MED OTITIS MEDIA & URI AGE 0–17 ......................................................... .4666 2.4 2.9

71 ..... 03 MED LARYNGOTRACHEITIS ....................................................................... .7730 3.0 3.9

72 ..... 03 MED NASAL TRAUMA & DEFORMITY ........................................................ .6409 2.6 3.3

73 ..... 03 MED OTHER EAR, NOSE, MOUTH & THROAT DIAGNOSES AGE >17 ... .7763 3.3 4.3

74 ..... 03 MED * OTHER EAR, NOSE, MOUTH & THROAT DIAGNOSES AGE 0–17 .3348 2.1 2.1

75 ..... 04 SURG MAJOR CHEST PROCEDURES ......................................................... 3.1338 7.8 10.0

76 ..... 04 SURG OTHER RESP SYSTEM O.R. PROCEDURES W CC ........................ 2.7905 8.4 11.3

77 ..... 04 SURG OTHER RESP SYSTEM O.R. PROCEDURES W/O CC ..................... 1.1793 3.4 4.9

78 ..... 04 MED PULMONARY EMBOLISM ................................................................... 1.3703 6.0 7.0

79 ..... 04 MED RESPIRATORY INFECTIONS & INFLAMMATIONS AGE >17 W CC 1.6471 6.6 8.5

80 ..... 04 MED RESPIRATORY INFECTIONS & INFLAMMATIONS AGE >17 W/O

CC.

.9168 4.6 5.7

81 ..... 04 MED * RESPIRATORY INFECTIONS & INFLAMMATIONS AGE 0–17 ....... 1.5162 6.1 6.1

82 ..... 04 MED RESPIRATORY NEOPLASMS ............................................................. 1.3810 5.2 7.0

83 ..... 04 MED MAJOR CHEST TRAUMA W CC ......................................................... .9752 4.4 5.6

84 ..... 04 MED MAJOR CHEST TRAUMA W/O CC ..................................................... .5492 2.8 3.4

85 ..... 04 MED PLEURAL EFFUSION W CC ............................................................... 1.2201 4.9 6.4

86 ..... 04 MED PLEURAL EFFUSION W/O CC ........................................................... .6990 2.9 3.8

87 ..... 04 MED PULMONARY EDEMA & RESPIRATORY FAILURE .......................... 1.3746 4.8 6.3

88 ..... 04 MED CHRONIC OBSTRUCTIVE PULMONARY DISEASE .......................... .9314 4.2 5.2

89 ..... 04 MED SIMPLE PNEUMONIA & PLEURISY AGE >17 W CC ........................ 1.0638 5.0 6.0

90 ..... 04 MED SIMPLE PNEUMONIA & PLEURISY AGE >17 W/O CC .................... .6540 3.6 4.2

91 ..... 04 MED SIMPLE PNEUMONIA & PLEURISY AGE 0–17 ................................. .6702 2.8 3.3

92 ..... 04 MED INTERSTITIAL LUNG DISEASE W CC ............................................... 1.1852 5.0 6.3

93 ..... 04 MED INTERSTITIAL LUNG DISEASE W/O CC ........................................... .7211 3.3 4.0

94 ..... 04 MED PNEUMOTHORAX W CC .................................................................... 1.1694 4.8 6.3

95 ..... 04 MED PNEUMOTHORAX W/O CC ................................................................ .6072 3.0 3.7

96 ..... 04 MED BRONCHITIS & ASTHMA AGE >17 W CC ......................................... .7873 3.9 4.7

97 ..... 04 MED BRONCHITIS & ASTHMA AGE >17 W/O CC ..................................... .5871 3.1 3.7

98 ..... 04 MED BRONCHITIS & ASTHMA AGE 0–17 .................................................. .9098 3.0 4.7

99 ..... 04 MED RESPIRATORY SIGNS & SYMPTOMS W CC ................................... .7104 2.5 3.2

100 ... 04 MED RESPIRATORY SIGNS & SYMPTOMS W/O CC ................................ .5415 1.8 2.2

101 ... 04 MED OTHER RESPIRATORY SYSTEM DIAGNOSES W CC ..................... .8535 3.3 4.4

102 ... 04 MED OTHER RESPIRATORY SYSTEM DIAGNOSES W/O CC ................. .5522 2.1 2.7

103 ... PRE SURG HEART TRANSPLANT ......................................................................... 17.3527 28.8 48.6

104 ... 05 SURG CARDIAC VALVE & OTHER MAJOR CARDIOTHORACIC PROC W

CARDIAC CATH.

7.2014 8.9 11.7

105 ... 05 SURG CARDIAC VALVE & OTHER MAJOR CARDIOTHORACIC PROC W/

O CARDIAC CATH.

5.6515 7.4 9.3

106 ... 05 SURG CORONARY BYPASS W PTCA .......................................................... 7.5379 9.4 11.2

107 ... 05 SURG CORONARY BYPASS W CARDIAC CATH ......................................... 5.3870 9.2 10.4

108 ... 05 SURG OTHER CARDIOTHORACIC PROCEDURES ..................................... 5.6650 8.0 10.6

109 ... 05 SURG CORONARY BYPASS W/O PTCA OR CARDIAC CATH ................... 4.0244 6.8 7.7

110 ... 05 SURG MAJOR CARDIOVASCULAR PROCEDURES W CC ......................... 4.1440 7.1 9.5

111 ... 05 SURG MAJOR CARDIOVASCULAR PROCEDURES W/O CC ..................... 2.2427 4.7 5.5

112 ... 05 SURG PERCUTANEOUS CARDIOVASCULAR PROCEDURES ................... 1.8729 2.6 3.8

113 ... 05 SURG AMPUTATION FOR CIRC SYSTEM DISORDERS EXCEPT UPPER

LIMB & TOE.

2.7595 9.7 12.7

114 ... 05 SURG UPPER LIMB & TOE AMPUTATION FOR CIRC SYSTEM DISORDERS.1.5650 6.0 8.3

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26375

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

115 ... 05 SURG PRM CARD PACEM IMPL W AMI,HRT FAIL OR SHK,OR AICD

LEAD OR GNRTR PR.

3.4763 6.0 8.4

116 ... 05 SURG OTH PERM CARD PACEMAK IMPL OR PTCA W CORONARY ARTERY STENT IMPLNT.2.4225 2.6 3.7

117 ... 05 SURG CARDIAC PACEMAKER REVISION EXCEPT DEVICE REPLACEMENT.1.2983 2.6 4.1

118 ... 05 SURG CARDIAC PACEMAKER DEVICE REPLACEMENT ........................... 1.4952 1.9 2.8

119 ... 05 SURG VEIN LIGATION & STRIPPING ........................................................... 1.2627 2.9 4.8

120 ... 05 SURG OTHER CIRCULATORY SYSTEM O.R. PROCEDURES ................... 2.0394 4.9 8.1

121 ... 05 MED CIRCULATORY DISORDERS W AMI & MAJOR COMP, DISCHARGED ALIVE.1.6191 5.5 6.7

122 ... 05 MED CIRCULATORY DISORDERS W AMI W/O MAJOR COMP, DISCHARGED ALIVE.1.0872 3.3 4.0

123 ... 05 MED CIRCULATORY DISORDERS W AMI, EXPIRED ............................... 1.5531 2.8 4.6

124 ... 05 MED CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH &

COMPLEX DIAG.

1.4152 3.3 4.4

125 ... 05 MED CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH W/O

COMPLEX DIAG.

1.0624 2.2 2.8

126 ... 05 MED ACUTE & SUBACUTE ENDOCARDITIS ............................................. 2.5352 9.2 12.0

127 ... 05 MED HEART FAILURE & SHOCK ................................................................ 1.0135 4.2 5.4

128 ... 05 MED DEEP VEIN THROMBOPHLEBITIS ..................................................... .7644 5.0 5.8

129 ... 05 MED CARDIAC ARREST, UNEXPLAINED .................................................. 1.0936 1.8 2.8

130 ... 05 MED PERIPHERAL VASCULAR DISORDERS W CC ................................. .9474 4.7 5.9

131 ... 05 MED PERIPHERAL VASCULAR DISORDERS W/O CC ............................. .5891 3.6 4.4

132 ... 05 MED ATHEROSCLEROSIS W CC ............................................................... .6703 2.4 3.1

133 ... 05 MED ATHEROSCLEROSIS W/O CC ............................................................ .5656 1.9 2.4

134 ... 05 MED HYPERTENSION .................................................................................. .5921 2.6 3.3

135 ... 05 MED CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W

CC.

.9085 3.3 4.5

136 ... 05 MED CARDIAC CONGENITAL & VALVULAR DISORDERS AGE >17 W/O

CC.

.6074 2.3 2.9

137 ... 05 MED * CARDIAC CONGENITAL & VALVULAR DISORDERS AGE 0–17 ... .8170 3.3 3.3

138 ... 05 MED CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W CC ...... .8288 3.1 4.0

139 ... 05 MED CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W/O CC .. .5139 2.0 2.5

140 ... 05 MED ANGINA PECTORIS ............................................................................. .5737 2.2 2.7

141 ... 05 MED SYNCOPE & COLLAPSE W CC .......................................................... .7225 2.9 3.7

142 ... 05 MED SYNCOPE & COLLAPSE W/O CC ...................................................... .5556 2.2 2.7

143 ... 05 MED CHEST PAIN ........................................................................................ .5403 1.8 2.2

144 ... 05 MED OTHER CIRCULATORY SYSTEM DIAGNOSES W CC ..................... 1.1676 3.8 5.4

145 ... 05 MED OTHER CIRCULATORY SYSTEM DIAGNOSES W/O CC ................. .6308 2.2 2.8

146 ... 06 SURG RECTAL RESECTION W CC ............................................................... 2.7439 8.9 10.2

147 ... 06 SURG RECTAL RESECTION W/O CC ........................................................... 1.6272 6.0 6.6

148 ... 06 SURG MAJOR SMALL & LARGE BOWEL PROCEDURES W CC ................ 3.4317 10.1 12.1

149 ... 06 SURG MAJOR SMALL & LARGE BOWEL PROCEDURES W/O CC ............ 1.5645 6.1 6.6

150 ... 06 SURG PERITONEAL ADHESIOLYSIS W CC ................................................. 2.8508 9.1 11.2

151 ... 06 SURG PERITONEAL ADHESIOLYSIS W/O CC ............................................. 1.3404 4.8 5.9

152 ... 06 SURG MINOR SMALL & LARGE BOWEL PROCEDURES W CC ................ 1.9422 6.8 8.2

153 ... 06 SURG MINOR SMALL & LARGE BOWEL PROCEDURES W/O CC ............ 1.2045 4.9 5.5

154 ... 06 SURG STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE

>17 W CC.

4.1504 10.1 13.3

155 ... 06 SURG STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE

>17 W/O CC.

1.3691 3.3 4.3

156 ... 06 SURG * STOMACH, ESOPHAGEAL & DUODENAL PROCEDURES AGE

0–17.

.8413 6.0 6.0

157 ... 06 SURG ANAL & STOMAL PROCEDURES W CC ........................................... 1.2381 3.9 5.5

158 ... 06 SURG ANAL & STOMAL PROCEDURES W/O CC ........................................ .6630 2.1 2.6

159 ... 06 SURG HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE

>17 W CC.

1.3341 3.8 5.0

160 ... 06 SURG HERNIA PROCEDURES EXCEPT INGUINAL & FEMORAL AGE

>17 W/O CC.

.7828 2.2 2.7

161 ... 06 SURG INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W CC .. 1.1022 2.9 4.2

162 ... 06 SURG INGUINAL & FEMORAL HERNIA PROCEDURES AGE >17 W/O CC .6236 1.6 2.0

163 ... 06 SURG * HERNIA PROCEDURES AGE 0–17 .................................................. .8701 2.1 2.1

164 ... 06 SURG APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W CC ....... 2.3776 7.1 8.4

165 ... 06 SURG APPENDECTOMY W COMPLICATED PRINCIPAL DIAG W/O CC ... 1.2823 4.3 4.9

166 ... 06 SURG APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W CC ... 1.4813 4.0 5.1

167 ... 06 SURG APPENDECTOMY W/O COMPLICATED PRINCIPAL DIAG W/O CC .8936 2.3 2.7

168 ... 03 SURG MOUTH PROCEDURES W CC ........................................................... 1.2069 3.2 4.6

169 ... 03 SURG MOUTH PROCEDURES W/O CC ....................................................... .7475 1.9 2.4

170 ... 06 SURG OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W CC ............... 2.8739 7.7 11.2

26376 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

171 ... 06 SURG OTHER DIGESTIVE SYSTEM O.R. PROCEDURES W/O CC ........... 1.1951 3.6 4.8

172 ... 06 MED DIGESTIVE MALIGNANCY W CC ....................................................... 1.3502 5.1 7.0

173 ... 06 MED DIGESTIVE MALIGNANCY W/O CC ................................................... .7641 2.8 3.9

174 ... 06 MED G.I. HEMORRHAGE W CC .................................................................. .9981 3.9 4.8

175 ... 06 MED G.I. HEMORRHAGE W/O CC .............................................................. .5495 2.5 2.9

176 ... 06 MED COMPLICATED PEPTIC ULCER ........................................................ 1.1057 4.1 5.3

177 ... 06 MED UNCOMPLICATED PEPTIC ULCER W CC ........................................ .8997 3.7 4.6

178 ... 06 MED UNCOMPLICATED PEPTIC ULCER W/O CC .................................... .6593 2.6 3.1

179 ... 06 MED INFLAMMATORY BOWEL DISEASE .................................................. 1.0583 4.7 6.0

180 ... 06 MED G.I. OBSTRUCTION W CC .................................................................. .9426 4.2 5.4

181 ... 06 MED G.I. OBSTRUCTION W/O CC .............................................................. .5309 2.8 3.4

182 ... 06 MED ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE

>17 W CC.

.7922 3.4 4.4

183 ... 06 MED ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE

>17 W/O CC.

.5713 2.4 3.0

184 ... 06 MED ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS AGE

0–17.

.5137 2.5 3.3

185 ... 03 MED DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORATIONS, AGE >17..8624 3.3 4.5

186 ... 03 MED * DENTAL & ORAL DIS EXCEPT EXTRACTIONS & RESTORATIONS, AGE 0–17..3207 2.9 2.9

187 ... 03 MED DENTAL EXTRACTIONS & RESTORATIONS .................................... .7687 2.9 3.8

188 ... 06 MED OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W CC ........... 1.1005 4.1 5.6

189 ... 06 MED OTHER DIGESTIVE SYSTEM DIAGNOSES AGE >17 W/O CC ........ .5799 2.4 3.1

190 ... 06 MED OTHER DIGESTIVE SYSTEM DIAGNOSES AGE 0–17 .................... .9912 4.1 6.0

191 ... 07 SURG PANCREAS, LIVER & SHUNT PROCEDURES W CC ....................... 4.3818 10.5 14.1

192 ... 07 SURG PANCREAS, LIVER & SHUNT PROCEDURES W/O CC ................... 1.7866 5.3 6.6

193 ... 07 SURG BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O

C.D.E. W CC.

3.3954 10.3 12.6

194 ... 07 SURG BILIARY TRACT PROC EXCEPT ONLY CHOLECYST W OR W/O

C.D.E. W/O CC.

1.6141 5.6 6.8

195 ... 07 SURG CHOLECYSTECTOMY W C.D.E. W CC ............................................. 2.9025 8.3 9.9

196 ... 07 SURG CHOLECYSTECTOMY W C.D.E. W/O CC ......................................... 1.6543 4.9 5.7

197 ... 07 SURG CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E.

W CC.

2.4551 7.2 8.7

198 ... 07 SURG CHOLECYSTECTOMY EXCEPT BY LAPAROSCOPE W/O C.D.E.

W/O CC.

1.2323 3.9 4.5

199 ... 07 SURG HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR MALIGNANCY 2.3610 7.2 9.7

200 ... 07 SURG HEPATOBILIARY DIAGNOSTIC PROCEDURE FOR NON-MALIGNANCY.3.1765 7.0 10.8

201 ... 07 SURG OTHER HEPATOBILIARY OR PANCREAS O.R. PROCEDURES ..... 3.4002 10.2 13.9

202 ... 07 MED CIRRHOSIS & ALCOHOLIC HEPATITIS ............................................. 1.3035 4.9 6.5

203 ... 07 MED MALIGNANCY OF HEPATOBILIARY SYSTEM OR PANCREAS ....... 1.3284 5.0 6.7

204 ... 07 MED DISORDERS OF PANCREAS EXCEPT MALIGNANCY ..................... 1.2030 4.5 5.9

205 ... 07 MED DISORDERS OF LIVER EXCEPT MALIG,CIRR,ALC HEPA W CC ... 1.2072 4.7 6.3

206 ... 07 MED DISORDERS OF LIVER EXCEPT MALIG,CIRR,ALC HEPA W/O CC .6759 3.0 3.9

207 ... 07 MED DISORDERS OF THE BILIARY TRACT W CC ................................... 1.1037 4.0 5.2

208 ... 07 MED DISORDERS OF THE BILIARY TRACT W/O CC ............................... .6532 2.3 2.9

209 ... 08 SURG MAJOR JOINT & LIMB REATTACHMENT PROCEDURES OF

LOWER EXTREMITY.

2.0902 4.6 5.2

210 ... 08 SURG HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17

W CC.

1.8074 6.0 6.9

211 ... 08 SURG HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE >17

W/O CC.

1.2663 4.6 5.0

212 ... 08 SURG * HIP & FEMUR PROCEDURES EXCEPT MAJOR JOINT AGE 0–17 .8449 11.1 11.1

213 ... 08 SURG AMPUTATION FOR MUSCULOSKELETAL SYSTEM & CONN TISSUE DISORDERS.1.7751 6.4 8.7

214 ... 08 SURG NO LONGER VALID ............................................................................. .0000 .0 .0

215 ... 08 SURG NO LONGER VALID ............................................................................. .0000 .0 .0

216 ... 08 SURG BIOPSIES OF MUSCULOSKELETAL SYSTEM & CONNECTIVE

TISSUE.

2.1983 7.1 9.8

217 ... 08 SURG WND DEBRID & SKN GRFT EXCEPT HAND, FOR MUSCSKELET

& CONN TISS DIS.

2.9142 8.9 13.1

218 ... 08 SURG LOWER EXTREM & HUMER PROC EXCEPT HIP, FOOT, FEMUR

AGE >17 W CC.

1.5309 4.2 5.4

219 ... 08 SURG LOWER EXTREM & HUMER PROC EXCEPT HIP, FOOT, FEMUR

AGE >17 W/O CC.

1.0219 2.7 3.2

220 ... 08 SURG * LOWER EXTREM & HUMER PROC EXCEPT HIP, FOOT, FEMUR

AGE 0–17.

.5828 5.3 5.3

221 ... 08 SURG NO LONGER VALID ............................................................................. .0000 .0 .0

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26377

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

222 ... 08 SURG NO LONGER VALID ............................................................................. .0000 .0 .0

223 ... 08 SURG MAJOR SHOULDER/ELBOW PROC, OR OTHER UPPER EXTREMITY PROC W CC..9560 2.0 2.6

224 ... 08 SURG SHOULDER,ELBOW OR FOREARM PROC,EXC MAJOR JOINT

PROC, W/O CC.

.7986 1.7 2.0

225 ... 08 SURG FOOT PROCEDURES ......................................................................... 1.0864 3.3 4.7

226 ... 08 SURG SOFT TISSUE PROCEDURES W CC ................................................. 1.4749 4.3 6.3

227 ... 08 SURG SOFT TISSUE PROCEDURES W/O CC ............................................. .8025 2.1 2.7

228 ... 08 SURG MAJOR THUMB OR JOINT PROC,OR OTH HAND OR WRIST

PROC W CC.

1.0648 2.4 3.6

229 ... 08 SURG HAND OR WRIST PROC, EXCEPT MAJOR JOINT PROC, W/O CC .7157 1.8 2.4

230 ... 08 SURG LOCAL EXCISION & REMOVAL OF INT FIX DEVICES OF HIP &

FEMUR.

1.2592 3.4 5.1

231 ... 08 SURG LOCAL EXCISION & REMOVAL OF INT FIX DEVICES EXCEPT

HIP & FEMUR.

1.3813 3.2 4.8

232 ... 08 SURG ARTHROSCOPY .................................................................................. 1.0833 2.3 3.6

233 ... 08 SURG OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W CC 2.0825 5.3 7.7

234 ... 08 SURG OTHER MUSCULOSKELET SYS & CONN TISS O.R. PROC W/O

CC.

1.2661 2.7 3.6

235 ... 08 MED FRACTURES OF FEMUR .................................................................... .7584 3.8 5.2

236 ... 08 MED FRACTURES OF HIP & PELVIS ......................................................... .7218 4.0 5.0

237 ... 08 MED SPRAINS, STRAINS, & DISLOCATIONS OF HIP, PELVIS & THIGH .5668 3.0 3.7

238 ... 08 MED OSTEOMYELITIS ................................................................................. 1.3520 6.4 8.6

239 ... 08 MED PATHOLOGICAL FRACTURES & MUSCULOSKELETAL & CONN

TISS MALIGNANCY.

.9749 4.9 6.2

240 ... 08 MED CONNECTIVE TISSUE DISORDERS W CC ....................................... 1.2671 4.9 6.6

241 ... 08 MED CONNECTIVE TISSUE DISORDERS W/O CC ................................... .6166 3.1 3.9

242 ... 08 MED SEPTIC ARTHRITIS ............................................................................. 1.0690 5.1 6.6

243 ... 08 MED MEDICAL BACK PROBLEMS .............................................................. .7261 3.7 4.7

244 ... 08 MED BONE DISEASES & SPECIFIC ARTHROPATHIES W CC ................ .7170 3.7 4.8

245 ... 08 MED BONE DISEASES & SPECIFIC ARTHROPATHIES W/O CC ............. .4842 2.8 3.6

246 ... 08 MED NON-SPECIFIC ARTHROPATHIES .................................................... .5572 3.0 3.6

247 ... 08 MED SIGNS & SYMPTOMS OF MUSCULOSKELETAL SYSTEM & CONN

TISSUE.

.5698 2.6 3.4

248 ... 08 MED TENDONITIS, MYOSITIS & BURSITIS ............................................... .7854 3.7 4.7

249 ... 08 MED AFTERCARE, MUSCULOSKELETAL SYSTEM & CONNECTIVE

TISSUE.

.6919 2.6 3.8

250 ... 08 MED FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17

W CC.

.6912 3.3 4.3

251 ... 08 MED FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE >17

W/O CC.

.4993 2.4 3.0

252 ... 08 MED * FX, SPRN, STRN & DISL OF FOREARM, HAND, FOOT AGE 0–17 .2531 1.8 1.8

253 ... 08 MED FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE

>17 W CC.

.7239 3.7 4.7

254 ... 08 MED FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE

>17 W/O CC.

.4403 2.6 3.2

255 ... 08 MED * FX, SPRN, STRN & DISL OF UPARM, LOWLEG EX FOOT AGE

0–17.

.2947 2.9 2.9

256 ... 08 MED OTHER MUSCULOSKELETAL SYSTEM & CONNECTIVE TISSUE

DIAGNOSES.

.7950 3.8 5.1

257 ... 09 SURG TOTAL MASTECTOMY FOR MALIGNANCY W CC ........................... .9100 2.3 2.8

258 ... 09 SURG TOTAL MASTECTOMY FOR MALIGNANCY W/O CC ....................... .7223 1.8 2.0

259 ... 09 SURG SUBTOTAL MASTECTOMY FOR MALIGNANCY W CC .................... .9083 1.8 2.8

260 ... 09 SURG SUBTOTAL MASTECTOMY FOR MALIGNANCY W/O CC ................ .6521 1.3 1.4

261 ... 09 SURG BREAST PROC FOR NON-MALIGNANCY EXCEPT BIOPSY &

LOCAL EXCISION.

.9307 1.7 2.2

262 ... 09 SURG BREAST BIOPSY & LOCAL EXCISION FOR NON-MALIGNANCY ... .8768 2.7 3.8

263 ... 09 SURG SKIN GRAFT & /OR DEBRID FOR SKN ULCER OR CELLULITIS W

CC.

2.1112 8.9 12.1

264 ... 09 SURG SKIN GRAFT & /OR DEBRID FOR SKN ULCER OR CELLULITIS

W/O CC.

1.1515 5.4 7.2

265 ... 09 SURG SKIN GRAFT & /OR DEBRID EXCEPT FOR SKIN ULCER OR

CELLULITIS W CC.

1.5284 4.2 6.6

266 ... 09 SURG SKIN GRAFT & /OR DEBRID EXCEPT FOR SKIN ULCER OR

CELLULITIS W/O CC.

.8726 2.4 3.3

267 ... 09 SURG PERIANAL & PILONIDAL PROCEDURES .......................................... 1.0827 3.1 5.2

268 ... 09 SURG SKIN, SUBCUTANEOUS TISSUE & BREAST PLASTIC PROCEDURES.1.1382 2.4 3.7

269 ... 09 SURG OTHER SKIN, SUBCUT TISS & BREAST PROC W CC .................... 1.7023 5.8 8.3

270 ... 09 SURG OTHER SKIN, SUBCUT TISS & BREAST PROC W/O CC ................ .7657 2.3 3.3

26378 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

271 ... 09 MED SKIN ULCERS ...................................................................................... 1.0093 5.5 7.1

272 ... 09 MED MAJOR SKIN DISORDERS W CC ...................................................... 1.0005 4.8 6.4

273 ... 09 MED MAJOR SKIN DISORDERS W/O CC .................................................. .6162 3.2 4.2

274 ... 09 MED MALIGNANT BREAST DISORDERS W CC ........................................ 1.2100 4.9 7.0

275 ... 09 MED MALIGNANT BREAST DISORDERS W/O CC .................................... .5316 2.4 3.3

276 ... 09 MED NON-MALIGANT BREAST DISORDERS ............................................ .6919 3.6 4.7

277 ... 09 MED CELLULITIS AGE >17 W CC ............................................................... .8398 4.7 5.7

278 ... 09 MED CELLULITIS AGE >17 W/O CC ........................................................... .5526 3.6 4.3

279 ... 09 MED * CELLULITIS AGE 0–17 ...................................................................... .6626 4.2 4.2

280 ... 09 MED TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W CC .6769 3.2 4.2

281 ... 09 MED TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE >17 W/O

CC.

.4720 2.4 3.1

282 ... 09 MED * TRAUMA TO THE SKIN, SUBCUT TISS & BREAST AGE 0–17 ..... .2563 2.2 2.2

283 ... 09 MED MINOR SKIN DISORDERS W CC ....................................................... .6924 3.5 4.6

284 ... 09 MED MINOR SKIN DISORDERS W/O CC ................................................... .4348 2.5 3.2

285 ... 10 SURG AMPUTAT OF LOWER LIMB FOR ENDOCRINE, NUTRIT, &

METABOL DISORDERS.

1.9923 7.7 10.4

286 ... 10 SURG ADRENAL & PITUITARY PROCEDURES ........................................... 2.1300 4.9 6.2

287 ... 10 SURG SKIN GRAFTS & WOUND DEBRID FOR ENDOC, NUTRIT &

METAB DISORDERS.

1.8336 7.8 10.5

288 ... 10 SURG O.R. PROCEDURES FOR OBESITY .................................................. 2.1764 4.6 5.7

289 ... 10 SURG PARATHYROID PROCEDURES ......................................................... .9892 2.0 3.1

290 ... 10 SURG THYROID PROCEDURES ................................................................... .9207 1.8 2.4

291 ... 10 SURG THYROGLOSSAL PROCEDURES ...................................................... .5503 1.4 1.6

292 ... 10 SURG OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W CC ........... 2.4548 6.9 10.0

293 ... 10 SURG OTHER ENDOCRINE, NUTRIT & METAB O.R. PROC W/O CC ....... 1.2190 3.5 4.9

294 ... 10 MED DIABETES AGE >35 ............................................................................ .7596 3.6 4.7

295 ... 10 MED DIABETES AGE 0–35 .......................................................................... .7555 2.9 3.9

296 ... 10 MED NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W CC .8594 4.0 5.2

297 ... 10 MED NUTRITIONAL & MISC METABOLIC DISORDERS AGE >17 W/O

CC.

.5170 2.8 3.5

298 ... 10 MED NUTRITIONAL & MISC METABOLIC DISORDERS AGE 0–17 .......... .5309 2.5 3.2

299 ... 10 MED INBORN ERRORS OF METABOLISM ................................................ .9442 4.0 5.6

300 ... 10 MED ENDOCRINE DISORDERS W CC ....................................................... 1.0836 4.7 6.1

301 ... 10 MED ENDOCRINE DISORDERS W/O CC ................................................... .6108 2.9 3.7

302 ... 11 SURG KIDNEY TRANSPLANT ........................................................................ 3.4495 7.9 9.4

303 ... 11 SURG KIDNEY, URETER & MAJOR BLADDER PROCEDURES FOR NEOPLASM.2.4639 7.0 8.5

304 ... 11 SURG KIDNEY, URETER & MAJOR BLADDER PROC FOR NON-NEOPL

W CC.

2.3371 6.4 8.9

305 ... 11 SURG KIDNEY, URETER & MAJOR BLADDER PROC FOR NON-NEOPL

W/O CC.

1.1844 3.1 3.8

306 ... 11 SURG PROSTATECTOMY W CC ................................................................... 1.2483 3.7 5.5

307 ... 11 SURG PROSTATECTOMY W/O CC ............................................................... .6424 1.9 2.3

308 ... 11 SURG MINOR BLADDER PROCEDURES W CC .......................................... 1.6345 4.2 6.4

309 ... 11 SURG MINOR BLADDER PROCEDURES W/O CC ...................................... .9332 2.0 2.5

310 ... 11 SURG TRANSURETHRAL PROCEDURES W CC ......................................... 1.1174 3.0 4.4

311 ... 11 SURG TRANSURETHRAL PROCEDURES W/O CC ..................................... .6165 1.6 1.9

312 ... 11 SURG URETHRAL PROCEDURES, AGE >17 W CC .................................... 1.0197 3.0 4.5

313 ... 11 SURG URETHRAL PROCEDURES, AGE >17 W/O CC ................................ .6464 1.7 2.1

314 ... 11 SURG * URETHRAL PROCEDURES, AGE 0–17 ........................................... .4939 2.3 2.3

315 ... 11 SURG OTHER KIDNEY & URINARY TRACT O.R. PROCEDURES .............. 2.0511 4.2 7.5

316 ... 11 MED RENAL FAILURE .................................................................................. 1.3444 4.9 6.7

317 ... 11 MED ADMIT FOR RENAL DIALYSIS ........................................................... .7439 2.1 3.2

318 ... 11 MED KIDNEY & URINARY TRACT NEOPLASMS W CC ............................ 1.1316 4.3 6.0

319 ... 11 MED KIDNEY & URINARY TRACT NEOPLASMS W/O CC ........................ .6045 2.1 2.9

320 ... 11 MED KIDNEY & URINARY TRACT INFECTIONS AGE >17 W CC ............ .8625 4.3 5.4

321 ... 11 MED KIDNEY & URINARY TRACT INFECTIONS AGE >17 W/O CC ......... .5686 3.2 3.8

322 ... 11 MED KIDNEY & URINARY TRACT INFECTIONS AGE 0–17 ..................... .4946 3.3 4.1

323 ... 11 MED URINARY STONES W CC, & /OR ESW LITHOTRIPSY .................... .7992 2.4 3.2

324 ... 11 MED URINARY STONES W/O CC ............................................................... .4502 1.6 1.9

325 ... 11 MED KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE >17 W

CC.

.6468 3.0 3.9

326 ... 11 MED KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE >17 W/O

CC.

.4302 2.1 2.7

327 ... 11 MED * KIDNEY & URINARY TRACT SIGNS & SYMPTOMS AGE 0–17 ..... .3533 3.1 3.1

328 ... 11 MED URETHRAL STRICTURE AGE >17 W CC .......................................... .7487 2.8 3.9

329 ... 11 MED URETHRAL STRICTURE AGE >17 W/O CC ...................................... .5283 1.7 2.0

330 ... 11 MED * URETHRAL STRICTURE AGE 0–17 ................................................. .3182 1.6 1.6

331 ... 11 MED OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE >17 W CC 1.0226 4.1 5.6

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26379

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

332 ... 11 MED OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE >17 W/O

CC.

.5994 2.5 3.3

333 ... 11 MED OTHER KIDNEY & URINARY TRACT DIAGNOSES AGE 0–17 ........ .8248 3.5 5.1

334 ... 12 SURG MAJOR MALE PELVIC PROCEDURES W CC ................................... 1.5582 4.2 4.9

335 ... 12 SURG MAJOR MALE PELVIC PROCEDURES W/O CC ............................... 1.1706 3.2 3.4

336 ... 12 SURG TRANSURETHRAL PROSTATECTOMY W CC .................................. .8873 2.7 3.5

337 ... 12 SURG TRANSURETHRAL PROSTATECTOMY W/O CC .............................. .6147 1.9 2.2

338 ... 12 SURG TESTES PROCEDURES, FOR MALIGNANCY ................................... 1.1903 3.5 5.3

339 ... 12 SURG TESTES PROCEDURES, NON-MALIGNANCY AGE >17 .................. 1.0710 3.0 4.5

340 ... 12 SURG * TESTES PROCEDURES, NON-MALIGNANCY AGE 0–17 .............. .2828 2.4 2.4

341 ... 12 SURG PENIS PROCEDURES ......................................................................... 1.1668 2.1 3.2

342 ... 12 SURG CIRCUMCISION AGE >17 ................................................................... .8214 2.5 3.1

343 ... 12 SURG * CIRCUMCISION AGE 0–17 ............................................................... .1537 1.7 1.7

344 ... 12 SURG OTHER MALE REPRODUCTIVE SYSTEM O.R. PROCEDURES

FOR MALIGNANCY.

1.1489 1.6 2.3

345 ... 12 SURG OTHER MALE REPRODUCTIVE SYSTEM O.R. PROC EXCEPT

FOR MALIGNANCY.

.8813 2.6 3.8

346 ... 12 MED MALIGNANCY, MALE REPRODUCTIVE SYSTEM, W CC ................ .9783 4.3 5.8

347 ... 12 MED MALIGNANCY, MALE REPRODUCTIVE SYSTEM, W/O CC ............. .5905 2.4 3.4

348 ... 12 MED BENIGN PROSTATIC HYPERTROPHY W CC ................................... .7170 3.2 4.2

349 ... 12 MED BENIGN PROSTATIC HYPERTROPHY W/O CC ............................... .4420 2.0 2.6

350 ... 12 MED INFLAMMATION OF THE MALE REPRODUCTIVE SYSTEM ........... .6987 3.6 4.4

351 ... 12 MED * STERILIZATION, MALE ..................................................................... .2358 1.3 1.3

352 ... 12 MED OTHER MALE REPRODUCTIVE SYSTEM DIAGNOSES .................. .6875 2.8 3.9

353 ... 13 SURG PELVIC EVISCERATION, RADICAL HYSTERECTOMY & RADICAL

VULVECTOMY.

1.9232 5.3 6.7

354 ... 13 SURG UTERINE, ADNEXA PROC FOR NON-OVARIAN/ADNEXAL MALIG

W CC.

1.5267 4.9 5.9

355 ... 13 SURG UTERINE, ADNEXA PROC FOR NON-OVARIAN/ADNEXAL MALIG

W/O CC.

.9265 3.1 3.3

356 ... 13 SURG FEMALE REPRODUCTIVE SYSTEM RECONSTRUCTIVE PROCEDURES..7838 2.1 2.4

357 ... 13 SURG UTERINE & ADNEXA PROC FOR OVARIAN OR ADNEXAL MALIGNANCY.2.3601 6.9 8.5

358 ... 13 SURG UTERINE & ADNEXA PROC FOR NON-MALIGNANCY W CC ......... 1.2247 3.7 4.4

359 ... 13 SURG UTERINE & ADNEXA PROC FOR NON-MALIGNANCY W/O CC ..... .8582 2.6 2.8

360 ... 13 SURG VAGINA, CERVIX & VULVA PROCEDURES ...................................... .8859 2.4 3.0

361 ... 13 SURG LAPAROSCOPY & INCISIONAL TUBAL INTERRUPTION ................. 1.2248 2.2 3.5

362 ... 13 SURG * ENDOSCOPIC TUBAL INTERRUPTION ........................................... .3013 1.4 1.4

363 ... 13 SURG D & C, CONIZATION & RADIO-IMPLANT, FOR MALIGNANCY ........ .8178 2.6 3.5

364 ... 13 SURG D & C, CONIZATION EXCEPT FOR MALIGNANCY .......................... .7559 2.6 3.6

365 ... 13 SURG OTHER FEMALE REPRODUCTIVE SYSTEM O.R. PROCEDURES 1.8502 5.0 7.3

366 ... 13 MED MALIGNANCY, FEMALE REPRODUCTIVE SYSTEM W CC ............. 1.2498 4.8 6.8

367 ... 13 MED MALIGNANCY, FEMALE REPRODUCTIVE SYSTEM W/O CC ......... .5675 2.4 3.2

368 ... 13 MED INFECTIONS, FEMALE REPRODUCTIVE SYSTEM .......................... 1.1249 5.0 6.7

369 ... 13 MED MENSTRUAL & OTHER FEMALE REPRODUCTIVE SYSTEM DISORDERS..5721 2.4 3.2

370 ... 14 SURG CESAREAN SECTION W CC .............................................................. 1.0631 4.4 5.7

371 ... 14 SURG CESAREAN SECTION W/O CC .......................................................... .7157 3.3 3.7

372 ... 14 MED VAGINAL DELIVERY W COMPLICATING DIAGNOSES .................... .6069 2.7 3.5

373 ... 14 MED VAGINAL DELIVERY W/O COMPLICATING DIAGNOSES ................ .4172 2.0 2.3

374 ... 14 SURG VAGINAL DELIVERY W STERILIZATION & /OR D & C .................... .7698 2.7 3.5

375 ... 14 SURG * VAGINAL DELIVERY W O.R. PROC EXCEPT STERIL & /OR D &

C.

.6841 4.4 4.4

376 ... 14 MED POSTPARTUM & POST ABORTION DIAGNOSES W/O O.R. PROCEDURE..5314 2.6 3.5

377 ... 14 SURG POSTPARTUM & POST ABORTION DIAGNOSES W O.R. PROCEDURE..8870 2.6 3.9

378 ... 14 MED ECTOPIC PREGNANCY ...................................................................... .7543 2.1 2.3

379 ... 14 MED THREATENED ABORTION .................................................................. .3981 2.0 3.1

380 ... 14 MED ABORTION W/O D & C ........................................................................ .4867 1.8 2.2

381 ... 14 SURG ABORTION W D & C, ASPIRATION CURETTAGE OR

HYSTEROTOMY.

.5323 1.5 2.0

382 ... 14 MED FALSE LABOR ..................................................................................... .1845 1.2 1.3

383 ... 14 MED OTHER ANTEPARTUM DIAGNOSES W MEDICAL COMPLICATIONS..5082 2.7 3.9

384 ... 14 MED OTHER ANTEPARTUM DIAGNOSES W/O MEDICAL COMPLICATIONS..3232 1.7 2.3

385 ... 15 MED * NEONATES, DIED OR TRANSFERRED TO ANOTHER ACUTE

CARE FACILITY.

1.3729 1.8 1.8

26380 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

386 ... 15 MED * EXTREME IMMATURITY OR RESPIRATORY DISTRESS SYNDROME, NEONATE.4.5275 17.9 17.9

387 ... 15 MED * PREMATURITY W MAJOR PROBLEMS ........................................... 3.0922 13.3 13.3

388 ... 15 MED * PREMATURITY W/O MAJOR PROBLEMS ....................................... 1.8657 8.6 8.6

389 ... 15 MED * FULL TERM NEONATE W MAJOR PROBLEMS .............................. 1.8357 4.7 4.7

390 ... 15 MED NEONATE W OTHER SIGNIFICANT PROBLEMS ............................. .8865 2.9 3.7

391 ... 15 MED * NORMAL NEWBORN ......................................................................... .1523 3.1 3.1

392 ... 16 SURG SPLENECTOMY AGE >17 ................................................................... 3.1818 7.1 9.5

393 ... 16 SURG * SPLENECTOMY AGE 0–17 ............................................................... 1.3449 9.1 9.1

394 ... 16 SURG OTHER O.R. PROCEDURES OF THE BLOOD AND BLOOD FORMING ORGANS.1.5946 4.1 6.7

395 ... 16 MED RED BLOOD CELL DISORDERS AGE >17 ........................................ .8262 3.3 4.5

396 ... 16 MED RED BLOOD CELL DISORDERS AGE 0–17 ...................................... 1.2128 2.4 3.7

397 ... 16 MED COAGULATION DISORDERS ............................................................. 1.2290 3.8 5.2

398 ... 16 MED RETICULOENDOTHELIAL & IMMUNITY DISORDERS W CC ........... 1.2765 4.7 6.0

399 ... 16 MED RETICULOENDOTHELIAL & IMMUNITY DISORDERS W/O CC ....... .6899 2.8 3.6

400 ... 17 SURG LYMPHOMA & LEUKEMIA W MAJOR O.R. PROCEDURE ............... 2.6272 5.8 9.1

401 ... 17 SURG LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W

CC.

2.7311 7.8 11.2

402 ... 17 SURG LYMPHOMA & NON-ACUTE LEUKEMIA W OTHER O.R. PROC W/

O CC.

1.1002 2.8 3.9

403 ... 17 MED LYMPHOMA & NON-ACUTE LEUKEMIA W CC ................................. 1.7607 5.7 8.1

404 ... 17 MED LYMPHOMA & NON-ACUTE LEUKEMIA W/O CC ............................. .8495 3.1 4.2

405 ... 17 MED * ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE 0–17 ... 1.9067 4.9 4.9

406 ... 17 SURG MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ

O.R.PROC W CC.

2.8109 7.5 10.3

407 ... 17 SURG MYELOPROLIF DISORD OR POORLY DIFF NEOPL W MAJ

O.R.PROC W/O CC.

1.3138 3.6 4.4

408 ... 17 SURG MYELOPROLIF DISORD OR POORLY DIFF NEOPL W OTHER

O.R.PROC.

1.9991 4.7 7.7

409 ... 17 MED RADIOTHERAPY .................................................................................. 1.1226 4.4 5.9

410 ... 17 MED CHEMOTHERAPY W/O ACUTE LEUKEMIA AS SECONDARY DIAGNOSIS..9493 2.9 3.7

411 ... 17 MED HISTORY OF MALIGNANCY W/O ENDOSCOPY .............................. .3288 2.0 2.3

412 ... 17 MED HISTORY OF MALIGNANCY W ENDOSCOPY .................................. .4877 2.0 2.7

413 ... 17 MED OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W

CC.

1.3665 5.3 7.3

414 ... 17 MED OTHER MYELOPROLIF DIS OR POORLY DIFF NEOPL DIAG W/O

CC.

.7522 3.0 4.1

415 ... 18 SURG O.R. PROCEDURE FOR INFECTIOUS & PARASITIC DISEASES .... 3.5919 10.3 14.2

416 ... 18 MED SEPTICEMIA AGE >17 ........................................................................ 1.5287 5.5 7.4

417 ... 18 MED SEPTICEMIA AGE 0–17 ...................................................................... 1.2437 3.9 6.3

418 ... 18 MED POSTOPERATIVE & POST-TRAUMATIC INFECTIONS .................... 1.0076 4.8 6.2

419 ... 18 MED FEVER OF UNKNOWN ORIGIN AGE >17 W CC ............................... .8724 3.7 4.8

420 ... 18 MED FEVER OF UNKNOWN ORIGIN AGE >17 W/O CC ........................... .6053 2.9 3.6

421 ... 18 MED VIRAL ILLNESS AGE >17 .................................................................... .6760 3.1 3.9

422 ... 18 MED VIRAL ILLNESS & FEVER OF UNKNOWN ORIGIN AGE 0–17 ........ .7893 2.8 5.1

423 ... 18 MED OTHER INFECTIOUS & PARASITIC DISEASES DIAGNOSES ......... 1.7317 5.9 8.2

424 ... 19 SURG O.R. PROCEDURE W PRINCIPAL DIAGNOSES OF MENTAL ILLNESS.2.2742 8.7 13.5

425 ... 19 MED ACUTE ADJUSTMENT REACTION & PSYCHOLOGICAL DYSFUNCTION..7022 3.0 4.1

426 ... 19 MED DEPRESSIVE NEUROSES .................................................................. .5303 3.3 4.6

427 ... 19 MED NEUROSES EXCEPT DEPRESSIVE .................................................. .5673 3.3 5.0

428 ... 19 MED DISORDERS OF PERSONALITY & IMPULSE CONTROL ................. .7360 4.4 7.1

429 ... 19 MED ORGANIC DISTURBANCES & MENTAL RETARDATION ................. .8567 4.9 6.6

430 ... 19 MED PSYCHOSES ........................................................................................ .7659 5.9 8.3

431 ... 19 MED CHILDHOOD MENTAL DISORDERS .................................................. .6434 4.7 6.6

432 ... 19 MED OTHER MENTAL DISORDER DIAGNOSES ....................................... .6488 3.2 4.8

433 ... 20 MED ALCOHOL/DRUG ABUSE OR DEPENDENCE, LEFT AMA ............... .2829 2.2 3.0

434 ... 20 MED ALC/DRUG ABUSE OR DEPEND, DETOX OR OTH SYMPT TREAT

W CC.

.7239 3.9 5.1

435 ... 20 MED ALC/DRUG ABUSE OR DEPEND, DETOX OR OTH SYMPT TREAT

W/O CC.

.4167 3.5 4.3

436 ... 20 MED ALC/DRUG DEPENDENCE W REHABILITATION THERAPY ............ .7433 10.3 12.9

437 ... 20 MED ALC/DRUG DEPENDENCE, COMBINED REHAB & DETOX THERAPY..6576 7.6 9.0

438 ... ............ NO LONGER VALID ............................................................................. .0000 .0 .0

439 ... 21 SURG SKIN GRAFTS FOR INJURIES ........................................................... 1.7255 5.3 8.2

440 ... 21 SURG WOUND DEBRIDEMENTS FOR INJURIES ........................................ 1.9063 5.8 8.9

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26381

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

441 ... 21 SURG HAND PROCEDURES FOR INJURIES ............................................... .9443 2.2 3.2

442 ... 21 SURG OTHER O.R. PROCEDURES FOR INJURIES W CC ......................... 2.3391 5.4 8.2

443 ... 21 SURG OTHER O.R. PROCEDURES FOR INJURIES W/O CC ..................... .9979 2.5 3.4

444 ... 21 MED TRAUMATIC INJURY AGE >17 W CC ................................................ .7225 3.2 4.2

445 ... 21 MED TRAUMATIC INJURY AGE >17 W/O CC ............................................ .5054 2.4 3.0

446 ... 21 MED * TRAUMATIC INJURY AGE 0–17 ....................................................... .2955 2.4 2.4

447 ... 21 MED ALLERGIC REACTIONS AGE >17 ...................................................... .5160 1.9 2.5

448 ... 21 MED * ALLERGIC REACTIONS AGE 0–17 .................................................. .0972 2.9 2.9

449 ... 21 MED POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W CC ......... .8073 2.6 3.7

450 ... 21 MED POISONING & TOXIC EFFECTS OF DRUGS AGE >17 W/O CC ..... .4409 1.6 2.1

451 ... 21 MED * POISONING & TOXIC EFFECTS OF DRUGS AGE 0–17 ................ .2625 2.1 2.1

452 ... 21 MED COMPLICATIONS OF TREATMENT W CC ........................................ 1.0135 3.5 5.0

453 ... 21 MED COMPLICATIONS OF TREATMENT W/O CC .................................... .4998 2.2 2.8

454 ... 21 MED OTHER INJURY, POISONING & TOXIC EFFECT DIAG W CC ......... .8586 3.2 4.6

455 ... 21 MED OTHER INJURY, POISONING & TOXIC EFFECT DIAG W/O CC ..... .4661 2.0 2.6

456 ... NO LONGER VALID ............................................................................. .0000 .0 .0

457 ... NO LONGER VALID ............................................................................. .0000 .0 .0

458 ... NO LONGER VALID ............................................................................. .0000 .0 .0

459 ... NO LONGER VALID ............................................................................. .0000 .0 .0

460 ... NO LONGER VALID ............................................................................. .0000 .0 .0

461 ... 23 SURG O.R. PROC W DIAGNOSES OF OTHER CONTACT W HEALTH

SERVICES.

1.2045 2.4 4.6

462 ... 23 MED REHABILITATION ................................................................................ 1.2426 9.3 11.7

463 ... 23 MED SIGNS & SYMPTOMS W CC .............................................................. .6922 3.3 4.3

464 ... 23 MED SIGNS & SYMPTOMS W/O CC ........................................................... .4771 2.4 3.1

465 ... 23 MED AFTERCARE W HISTORY OF MALIGNANCY AS SECONDARY DIAGNOSIS..5777 2.1 3.4

466 ... 23 MED AFTERCARE W/O HISTORY OF MALIGNANCY AS SECONDARY

DIAGNOSIS.

.6777 2.2 3.9

467 ... 23 MED OTHER FACTORS INFLUENCING HEALTH STATUS ....................... .5112 2.3 4.1

468 ... EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS.3.6423 9.2 13.0

469 ... ** PRINCIPAL DIAGNOSIS INVALID AS DISCHARGE DIAGNOSIS .0000 .0 .0

470 ... ** UNGROUPABLE ............................................................................... .0000 .0 .0

471 ... 08 SURG BILATERAL OR MULTIPLE MAJOR JOINT PROCS OF LOWER

EXTREMITY.

3.1978 5.0 5.7

472 ... NO LONGER VALID ............................................................................. .0000 .0 .0

473 ... 17 SURG ACUTE LEUKEMIA W/O MAJOR O.R. PROCEDURE AGE >17 ....... 3.5861 7.6 13.1

474 ... NO LONGER VALID ............................................................................. .0000 .0 .0

475 ... 04 MED RESPIRATORY SYSTEM DIAGNOSIS WITH VENTILATOR SUPPORT.3.6949 8.1 11.3

476 ... SURG PROSTATIC O.R. PROCEDURE UNRELATED TO PRINCIPAL DIAGNOSIS.2.2633 8.4 11.6

477 ... SURG NON-EXTENSIVE O.R. PROCEDURE UNRELATED TO PRINCIPAL

DIAGNOSIS.

1.8270 5.4 8.2

478 ... 05 SURG OTHER VASCULAR PROCEDURES W CC ....................................... 2.3372 5.0 7.3

479 ... 05 SURG OTHER VASCULAR PROCEDURES W/O CC ................................... 1.4333 2.8 3.6

480 ... PRE SURG LIVER TRANSPLANT ........................................................................... 9.5064 14.6 19.2

481 ... PRE SURG BONE MARROW TRANSPLANT ......................................................... 8.7719 24.1 27.1

482 ... PRE SURG TRACHEOSTOMY FOR FACE, MOUTH & NECK DIAGNOSES ....... 3.5738 9.9 12.8

483 ... PRE SURG TRACHEOSTOMY EXCEPT FOR FACE, MOUTH & NECK DIAGNOSES.15.8415 33.4 40.7

484 ... 24 SURG CRANIOTOMY FOR MULTIPLE SIGNIFICANT TRAUMA .................. 5.6100 9.0 13.3

485 ... 24 SURG LIMB REATTACHMENT, HIP AND FEMUR PROC FOR MULTIPLE

SIGNIFICANT TRA.

3.0519 7.6 9.4

486 ... 24 SURG OTHER O.R. PROCEDURES FOR MULTIPLE SIGNIFICANT TRAUMA.4.9156 8.1 12.2

487 ... 24 MED OTHER MULTIPLE SIGNIFICANT TRAUMA ...................................... 2.0199 5.5 7.7

488 ... 25 SURG HIV W EXTENSIVE O.R. PROCEDURE ............................................. 4.5503 11.6 17.0

489 ... 25 MED HIV W MAJOR RELATED CONDITION .............................................. 1.7496 6.0 8.6

490 ... 25 MED HIV W OR W/O OTHER RELATED CONDITION ............................... .9715 3.7 5.1

491 ... 08 SURG MAJOR JOINT & LIMB REATTACHMENT PROCEDURES OF

UPPER EXTREMITY.

1.6661 2.9 3.5

492 ... 17 MED CHEMOTHERAPY W ACUTE LEUKEMIA AS SECONDARY DIAGNOSIS.4.2524 10.9 16.1

493 ... 07 SURG LAPAROSCOPIC CHOLECYSTECTOMY W/O C.D.E. W CC ............ 1.8180 4.3 5.7

494 ... 07 SURG LAPAROSCOPIC CHOLECYSTECTOMY W/O C.D.E. W/O CC ........ 1.0374 2.0 2.5

495 ... PRE SURG LUNG TRANSPLANT ........................................................................... 8.5947 13.1 20.3

496 ... 08 SURG COMBINED ANTERIOR/POSTERIOR SPINAL FUSION .................... 5.5796 7.8 10.0

497 ... 08 SURG SPINAL FUSION W CC ....................................................................... 2.9469 4.9 6.2

26382 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 5.—LIST OF DIAGNOSIS RELATED GROUPS (DRGS), RELATIVE WEIGHTING FACTORS, GEOMETRIC AND ARITHMETIC

MEAN LENGTH OF STAY—Continued

DRG MDC Type DRG title Relative

weights

Geometric

mean LOS

Arithmetic

mean LOS

498 ... 08 SURG SPINAL FUSION W/O CC .................................................................... 1.9077 2.8 3.4

499 ... 08 SURG BACK & NECK PROCEDURES EXCEPT SPINAL FUSION W CC .... 1.4590 3.6 4.8

500 ... 08 SURG BACK & NECK PROCEDURES EXCEPT SPINAL FUSION W/O CC .9811 2.2 2.7

501 ... 08 SURG KNEE PROCEDURES W PDX OF INFECTION W CC ....................... 2.6350 8.4 10.6

502 ... 08 SURG KNEE PROCEDURES W PDX OF INFECTION W/O CC ................... 1.4327 4.9 6.0

503 ... 08 SURG KNEE PROCEDURES W/O PDX OF INFECTION .............................. 1.2151 3.1 4.0

504 ... 22 SURG EXTENSIVE 3RD DEGREE BURNS W SKIN GRAFT ........................ 12.4664 23.9 30.1

505 ... 22 MED EXTENSIVE 3RD DEGREE BURNS W/O SKIN GRAFT .................... 2.0389 2.5 4.7

506 ... 22 SURG FULL THICKNESS BURN W SKIN GRAFT OR INHAL INJ W CC

OR SIG TRAUMA.

4.4971 13.0 17.6

507 ... 22 SURG FULL THICKNESS BURN W SKIN GRFT OR INHAL INJ W/O CC

OR SIG TRAUMA.

1.8438 6.6 9.2

508 ... 22 MED FULL THICKNESS BURN W/O SKIN GRFT OR INHAL INJ W CC

OR SIG TRAUMA.

1.3119 5.1 7.2

509 ... 22 MED FULL THICKNESS BURN W/O SKIN GRFT OR INH INJ W/O CC

OR SIG TRAUMA.

.8154 4.1 6.2

510 ... 22 MED NON-EXTENSIVE BURNS W CC OR SIGNIFICANT TRAUMA ......... 1.4130 5.2 7.9

511 ... 22 MED NON-EXTENSIVE BURNS W/O CC OR SIGNIFICANT TRAUMA ..... .6568 3.1 4.5

* MEDICARE DATA HAVE BEEN SUPPLEMENTED BY DATA FROM 19 STATES FOR LOW VOLUME DRGS.

** DRGS 469 AND 470 CONTAIN CASES WHICH COULD NOT BE ASSIGNED TO VALID DRGS.

NOTE: GEOMETRIC MEAN IS USED ONLY TO DETERMINE PAYMENT FOR TRANSFER CASES.

NOTE: ARITHMETIC MEAN IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY.

NOTE: RELATIVE WEIGHTS ARE BASED ON MEDICARE PATIENT DATA AND MAY NOT BE APPROPRIATE FOR OTHER PATIENTS.

TABLE 6A.—NEW DIAGNOSIS CODES

Diagnosis

code Description CC MDC DRG

007.5 Cyclosporiasis ..................................................................................................... N 6 182, 183, 184

082.40 Unspecified ehrlichiosis ....................................................................................... N 18 423

082.41 Ehrlichiosis Chafiensis (E. Chafiensis) ............................................................... N 18 423

082.49 Other ehrlichiosis ................................................................................................ N 18 423

285.21 Anemia in end-stage renal disease .................................................................... N 16 395, 396

285.22 Anemia in neoplastic disease ............................................................................. N 16 395, 396

285.29 Anemia of other chronic illness ........................................................................... N 16 395, 396

294.10 Dementia in conditions classified elsewhere without behavioral disturbance .... N 19 429

294.11 Dementia in conditions classified elsewhere with behavioral disturbance ......... N 19 429

372.81 Conjunctivochalasis ............................................................................................. N 2 46, 47, 48

372.89 Other disorders of conjunctiva ............................................................................ N 2 46, 47, 48

477.1 Allergic rhinitis, due to food ................................................................................ N 3 68, 69, 70

493.02 Extrinsic asthma, with acute exacerbation ......................................................... Y 4 96, 97, 98

493.12 Intrinsic asthma, with acute exacerbation ........................................................... Y 4 96, 97, 98

493.22 Chronic obstructive asthma, with acute exacerbation ........................................ Y 4 88

493.92 Unspecified asthma, with acute exacerbation .................................................... Y 4 96, 97, 98

494.0 Bronchiectasis without acute exacerbation ......................................................... N 4 88

494.1 Bronchiectasis with acute exacerbation .............................................................. Y 4 88

558.3 Allergic gastroenteritis and colitis ....................................................................... N 6 182, 183, 184

600.0 Hypertrophy (benign) of prostate ........................................................................ N 12 348, 349

600.1 Nodular prostate .................................................................................................. N 12 348, 349

600.2 Benign localized hyperplasia of prostate ............................................................ N 12 348, 349

600.3 Cyst of prostate ................................................................................................... N 12 348, 349

600.9 Unspecified hyperplasia of prostate .................................................................... N 12 348, 349

645.10 Post term pregnancy, unspecified as to episode of care or not applicable ....... N 14 469

645.11 Post term pregnancy, delivered, with or without mention of antepartum condition.N 14 370, 371, 372, 373,

374, 375

645.13 Post term pregnancy, antepartum condition or complication ............................. N 14 383, 384

645.20 Prolonged pregnancy, unspecified as to episode of care or not applicable ...... N 14 469

645.21 Prolonged pregnancy, delivered, with or without mention of antepartum condition.N 14 370, 371, 372, 373,

374, 375

645.23 Prolonged pregnancy, antepartum condition or complication ............................ N 14 383, 384

692.75 Disseminated superficial actinic porokeratosis (DSAP) ...................................... N 9 283, 284

707.10 Unspecified ulcer of lower limb ........................................................................... Y 9 263, 264, 271

707.11 Ulcer of thigh ....................................................................................................... Y 9 263, 264, 271

707.12 Ulcer of calf ......................................................................................................... Y 9 263, 264, 271

707.13 Ulcer of ankle ...................................................................................................... Y 9 263, 264, 271

707.14 Ulcer of heel and midfoot .................................................................................... Y 9 263, 264, 271

707.15 Ulcer of other part of foot .................................................................................... Y 9 263, 264, 271

707.19 Ulcer of other part of lower limb ......................................................................... Y 9 263, 264, 271

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26383

TABLE 6A.—NEW DIAGNOSIS CODES—Continued

Diagnosis

code Description CC MDC DRG

727.83 Plica syndrome .................................................................................................... N 8 248

781.91 Loss of height ...................................................................................................... N 1 34, 35

781.92 Abnormal posture ................................................................................................ N 1 34, 35

781.99 Other symptoms involving nervous and musculoskeletal systems .................... N 1 34, 35

783.21 Loss of weight ..................................................................................................... N 10 296, 297, 298

783.22 Underweight ........................................................................................................ N 10 296, 297, 298

783.40 Unspecified lack of normal physiological development ...................................... N 10 296, 297, 298

783.41 Failure to thrive ................................................................................................... N 10 296, 297, 298

783.42 Delayed milestones ............................................................................................. N 10 296, 297, 298

783.43 Short stature ........................................................................................................ N 10 296, 297, 298

783.7 Adult failure to thrive ........................................................................................... N 10 296, 297, 298

790.01 Precipitous drop in hematocrit ............................................................................ N 16 395, 396

790.09 Other abnormality of red blood cells ................................................................... N 16 395, 396

792.5 Cloudy (hemodialysis) (peritoneal) dialysis effluent ........................................... N 23 463, 464

995.7 Other adverse food reactions, not elsewhere classified ..................................... N 21 454, 455

996.87 Complications of transplanted organ, intestine ................................................... Y 21 452, 453

V15.01 Allergy to peanuts ............................................................................................... N 23 467

V15.02 Allergy to milk products ....................................................................................... N 23 467

V15.03 Allergy to eggs .................................................................................................... N 23 467

V15.04 Allergy to seafood ............................................................................................... N 23 467

V15.05 Allergy to other foods .......................................................................................... N 23 467

V15.06 Allergy to insects ................................................................................................. N 23 467

V15.07 Allergy to latex .................................................................................................... N 23 467

V15.08 Allergy to radiographic dye ................................................................................. N 23 467

V15.09 Other allergy, other than to medicinal agents .................................................... N 23 467

V21.30 Unspecified low birth weight status .................................................................... N 23 467

V21.31 Low birth weight status, less than 500 grams .................................................... N 23 467

V21.32 Low birth weight status, 500–999 grams ............................................................ N 23 467

V21.33 Low birth weight status, 1000–1499 grams ........................................................ N 23 467

V21.34 Low birth weight status, 1500–1999 grams ........................................................ N 23 467

V21.35 Low birth weight status, 2000–2500 grams ........................................................ N 23 467

V26.21 Fertility testing ..................................................................................................... N 23 467

V26.22 Aftercare following sterilization reversal ............................................................. N 23 467

V26.29 Other investigation and testing ........................................................................... N 23 467

V42.84 Organ or tissue replaced by transplant, intestines ............................................. Y 23 467

V45.74 Acquired absence of organ, other parts of urinary tract ..................................... N 23 467

V45.75 Acquired absence of organ, stomach ................................................................. N 23 467

V45.76 Acquired absence of organ, lung ........................................................................ N 23 467

V45.77 Acquired absence of organ, genital organs ........................................................ N 23 467

V45.78 Acquired absence of organ, eye ......................................................................... N 23 467

V45.79 Other acquired absence of organ ....................................................................... N 23 467

V49.81 Postmenopausal status (age-related) (natural) .................................................. N 23 467

V49.89 Other specified conditions influencing health status .......................................... N 23 467

V56.31 Encounter for adequacy testing for hemodialysis ............................................... N 11 317

V56.32 Encounter for adequacy testing for peritoneal dialysis ....................................... N 11 317

V58.83 Encounter for therapeutic drug monitoring ......................................................... N 23 465, 466

V67.00 Follow-up examination, following unspecified surgery ....................................... N 23 465, 466

V67.01 Following surgery, follow-up vaginal pap smear ................................................ N 23 465, 466

V67.09 Follow-up examination, following other surgery ................................................. N 23 465, 466

V71.81 Observation for suspected abuse and neglect ................................................... N 23 467

V71.89 Observation for other specified suspected conditions ........................................ N 23 467

V76.46 Special screening for malignant neoplasms, ovary ............................................ N 23 467

V76.47 Special screening for malignant neoplasms, Vagina .......................................... N 23 467

V76.50 Special screening for malignant neoplasms, unspecified intestine .................... N 23 467

V76.51 Special screening for malignant neoplasms, colon ............................................ N 23 467

V76.52 Special screening for malignant neoplasms, small intestine .............................. N 23 467

V76.81 Special screening for malignant neoplasms, nervous system ........................... N 23 467

V76.89 Special screening for other malignant neoplasm ............................................... N 23 467

V77.91 Screening for lipoid disorders ............................................................................. N 23 467

V77.99 Other and unspecified endocrine, nutritional, metabolic, and immunity disorders.N 23 467

V82.81 Special screening for osteoporosis ..................................................................... N 23 467

V82.89 Special screening for other specified conditions ................................................ N 23 467

26384 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 6B.—NEW PROCEDURE CODES

Procedure

code Description OR MDC DRG

39.71 Endovascular implantation of graph in abdominal aorta .................................... Y 5

11

21

24

110, 111

315

442, 443

486

39.79 Other endovascular graft repair of aneurysm ..................................................... Y 1

5

11

21

24

1, 2, 3

110, 111

315

442, 443

486

41.07 Autologous hematopoietic stem cell transplant with purging ............................. Y PRE 481

41.08 Allogeneic hematopoietic stem cell transplant with purging ............................... Y PRE 481

41.09 Autologous bone marrow transplant with purging .............................................. Y PRE 481

46.97 Transplant of intestine ......................................................................................... Y 6

7

17

21

24

148, 149

201

400, 406, 407

442, 443

486

60.96 Transurethral destruction of prostate tissue by microwave thermotherapy ....... Y 11

12

UNR

306, 307

336, 337

476

60.97 Other transurethral destruction of prostate tissue by other thermotherapy ....... Y 11

12

UNR

306, 307

336, 337

476

99.75 Administration of neuroprotective agent ............................................................. N

TABLE 6C.—INVALID DIAGNOSIS CODES

Diagnosis

code Description CC MDC DRG

294.1 Dementia in conditions classified elsewhere ...................................................... N 19 429

372.8 Other disorders of conjunctiva ............................................................................ N 2 46, 47, 48

494 Bronchiectasis ..................................................................................................... Y 4 88

600 Hyperplasia of prostate ....................................................................................... N 12 348, 349

645.00 Prolonged pregnancy, unspecified as to episode of care or not applicable ...... N 14 469

645.01 Prolonged pregnancy, delivered, with or without mention of antepartum condition.N 14 370, 371, 372, 373,

374, 375

645.03 Prolonged pregnancy, antepartum condition or complication ............................ N 14 383, 384

707.1 Ulcer of lower limb, except decubitus ................................................................. Y 9 263, 264, 271

781.9 Other symptoms involving nervous and musculoskeletal systems .................... N 1 34, 35

783.2 Abnormal loss of weight ...................................................................................... N 10 296, 297, 298

783.4 Lack of expected normal physiological development ......................................... N 10 296, 297, 298

790.0 Abnormality of red blood cells ............................................................................ N 16 395, 396

V15.0 Allergy, other than to medicinal agents .............................................................. N 23 467

V26.2 Investigation and testing ..................................................................................... N 23 467

V49.8 Other specified problems influencing health status ............................................ N 23 467

V67.0 Follow-up examination following surgery ............................................................ N 23 465, 466

V71.8 Observation for other specified suspected conditions ........................................ N 23 467

V76.8 Special screening for malignant neoplasms, other neoplasm ............................ N 23 467

V77.9 Other and unspecified endocrine, nutritional, metabolic, and immunity disorders.N 23 467

V82.8 Special screening for other specified conditions ................................................ N 23 467

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26385

TABLE 6D.—REVISED DIAGNOSIS CODE TITLES

Diagnosis

code Description CC MDC DRG

564.1 Irritable bowel syndrome ..................................................................................... N 6 182, 183, 184

V26.3 Genetic counseling and testing ........................................................................... N 23 467

V76.49 Special screening for malignant, other sites ....................................................... N 23 467

TABLE 6E.—REVISED PROCEDURE CODES

Procedure

code Description OR MDC DRG

41.01 Autologous bone marrow transplant without purging ......................................... Y PRE 481

41.04 Autologous hematopoietic stem cell transplant without purging ........................ Y PRE 481

41.05 Allogeneic hematopoietic stem cell transplant without purging .......................... Y PRE 481

86.59 Closure of skin and subcutaneous tissue other sites ......................................... N

26386 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 6F.—ADDITIONS TO THE CC EXCLUSIONS LIST

CCs that are added to the list are in Table 6F—Additions to the CC Exclusions List. Each of the principal diagnoses is shown with an asterisk,

and the revisions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis.

*0075 2818 70713 49312 01170 4870 01152 4829

00841 2824 70714 49322 01171 4950 01153 4830

00842 28260 70715 49392 01172 4951 01154 4831

00843 28261 70719 *49391 01173 4952 01155 4838

00844 28262 *4871 49302 01174 4953 01156 4841

00845 28263 4941 49312 01175 4954 01160 4843

00846 28269 *49300 49322 01176 4955 01161 4845

00847 2830 49302 49392 01180 4956 01162 4846

00849 28310 49312 *49392 01181 4957 01163 4847

*01790 28311 49322 49301 01182 4958 01164 4848

4941 28319 49392 49302 01183 4959 01165 485

*01791 2832 *49301 49311 01184 496 01166 486

4941 2839 49302 49312 01185 5060 01170 4870

*01792 2840 49312 49320 01186 5061 01171 4941

4941 2848 49322 49321 01190 5070 01172 4950

*01793 2849 49392 49322 01191 5071 01173 4951

4941 2850 *49302 49391 01192 5078 01174 4952

*01794 2851 49301 49392 01193 5080 01175 4953

4941 *29410 49302 *4940 01194 5081 01176 4954

*01795 2910 49311 01100 01195 515 01180 4955

4941 2911 49312 01101 01196 5160 01181 4956

*01796 2912 49320 01102 01200 5161 01182 4957

4941 2913 49321 01103 01201 5162 01183 4958

*28521 2914 49322 01104 01202 5163 01184 4959

2800 29181 49391 01105 01203 5168 01185 496

2814 29189 49392 01106 01204 5169 01186 5060

2818 2919 *49310 01110 01205 5171 01190 5061

2824 2920 49302 01111 01206 5172 01191 5070

28260 29211 49312 01112 01210 5178 01192 5071

28261 29212 49322 01113 01211 74861 01193 5078

28262 2922 49392 01114 01212 *4941 01194 5080

28263 29281 *49311 01115 01213 01100 01195 5081

28269 29282 49302 01116 01214 01101 01196 515

2830 29283 49312 01120 01215 01102 01200 5160

28310 29284 49322 01121 01216 01103 01201 5161

28311 29289 49392 01122 0310 01104 01202 5162

28319 2929 *49312 01123 11505 01105 01203 5163

2832 29381 49301 01124 11515 01106 01204 5168

2839 29382 49302 01125 1304 01110 01205 5169

2840 29383 49311 01126 1363 01111 01206 5171

2848 29384 49312 01130 481 01112 01210 5172

2849 *29411 49320 01131 4820 01113 01211 5178

2850 2910 49321 01132 4821 01114 01212 74861

2851 2911 49322 01133 4822 01115 01213 *496

*28522 2912 49391 01134 48230 01116 01214 4941

2800 2913 49392 01135 48231 01120 01215 *5061

2814 2914 *49320 01136 48232 01121 01216 4941

2818 29181 49302 01140 48239 01122 0310 *5064

2824 29189 49312 01141 48240 01123 11505 4941

28260 2919 49322 01142 48241 01124 11515 *5069

28261 2920 49392 01143 48249 01125 1304 4941

28262 29211 *49321 01144 48281 01126 1363 *5178

28263 29212 49302 01145 48282 01130 481 49302

28269 2922 49312 01146 48283 01131 4820 49312

2830 29281 49322 01150 48284 01132 4821 49322

28310 29282 49392 01151 48289 01133 4822 49392

28311 29283 *49322 01152 4829 01134 48230 *51889

28319 29284 49301 01153 4830 01135 48231 49302

2832 29289 49302 01154 4831 01136 48232 49312

2839 2929 49311 01155 4838 01140 48239 49322

2840 29381 49312 01156 4841 01141 48240 49392

2848 29382 49320 01160 4843 01142 48241 *5198

2849 29383 49321 01161 4845 01143 48249 49302

2850 29384 49322 01162 4846 01144 48281 49312

2851 *44023 49391 01163 4847 01145 48282 49322

*28529 70710 49392 01164 4848 01146 48283 49392

2800 70711 *49390 01165 485 01150 48284 *5199

2814 70712 49302 01166 486 01151 48289 49302

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26387

TABLE 6F.—ADDITIONS TO THE CC EXCLUSIONS LIST—Continued

CCs that are added to the list are in Table 6F—Additions to the CC Exclusions List. Each of the principal diagnoses is shown with an asterisk,

and the revisions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis.

49312 *70712 V421

49322 70710 V426

49392 70711 V427

*5583 70712 V4281

00841 70713 V4282

00842 70714 V4283

00843 70715 V4289

00844 70719 V432

00845 *70713 *99689

00846 70710 V4284

00847 70711 *99791

00849 70712 99687

*6000 70713 *99799

5960 70714 99687

5996 70715 *V4284

6010 70719 V4284

6012 *70714 *V4289

6013 70710 V4284

6021 70711 *V429

78820 70712 V4284

78829 70713

*6001 70714

5960 70715

5996 70719

6010 *70715

6012 70710

6013 70711

6021 70712

78820 70713

78829 70714

*6002 70715

5960 70719

5996 *70719

6010 70710

6012 70711

6013 70712

6021 70713

78820 70714

78829 70715

*6003 70719

5960 *7078

5996 70710

6010 70711

6012 70712

6013 70713

6021 70714

78820 70715

78829 70719

*6009 *7079

5960 70710

5996 70711

6010 70712

6012 70713

6013 70714

6021 70715

78820 70719

78829 *7098

*70710 70710

70710 70711

70711 70712

70712 70713

70713 70714

70714 70715

70715 70719

70719 *74861

*70711 4941

70710 *99680

70711 99687

70712 V4284

70713 *99687

70714 99680

70715 99687

70719 V420

26388 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 6G.—DELECTIONS TO THE CC EXCLUSIONS LIST

CCs that are deleted from the list are in Table 6G—Deletions to the CC Exclusions List. Each of the principal diagnoses is shown with an

asterisk, and the revisions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis.

*01790 01135 48231 6021

494 01136 48232 78820

*01791 01140 48239 78829

494 01141 48240 *7071

*01792 01142 48241 7071

494 01143 48249 *7078

*01793 01144 48281 7071

494 01145 48282 *7079

*01794 01146 48283 7071

494 01150 48284 *7098

01795 01151 48289 7071

494 01152 4829 *74861

*01796 01153 4830 494

494 01154 4831

*2941 01155 4838

2910 01156 4841

2911 01160 4843

2912 01161 4845

2913 01162 4846

2914 01163 4847

29181 01164 4848

29189 01165 485

2919 01166 486

2920 01170 4870

29211 01171 494

29212 01172 4950

2922 01173 4951

29281 01174 4952

29282 01175 4953

29283 01176 4954

29284 01180 4955

29289 01181 4956

2929 01182 4957

29381 01183 4958

29382 01184 4959

29383 01185 496

29384 01186 5060

*44023 01190 5061

7071 01191 5070

*4871 01192 5071

494 01193 5078

*494 01194 5080

01100 01195 5081

01101 01196 515

01102 01200 5160

01103 01201 5161

01104 01202 5162

01105 01203 5163

01106 01204 5168

01110 01205 5169

01111 01206 5171

01112 01210 5172

01113 01211 5178

01114 01212 74861

01115 01213 *496

01116 01214 494

01120 01215 *5061

01121 01216 494

01122 0310 *5064

01123 11505 494

01124 11515 *5069

01125 1304 494

01126 1363 *600

01130 481 5960

01131 4820 5996

01132 4821 6010

01133 4822 6012

01134 48230 6013

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26389

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

1 ................................... 35069 9.0962 2 4 6 12 19

2 ................................... 7064 9.6692 3 5 7 12 19

4 ................................... 6022 7.3316 1 2 5 9 16

5 ................................... 95151 3.2852 1 1 2 3 7

6 ................................... 340 3.2412 1 1 2 4 7

7 ................................... 12054 10.2745 2 4 7 13 21

8 ................................... 3662 3.0145 1 1 2 4 7

9 ................................... 1623 6.4898 1 3 5 8 12

10 ................................. 18297 6.5874 2 3 5 8 13

11 ................................. 3300 4.1488 1 2 3 5 8

12 ................................. 44849 6.0417 2 3 4 7 11

13 ................................. 6185 5.0928 2 3 4 6 9

14 ................................. 330036 5.9583 2 3 5 7 11

15 ................................. 139608 3.6293 1 2 3 5 7

16 ................................. 11101 6.1222 2 3 5 7 12

17 ................................. 3437 3.3750 1 2 3 4 6

18 ................................. 25899 5.5415 2 3 4 7 10

19 ................................. 7951 3.7393 1 2 3 5 7

20 ................................. 5735 10.2382 3 5 8 13 20

21 ................................. 1356 6.8754 2 3 5 9 13

22 ................................. 2501 4.9384 2 2 4 6 9

23 ................................. 8311 4.2224 1 2 3 5 8

24 ................................. 52472 5.0144 1 2 4 6 10

25 ................................. 24380 3.3056 1 2 3 4 6

26 ................................. 20 3.2000 1 1 2 3 7

27 ................................. 3567 5.0962 1 1 3 6 11

28 ................................. 10686 6.2281 1 3 5 8 13

29 ................................. 3910 3.7133 1 2 3 5 7

31 ................................. 3209 4.2312 1 2 3 5 8

32 ................................. 1545 2.7398 1 1 2 3 5

34 ................................. 19531 5.1937 1 2 4 6 10

35 ................................. 5177 3.4199 1 2 3 4 6

36 ................................. 4223 1.3640 1 1 1 1 2

37 ................................. 1476 3.6917 1 1 3 5 8

38 ................................. 115 2.5304 1 1 1 3 5

39 ................................. 1152 1.9106 1 1 1 2 4

40 ................................. 1755 3.5801 1 1 2 4 8

41 ................................. 1 4.0000 4 4 4 4 4

42 ................................. 2698 2.2279 1 1 1 3 5

43 ................................. 83 3.3012 1 2 3 4 7

44 ................................. 1226 4.9625 2 3 4 6 9

45 ................................. 2490 3.2743 1 2 3 4 6

46 ................................. 2940 4.5871 1 2 4 6 9

47 ................................. 1183 3.2975 1 1 3 4 6

49 ................................. 2228 4.9677 1 2 4 6 9

50 ................................. 2569 1.9844 1 1 1 2 3

51 ................................. 264 2.5606 1 1 1 3 6

52 ................................. 196 2.1276 1 1 1 2 5

53 ................................. 2569 3.6734 1 1 2 4 8

54 ................................. 4 1.5000 1 1 1 1 3

55 ................................. 1560 2.8865 1 1 1 3 6

56 ................................. 526 3.0646 1 1 2 4 6

57 ................................. 579 3.9862 1 1 2 4 8

59 ................................. 111 2.4414 1 1 2 2 5

60 ................................. 2 1.0000 1 1 1 1 1

61 ................................. 208 4.8894 1 1 2 6 13

62 ................................. 2 3.5000 2 2 5 5 5

63 ................................. 3168 4.2601 1 2 3 5 9

64 ................................. 3162 6.4756 1 2 4 8 14

65 ................................. 31728 2.8963 1 1 2 4 5

66 ................................. 6938 3.1721 1 1 3 4 6

67 ................................. 477 3.5241 1 2 3 4 7

68 ................................. 13401 4.1595 1 2 3 5 8

69 ................................. 4228 3.2774 1 2 3 4 6

70 ................................. 33 2.9091 1 2 3 4 5

71 ................................. 105 3.8667 1 2 3 6 7

72 ................................. 812 3.3017 1 2 3 4 6

73 ................................. 6402 4.3380 1 2 3 5 8

75 ................................. 39147 9.9967 3 5 8 12 20

76 ................................. 39851 11.2556 3 5 9 14 21

26390 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

77 ................................. 2375 4.8880 1 2 4 7 10

78 ................................. 30492 6.9444 3 5 6 8 11

79 ................................. 183121 8.4551 3 4 7 11 16

80 ................................. 8291 5.6652 2 3 5 7 10

81 ................................. 5 9.2000 2 2 10 10 19

82 ................................. 63683 6.9428 2 3 5 9 14

83 ................................. 6462 5.5305 2 3 4 7 10

84 ................................. 1494 3.3681 1 2 3 4 6

85 ................................. 20066 6.3638 2 3 5 8 12

86 ................................. 1923 3.7889 1 2 3 5 7

87 ................................. 62959 6.2450 1 3 5 8 12

88 ................................. 403808 5.2212 2 3 4 7 9

89 ................................. 524107 6.0245 2 3 5 7 11

90 ................................. 51271 4.2271 2 3 4 5 7

91 ................................. 49 3.3061 1 2 3 4 5

92 ................................. 13763 6.2465 2 3 5 8 12

93 ................................. 1543 3.9942 1 2 3 5 7

94 ................................. 12332 6.3027 2 3 5 8 12

95 ................................. 1561 3.6887 1 2 3 5 7

96 ................................. 64893 4.7277 2 3 4 6 8

97 ................................. 31521 3.6879 1 2 3 5 7

98 ................................. 18 4.6667 1 1 3 6 7

99 ................................. 18166 3.2204 1 1 2 4 6

100 ............................... 7230 2.2047 1 1 2 3 4

101 ............................... 19700 4.4248 1 2 3 5 8

102 ............................... 4970 2.7360 1 1 2 3 5

103 ............................... 442 48.6041 9 12 29 64 112

104 ............................... 33069 11.6306 3 6 10 15 22

105 ............................... 29348 9.2675 4 5 7 11 17

106 ............................... 3800 11.2111 5 7 9 13 20

107 ............................... 90499 10.3531 5 7 9 12 17

108 ............................... 5234 10.5728 3 5 8 13 20

109 ............................... 61584 7.7338 4 5 6 9 13

110 ............................... 54902 9.4567 2 5 8 11 18

111 ............................... 7109 5.4788 2 4 5 7 8

112 ............................... 60796 3.7594 1 1 3 5 8

113 ............................... 44201 12.0562 3 6 9 15 24

114 ............................... 8478 8.2536 2 4 7 10 16

115 ............................... 14032 8.4152 1 4 7 11 16

116 ............................... 308071 3.7287 1 1 3 5 8

117 ............................... 3404 4.0523 1 1 2 5 9

118 ............................... 6649 2.8117 1 1 1 3 6

119 ............................... 1445 4.8374 1 1 3 6 12

120 ............................... 36651 8.1192 1 2 5 10 18

121 ............................... 163449 6.4387 2 3 5 8 12

122 ............................... 80682 3.8317 1 2 3 5 7

123 ............................... 40870 4.5742 1 1 3 6 11

124 ............................... 134743 4.3708 1 2 3 6 8

125 ............................... 74923 2.7862 1 1 2 4 5

126 ............................... 5131 11.6936 3 6 9 14 22

127 ............................... 680654 5.3354 2 3 4 7 10

128 ............................... 11526 5.8044 3 4 5 7 9

129 ............................... 4173 2.8447 1 1 1 3 7

130 ............................... 89048 5.8037 2 3 5 7 10

131 ............................... 26830 4.3785 1 3 4 6 7

132 ............................... 152932 3.0474 1 1 2 4 6

133 ............................... 7573 2.3956 1 1 2 3 4

134 ............................... 32813 3.2987 1 2 3 4 6

135 ............................... 7100 4.4668 1 2 3 5 9

136 ............................... 1170 2.9120 1 1 2 4 6

138 ............................... 191436 4.0071 1 2 3 5 8

139 ............................... 77194 2.5069 1 1 2 3 5

140 ............................... 76478 2.7136 1 1 2 3 5

141 ............................... 85791 3.7068 1 2 3 5 7

142 ............................... 42652 2.6766 1 1 2 3 5

143 ............................... 185700 2.1667 1 1 2 3 4

144 ............................... 78800 5.3171 1 2 4 7 11

145 ............................... 6884 2.8117 1 1 2 4 6

146 ............................... 11215 10.1815 5 7 9 12 17

147 ............................... 2418 6.6208 3 5 6 8 10

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26391

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

148 ............................... 134272 12.1101 5 7 10 14 22

149 ............................... 17551 6.6488 4 5 6 8 10

150 ............................... 20300 11.1450 4 7 9 14 20

151 ............................... 4479 5.9272 2 3 5 8 10

152 ............................... 4441 8.1743 3 5 7 10 14

153 ............................... 1914 5.4713 3 4 5 7 8

154 ............................... 29346 13.2615 4 7 10 16 25

155 ............................... 6052 4.3354 1 2 3 6 8

156 ............................... 2 28.0000 28 28 28 28 28

157 ............................... 8196 5.4926 1 2 4 7 11

158 ............................... 4393 2.6271 1 1 2 3 5

159 ............................... 16421 5.0258 1 2 4 6 10

160 ............................... 10974 2.7204 1 1 2 4 5

161 ............................... 11483 4.1695 1 2 3 5 9

162 ............................... 7018 1.9577 1 1 1 2 4

163 ............................... 8 2.7500 1 1 3 3 3

164 ............................... 4720 8.4019 4 5 7 10 15

165 ............................... 1942 4.8553 2 3 5 6 8

166 ............................... 3307 5.0889 2 3 4 6 9

167 ............................... 2896 2.7099 1 2 2 3 5

168 ............................... 1511 4.5963 1 2 3 6 9

169 ............................... 802 2.4214 1 1 2 3 5

170 ............................... 11287 11.1669 2 5 8 14 23

171 ............................... 1125 4.7911 1 2 4 6 9

172 ............................... 30485 6.9710 2 3 5 9 14

173 ............................... 2492 3.8435 1 1 3 5 8

174 ............................... 236408 4.8222 2 3 4 6 9

175 ............................... 28026 2.9414 1 2 3 4 5

176 ............................... 15607 5.2668 2 3 4 6 10

177 ............................... 9489 4.5521 2 2 4 6 8

178 ............................... 3568 3.1373 1 2 3 4 6

179 ............................... 12177 6.0139 2 3 5 7 11

180 ............................... 85083 5.3978 2 3 4 7 10

181 ............................... 24320 3.4134 1 2 3 4 6

182 ............................... 232501 4.3626 1 2 3 5 8

183 ............................... 78432 2.9618 1 1 2 4 6

184 ............................... 98 3.2449 1 2 2 4 5

185 ............................... 4300 4.4963 1 2 3 6 9

186 ............................... 2 4.5000 2 2 7 7 7

187 ............................... 722 3.8130 1 2 3 5 8

188 ............................... 74594 5.5723 1 2 4 7 11

189 ............................... 11097 3.1388 1 1 2 4 6

190 ............................... 69 6.0290 2 3 4 6 11

191 ............................... 9367 14.0878 4 7 10 18 28

192 ............................... 974 6.5842 2 4 6 8 11

193 ............................... 5669 12.5490 5 7 10 15 23

194 ............................... 755 6.7497 2 4 6 8 12

195 ............................... 4869 9.9029 4 6 8 12 17

196 ............................... 1190 5.6832 2 4 5 7 9

197 ............................... 20225 8.7363 3 5 7 11 16

198 ............................... 6079 4.4996 2 3 4 6 8

199 ............................... 1724 9.6456 3 4 8 12 19

200 ............................... 1071 10.7404 2 4 8 14 22

201 ............................... 1465 13.8314 3 6 11 18 27

202 ............................... 25595 6.5031 2 3 5 8 13

203 ............................... 28958 6.6940 2 3 5 9 13

204 ............................... 54818 5.8581 2 3 4 7 11

205 ............................... 22519 6.2964 2 3 5 8 12

206 ............................... 1778 3.8335 1 2 3 5 7

207 ............................... 30768 5.1176 1 2 4 6 10

208 ............................... 9616 2.8974 1 1 2 4 6

209 ............................... 342301 5.1232 3 3 4 6 8

210 ............................... 126555 6.8082 3 4 6 8 11

211 ............................... 31227 4.9152 3 4 4 6 7

212 ............................... 7 3.0000 2 2 2 3 4

213 ............................... 8882 8.7299 2 4 7 11 17

216 ............................... 5822 9.7583 2 4 7 12 19

217 ............................... 17573 13.0833 3 5 9 16 28

218 ............................... 21344 5.3594 2 3 4 6 10

219 ............................... 19125 3.2444 1 2 3 4 5

26392 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

220 ............................... 2 2.5000 1 1 4 4 4

223 ............................... 17434 2.5812 1 1 2 3 5

224 ............................... 7953 2.0448 1 1 2 3 4

225 ............................... 5575 4.7146 1 2 3 6 10

226 ............................... 4985 6.2828 1 2 4 8 13

227 ............................... 4416 2.6594 1 1 2 3 5

228 ............................... 2437 3.5568 1 1 2 4 8

229 ............................... 1080 2.3944 1 1 2 3 5

230 ............................... 2102 5.1237 1 2 3 6 10

231 ............................... 10618 4.8282 1 2 3 6 10

232 ............................... 565 3.5894 1 1 2 4 9

233 ............................... 4542 7.6797 2 3 5 9 16

234 ............................... 2666 3.5709 1 2 3 4 7

235 ............................... 5334 5.1245 1 2 4 6 10

236 ............................... 38564 4.8516 1 3 4 6 9

237 ............................... 1576 3.7386 1 2 3 5 7

238 ............................... 7594 8.4664 3 4 6 10 16

239 ............................... 51719 6.2172 2 3 5 8 12

240 ............................... 11850 6.5754 2 3 5 8 13

241 ............................... 2953 3.9401 1 2 3 5 7

242 ............................... 2477 6.5268 2 3 5 8 12

243 ............................... 84831 4.7022 1 3 4 6 9

244 ............................... 11891 4.7802 1 2 4 6 9

245 ............................... 4929 3.7206 1 2 3 4 7

246 ............................... 1342 3.6461 1 2 3 4 7

247 ............................... 15047 3.4443 1 1 3 4 7

248 ............................... 9336 4.7321 1 2 4 6 9

249 ............................... 10719 3.7768 1 1 3 5 8

250 ............................... 3509 4.2485 1 2 3 5 8

251 ............................... 2351 2.9872 1 1 3 4 5

252 ............................... 1 2.0000 2 2 2 2 2

253 ............................... 18878 4.6841 1 3 4 6 9

254 ............................... 10341 3.2080 1 2 3 4 6

255 ............................... 1 1.0000 1 1 1 1 1

256 ............................... 5803 5.1260 1 2 4 6 10

257 ............................... 16795 2.8263 1 2 2 3 5

258 ............................... 15710 2.0006 1 1 2 2 3

259 ............................... 3717 2.7896 1 1 1 3 6

260 ............................... 4780 1.4749 1 1 1 2 2

261 ............................... 1730 2.1624 1 1 1 2 4

262 ............................... 673 3.8098 1 1 3 5 7

263 ............................... 24527 11.5534 3 5 8 14 23

264 ............................... 3877 6.9010 2 3 5 8 14

265 ............................... 3868 6.6099 1 2 4 8 14

266 ............................... 2527 3.3174 1 1 2 4 7

267 ............................... 255 5.2353 1 1 3 6 12

268 ............................... 896 3.6953 1 1 2 4 8

269 ............................... 8856 8.2516 2 3 6 10 16

270 ............................... 2734 3.2579 1 1 2 4 7

271 ............................... 21090 7.1019 2 4 6 8 13

272 ............................... 5465 6.3420 2 3 5 8 12

273 ............................... 1341 4.2118 1 2 3 5 8

274 ............................... 2368 6.9548 2 3 5 9 14

275 ............................... 224 3.3125 1 1 2 4 7

276 ............................... 1076 4.6515 1 2 4 6 9

277 ............................... 83707 5.7178 2 3 5 7 10

278 ............................... 28524 4.3359 2 3 4 5 7

279 ............................... 4 4.0000 2 2 4 5 5

280 ............................... 15047 4.1980 1 2 3 5 8

281 ............................... 6682 3.0805 1 1 3 4 6

283 ............................... 5322 4.5569 1 2 3 6 9

284 ............................... 1852 3.1960 1 1 2 4 6

285 ............................... 6125 10.4263 3 5 8 13 20

286 ............................... 1995 6.2000 2 3 5 7 11

287 ............................... 5974 10.5387 3 5 8 13 20

288 ............................... 2252 5.7234 2 3 4 6 9

289 ............................... 4326 3.1248 1 1 2 3 7

290 ............................... 8214 2.4329 1 1 2 2 4

291 ............................... 57 1.6316 1 1 1 2 2

292 ............................... 4945 9.9610 2 4 7 13 21

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26393

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

293 ............................... 321 4.9346 1 2 4 7 10

294 ............................... 83924 4.7128 1 2 4 6 9

295 ............................... 3464 3.8467 1 2 3 5 7

296 ............................... 232274 5.2398 2 3 4 6 10

297 ............................... 40842 3.4744 1 2 3 4 6

298 ............................... 106 3.1887 1 2 2 4 6

299 ............................... 1052 5.5542 1 2 4 6 11

300 ............................... 15582 6.1317 2 3 5 8 12

301 ............................... 3101 3.7004 1 2 3 5 7

302 ............................... 7525 9.4141 4 5 7 11 16

303 ............................... 19405 8.4850 4 5 7 10 15

304 ............................... 11967 8.8979 2 4 7 11 18

305 ............................... 2852 3.8443 1 2 3 5 7

306 ............................... 7925 5.4829 1 2 3 7 12

307 ............................... 2226 2.2668 1 1 2 3 4

308 ............................... 7673 6.3836 1 2 4 8 14

309 ............................... 3947 2.4880 1 1 2 3 5

310 ............................... 23701 4.3591 1 2 3 5 9

311 ............................... 8200 1.8902 1 1 1 2 3

312 ............................... 1570 4.5166 1 1 3 6 10

313 ............................... 633 2.1153 1 1 1 3 4

314 ............................... 2 1.0000 1 1 1 1 1

315 ............................... 28524 7.4721 1 1 5 10 17

316 ............................... 96406 6.6791 2 3 5 8 13

317 ............................... 1230 3.2114 1 1 2 3 6

318 ............................... 5544 5.9975 1 3 4 7 12

319 ............................... 460 2.8630 1 1 2 4 6

320 ............................... 181708 5.3834 2 3 4 7 10

321 ............................... 28174 3.8452 1 2 3 5 7

322 ............................... 69 4.0580 1 2 3 5 7

323 ............................... 16353 3.2183 1 1 2 4 7

324 ............................... 7365 1.8789 1 1 1 2 3

325 ............................... 7788 3.8947 1 2 3 5 7

326 ............................... 2414 2.6582 1 1 2 3 5

327 ............................... 7 9.2857 1 1 2 4 13

328 ............................... 718 3.9053 1 1 3 5 8

329 ............................... 104 2.0481 1 1 1 3 4

331 ............................... 43233 5.5300 1 2 4 7 11

332 ............................... 4795 3.2715 1 1 2 4 7

333 ............................... 296 5.0507 1 2 3 6 10

334 ............................... 12132 4.8938 2 3 4 6 8

335 ............................... 11393 3.4104 2 3 3 4 5

336 ............................... 40525 3.5229 1 2 3 4 7

337 ............................... 30540 2.1759 1 1 2 3 3

338 ............................... 1641 5.2956 1 2 3 7 12

339 ............................... 1503 4.5269 1 1 3 6 10

340 ............................... 1 1.0000 1 1 1 1 1

341 ............................... 3836 3.2018 1 1 2 3 7

342 ............................... 775 3.1174 1 2 2 4 6

344 ............................... 3934 2.2567 1 1 1 2 4

345 ............................... 1272 3.7673 1 1 2 5 8

346 ............................... 4622 5.8090 1 3 4 7 11

347 ............................... 396 3.3712 1 1 2 4 7

348 ............................... 3105 4.2029 1 2 3 5 8

349 ............................... 589 2.6027 1 1 2 3 5

350 ............................... 6157 4.3937 2 2 4 5 8

352 ............................... 646 3.8498 1 2 3 5 8

353 ............................... 2631 6.7081 3 3 5 8 13

354 ............................... 8209 5.8725 3 3 4 7 10

355 ............................... 5698 3.3243 2 3 3 4 5

356 ............................... 25961 2.4179 1 1 2 3 4

357 ............................... 5767 8.4947 3 4 7 10 16

358 ............................... 21628 4.3926 2 3 3 5 7

359 ............................... 29103 2.8141 2 2 3 3 4

360 ............................... 16133 2.9634 1 2 2 3 5

361 ............................... 420 3.4524 1 1 2 4 7

362 ............................... 1 1.0000 1 1 1 1 1

363 ............................... 3079 3.4784 1 2 2 3 7

364 ............................... 1611 3.5847 1 1 2 5 7

365 ............................... 1917 7.3005 2 3 5 9 16

26394 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

366 ............................... 4226 6.7283 1 3 5 8 14

367 ............................... 472 3.1462 1 1 2 4 7

368 ............................... 2861 6.7113 2 3 5 8 13

369 ............................... 2832 3.1963 1 1 2 4 6

370 ............................... 1141 5.7160 3 3 4 5 9

371 ............................... 1174 3.6567 2 3 3 4 5

372 ............................... 916 3.4509 2 2 2 3 5

373 ............................... 3916 2.2829 1 2 2 2 3

374 ............................... 125 3.4880 2 2 2 3 5

375 ............................... 6 2.6667 2 2 2 3 3

376 ............................... 254 3.4803 1 2 2 4 7

377 ............................... 53 3.8679 1 1 2 5 8

378 ............................... 151 2.3444 1 1 2 3 4

379 ............................... 355 3.1127 1 1 2 3 7

380 ............................... 74 2.1622 1 1 2 2 4

381 ............................... 176 1.9545 1 1 1 2 3

382 ............................... 39 1.3077 1 1 1 1 2

383 ............................... 1545 3.8913 1 1 3 5 8

384 ............................... 123 2.3415 1 1 1 2 4

389 ............................... 8 5.8750 3 3 4 8 10

390 ............................... 19 3.7368 1 1 3 5 7

392 ............................... 2508 9.4769 3 4 7 12 19

393 ............................... 1 8.0000 8 8 8 8 8

394 ............................... 1724 6.6810 1 2 4 8 15

395 ............................... 80464 4.5303 1 2 3 6 9

396 ............................... 17 3.7059 1 1 2 5 6

397 ............................... 18071 5.2277 1 2 4 7 10

398 ............................... 18051 5.9638 2 3 5 7 11

399 ............................... 1614 3.5520 1 2 3 4 7

400 ............................... 6845 9.0488 1 3 6 12 20

401 ............................... 5827 11.1903 2 5 8 14 23

402 ............................... 1483 3.9400 1 1 3 5 8

403 ............................... 33277 8.0524 2 3 6 10 17

404 ............................... 4491 4.2224 1 2 3 6 9

406 ............................... 2546 10.2859 3 4 7 13 21

407 ............................... 695 4.4086 1 2 4 6 8

408 ............................... 2246 7.7061 1 2 5 10 18

409 ............................... 3281 5.9113 2 3 4 6 11

410 ............................... 40863 3.7201 1 2 3 5 6

411 ............................... 13 2.3077 1 1 2 4 4

412 ............................... 29 2.7241 1 1 2 3 6

413 ............................... 6149 7.2477 2 3 6 9 14

414 ............................... 712 4.0941 1 2 3 5 9

415 ............................... 39856 14.1713 4 6 11 18 28

416 ............................... 195783 7.3483 2 4 6 9 14

417 ............................... 32 6.1875 1 2 4 7 13

418 ............................... 22097 6.1239 2 3 5 7 11

419 ............................... 15859 4.8212 2 2 4 6 9

420 ............................... 3091 3.5642 1 2 3 4 6

421 ............................... 12242 3.8638 1 2 3 5 7

422 ............................... 96 5.2708 1 2 2 5 7

423 ............................... 8073 8.1416 2 3 6 10 17

424 ............................... 1354 13.3936 2 5 9 16 28

425 ............................... 15006 4.0716 1 2 3 5 8

426 ............................... 4313 4.5613 1 2 3 6 9

427 ............................... 1660 5.0283 1 2 3 6 10

428 ............................... 839 7.1025 1 2 4 8 15

429 ............................... 27480 6.4737 2 3 5 8 12

430 ............................... 58011 8.2066 2 3 6 10 16

431 ............................... 295 6.5864 2 3 5 8 13

432 ............................... 389 4.7506 1 2 3 5 9

433 ............................... 5781 3.0073 1 1 2 4 6

434 ............................... 21835 5.0844 1 2 4 6 9

435 ............................... 14486 4.2925 1 2 4 5 8

436 ............................... 3499 12.8337 4 7 11 17 25

437 ............................... 9750 8.9544 3 5 8 11 15

439 ............................... 1287 8.1756 1 3 5 10 17

440 ............................... 5017 8.8433 2 3 6 10 19

441 ............................... 579 3.2383 1 1 2 4 7

442 ............................... 15896 8.2292 1 3 6 10 17

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26395

TABLE 7A.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V17.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

443 ............................... 3547 3.3941 1 1 2 4 7

444 ............................... 5150 4.2252 1 2 3 5 8

445 ............................... 2223 3.0031 1 1 2 4 5

447 ............................... 4854 2.5117 1 1 2 3 5

448 ............................... 1 4.0000 4 4 4 4 4

449 ............................... 26543 3.6722 1 1 3 4 7

450 ............................... 6363 2.0525 1 1 1 2 4

451 ............................... 1 1.0000 1 1 1 1 1

452 ............................... 21656 4.9536 1 2 3 6 10

453 ............................... 4464 2.8156 1 1 2 3 5

454 ............................... 4930 4.5554 1 2 3 6 9

455 ............................... 1070 2.6262 1 1 2 3 5

461 ............................... 3356 4.5584 1 1 2 5 11

462 ............................... 12630 11.5264 4 6 9 15 21

463 ............................... 18895 4.2653 1 2 3 5 8

464 ............................... 5456 3.0770 1 1 2 4 6

465 ............................... 227 3.3612 1 1 2 3 7

466 ............................... 1719 3.8674 1 1 2 4 8

467 ............................... 1301 4.0638 1 1 2 4 7

468 ............................... 58386 12.9325 3 6 10 17 26

471 ............................... 11423 5.7339 3 4 5 6 9

473 ............................... 7615 12.8411 2 3 7 19 32

475 ............................... 109114 11.1765 2 5 9 15 22

476 ............................... 4448 11.6369 2 5 10 15 21

477 ............................... 25690 8.1425 1 3 6 10 17

478 ............................... 111192 7.3159 1 3 5 9 15

479 ............................... 22375 3.6220 1 2 3 5 7

480 ............................... 460 19.1848 7 9 14 23 38

481 ............................... 229 27.1485 16 19 23 32 43

482 ............................... 6119 12.7756 4 7 10 15 24

483 ............................... 43070 38.8321 14 21 32 49 70

484 ............................... 323 13.3065 2 5 10 18 28

485 ............................... 2932 9.3905 4 5 7 11 17

486 ............................... 2012 12.1511 1 5 9 16 24

487 ............................... 3491 7.5408 1 3 6 10 15

488 ............................... 767 16.9465 4 7 12 21 34

489 ............................... 14253 8.5597 2 3 6 10 18

490 ............................... 5283 5.1333 1 2 4 6 10

491 ............................... 11332 3.4896 2 2 3 4 6

492 ............................... 2667 16.1234 4 5 9 26 34

493 ............................... 54030 5.7170 1 3 5 7 11

494 ............................... 27254 2.4838 1 1 2 3 5

495 ............................... 145 20.2552 6 8 12 18 33

496 ............................... 1270 9.9843 4 5 7 12 18

497 ............................... 22593 6.2173 2 3 5 7 11

498 ............................... 19133 3.4179 1 2 3 4 6

499 ............................... 30738 4.7687 1 2 4 6 9

500 ............................... 42090 2.6897 1 1 2 3 5

501 ............................... 1943 10.5713 4 5 8 13 20

502 ............................... 612 5.9379 2 3 5 7 10

503 ............................... 5563 3.9730 1 2 3 5 7

504 ............................... 122 30.0984 10 15 25 40 60

505 ............................... 153 4.7190 1 1 2 6 12

506 ............................... 962 17.6258 4 8 14 24 37

507 ............................... 280 9.1857 2 4 7 13 18

508 ............................... 637 7.1350 2 3 5 9 15

509 ............................... 165 6.1333 1 2 4 8 12

510 ............................... 1653 7.8506 2 3 5 9 17

511 ............................... 594 4.4646 1 1 3 6 10

10930692

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

1 ................................... 35069 9.0962 2 4 6 12 19

26396 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

2 ................................... 7064 9.6692 3 5 7 12 19

4 ................................... 6022 7.3316 1 2 5 9 16

5 ................................... 95151 3.2852 1 1 2 3 7

6 ................................... 340 3.2412 1 1 2 4 7

7 ................................... 12054 10.2745 2 4 7 13 21

8 ................................... 3662 3.0145 1 1 2 4 7

9 ................................... 1623 6.4898 1 3 5 8 12

10 ................................. 18297 6.5874 2 3 5 8 13

11 ................................. 3300 4.1488 1 2 3 5 8

12 ................................. 44849 6.0417 2 3 4 7 11

13 ................................. 6185 5.0928 2 3 4 6 9

14 ................................. 362463 6.0528 2 3 5 7 11

15 ................................. 139608 3.6293 1 2 3 5 7

16 ................................. 11101 6.1222 2 3 5 7 12

17 ................................. 3437 3.3750 1 2 3 4 6

18 ................................. 25899 5.5415 2 3 4 7 10

19 ................................. 7951 3.7393 1 2 3 5 7

20 ................................. 5735 10.2382 3 5 8 13 20

21 ................................. 1356 6.8754 2 3 5 9 13

22 ................................. 2501 4.9384 2 2 4 6 9

23 ................................. 8311 4.2224 1 2 3 5 8

24 ................................. 52472 5.0144 1 2 4 6 10

25 ................................. 24380 3.3056 1 2 3 4 6

26 ................................. 20 3.2000 1 1 2 3 7

27 ................................. 3567 5.0962 1 1 3 6 11

28 ................................. 10685 6.2270 1 3 5 8 13

29 ................................. 3910 3.7133 1 2 3 5 7

31 ................................. 3209 4.2312 1 2 3 5 8

32 ................................. 1545 2.7398 1 1 2 3 5

34 ................................. 19531 5.1937 1 2 4 6 10

35 ................................. 5177 3.4199 1 2 3 4 6

36 ................................. 4223 1.3640 1 1 1 1 2

37 ................................. 1476 3.6917 1 1 3 5 8

38 ................................. 115 2.5304 1 1 1 3 5

39 ................................. 1152 1.9106 1 1 1 2 4

40 ................................. 1755 3.5801 1 1 2 4 8

41 ................................. 1 4.0000 4 4 4 4 4

42 ................................. 2698 2.2279 1 1 1 3 5

43 ................................. 83 3.3012 1 2 3 4 7

44 ................................. 1226 4.9625 2 3 4 6 9

45 ................................. 2490 3.2743 1 2 3 4 6

46 ................................. 2940 4.5871 1 2 4 6 9

47 ................................. 1183 3.2975 1 1 3 4 6

49 ................................. 2228 4.9677 1 2 4 6 9

50 ................................. 2569 1.9844 1 1 1 2 3

51 ................................. 264 2.5606 1 1 1 3 6

52 ................................. 196 2.1276 1 1 1 2 5

53 ................................. 2569 3.6734 1 1 2 4 8

54 ................................. 4 1.5000 1 1 1 1 3

55 ................................. 1560 2.8865 1 1 1 3 6

56 ................................. 526 3.0646 1 1 2 4 6

57 ................................. 579 3.9862 1 1 2 4 8

59 ................................. 111 2.4414 1 1 2 2 5

60 ................................. 2 1.0000 1 1 1 1 1

61 ................................. 208 4.8894 1 1 2 6 13

62 ................................. 2 3.5000 2 2 5 5 5

63 ................................. 3168 4.2601 1 2 3 5 9

64 ................................. 3162 6.4756 1 2 4 8 14

65 ................................. 31728 2.8963 1 1 2 4 5

66 ................................. 6938 3.1721 1 1 3 4 6

67 ................................. 477 3.5241 1 2 3 4 7

68 ................................. 13401 4.1595 1 2 3 5 8

69 ................................. 4228 3.2774 1 2 3 4 6

70 ................................. 33 2.9091 1 2 3 4 5

71 ................................. 105 3.8667 1 2 3 6 7

72 ................................. 812 3.3017 1 2 3 4 6

73 ................................. 6402 4.3380 1 2 3 5 8

75 ................................. 39147 9.9967 3 5 8 12 20

76 ................................. 39851 11.2556 3 5 9 14 21

77 ................................. 2375 4.8880 1 2 4 7 10

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26397

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

78 ................................. 30492 6.9444 3 5 6 8 11

79 ................................. 183121 8.4551 3 4 7 11 16

80 ................................. 8291 5.6652 2 3 5 7 10

81 ................................. 5 9.2000 2 2 10 10 19

82 ................................. 63683 6.9428 2 3 5 9 14

83 ................................. 6462 5.5305 2 3 4 7 10

84 ................................. 1494 3.3681 1 2 3 4 6

85 ................................. 20066 6.3638 2 3 5 8 12

86 ................................. 1923 3.7889 1 2 3 5 7

87 ................................. 62959 6.2450 1 3 5 8 12

88 ................................. 403808 5.2212 2 3 4 7 9

89 ................................. 524106 6.0245 2 3 5 7 11

90 ................................. 51271 4.2271 2 3 4 5 7

91 ................................. 49 3.3061 1 2 3 4 5

92 ................................. 13763 6.2465 2 3 5 8 12

93 ................................. 1543 3.9942 1 2 3 5 7

94 ................................. 12332 6.3027 2 3 5 8 12

95 ................................. 1561 3.6887 1 2 3 5 7

96 ................................. 64893 4.7277 2 3 4 6 8

97 ................................. 31521 3.6879 1 2 3 5 7

98 ................................. 18 4.6667 1 1 3 6 7

99 ................................. 18166 3.2204 1 1 2 4 6

100 ............................... 7230 2.2047 1 1 2 3 4

101 ............................... 19700 4.4248 1 2 3 5 8

102 ............................... 4970 2.7360 1 1 2 3 5

103 ............................... 442 48.6041 9 12 29 64 112

104 ............................... 33352 11.6423 3 6 10 15 22

105 ............................... 29488 9.2812 4 5 7 11 17

106 ............................... 3785 11.2201 5 7 9 13 20

107 ............................... 90361 10.3492 5 7 9 12 17

108 ............................... 5213 10.5580 3 5 8 13 20

109 ............................... 61526 7.7320 4 5 6 9 13

110 ............................... 54724 9.4413 2 5 8 11 18

111 ............................... 7102 5.4816 2 4 5 7 8

112 ............................... 60794 3.7592 1 1 3 5 8

113 ............................... 49775 12.1191 4 6 9 15 24

114 ............................... 8478 8.2536 2 4 7 10 16

115 ............................... 14032 8.4152 1 4 7 11 16

116 ............................... 308070 3.7287 1 1 3 5 8

117 ............................... 3404 4.0523 1 1 2 5 9

118 ............................... 6649 2.8117 1 1 1 3 6

119 ............................... 1445 4.8374 1 1 3 6 12

120 ............................... 36650 8.1194 1 2 5 10 18

121 ............................... 163449 6.4387 2 3 5 8 12

122 ............................... 80682 3.8317 1 2 3 5 7

123 ............................... 40869 4.5742 1 1 3 6 11

124 ............................... 134743 4.3708 1 2 3 6 8

125 ............................... 74923 2.7862 1 1 2 4 5

126 ............................... 5131 11.6936 3 6 9 14 22

127 ............................... 680654 5.3354 2 3 4 7 10

128 ............................... 11526 5.8044 3 4 5 7 9

129 ............................... 4173 2.8447 1 1 1 3 7

130 ............................... 89048 5.8037 2 3 5 7 10

131 ............................... 26830 4.3785 1 3 4 6 7

132 ............................... 152932 3.0474 1 1 2 4 6

133 ............................... 7573 2.3956 1 1 2 3 4

134 ............................... 32813 3.2987 1 2 3 4 6

135 ............................... 7100 4.4668 1 2 3 5 9

136 ............................... 1170 2.9120 1 1 2 4 6

138 ............................... 191436 4.0071 1 2 3 5 8

139 ............................... 77194 2.5069 1 1 2 3 5

140 ............................... 76478 2.7136 1 1 2 3 5

141 ............................... 85791 3.7068 1 2 3 5 7

142 ............................... 42652 2.6766 1 1 2 3 5

143 ............................... 185700 2.1667 1 1 2 3 4

144 ............................... 78800 5.3171 1 2 4 7 11

145 ............................... 6884 2.8117 1 1 2 4 6

146 ............................... 11215 10.1815 5 7 9 12 17

147 ............................... 2418 6.6208 3 5 6 8 10

148 ............................... 134272 12.1101 5 7 10 14 22

26398 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

149 ............................... 17551 6.6488 4 5 6 8 10

150 ............................... 20300 11.1450 4 7 9 14 20

151 ............................... 4479 5.9272 2 3 5 8 10

152 ............................... 4441 8.1743 3 5 7 10 14

153 ............................... 1914 5.4713 3 4 5 7 8

154 ............................... 29346 13.2615 4 7 10 16 25

155 ............................... 6052 4.3354 1 2 3 6 8

156 ............................... 2 28.0000 28 28 28 28 28

157 ............................... 8196 5.4926 1 2 4 7 11

158 ............................... 4393 2.6271 1 1 2 3 5

159 ............................... 16421 5.0258 1 2 4 6 10

160 ............................... 10974 2.7204 1 1 2 4 5

161 ............................... 11483 4.1695 1 2 3 5 9

162 ............................... 7018 1.9577 1 1 1 2 4

163 ............................... 8 2.7500 1 1 3 3 3

164 ............................... 4720 8.4019 4 5 7 10 15

165 ............................... 1942 4.8553 2 3 5 6 8

166 ............................... 3307 5.0889 2 3 4 6 9

167 ............................... 2896 2.7099 1 2 2 3 5

168 ............................... 1511 4.5963 1 2 3 6 9

169 ............................... 802 2.4214 1 1 2 3 5

170 ............................... 11287 11.1669 2 5 8 14 23

171 ............................... 1125 4.7911 1 2 4 6 9

172 ............................... 30485 6.9710 2 3 5 9 14

173 ............................... 2492 3.8435 1 1 3 5 8

174 ............................... 236408 4.8222 2 3 4 6 9

175 ............................... 28026 2.9414 1 2 3 4 5

176 ............................... 15607 5.2668 2 3 4 6 10

177 ............................... 9489 4.5521 2 2 4 6 8

178 ............................... 3568 3.1373 1 2 3 4 6

179 ............................... 12177 6.0139 2 3 5 7 11

180 ............................... 85083 5.3978 2 3 4 7 10

181 ............................... 24320 3.4134 1 2 3 4 6

182 ............................... 232501 4.3626 1 2 3 5 8

183 ............................... 78432 2.9618 1 1 2 4 6

184 ............................... 98 3.2449 1 2 2 4 5

185 ............................... 4300 4.4963 1 2 3 6 9

186 ............................... 2 4.5000 2 2 7 7 7

187 ............................... 722 3.8130 1 2 3 5 8

188 ............................... 74594 5.5723 1 2 4 7 11

189 ............................... 11097 3.1388 1 1 2 4 6

190 ............................... 69 6.0290 2 3 4 6 11

191 ............................... 9367 14.0878 4 7 10 18 28

192 ............................... 974 6.5842 2 4 6 8 11

193 ............................... 5669 12.5490 5 7 10 15 23

194 ............................... 755 6.7497 2 4 6 8 12

195 ............................... 4869 9.9029 4 6 8 12 17

196 ............................... 1190 5.6832 2 4 5 7 9

197 ............................... 20225 8.7363 3 5 7 11 16

198 ............................... 6079 4.4996 2 3 4 6 8

199 ............................... 1724 9.6456 3 4 8 12 19

200 ............................... 1071 10.7404 2 4 8 14 22

201 ............................... 1465 13.8314 3 6 11 18 27

202 ............................... 25595 6.5031 2 3 5 8 13

203 ............................... 28958 6.6940 2 3 5 9 13

204 ............................... 54818 5.8581 2 3 4 7 11

205 ............................... 22519 6.2964 2 3 5 8 12

206 ............................... 1778 3.8335 1 2 3 5 7

207 ............................... 30768 5.1176 1 2 4 6 10

208 ............................... 9616 2.8974 1 1 2 4 6

209 ............................... 394168 5.1231 3 3 4 6 8

210 ............................... 146423 6.8039 3 4 6 8 11

211 ............................... 35938 4.9292 3 4 4 6 7

212 ............................... 7 3.0000 2 2 2 3 4

213 ............................... 8882 8.7299 2 4 7 11 17

216 ............................... 5822 9.7583 2 4 7 12 19

217 ............................... 17573 13.0833 3 5 9 16 28

218 ............................... 21344 5.3594 2 3 4 6 10

219 ............................... 19125 3.2444 1 2 3 4 5

220 ............................... 2 2.5000 1 1 4 4 4

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26399

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

223 ............................... 17434 2.5812 1 1 2 3 5

224 ............................... 7953 2.0448 1 1 2 3 4

225 ............................... 5575 4.7146 1 2 3 6 10

226 ............................... 4985 6.2828 1 2 4 8 13

227 ............................... 4416 2.6594 1 1 2 3 5

228 ............................... 2437 3.5568 1 1 2 4 8

229 ............................... 1080 2.3944 1 1 2 3 5

230 ............................... 2102 5.1237 1 2 3 6 10

231 ............................... 10618 4.8282 1 2 3 6 10

232 ............................... 565 3.5894 1 1 2 4 9

233 ............................... 4542 7.6797 2 3 5 9 16

234 ............................... 2666 3.5709 1 2 3 4 7

235 ............................... 5334 5.1245 1 2 4 6 10

236 ............................... 43318 4.8912 2 3 4 6 9

237 ............................... 1576 3.7386 1 2 3 5 7

238 ............................... 7594 8.4664 3 4 6 10 16

239 ............................... 51719 6.2172 2 3 5 8 12

240 ............................... 11850 6.5754 2 3 5 8 13

241 ............................... 2953 3.9401 1 2 3 5 7

242 ............................... 2477 6.5268 2 3 5 8 12

243 ............................... 84831 4.7022 1 3 4 6 9

244 ............................... 11891 4.7802 1 2 4 6 9

245 ............................... 4929 3.7206 1 2 3 4 7

246 ............................... 1342 3.6461 1 2 3 4 7

247 ............................... 15047 3.4443 1 1 3 4 7

248 ............................... 9336 4.7321 1 2 4 6 9

249 ............................... 10719 3.7768 1 1 3 5 8

250 ............................... 3509 4.2485 1 2 3 5 8

251 ............................... 2351 2.9872 1 1 3 4 5

252 ............................... 1 2.0000 2 2 2 2 2

253 ............................... 18878 4.6841 1 3 4 6 9

254 ............................... 10341 3.2080 1 2 3 4 6

255 ............................... 1 1.0000 1 1 1 1 1

256 ............................... 5803 5.1260 1 2 4 6 10

257 ............................... 16795 2.8263 1 2 2 3 5

258 ............................... 15710 2.0006 1 1 2 2 3

259 ............................... 3717 2.7896 1 1 1 3 6

260 ............................... 4780 1.4749 1 1 1 2 2

261 ............................... 1730 2.1624 1 1 1 2 4

262 ............................... 673 3.8098 1 1 3 5 7

263 ............................... 27219 11.5858 3 5 8 14 23

264 ............................... 4261 6.9681 2 3 5 8 14

265 ............................... 3868 6.6099 1 2 4 8 14

266 ............................... 2527 3.3174 1 1 2 4 7

267 ............................... 255 5.2353 1 1 3 6 12

268 ............................... 896 3.6953 1 1 2 4 8

269 ............................... 8856 8.2516 2 3 6 10 16

270 ............................... 2734 3.2579 1 1 2 4 7

271 ............................... 21090 7.1019 2 4 6 8 13

272 ............................... 5465 6.3420 2 3 5 8 12

273 ............................... 1341 4.2118 1 2 3 5 8

274 ............................... 2368 6.9548 2 3 5 9 14

275 ............................... 224 3.3125 1 1 2 4 7

276 ............................... 1076 4.6515 1 2 4 6 9

277 ............................... 83707 5.7178 2 3 5 7 10

278 ............................... 28524 4.3359 2 3 4 5 7

279 ............................... 4 4.0000 2 2 4 5 5

280 ............................... 15047 4.1980 1 2 3 5 8

281 ............................... 6682 3.0805 1 1 3 4 6

283 ............................... 5322 4.5569 1 2 3 6 9

284 ............................... 1852 3.1960 1 1 2 4 6

285 ............................... 6125 10.4263 3 5 8 13 20

286 ............................... 1995 6.2000 2 3 5 7 11

287 ............................... 5974 10.5387 3 5 8 13 20

288 ............................... 2252 5.7234 2 3 4 6 9

289 ............................... 4326 3.1248 1 1 2 3 7

290 ............................... 8214 2.4329 1 1 2 2 4

291 ............................... 57 1.6316 1 1 1 2 2

292 ............................... 4945 9.9610 2 4 7 13 21

293 ............................... 321 4.9346 1 2 4 7 10

26400 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

294 ............................... 83924 4.7128 1 2 4 6 9

295 ............................... 3464 3.8467 1 2 3 5 7

296 ............................... 232274 5.2398 2 3 4 6 10

297 ............................... 40842 3.4744 1 2 3 4 6

298 ............................... 106 3.1887 1 2 2 4 6

299 ............................... 1052 5.5542 1 2 4 6 11

300 ............................... 15582 6.1317 2 3 5 8 12

301 ............................... 3101 3.7004 1 2 3 5 7

302 ............................... 7525 9.4141 4 5 7 11 16

303 ............................... 19405 8.4850 4 5 7 10 15

304 ............................... 11967 8.8979 2 4 7 11 18

305 ............................... 2852 3.8443 1 2 3 5 7

306 ............................... 7925 5.4829 1 2 3 7 12

307 ............................... 2226 2.2668 1 1 2 3 4

308 ............................... 7673 6.3836 1 2 4 8 14

309 ............................... 3947 2.4880 1 1 2 3 5

310 ............................... 23701 4.3591 1 2 3 5 9

311 ............................... 8200 1.8902 1 1 1 2 3

312 ............................... 1570 4.5166 1 1 3 6 10

313 ............................... 633 2.1153 1 1 1 3 4

314 ............................... 2 1.0000 1 1 1 1 1

315 ............................... 28524 7.4721 1 1 5 10 17

316 ............................... 96405 6.6791 2 3 5 8 13

317 ............................... 1230 3.2114 1 1 2 3 6

318 ............................... 5544 5.9975 1 3 4 7 12

319 ............................... 460 2.8630 1 1 2 4 6

320 ............................... 181708 5.3834 2 3 4 7 10

321 ............................... 28174 3.8452 1 2 3 5 7

322 ............................... 69 4.0580 1 2 3 5 7

323 ............................... 16353 3.2183 1 1 2 4 7

324 ............................... 7365 1.8789 1 1 1 2 3

325 ............................... 7788 3.8947 1 2 3 5 7

326 ............................... 2414 2.6582 1 1 2 3 5

327 ............................... 7 9.2857 1 1 2 4 13

328 ............................... 718 3.9053 1 1 3 5 8

329 ............................... 104 2.0481 1 1 1 3 4

331 ............................... 43233 5.5300 1 2 4 7 11

332 ............................... 4795 3.2715 1 1 2 4 7

333 ............................... 296 5.0507 1 2 3 6 10

334 ............................... 12132 4.8938 2 3 4 6 8

335 ............................... 11393 3.4104 2 3 3 4 5

336 ............................... 40525 3.5229 1 2 3 4 7

337 ............................... 30540 2.1759 1 1 2 3 3

338 ............................... 1641 5.2956 1 2 3 7 12

339 ............................... 1503 4.5269 1 1 3 6 10

340 ............................... 1 1.0000 1 1 1 1 1

341 ............................... 3836 3.2018 1 1 2 3 7

342 ............................... 775 3.1174 1 2 2 4 6

344 ............................... 3934 2.2567 1 1 1 2 4

345 ............................... 1272 3.7673 1 1 2 5 8

346 ............................... 4622 5.8090 1 3 4 7 11

347 ............................... 396 3.3712 1 1 2 4 7

348 ............................... 3105 4.2029 1 2 3 5 8

349 ............................... 589 2.6027 1 1 2 3 5

350 ............................... 6157 4.3937 2 2 4 5 8

352 ............................... 646 3.8498 1 2 3 5 8

353 ............................... 2631 6.7081 3 3 5 8 13

354 ............................... 8209 5.8725 3 3 4 7 10

355 ............................... 5698 3.3243 2 3 3 4 5

356 ............................... 25961 2.4179 1 1 2 3 4

357 ............................... 5767 8.4947 3 4 7 10 16

358 ............................... 21628 4.3926 2 3 3 5 7

359 ............................... 29103 2.8141 2 2 3 3 4

360 ............................... 16133 2.9634 1 2 2 3 5

361 ............................... 420 3.4524 1 1 2 4 7

362 ............................... 1 1.0000 1 1 1 1 1

363 ............................... 3079 3.4784 1 2 2 3 7

364 ............................... 1611 3.5847 1 1 2 5 7

365 ............................... 1917 7.3005 2 3 5 9 16

366 ............................... 4226 6.7283 1 3 5 8 14

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26401

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

367 ............................... 472 3.1462 1 1 2 4 7

368 ............................... 2861 6.7113 2 3 5 8 13

369 ............................... 2832 3.1963 1 1 2 4 6

370 ............................... 1141 5.7160 3 3 4 5 9

371 ............................... 1174 3.6567 2 3 3 4 5

372 ............................... 916 3.4509 2 2 2 3 5

373 ............................... 3916 2.2829 1 2 2 2 3

374 ............................... 125 3.4880 2 2 2 3 5

375 ............................... 6 2.6667 2 2 2 3 3

376 ............................... 254 3.4803 1 2 2 4 7

377 ............................... 53 3.8679 1 1 2 5 8

378 ............................... 151 2.3444 1 1 2 3 4

379 ............................... 355 3.1127 1 1 2 3 7

380 ............................... 74 2.1622 1 1 2 2 4

381 ............................... 176 1.9545 1 1 1 2 3

382 ............................... 39 1.3077 1 1 1 1 2

383 ............................... 1545 3.8913 1 1 3 5 8

384 ............................... 123 2.3415 1 1 1 2 4

389 ............................... 8 5.8750 3 3 4 8 10

390 ............................... 19 3.7368 1 1 3 5 7

392 ............................... 2508 9.4769 3 4 7 12 19

393 ............................... 1 8.0000 8 8 8 8 8

394 ............................... 1724 6.6810 1 2 4 8 15

395 ............................... 80464 4.5303 1 2 3 6 9

396 ............................... 17 3.7059 1 1 2 5 6

397 ............................... 18071 5.2277 1 2 4 7 10

398 ............................... 18051 5.9638 2 3 5 7 11

399 ............................... 1614 3.5520 1 2 3 4 7

400 ............................... 6845 9.0488 1 3 6 12 20

401 ............................... 5827 11.1903 2 5 8 14 23

402 ............................... 1483 3.9400 1 1 3 5 8

403 ............................... 32911 8.0630 2 3 6 10 17

404 ............................... 4457 4.2257 1 2 3 6 9

406 ............................... 2546 10.2859 3 4 7 13 21

407 ............................... 695 4.4086 1 2 4 6 8

408 ............................... 2247 7.7036 1 2 5 10 18

409 ............................... 3281 5.9113 2 3 4 6 11

410 ............................... 40862 3.7202 1 2 3 5 6

411 ............................... 13 2.3077 1 1 2 4 4

412 ............................... 29 2.7241 1 1 2 3 6

413 ............................... 6515 7.2391 2 3 6 9 14

414 ............................... 746 4.0804 1 2 3 5 8

415 ............................... 39856 14.1713 4 6 11 18 28

416 ............................... 195783 7.3483 2 4 6 9 14

417 ............................... 32 6.1875 1 2 4 7 13

418 ............................... 22097 6.1239 2 3 5 7 11

419 ............................... 15859 4.8212 2 2 4 6 9

420 ............................... 3091 3.5642 1 2 3 4 6

421 ............................... 12242 3.8638 1 2 3 5 7

422 ............................... 96 5.2708 1 2 2 5 7

423 ............................... 8073 8.1416 2 3 6 10 17

424 ............................... 1354 13.3936 2 5 9 16 28

425 ............................... 15006 4.0716 1 2 3 5 8

426 ............................... 4313 4.5613 1 2 3 6 9

427 ............................... 1660 5.0283 1 2 3 6 10

428 ............................... 839 7.1025 1 2 4 8 15

429 ............................... 30016 6.4824 2 3 5 8 12

430 ............................... 58011 8.2066 2 3 6 10 16

431 ............................... 295 6.5864 2 3 5 8 13

432 ............................... 389 4.7506 1 2 3 5 9

433 ............................... 5781 3.0073 1 1 2 4 6

434 ............................... 21835 5.0844 1 2 4 6 9

435 ............................... 14486 4.2925 1 2 4 5 8

436 ............................... 3499 12.8337 4 7 11 17 25

437 ............................... 9750 8.9544 3 5 8 11 15

439 ............................... 1287 8.1756 1 3 5 10 17

440 ............................... 5017 8.8433 2 3 6 10 19

441 ............................... 579 3.2383 1 1 2 4 7

442 ............................... 15896 8.2292 1 3 6 10 17

443 ............................... 3547 3.3941 1 1 2 4 7

26402 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 7B.—MEDICARE PROSPECTIVE PAYMENT SYSTEM, SELECTED PERCENTILE LENGTHS OF STAY—Continued

[FY99 MEDPAR Update 12/99 Grouper V18.0]

DRG Number

discharges

Arithmetic

mean LOS

10th

percentile

25th

percentile

50th

percentile

75th

percentile

90th

percentile

444 ............................... 5150 4.2252 1 2 3 5 8

445 ............................... 2223 3.0031 1 1 2 4 5

447 ............................... 4854 2.5117 1 1 2 3 5

448 ............................... 1 4.0000 4 4 4 4 4

449 ............................... 26543 3.6722 1 1 3 4 7

450 ............................... 6363 2.0525 1 1 1 2 4

451 ............................... 1 1.0000 1 1 1 1 1

452 ............................... 21656 4.9536 1 2 3 6 10

453 ............................... 4464 2.8156 1 1 2 3 5

454 ............................... 4930 4.5554 1 2 3 6 9

455 ............................... 1070 2.6262 1 1 2 3 5

461 ............................... 3357 4.5594 1 1 2 5 11

462 ............................... 12630 11.5264 4 6 9 15 21

463 ............................... 18895 4.2653 1 2 3 5 8

464 ............................... 5455 3.0761 1 1 2 4 6

465 ............................... 227 3.3612 1 1 2 3 7

466 ............................... 1719 3.8674 1 1 2 4 8

467 ............................... 1301 4.0638 1 1 2 4 7

468 ............................... 58391 12.9318 3 6 10 17 26

471 ............................... 11423 5.7339 3 4 5 6 9

473 ............................... 7615 12.8411 2 3 7 19 32

475 ............................... 109112 11.1767 2 5 9 15 22

476 ............................... 4448 11.6369 2 5 10 15 21

477 ............................... 25690 8.1425 1 3 6 10 17

478 ............................... 111191 7.3157 1 3 5 9 15

479 ............................... 22375 3.6220 1 2 3 5 7

480 ............................... 460 19.1848 7 9 14 23 38

481 ............................... 229 27.1485 16 19 23 32 43

482 ............................... 6119 12.7756 4 7 10 15 24

483 ............................... 47190 38.8624 14 21 32 49 70

484 ............................... 323 13.3065 2 5 10 18 28

485 ............................... 2932 9.3905 4 5 7 11 17

486 ............................... 2012 12.1511 1 5 9 16 24

487 ............................... 3491 7.5408 1 3 6 10 15

488 ............................... 767 16.9465 4 7 12 21 34

489 ............................... 14253 8.5597 2 3 6 10 18

490 ............................... 5283 5.1333 1 2 4 6 10

491 ............................... 11332 3.4896 2 2 3 4 6

492 ............................... 2667 16.1234 4 5 9 26 34

493 ............................... 54030 5.7170 1 3 5 7 11

494 ............................... 27254 2.4838 1 1 2 3 5

495 ............................... 145 20.2552 6 8 12 18 33

496 ............................... 1270 9.9843 4 5 7 12 18

497 ............................... 22593 6.2173 2 3 5 7 11

498 ............................... 19133 3.4179 1 2 3 4 6

499 ............................... 30738 4.7687 1 2 4 6 9

500 ............................... 42090 2.6897 1 1 2 3 5

501 ............................... 1943 10.5713 4 5 8 13 20

502 ............................... 612 5.9379 2 3 5 7 10

503 ............................... 5563 3.9730 1 2 3 5 7

504 ............................... 122 30.0984 10 15 25 40 60

505 ............................... 153 4.7190 1 1 2 6 12

506 ............................... 962 17.6258 4 8 14 24 37

507 ............................... 280 9.1857 2 4 7 13 18

508 ............................... 637 7.1350 2 3 5 9 15

509 ............................... 165 6.1333 1 2 4 8 12

510 ............................... 1653 7.8506 2 3 5 9 17

511 ............................... 594 4.4646 1 1 3 6 10

11059625

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26403

TABLE 8A.—STATEWIDE AVERAGE OPERATING COST-TO-CHARGE RATIOS

FOR URBAN AND RURAL HOSPITALS

(CASE WEIGHTED) MARCH 2000

State Urban Rural

ALABAMA ..................... 0.401 0.355

ALASKA ........................ 0.469 0.722

ARIZONA ...................... 0.373 0.516

ARKANSAS .................. 0.478 0.454

CALIFORNIA ................ 0.344 0.443

COLORADO ................. 0.427 0.560

CONNECTICUT ............ 0.495 0.503

DELAWARE .................. 0.507 0.449

DISTRICT OF COLUMBIA ............................ 0.521 ..............

FLORIDA ...................... 0.363 0.380

GEORGIA ..................... 0.474 0.486

HAWAII ......................... 0.409 0.554

IDAHO .......................... 0.549 0.570

ILLINOIS ....................... 0.427 0.515

INDIANA ....................... 0.532 0.543

IOWA ............................ 0.493 0.623

KANSAS ....................... 0.443 0.656

KENTUCKY .................. 0.477 0.493

LOUISIANA ................... 0.406 0.495

MAINE .......................... 0.597 0.554

MARYLAND .................. 0.759 0.821

MASSACHUSETTS ...... 0.525 0.537

MICHIGAN .................... 0.558 0.597

MINNESOTA ................ 0.510 0.590

MISSISSIPPI ................ 0.455 0.455

MISSOURI .................... 0.413 0.506

MONTANA .................... 0.525 0.570

NEBRASKA .................. 0.468 0.623

NEVADA ....................... 0.293 0.483

NEW HAMPSHIRE ....... 0.543 0.583

NEW JERSEY .............. 0.411 ..............

NEW MEXICO .............. 0.477 0.498

NEW YORK .................. 0.529 0.610

NORTH CAROLINA ..... 0.539 0.489

NORTH DAKOTA ......... 0.622 0.660

OHIO ............................. 0.513 0.578

OKLAHOMA ................. 0.422 0.509

OREGON ...................... 0.560 0.581

PENNSYLVANIA .......... 0.396 0.517

PUERTO RICO ............. 0.479 0.578

RHODE ISLAND ........... 0.523 ..............

SOUTH CAROLINA ...... 0.456 0.452

SOUTH DAKOTA ......... 0.537 0.600

TENNESSEE ................ 0.441 0.482

TEXAS .......................... 0.406 0.511

UTAH ............................ 0.505 0.627

VERMONT .................... 0.623 0.590

VIRGINA ....................... 0.467 0.500

WASHINGTON ............. 0.577 0.652

WEST VIRGINIA .......... 0.577 0.530

WISCONSIN ................. 0.559 0.622

WYOMING .................... 0.475 0.681

TABLE 8B.—STATEWIDE AVERAGE

CAPITAL COST-TO-CHARGE RATIOS

(CASE WEIGHTED) MARCH 2000

State Ratio

ALABAMA ....................................... 0.040

ALASKA .......................................... 0.070

ARIZONA ........................................ 0.041

ARKANSAS .................................... 0.050

CALIFORNIA .................................. 0.037

COLORADO ................................... 0.046

CONNECTICUT .............................. 0.036

TABLE 8B.—STATEWIDE AVERAGE

CAPITAL COST-TO-CHARGE RATIOS

(CASE WEIGHTED) MARCH 2000—

Continued

State Ratio

DELAWARE .................................... 0.051

DISTRICT OF COLUMBIA ............. 0.039

FLORIDA ........................................ 0.045

GEORGIA ....................................... 0.056

HAWAII ........................................... 0.042

IDAHO ............................................ 0.049

ILLINOIS ......................................... 0.042

INDIANA ......................................... 0.057

IOWA .............................................. 0.056

KANSAS ......................................... 0.054

KENTUCKY .................................... 0.046

LOUISIANA ..................................... 0.050

MAINE ............................................ 0.039

MARYLAND .................................... 0.013

MASSACHUSETTS ........................ 0.054

MICHIGAN ...................................... 0.053

MINNESOTA .................................. 0.049

MISSISSIPPI .................................. 0.045

MISSOURI ...................................... 0.046

MONTANA ...................................... 0.050

NEBRASKA .................................... 0.054

NEVADA ......................................... 0.030

NEW HAMPSHIRE ......................... 0.063

NEW JERSEY ................................ 0.037

NEW MEXICO ................................ 0.044

NEW YORK .................................... 0.051

NORTH CAROLINA ....................... 0.050

NORTH DAKOTA ........................... 0.074

OHIO ............................................... 0.050

OKLAHOMA ................................... 0.048

OREGON ........................................ 0.048

PENNSYLVANIA ............................ 0.040

PUERTO RICO ............................... 0.043

RHODE ISLAND ............................. 0.030

SOUTH CAROLINA ........................ 0.047

SOUTH DAKOTA ........................... 0.066

TENNESSEE .................................. 0.051

TEXAS ............................................ 0.048

UTAH .............................................. 0.049

VERMONT ...................................... 0.051

VIRGINIA ........................................ 0.058

WASHINGTON ............................... 0.064

WEST VIRGINIA ............................ 0.047

WISCONSIN ................................... 0.054

WYOMING ...................................... 0.057

Appendix A—Regulatory Impact

Analysis

I. Introduction

We generally prepare a regulatory

flexibility analysis that is consistent with the

Regulatory Flexibility Act (RFA) (5 U.S.C.

601 through 612), unless we certify that a

proposed rule would not have a significant

economic impact on a substantial number of

small entities. For purposes of the RFA, we

consider all hospitals to be small entities.

Also, section 1102(b) of the Act requires us

to prepare a regulatory impact analysis for

any proposed rule that may have a significant

impact on the operations of a substantial

number of small rural hospitals. Such an

analysis must conform to the provisions of

section 603 of the RFA. With the exception

of hospitals located in certain New England

counties, for purposes of section 1102(b) of

the Act, we define a small rural hospital as

a hospital with fewer than 100 beds that is

located outside of a Metropolitan Statistical

Area (MSA) or New England County

Metropolitan Area (NECMA). Section 601(g)

of the Social Security Amendments of 1983

(Public Law 98–21) designated hospitals in

certain New England counties as belonging to

the adjacent NECMA. Thus, for purposes of

the hospital inpatient prospective payment

system, we classify these hospitals as urban

hospitals.

It is clear that the changes being proposed

in this document would affect both a

substantial number of small rural hospitals as

well as other classes of hospitals, and the

effects on some may be significant. Therefore,

the discussion below, in combination with

the rest of this proposed rule, constitutes a

combined regulatory impact analysis and

regulatory flexibility analysis.

We have reviewed this proposed rule

under the threshold criteria of Executive

Order 13132, Federalism, and have

determined that the proposed rule will not

have any negative impact on the rights, roles,

and responsibilities of State, local, or tribal

governments.

Section 202 of the Unfunded Mandates

Reform Act of 1995 also requires that

agencies assess anticipated costs and benefits

before issuing any rule that may result in an

expenditure in any one year by State, local,

or tribal governments, in the aggregate, or by

the private sector, of $100 million. This

proposed rule does not mandate any

requirements for State, local, or tribal

governments.

In accordance with the provisions of

Executive Order 12866, this proposed rule

was reviewed by the Office of Management

and Budget.

II. Objectives

The primary objective of the hospital

inpatient prospective payment system is to

create incentives for hospitals to operate

efficiently and minimize unnecessary costs

while at the same time ensuring that

payments are sufficient to adequately

compensate hospitals for their legitimate

costs. In addition, we share national goals of

preserving the Medicare Trust Fund.

We believe the proposed changes would

further each of these goals while maintaining

the financial viability of the hospital industry

and ensuring access to high quality health

care for Medicare beneficiaries. We expect

that these proposed changes would ensure

that the outcomes of this payment system are

reasonable and equitable while avoiding or

minimizing unintended adverse

consequences.

III. Limitations of Our Analysis

As has been the case in our previously

published regulatory impact analyses, the

following quantitative analysis presents the

projected effects of our proposed policy

changes, as well as statutory changes

effective for FY 2001, on various hospital

groups. We estimate the effects of individual

policy changes by estimating payments per

case while holding all other payment policies

constant. We use the best data available, but

we do not attempt to predict behavioral

responses to our policy changes, and we do

26404 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

not make adjustments for future changes in

such variables as admissions, lengths of stay,

or case-mix. As we have done in previous

proposed rules, we are soliciting comments

and information about the anticipated effects

of these changes on hospitals and our

methodology for estimating them.

IV. Hospitals Included In and Excluded

From the Prospective Payment System

The prospective payment systems for

hospital inpatient operating and capitalrelated costs encompass nearly all general,

short-term, acute care hospitals that

participate in the Medicare program. There

were 44 Indian Health Service hospitals in

our database, which we excluded from the

analysis due to the special characteristics of

the prospective payment method for these

hospitals. Among other short-term, acute care

hospitals, only the 50 such hospitals in

Maryland remain excluded from the

prospective payment system under the

waiver at section 1814(b)(3) of the Act. Thus,

as of February 2000, we have included 4,836

hospitals in our analysis. This represents

about 80 percent of all Medicareparticipating hospitals. The majority of this

impact analysis focuses on this set of

hospitals.

The remaining 20 percent are specialty

hospitals that are excluded from the

prospective payment system and continue to

be paid on the basis of their reasonable costs

(subject to a rate-of-increase ceiling on their

inpatient operating costs per discharge).

These hospitals include psychiatric,

rehabilitation, long-term care, children’s, and

cancer hospitals. The impacts of our final

policy changes on these hospitals are

discussed below.

V. Impact on Excluded Hospitals and Units

As of February 2000, there were 1,081

specialty hospitals excluded from the

prospective payment system and instead paid

on a reasonable cost basis subject to the rateof-increase ceiling under § 413.40. Broken

down by specialty, there were 549

psychiatric, 194 rehabilitation, 238 long-term

care, 73 childrens’, 17 Christian Science

Sanatoria, and 10 cancer hospitals. In

addition, there were 1,470 psychiatric units

and 910 rehabilitation units in hospitals

otherwise subject to the prospective payment

system. These excluded units are also paid in

accordance with § 413.40. Under

§ 413.40(a)(2)(i)(A), the rate-of-increase

ceiling is not applicable to the 36 specialty

hospitals and units in Maryland that are paid

in accordance with the waiver at section

1814(b)(3) of the Act.

As required by section 1886(b)(3)(B) of the

Act, the update factor applicable to the rateof-increase limit for excluded hospitals and

units for FY 2001 would be between 0 and

3.1 percent, depending on the hospital’s or

unit’s costs in relation to its limit for the

most recent cost reporting period for which

information is available.

The impact on excluded hospitals and

units of the update in the rate-of-increase

limit depends on the cumulative cost

increases experienced by each excluded

hospital or unit since its applicable base

period. For excluded hospitals and units that

have maintained their cost increases at a

level below the percentage increases in the

rate-of-increase limits since their base period,

the major effect will be on the level of

incentive payments these hospitals and units

receive. Conversely, for excluded hospitals

and units with per-case cost increases above

the cumulative update in their rate-ofincrease limits, the major effect will be the

amount of excess costs that would not be

reimbursed.

We note that, under § 413.40(d)(3), an

excluded hospital or unit whose costs exceed

110 percent of its rate-of-increase limit

receives its rate-of-increase limit plus 50

percent of the difference between its

reasonable costs and 110 percent of the limit,

not to exceed 110 percent of its limit. In

addition, under the various provisions set

forth in § 413.40, certain excluded hospitals

and units can obtain payment adjustments

for justifiable increases in operating costs

that exceed the limit. At the same time,

however, by generally limiting payment

increases, we continue to provide an

incentive for excluded hospitals and units to

restrain the growth in their spending for

patient services.

VI. Graduate Medical Education Impact of

National Average Per Resident Amount

(PRA)

As discussed in section IV.G. of the

preamble, this proposed rule would

implement statutory provisions enacted by

section 311 of Public Law 106–113 that

establish a methodology for the use of a

national average PRA in computing direct

graduate medical education (GME) payments

for cost reporting periods beginning on or

after October 1, 2000 and on or before

September 30, 2005. The methodology would

establish a ‘‘floor’’ and ‘‘ceiling’’ based on a

locality-adjusted, updated national average

PRA. Under section 1886(h)(2)(D)(iii) of the

Act, as added by section 311(a) of Public Law

106–113, the PRA for a hospital for the cost

reporting period beginning during FY 2001

cannot be below 70 percent of the localityadjusted, updated national average PRA.

Thus, if a hospital’s PRA for the cost

reporting period beginning during FY 2001

would otherwise be below the floor, the

hospital’s PRA for that cost reporting period

would be equal to 70 percent of the localityadjusted, national average PRA. Under

section 1886(h)(2)(D)(iv) of the Act, as added

by section 311(a) of Public Law 106–113, if

a hospital’s PRA exceeds 140 percent of the

locality-adjusted, updated national average

PRA, the hospital’s PRA would be frozen (for

FYs 2001 and 2002) or subject to a 2-percent

reduction to the otherwise applicable update

(for FYs 2003 through 2005). See section

IV.G. of the preamble for a fuller explanation

of this policy.

For purposes of the proposed rule, we have

calculated an estimated impact of this

proposed policy on teaching hospitals’ PRAs

for FY 2001 making assumptions about

update factors and geographic adjustment

factors (GAF) for each hospital. Generally,

utilizing FY 1997 data, we calculated a floor

and a ceiling and estimated the impact on

hospitals. This impact was then inflated to

FY 2001 to estimate the total impact on the

Medicare program for FY 2001. The

estimated numbers for this impact should not

be used by hospitals in calculating their own

individual PRAs; hospitals must use the

methodology stated in section IV.G. of this

proposed rule to revise (if appropriate) their

individual PRAs.

In calculating this impact, we utilized

Medicare cost report data for all cost reports

ending in FY 1997. We excluded hospitals

that file manual cost reports because we did

not have access to their Medicare utilization

data. We also excluded all teaching hospitals

in Maryland because these hospitals are paid

under a Medicare waiver. For those hospitals

that had two cost reporting periods ending in

FY 1997, we used the later of the two

periods. A total of 1,231 teaching hospitals

were included in this analysis.

Utilizing the proposed FY 1997 weighted

average PRA of $68,487, we calculated a FY

1997 70-percent floor of $47,941 and a FY

1997 140-percent ceiling of $95,882. We then

estimated that, for cost reporting periods

ending in FY 1997, 339 hospitals had PRAs

that were below $47,941 (27.5 percent of

1,231 hospitals), and 180 hospitals had PRAs

above $95,882 (14.6 percent of 1,231

hospitals). Thus, for example, to illustrate the

extremes in impact for a hospital with PRAs

below the floor, Hospital A had a FY 1997

primary care PRA of $22,000 and a nonprimary care PRA of $20,000. When these

PRAs are replaced by a single PRA of

$47,941, the hospital gains over 110 percent

in payments per resident. For a hospital with

PRAs above the ceiling, Hospital B had a FY

1997 primary care PRA of $150,000 and a

non-primary care PRA of $148,000. When

these PRAs are frozen and not updated for

inflation in FY 2001, the percentage loss in

payments per resident that year would be

equal to the CPI–U percentage that would

otherwise have been used to update the PRA.

For the 339 hospitals that had PRAs below

the FY 1997 $47,941 floor, we estimated that

the total cost to the Medicare program for FY

2001 of applying the floor would be $33.3

million. For the 180 hospitals that had PRAs

above the FY 1997 $95,882 ceiling, we

estimated that the total savings to the

Medicare program for FY 2001 would be

$18.7 million. Subtracting the estimated

savings of $18.7 million from the estimated

costs of $33.3 million yields an estimated

total net cost to the Medicare program for FY

2001 of $14.6 million.

VII. Quantitative Impact Analysis of the

Proposed Policy Changes Under the

Prospective Payment System for Operating

Costs

A. Basis and Methodology of Estimates

In this proposed rule, we are announcing

policy changes and payment rate updates for

the prospective payment systems for

operating and capital-related costs. We

estimate the total impact of these changes for

FY 2001 payments compared to FY 2000

payments to be approximately a $1.3 billion

increase. We have prepared separate impact

analyses of the proposed changes to each

system. This section deals with changes to

the operating prospective payment system.

The data used in developing the

quantitative analyses presented below are

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taken from the FY 1999 MedPAR file and the

most current provider-specific file that is

used for payment purposes. Although the

analyses of the changes to the operating

prospective payment system do not

incorporate cost data, the most recently

available hospital cost report data were used

to categorize hospitals. Our analysis has

several qualifications. First, we do not make

adjustments for behavioral changes that

hospitals may adopt in response to these

proposed policy changes. Second, due to the

interdependent nature of the prospective

payment system, it is very difficult to

precisely quantify the impact associated with

each proposed change. Third, we draw upon

various sources for the data used to

categorize hospitals in the tables. In some

cases, particularly the number of beds, there

is a fair degree of variation in the data from

different sources. We have attempted to

construct these variables with the best

available source overall. For individual

hospitals, however, some miscategorizations

are possible.

Using cases in the FY 1999 MedPAR file,

we simulated payments under the operating

prospective payment system given various

combinations of payment parameters. Any

short-term, acute care hospitals not paid

under the general prospective payment

systems (Indian Health Service hospitals and

hospitals in Maryland) are excluded from the

simulations. Payments under the capital

prospective payment system, or payments for

costs other than inpatient operating costs, are

not analyzed here. Estimated payment

impacts of proposed FY 2001 changes to the

capital prospective payment system are

discussed in section IX of this Appendix.

The proposed changes discussed separately

below are the following:

• The effects of the annual reclassification

of diagnoses and procedures and the

recalibration of the diagnosis-related group

(DRG) relative weights required by section

1886(d)(4)(C) of the Act.

• The effects of changes in hospitals’ wage

index values reflecting the wage index

update (FY 1997 data).

• The effects of our proposal to remove

from the wage index the costs and hours

associated with teaching physicians paid

under Medicare Part A, residents, and

certified registered nurse anesthetists

(CRNAs) during the second year of a 5-year

phase-out, by calculating a wage index based

on 40 percent of hospitals’ average hourly

wages after removing these costs and hours,

and 60 percent of hospitals’ average hourly

wages with these costs included.

• The effects of geographic

reclassifications by the Medicare Geographic

Classification Review Board (MGCRB) that

will be effective in FY 2001.

• The total change in payments based on

FY 2001 policies relative to payments based

on FY 2000 policies.

To illustrate the impacts of the FY 2001

proposed changes, our analysis begins with

a FY 2000 baseline simulation model using:

The FY 2000 DRG GROUPER (version 17.0);

the FY 2000 wage index; and no MGCRB

reclassifications. Outlier payments are set a

5.1 percent of total DRG plus outlier

payments.

Each proposed and statutory policy change

is then added incrementally to this baseline

model, finally arriving at an FY 2001 model

incorporating all of the changes. This allows

us to isolate the effects of each change.

Our final comparison illustrates the

percent change in payments per case from FY

2000 to FY 2001. Five factors have significant

impacts here. The first is the update to the

standardized amounts. In accordance with

section 1886(d)(3)(A)(iv) of the Act, we are

proposing to update the large urban and the

other areas average standardized amounts for

FY 2001 using the most recently forecasted

hospital market basket increase for FY 2001

of 3.1 percent minus 1.1 percentage points

(for an update of 2.0 percent).

Under section 1886(b)(3) of the Act, as

amended by section 406 of Public Law 106–

113, the updates to the average standardized

amounts and the hospital-specific amounts

for sole community hospitals (SCHs) will be

equal to the full market basket increase for

FY 2001. Consequently, the update factor

used for SCHs in this impact analysis is 3.1

percent. Under section 1886(b)(3)(D) of the

Act, the update factor for the hospitalspecific amounts for MDHs is equal to the

market basket increase of 3.1 percent minus

1.1 percentage points (for an update of 2.0

percent).

A second significant factor that impacts

changes in hospitals’ payments per case from

FY 2000 to FY 2001 is a change in MGCRB

reclassification status from one year to the

next. That is, hospitals reclassified in FY

2000 that are no longer reclassified in FY

2001 may have a negative payment impact

going from FY 2000 to FY 2001; conversely,

hospitals not reclassified in FY 2000 that are

reclassified in FY 2001 may have a positive

impact. In some cases, these impacts can be

quite substantial, so if a relatively small

number of hospitals in a particular category

lose their reclassification status, the

percentage change in payments for the

category may be below the national mean.

A third significant factor is that we

currently estimate that actual outlier

payments during FY 2000 will be 6.1 percent

of actual total DRG payments. When the FY

2000 final rule was published, we projected

FY 2000 outlier payments would be 5.1

percent of total DRG plus outlier payments;

the standardized amounts were offset

correspondingly. The effects of the higher

than expected outlier payments during FY

2000 (as discussed in the Addendum to this

proposed rule) are reflected in the analyses

below comparing our current estimates of FY

2000 payments per case to estimated FY 2001

payments per case.

Fourth, section 111 of Public Law 106–113

revised section 1886(d)(5)(B)(ii) of the Act so

that the IME adjustment changes from FY

2000 to FY 2001 from approximately a 6.25-

percent increase for every 100-percent

increase in a hospital’s resident-to-bed ratio

during FY 2000 to approximately a 6.2-

percent increase in FY 2001. Similarly,

section 112 of Public Law 106–113 revised

section 1886(d)(5)(F)(ix) of the Act so that the

DSH adjustment for FY 2001 is reduced by

3-percent from what would otherwise have

been paid (this is the same percentage

reduction that was applied in FY 2000).

Finally, section 405 of Public Law 106–113

provided that certain SCHs may elect to

receive payment on the basis of their costs

per case during their cost reporting period

that began during 1996. To be eligible, a SCH

must have received for its cost reporting

period beginning during 1999, payment on

the basis of its hospital-specific rate. For FY

2001, eligible SCHs that elect rebasing

receive a hospital-specific rate comprised of

75-percent of the higher of their FY 1982 or

FY 1987 hospital-specific rate, and 25-

percent of their FY 1996 hospital-specific

rate.

Table I demonstrates the results of our

analysis. The table categorizes hospitals by

various geographic and special payment

consideration groups to illustrate the varying

impacts on different types of hospitals. The

top row of the table shows the overall impact

on the 4,836 hospitals included in the

analysis. This number is 86 fewer hospitals

than were included in the impact analysis in

the FY 2000 final rule (64 FR 41624).

The next four rows of Table I contain

hospitals categorized according to their

geographic location (all urban, which is

further divided into large urban and other

urban, or rural). There are 2,710 hospitals

located in urban areas (MSAs or NECMAs)

included in our analysis. Among these, there

are 1,545 hospitals located in large urban

areas (populations over 1 million), and 1,165

hospitals in other urban areas (populations of

1 million or fewer). In addition, there are

2,126 hospitals in rural areas. The next two

groupings are by bed-size categories, shown

separately for urban and rural hospitals. The

final groupings by geographic location are by

census divisions, also shown separately for

urban and rural hospitals.

The second part of Table I shows hospital

groups based on hospitals’ FY 2001 payment

classifications, including any

reclassifications under section 1886(d)(10) of

the Act. For example, the rows labeled urban,

large urban, other urban, and rural show that

the number of hospitals paid based on these

categorizations (after consideration of

geographic reclassifications) are 2,786, 1,617,

1,169, and 2,050, respectively.

The next three groupings examine the

impacts of the proposed changes on hospitals

grouped by whether or not they have

residency programs (teaching hospitals that

receive an IME adjustment) or receive DSH

payments, or some combination of these two

adjustments. There are 3,730 nonteaching

hospitals in our analysis, 870 teaching

hospitals with fewer than 100 residents, and

236 teaching hospitals with 100 or more

residents.

In the DSH categories, hospitals are

grouped according to their DSH payment

status, and whether they are considered

urban or rural after MGCRB reclassifications.

Hospitals in the rural DSH categories,

therefore, represent hospitals that were not

reclassified for purposes of the standardized

amount or for purposes of the DSH

adjustment. (They may, however, have been

reclassified for purposes of the wage index.)

The next category groups hospitals

considered urban after geographic

reclassification, in terms of whether they

receive the IME adjustment, the DSH

adjustment, both, or neither.

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The next five rows examine the impacts of

the proposed changes on rural hospitals by

special payment groups (SCHs, rural referral

centers (RRCs), and MDHs), as well as rural

hospitals not receiving a special payment

designation. The RRCs (150), SCHs (660),

MDHs (352), and SCH and RRCs (58) shown

here were not reclassified for purposes of the

standardized amount. There are 20 RRCs, 1

MDH, 5 SCHs and 2 SCH and RRCs that will

be reclassified as urban for the standardized

amount in FY 2001 and, therefore, are not

included in these rows.

The next two groupings are based on type

of ownership and the hospital’s Medicare

utilization expressed as a percent of total

patient days. These data are taken primarily

from the FY 1998 Medicare cost report files,

if available (otherwise FY 1997 data are

used). Data needed to determine ownership

status or Medicare utilization percentages

were unavailable for 34 and 35 hospitals,

respectively. For the most part, these are new

hospitals.

The next series of groupings concern the

geographic reclassification status of

hospitals. The first three groupings display

hospitals that were reclassified by the

MGCRB for both FY 2000 and FY 2001, or

for only one of those 2 years, by urban and

rural status. The next rows illustrate the

overall number of FY 2001 reclassifications,

as well as the numbers of reclassified

hospitals grouped by urban and rural

location. The final row in Table I contains

hospitals located in rural counties but

deemed to be urban under section

1886(d)(8)(B) of the Act.

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B. Impact of the Proposed Changes to the

DRG Reclassifications and Recalibration of

Relative Weights (Column 1)

In column 1 of Table I, we present the

combined effects of the DRG reclassifications

and recalibration, as discussed in section II

of the preamble to this proposed rule. Section

1886(d)(4)(C)(i) of the Act requires us to

annually make appropriate classification

changes and to recalibrate the DRG weights

in order to reflect changes in treatment

patterns, technology, and any other factors

that may change the relative use of hospital

resources.

We compared aggregate payments using

the FY 2000 DRG relative weights (GROUPER

version 17) to aggregate payments using the

proposed FY 2001 DRG relative weights

(GROUPER version 18). Overall payments are

unaffected by the DRG reclassification and

recalibration. Consistent with the minor

changes we are proposing for the FY 2001

GROUPER, the redistributional impacts of

DRG reclassifications and recalibration across

hospital groups are very small (a 0.0 percent

impact for large and other urban hospitals; a

0.1 percent increase for rural hospitals).

Within hospital categories, the net effects for

urban hospitals are small positive changes for

small hospitals (a 0.1 percent increase for

hospitals with fewer than 200 beds), and

small decreases for larger hospitals (a 0.1

percent decrease for hospitals with more than

300 beds). Among rural hospitals, small

hospital categories experience the largest

increases, a 0.2 percent increase for hospitals

with fewer than 50 beds.

The breakdown by urban census division

shows that the small decrease among urban

hospitals is confined to the West North

Central and Mountain regions. Payments to

urban hospitals in most other regions are

unchanged, while payments to urban

hospitals in Puerto Rico rise by 0.1 percent.

All rural hospital census divisions

experience payment increases ranging from

0.1 percent for hospitals in New England,

Middle Atlantic, East North Central, West

North Central, and Mountain regions to 0.2

percent for hospitals in the South Atlantic,

East South Central, West South Central,

Pacific, and Puerto Rico census divisions.

C. Impact of Updating the Wage Data

(Column 2)

Section 1886(d)(3)(E) of the Act requires

that, beginning October 1, 1993, we annually

update the wage data used to calculate the

wage index. In accordance with this

requirement, the proposed wage index for FY

2001 is based on data submitted for hospital

cost reporting periods beginning on or after

October 1, 1996 and before October 1, 1997.

As with the previous column, the impact of

the new data on hospital payments is isolated

by holding the other payment parameters

constant in the two simulations. That is,

column 2 shows the percentage changes in

payments when going from a model using the

FY 2000 wage index (based on FY 1996 wage

data before geographic reclassifications to a

model using the FY 2001 prereclassification

wage index based on FY 1997 wage data).

Sections 152 and 154 of Public Law 106–113

reclassified certain hospitals for purposes of

the wage index standardized amounts. For

purposes of this column, these hospitals are

located in their prereclassification geographic

location. The impacts of these statutory

reclassifications are shown in column 5,

when examining the impacts of geographic

reclassification.

The wage data collected on the FY 1997

cost reports are similar to the data used in

the calculation of the FY 2000 wage index.

For a thorough discussion of the data used

to calculate the wage index, see section III.B.

of this proposed rule.

The results indicate that the new wage data

have an overall impact of a 0.3 percent

increase in hospital payments (prior to

applying the budget neutrality factor, see

column 5). Rural hospitals especially appear

to benefit from the update. Their payments

increase by 1.4 percent. These increases are

attributable to relatively large increases in the

wage index values for the rural areas of

particular States; Hawaii, Louisiana, and

Montana all had increases greater than 6

percent in their prereclassification wage

index values.

Urban hospitals as a group are not

significantly affected by the updated wage

data. The gains of hospitals in other urban

areas (0.6 percent increase) are offset by

decreases among hospitals in large urban

areas (0.3 percent decrease). Urban hospitals

in Puerto Rico experience a 7.0 percent

decrease, largely due to declines of 6 percent

or more in the prereclassified FY 2001 wage

indexes of 2 MSAs. Urban hospitals in the

East South Central census region experience

a 6 percent decline due to several MSAs in

Tennessee with prereclassified FY 2001 wage

indexes that fall by 6 percent or more. We

note that the wage data used for the proposed

wage index are based upon the data available

as of February 22, 2000 and, therefore, do not

reflect revision requests received and

processed by the fiscal intermediaries after

that date. To the extent these requests are

granted by hospitals’ fiscal intermediaries,

these revisions will be reflected in the final

rule. In addition, we continue to verify the

accuracy of the data for hospitals with

extraordinary changes in their data from the

prior year.

The largest increases are seen in the rural

census divisions. Rural South Atlantic

experiences the greatest positive impact, 1.9

percent. Hospitals in five other census

divisions receive positive impacts over 1.0

percent: West South Central at 1.7, East

North Central at 1.5, East South Central at

1.4, Pacific at 1.4, and West North Central at

1.3. The following chart compares the shifts

in wage index values for labor market areas

for FY 2000 relative to FY 2001. This chart

demonstrates the impact of the proposed

changes for the FY 2001 wage index relative

to the FY 2000 wage index. The majority of

labor market areas (322) experience less than

a 5-percent change. A total of 39 labor market

areas experience an increase of more than 5

percent with 12 having an increase greater

than 10 percent. A total of 15 areas

experience decreases of more than 5-percent.

Of those, 10 decline by 10 percent or more.

Percentage change in area wage index values

Number of labor market areas

FY 2000 FY 2001

Increase more than 10 percent ................................................................................................................... 8 12

Increase more than 5 percent and less than 10 percent ............................................................................ 22 27

Increase or decrease less than 5 percent ................................................................................................... 318 322

Decrease more than 5 percent and less than 10 percent .......................................................................... 17 5

Decrease more than 10 percent .................................................................................................................. 5 10

Among urban hospitals, 125 would

experience an increase of between 5 and 10

percent and 19 more than 10 percent. A total

of 401 rural hospitals have increases greater

than 5 percent, but none greater than 10

percent. On the negative side, 55 urban

hospitals have decreases in their wage index

values of at least 5 percent but less than 10

percent. Twelve urban hospitals have

decreases in their wage index values greater

than 10 percent. There are no rural hospitals

with decreases in their wage index values

greater than 5 percent or with increases of

more than 10 percent. The following chart

shows the projected impact for urban and

rural hospitals.

Percentage change in area wage index values

Number of hospitals

Urban Rural

Increase more than 10 percent ................................................................................................................... 19 0

Increase more than 5 percent and less than 10 percent ............................................................................ 125 401

Increase or decrease less than 5 percent ................................................................................................... 2,499 1,725

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Percentage change in area wage index values

Number of hospitals

Urban Rural

Decrease more than 5 percent and less than 10 percent .......................................................................... 55 0

Decrease more than 10 percent .................................................................................................................. 12 0

D. Impact of 5-Year Phase-Out of Teaching

Physicians’, Residents’, and CRNAs’ Costs

(Column 3)

As described in section III.C. of this

preamble, the proposed FY 2001 wage index

is calculated by blending 60 percent of

hospitals’ average hourly wages calculated

without removing teaching physician (paid

under Medicare Part A), residents, or CRNA

costs (and hours); and 40 percent of average

hourly wages calculated after removing these

costs (and hours). This constitutes the second

year of a 5-year phase-out of these costs and

hours, where the proportion of the

calculation based upon average hourly wages

after removing these costs increases by 20

percentage points per year.

In order to determine the impact of moving

from the 80/20 blend percentage to the 60/

40 blend percentage, we first estimated the

payments for FY 2001 using the FY 2001

prereclassified wage index calculated using

the 80/20 blend percentage (Column 2). We

then estimated what the payments for FY

2001 would have been if the 60/40 blend

percentage was applied to the FY 2001

prereclassified wage index. Column 3

compares the differences in these payment

estimates and shows that the 60/40 blend

percentage does not significantly impact

overall payments (0.0 percent change). Only

53 labor market areas experience a decrease

in their wage index and none decreases by

more than ¥0.1 percent.

E. Combined Impact of DRG and Wage Index

Changes—Including Budget Neutrality

Adjustment (Column 4)

The impact of DRG reclassifications and

recalibration on aggregate payments is

required by section 1886(d)(4)(C)(iii) of the

Act to be budget neutral. In addition, section

1886(d)(3)(E) of the Act specifies that any

updates or adjustments to the wage index are

to be budget neutral. As noted in the

Addendum to this proposed rule, we

compared simulated aggregate payments

using the FY 2000 DRG relative weights and

wage index to simulated aggregate payments

using the proposed FY 2001 DRG relative

weights and blended wage index. Based on

this comparison, we computed a wage and

recalibration budget neutrality factor of

0.996506. In Table I, the combined overall

impacts of the effects of both the DRG

reclassifications and recalibration and the

updated wage index are shown in column 4.

The 0.0 percent impact for all hospitals

demonstrates that these changes, in

combination with the budget neutrality

factor, are budget neutral.

For the most part, the changes in this

column are the sum of the changes in

columns 1, 2, and 3, minus approximately

0.3 percent attributable to the budget

neutrality factor. There may be some

variation of plus or minus 0.1 percent due to

rounding.

F. Impact of MGCRB Reclassifications

(Column 5)

Our impact analysis to this point has

assumed hospitals are paid on the basis of

their actual geographic location (with the

exception of ongoing policies that provide

that certain hospitals receive payments on

bases other than where they are

geographically located, such as hospitals in

rural counties that are deemed urban under

section 1886(d)(8)(B) of the Act). The changes

in column 5 reflect the per case payment

impact of moving from this baseline to a

simulation incorporating the MGCRB

decisions for FY 2001. As noted below, these

decisions affect hospitals’ standardized

amount and wage index area assignments. In

addition, until FY 2002, rural hospitals

reclassified for purposes of the standardized

amount qualify to be treated as urban for

purposes of the DSH adjustment.

Beginning in 1998, by February 28 of each

year, the MGCRB makes reclassification

determinations that will be effective for the

next fiscal year, which begins on October 1.

(In previous years, these determinations were

made by March 30.) The MGCRB may

approve a hospital’s reclassification request

for the purpose of using the other area’s

standardized amount, wage index value, or

both, or for FYs 1999 through 2001, for

purposes of qualifying for a DSH adjustment

or to receive a higher DSH payment.

The proposed FY 2001 wage index values

incorporate all of the MGCRB’s

reclassification decisions for FY 2001. The

wage index values also reflect any decisions

made by the HCFA Administrator through

the appeals and review process for MGCRB

decisions as of February 29, 2000. Additional

changes that result from the Administrator’s

review of MGCRB decisions or a request by

a hospital to withdraw its application will be

reflected in the final rule for FY 2001.

Section 152 of Public Law 106–113

reclassified certain hospitals for purposes of

the wage index and the standardized

amounts. The impacts of these statutory

reclassifications are included in this column.

The overall effect of geographic

reclassification is required by section

1886(d)(8)(D) of the Act to be budget neutral.

Therefore, we applied an adjustment of

0.994270 to ensure that the effects of

reclassification are budget neutral. (See

section II.A.4.b. of the Addendum to this

proposed rule.)

As a group, rural hospitals benefit from

geographic reclassification. Their payments

rise 2.4 percent, while payments to urban

hospitals decline 0.4 percent. Hospitals in

other urban areas see a decrease in payments

of 0.3 percent, while large urban hospitals

lose 0.5 percent. Among urban hospital

groups (that is, bed size, census division, and

special payment status), payments generally

decline.

A positive impact is evident among most

of the rural hospital groups. The largest

decrease among the rural census divisions is

0.6 percent for Puerto Rico. The largest

increases are in rural Middle Atlantic and

West South Central. These regions all receive

an increase of 2.8 percent.

Among rural hospitals designated as RRCs,

127 hospitals are reclassified for purposes of

the wage index only, leading to the 5.3

percent increase in payments among RRCs

overall. This positive impact on RRCs is also

reflected in the category of rural hospitals

with 150–199 beds, which has a 4.9 percent

increase in payments.

Rural hospitals reclassified for FY 2000

and FY 2001 experience a 5.7 percent

increase in payments. This may be due to the

fact that these hospitals have the most to gain

from reclassification and have been

reclassified for a period of years. Rural

hospitals reclassified for FY 2001 only

experience a 4.6 percent increase in

payments, while rural hospitals reclassified

for FY 2000 only experience a 0.4 percent

decrease in payments. Urban hospitals

reclassified for FY 2001 but not FY 2000

experience a 3.3 percent increase in

payments overall. Urban hospitals

reclassified for FY 2000 but not for FY 2001

experience a 1.1 percent decline in

payments.

The FY 2001 Reclassification rows of Table

I show the changes in payments per case for

all FY 2001 reclassified and nonreclassified

hospitals in urban and rural locations for

each of the three reclassification categories

(standardized amount only, wage index only,

or both). The table illustrates that the largest

impact for reclassified rural hospitals is for

those hospitals reclassified for both the

standardized amount and the wage index.

These hospitals receive an 8.4 percent

increase in payments. In addition, rural

hospitals reclassified just for the wage index

receive a 5.4 percent payment increase. The

overall impact on reclassified hospitals is to

increase their payments per case by an

average of 5 percent for FY 2001.

The reclassification of hospitals primarily

affects payment to nonreclassified hospitals

through changes in the wage index and the

geographic reclassification budget neutrality

adjustment required by section 1886(d)(8)(D)

of the Act. Among hospitals that are not

reclassified, the overall impact of hospital

reclassifications is an average decrease in

payments per case of about 0.4 percent. Rural

nonreclassified hospitals decrease by 0.4

percent, and urban nonreclassified hospitals

lose 0.6 percent (the amount of the budget

neutrality offset).

The foregoing analysis was based on

MGCRB and HCFA Administrator decisions

made by February 29, 2000. As previously

noted, there may be changes to some MGCRB

decisions through the appeals, review, and

applicant withdrawal process. The outcome

26416 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

of these cases will be reflected in the analysis

presented in the final rule.

G. All Changes (Column 6)

Column 6 compares our estimate of

payments per case, incorporating all changes

reflected in this proposed rule for FY 2001

(including statutory changes), to our estimate

of payments per case in FY 2000. It includes

the effects of the 2.0 percent update to the

standardized amounts and the hospitalspecific rates for MDHs and the 3.1 percent

update for SCHs. It also reflects the 1.0

percentage point difference between the

projected outlier payments in FY 2000 (5.1

percent of total DRG payments) and the

current estimate of the percentage of actual

outlier payments in FY 2000 (6.1 percent), as

described in the introduction to this

Appendix and the Addendum to this

proposed rule.

Another change affecting the difference

between FY 2000 and FY 2001 payments

arises from section 1886(d)(5)(8) of the Act,

as amended by Public Law 106–113. As

noted in the introduction to this impact

analysis, for FY 2001, the IME adjustment is

decreased from last year (6.5 percent in FY

2000 and 6.25 percent in FY 2001).

We also note that column 6 includes the

impacts of FY 2001 MGCRB reclassifications

compared to the payment impacts of FY 2000

reclassifications. Therefore, when comparing

FY 2001 payments to FY 2000, the percent

changes due to FY 2001 reclassifications

shown in column 5 need to be offset by the

effects of reclassification on hospitals’ FY

2000 payments (column 7 of Table 1, July 30,

1999 final rule (64 FR 41625)). For example,

the impact of MGCRB reclassifications on

rural hospitals’ FY 2001 payments was

approximately a 2.4 percent increase,

offsetting most of the 2.6 percent increase in

column 7 for FY 2000. Therefore, the net

change in FY 2001 payments due to

reclassification for rural hospitals is actually

a decrease of 0.2 percent relative to FY 2000.

However, last year’s analysis contained a

somewhat different set of hospitals, so this

might affect the numbers slightly.

Finally, section 405 of Public Law 106–113

provided that certain SCHs may elect to

receive payment on the basis of their costs

per case during their cost reporting period

that began during 1996. To be eligible, a SCH

must have received payment for cost

reporting periods beginning during 1999 on

the basis of its hospital-specific rate. For FY

2001, eligible SCHs that elect rebasing

receive a hospital-specific rate comprised of

75 percent of the higher of their FY 1982 or

FY 1987 hospital-specific rate, and 25

percent of their 1996 hospital-specific rate.

The impact of this provision is modeled in

column 6 as well.

There might also be interactive effects

among the various factors comprising the

payment system that we are not able to

isolate. For these reasons, the values in

column 6 may not equal the sum of the

changes in columns 4 and 5, plus the other

impacts that we are able to identify.

The overall payment change from FY 2000

to FY 2001 for all hospitals is a 1.2 percent

increase. This reflects the 2.0 percent update

for FY 2001 (3.1 percent for SCHs), the 1.0

percent lower outlier payments in FY 2001

compared to FY 2000 (5.1 percent compared

to 6.1 percent); the change in the IME

adjustment (6.5 in FY 2000 to 6.2 in FY

2001); and the rebasing of certain SCHs to

their 1996 hospital-specific rate.

Hospitals in urban areas experience a 0.9

percent increase in payments per case

compared to FY 2000. The 0.4 percent

negative impact due to reclassification is

offset by an identical negative impact for FY

2000. Hospitals in rural areas, meanwhile,

experience a 2.8 percent payment increase.

As discussed previously, this is primarily

due to the positive effect of the wage index

and DRG changes (1.2 percent increase).

Among urban census divisions, other than

the Middle Atlantic and East South Central

regions (which experience no change and a

0.2 percent increase in payments,

respectively), payments increased between

0.9 and 1.6 percent between FY 2000 and FY

2001. The rural census division experiencing

the smallest increase in payments was Puerto

Rico (0.1 percent). The largest increases by

rural hospitals are in the Mountain and West

North Central regions, both with 3.1 percent.

Among other rural census divisions, the

largest increases are in the South Atlantic

and the East North Central, both with 3.0.

Among special categories of rural

hospitals, those hospitals receiving payment

under the hospital-specific methodology

(SCHs, MDHs, and SCH/RRCs) experience

payment increases of 3.5 percent, 3.1 percent,

and 2.1 percent, respectively. This outcome

is primarily related to the fact that, for

hospitals receiving payments under the

hospital-specific methodology, there are no

outlier payments. Therefore, these hospitals

do not experience negative payment impacts

from the decline in outlier payments from FY

2000 to FY 2001 (from 6.1 of total DRG plus

outlier payments to 5.1 percent) as do

hospitals paid based on the national

standardized amounts.

The largest negative payment impacts from

FY 2000 to FY 2001 are among hospitals that

were reclassified for FY 2000 and are not

reclassified for FY 2001. Overall, these

hospitals lose 2.8 percent. The urban

hospitals in this category lose 2.7 percent,

while the rural hospitals lose 2.9 percent. On

the other hand, hospitals reclassified for FY

2001 that were not reclassified for FY 2000

would experience the greatest payment

increases: 6.1 percent overall; 8.5 percent for

119 rural hospitals in this category and 4.2

percent for 41 urban hospitals.

TABLE II.—IMPACT ANALYSIS OF CHANGES FOR FY 2000 OPERATING PROSPECTIVE PAYMENT SYSTEM

[Payments per case]

(BY GEOGRAPHIC LOCATION) Number of

hospitals

Average FY

2000 payment

per case

Average FY

2001 payment

per case

All changes

(1) (2) 1 (3) 1 (4)

ALL HOSPITALS 4,836 $6,816 $6,895 1.2

URBAN HOSPITALS ................................................................................ 2,710 7,391 7,457 0.9

LARGE URBAN AREAS ........................................................................... 1,545 7,927 7,973 0.6

OTHER URBAN AREAS .......................................................................... 1,165 6,694 6,786 1.4

RURAL HOSPITALS ....................................................................................... 2,126 4,565 4,695 2.8

BED SIZE (URBAN):

0–99 BEDS ............................................................................................... 687 4,970 5,041 1.4

100–199 BEDS ......................................................................................... 928 6,235 6,300 1.0

200–299 BEDS ......................................................................................... 543 7,022 7,076 0.8

300–499 BEDS ......................................................................................... 410 7,884 7,943 0.8

500 OR MORE BEDS .............................................................................. 142 9,762 9,859 1.0

BED SIZE (RURAL):

0–49 BEDS ............................................................................................... 1,208 3,787 3,925 3.6

50–99 BEDS ............................................................................................. 549 4,273 4,402 3.0

100–149 BEDS ......................................................................................... 217 4,671 4,789 2.5

150–199 BEDS ......................................................................................... 85 5,112 5,251 2.7

200 OR MORE BEDS .............................................................................. 67 5,719 5,847 2.2

URBAN BY CENSUS DIVISION:

NEW ENGLAND ....................................................................................... 146 7,843 7,939 1.2

MIDDLE ATLANTIC .................................................................................. 412 8,311 8,314 0.0

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26417

TABLE II.—IMPACT ANALYSIS OF CHANGES FOR FY 2000 OPERATING PROSPECTIVE PAYMENT SYSTEM—Continued

[Payments per case]

(BY GEOGRAPHIC LOCATION) Number of

hospitals

Average FY

2000 payment

per case

Average FY

2001 payment

per case

All changes

(1) (2) 1 (3) 1 (4)

SOUTH ATLANTIC ................................................................................... 400 7,045 7,120 1.1

EAST NORTH CENTRAL ......................................................................... 457 7,113 7,187 1.0

EAST SOUTH CENTRAL ......................................................................... 156 6,648 6,660 0.2

WEST NORTH CENTRAL ........................................................................ 185 7,128 7,235 1.5

WEST SOUTH CENTRAL ........................................................................ 343 6,788 6,898 1.6

MOUNTAIN ............................................................................................... 132 7,047 7,138 1.3

PACIFIC .................................................................................................... 434 8,591 8,678 1.0

PUERTO RICO ......................................................................................... 45 3,169 3,198 0.9

RURAL BY CENSUS DIVISION:

NEW ENGLAND ....................................................................................... 52 5,462 5,604 2.6

MIDDLE ATLANTIC .................................................................................. 79 4,927 5,056 2.6

SOUTH ATLANTIC ................................................................................... 276 4,698 4,840 3.0

EAST NORTH CENTRAL ......................................................................... 280 4,615 4,751 3.0

EAST SOUTH CENTRAL ......................................................................... 265 4,231 4,331 2.4

WEST NORTH CENTRAL ........................................................................ 491 4,380 4,517 3.1

WEST SOUTH CENTRAL ........................................................................ 337 4,062 4,170 2.7

MOUNTAIN ............................................................................................... 201 4,895 5,046 3.1

PACIFIC .................................................................................................... 140 5,612 5,769 2.8

PUERTO RICO ......................................................................................... 5 2,455 2,457 0.1

(BY PAYMENT CATEGORIES)

URBAN HOSPITALS: 2,786 7,352 7,419 0.9

LARGE URBAN ........................................................................................ 1,617 7,852 7,898 0.6

OTHER URBAN ....................................................................................... 1,169 6,681 6,776 1.4

RURAL HOSPITALS ................................................................................ 2,050 4,538 4,665 2.8

TEACHING STATUS:

NON-TEACHING ...................................................................................... 3,730 5,502 5,578 1.4

FEWER THAN 100 RESIDENTS ............................................................. 870 7,175 7,256 1.1

100 OR MORE RESIDENTS .................................................................... 236 10,914 11,001 0.8

DISPROPORTIONATE SHARE HOSPITALS (DSH):

NON–DSH ................................................................................................ 3,025 5,850 5,915 1.1

URBAN DSH:

100 BEDS OR MORE .............................................................................. 1,377 7,959 8,047 1.1

FEWER THAN 100 BEDS ........................................................................ 76 4,966 5,045 1.6

RURAL DSH:

SOLE COMMUNITY (SCH) ...................................................................... 153 4,198 4,397 4.7

REFERRAL CENTERS (RRC) ................................................................. 54 5,384 5,465 1.5

OTHER RURAL DSH HOSPITALS:

100 BEDS OR MORE .............................................................................. 48 4,141 4,249 2.6

FEWER THAN 100 BEDS ........................................................................ 103 3,706 3,844 3.7

URBAN TEACHING AND DSH:

BOTH TEACHING AND DSH ................................................................... 716 8,864 8,962 1.1

TEACHING AND NO DSH ....................................................................... 325 7,372 7,413 0.6

NO TEACHING AND DSH ....................................................................... 737 6,362 6,432 1.1

NO TEACHING AND NO DSH ................................................................. 1,008 5,711 5,744 0.6

RURAL HOSPITAL TYPES:

NONSPECIAL STATUS HOSPITALS ...................................................... 830 3,968 4,092 3.1

RRC .......................................................................................................... 150 5,269 5,380 2.1

SCH .......................................................................................................... 660 4,534 4,692 3.5

MDH .......................................................................................................... 352 3,786 3,903 3.1

SCH AND RRC ......................................................................................... 58 5,533 5,651 2.1

TYPE OF OWNERSHIP:

VOLUNTARY ............................................................................................ 2,820 6,987 7,062 1.1

PROPRIETARY ........................................................................................ 768 6,276 6,335 0.9

GOVERNMENT ........................................................................................ 1,214 6,307 6,427 1.9

UNKNOWN ............................................................................................... 34 11,179 11,236 0.5

MEDICARE UTILIZATION AS A PERCENT OF INPATIENT DAYS:

0–25 .......................................................................................................... 379 9,010 9,136 1.4

25–50 ........................................................................................................ 1,830 7,891 7,972 1.0

50–65 ........................................................................................................ 1,893 5,958 6,036 1.3

OVER 65 .................................................................................................. 699 5,297 5,358 1.2

UNKNOWN ............................................................................................... 35 11,178 11,236 0.5

HOSPITALS RECLASSIFIED BY THE MEDICARE GEOGRAPHIC REVIEW BOARD:

RECLASSIFICATION STATUS DURING FY 2000 AND FY 2001:

RECLASSIFIED DURING BOTH FY 2000 AND FY 2001 ....................... 381 5,848 5,921 1.2

URBAN ..................................................................................................... 52 8,046 8,033 ¥0.2

RURAL ...................................................................................................... 329 5,272 5,367 1.8

26418 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE II.—IMPACT ANALYSIS OF CHANGES FOR FY 2000 OPERATING PROSPECTIVE PAYMENT SYSTEM—Continued

[Payments per case]

Number of

hospitals

Average FY

2000 payment

per case

Average FY

2001 payment

per case

All changes

(1) (2) 1 (3) 1 (4)

RECLASSIFIED DURING FY 2001 ONLY ............................................... 160 5,900 6,259 6.1

URBAN ..................................................................................................... 41 7,600 7,917 4.2

RURAL ...................................................................................................... 119 4,604 4,994 8.5

RECLASSIFIED DURING FY 2000 ONLY ............................................... 118 5,940 5,774 ¥2.8

URBAN ..................................................................................................... 31 7,428 7,226 ¥2.7

RURAL ...................................................................................................... 87 4,584 4,449 ¥2.9

FY 2000 RECLASSIFICATIONS:

ALL RECLASSIFIED HOSPITALS ........................................................... 541 5,861 6,005 2.4

STANDARDIZED AMOUNT ONLY .......................................................... 66 4,864 4,892 0.6

WAGE INDEX ONLY ................................................................................ 386 5,889 5,930 0.7

BOTH ........................................................................................................ 46 6,494 6,424 ¥1.1

NONRECLASSIFIED ................................................................................ 4,312 6,944 7,030 1.2

ALL URBAN RECLASSIFIED ................................................................... 93 7,865 7,986 1.5

STANDARDIZED AMOUNT ONLY .......................................................... 16 5,230 5,246 0.3

WAGE INDEX ONLY ................................................................................ 59 8,321 8,508 2.2

BOTH ........................................................................................................ 18 8,036 7,962 ¥0.9

NONRECLASSIFIED ................................................................................ 2,592 7,384 7,447 0.9

ALL RURAL RECLASSIFIED ................................................................... 448 5,145 5,296 2.9

STANDARDIZED AMOUNT ONLY .......................................................... 53 4,728 4,856 2.7

WAGE INDEX ONLY ................................................................................ 372 5,177 5,327 2.9

BOTH ........................................................................................................ 23 5,267 5,460 3.7

NONRECLASSIFIED ................................................................................ 1,677 4,121 4,234 2.7

OTHER RECLASSIFIED HOSPITALS (SECTION 1886(d)(8)(B)) .......... 26 4,765 4,808 0.9

1These payment amounts per case do not reflect any estimates of annual case-mix increase.

Table II presents the projected impact of

the proposed changes for FY 2001 for urban

and rural hospitals and for the different

categories of hospitals shown in Table I. It

compares the estimated payments per case

for FY 2000 with the average estimated per

case payments for FY 2001, as calculated

under our models. Thus, this table presents,

in terms of the average dollar amounts paid

per discharge, the combined effects of the

changes presented in Table I. The percentage

changes shown in the last column of Table

II equal the percentage changes in average

payments from column 6 of Table I.

VIII. Impact of Organ, Tissue and Eye

Procurement Condition of Participation on

CAHs

In this proposed rule, we propose to add

a CoP for organ, tissue and eye procurement

for CAHs. We do not anticipate that this

condition would have a substantial economic

impact on CAHs. However, we believe it is

desirable to inform the public of our

projections of its likely effects. There are

several provisions in this proposed condition

that would impact CAHs to a greater or lesser

degree. Specifically, CAHs would be required

to have written protocols; have agreements

with an OPO, a tissue bank, and an eye bank;

refer all deaths that occur in the CAH to the

OPO or a third party designated by the OPO;

ensure that CAH employees who initiate a

request for donation to the family of a

potential donor have been trained as a

designated requestor; and work cooperatively

with the OPO, tissue bank, and eye bank in

educating CAH staff, reviewing death

records, and maintaining potential donors. It

is important to note that because of the

inherent flexibility of this condition, the

extent of its economic impact is dependent

upon decisions that will be made either by

the CAH or by the CAH in conjunction with

the OPO or the tissue and eye banks. Thus,

the impact on individual CAHs will vary and

is subject in large part to their decision

making. The impact will also vary based on

whether a CAH currently has an organ

donation protocol and its level of compliance

with existing law and regulations. For

example, if a CAH was a Medicare hospital

in compliance with the hospital CoP for

organ, tissue, and eye procurement prior to

converting to a CAH, there will be no

additional impact.

The first requirement in the proposed CoP

is that CAHs have and implement written

protocols that reflect the various other

requirements of the proposed CoP. Currently,

under section 1138 of the Act, CAHs must

have written protocols for organ donation.

Most CAHs will need to rewrite their existing

protocols to conform with this regulation;

however, this is clearly not a requirement

that imposes a significant economic burden.

In addition, a CAH must have an

agreement with its designated OPO and with

at least one tissue bank and at least one eye

bank. CAHs are required under section 1138

of the Act to refer all potential donors to an

OPO. Also, the OPO regulation at 42 CFR

486.306 requires, as a qualification for

designation as an OPO, that the OPO have a

working relationship with at least 75 percent

of the hospitals in its service area that

participate in the Medicare and Medicaid

programs and that have an operating room

and the equipment and personnel for

retrieving organs. Therefore, some CAHs may

already have an agreement with their

designated OPO. Although CAHs may need

to modify those existing agreements, the need

to make modifications would not impose a

significant economic burden. Although there

is no statutory or regulatory requirement for

a CAH to have agreements with tissue and

eye banks, we must assume some CAHs have

agreements with tissue and eye banks, since

hospitals are the source for virtually all

tissues and eyes.

The CoP would require CAHs to notify the

OPO about every death that occurs in the

CAH. The average Medicare hospital has

approximately 165 beds and 200 deaths per

year. However, by statute and regulation,

CAHs may use no more than 15 beds for

acute care services. Assuming that the

number of deaths in a hospital is related to

the number of acute care beds, there should

be approximately 18 deaths per year in the

average CAH. Thus, the economic impact for

a CAH of referring all deaths would be small.

Under the proposed CoP, a CAH may agree

to have the OPO determine medical

suitability for tissue and eye donation or may

have alternative arrangements with a tissue

bank and an eye bank. These alternative

arrangements could include the CAH’s direct

notification of the tissue and eye bank of

potential tissue and eye donors or direct

notification of all deaths. Again, the impact

is small, and the regulation permits the CAH

to decide how this process will take place.

We recognize that many communities already

have a one-phone-call system in place. In

addition, some OPOs are also tissue banks or

eye banks or both. A CAH that chose to use

the OPO’s tissue and eye bank services in

these localities would need to make only one

telephone call on every death.

This proposed CoP requires that the

individual who initiates a request for

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26419

donation to the family of a potential donor

must be an OPO representative or a

designated requestor. A designated requestor

is an individual who has taken a course

offered or approved by the OPO in the

methodology for approaching families of

potential donors and requesting donation.

The CAH would need to arrange for

designated requestor training. Most OPOs

have trained designated requestors as part of

the hospital CoP for organ, tissue, and eye

procurement. Even if the CAH wants to have

a sufficient number of designated requestors

to ensure that all shifts are covered, this

provision of the regulation would not have a

significant economic impact on CAHs. In

addition, the CAH may be able to choose to

have donation requests initiated by the OPO,

the tissue bank, or the eye bank staff rather

than CAH staff, in which case there is no

economic impact.

The regulation requires a CAH to work

cooperatively with the OPO, a tissue bank,

and an eye bank in educating CAH staff. We

do not believe education of CAH staff will

demand a significant amount of staff time. In

addition, most OPOs already give

educational presentations for the staff in their

hospitals.

The regulation requires a CAH to work

cooperatively with the OPO, a tissue bank,

and an eye bank in reviewing death records.

Most OPOs currently conduct extensive CAH

death record reviews. The CAH’s assistance

is required only to provide lists of CAH

deaths and facilitate access to records.

Finally, the regulation requires a CAH to

work cooperatively with the OPO, a tissue

bank, and an eye bank in maintaining

potential donors while necessary testing and

placement of potential donated organs and

tissues take place. It is possible that because

of the proposed CoP, some CAHs may have

their first organ donors. Therefore, we

considered the impact on a CAH of

maintaining a brain dead potential donor on

a ventilator until the organs can be placed.

CAHs with full ventilator capability should

have no trouble maintaining a potential

donor until the organs are placed. However,

some CAHs have ventilator capability only so

that a patient can be maintained until he or

she is transferred to a larger facility for

treatment. These CAHs would have the

equipment and staffing to maintain a

potential donor until transfer to another

facility occurs. Some CAHs do not have

ventilator capability and would be unable to

maintain a potential donor. However, CAHs

without ventilator capability would still be

obligated to notify the OPO, or a third party

designated by the OPO, of all individuals

whose death is imminent or who have died

in the CAH because there is a potential to

obtain a tissue or an eye donation. We do not

believe there will be a significant impact on

CAHs no matter what their situation—full

ventilator capability, ventilator capability

only for patients who are to be transferred to

a larger facility, or no ventilator capability.

We are sensitive to the possible burden this

proposed CoP may place on CAHs. Therefore,

we are particularly interested in comments

and information concerning the previously

mentioned requirements.

IX. Impact of Proposed Changes in the

Capital Prospective Payment System

A. General Considerations

We now have cost report data for the 7th

year of the capital prospective payment

system (cost reports beginning in FY 1998)

available through the December 1999 update

of the HCRIS. We also have updated

information on the projected aggregate

amount of obligated capital approved by the

fiscal intermediaries. However, our impact

analysis of payment changes for capitalrelated costs is still limited by the lack of

hospital-specific data on several items. These

are the hospital’s projected new capital costs

for each year, its projected old capital costs

for each year, and the actual amounts of

obligated capital that will be put in use for

patient care and recognized as Medicare old

capital costs in each year. The lack of this

information affects our impact analysis in the

following ways:

• Major investment in hospital capital

assets (for example, in building and major

fixed equipment) occurs at irregular

intervals. As a result, there can be significant

variation in the growth rates of Medicare

capital-related costs per case among

hospitals. We do not have the necessary

hospital-specific budget data to project the

hospital capital growth rate for individual

hospitals.

• Our policy of recognizing certain

obligated capital as old capital makes it

difficult to project future capital-related costs

for individual hospitals. Under § 412.302(c),

a hospital is required to notify its

intermediary that it has obligated capital by

the later of October 1, 1992, or 90 days after

the beginning of the hospital’s first cost

reporting period under the capital

prospective payment system. The

intermediary must then notify the hospital of

its determination whether the criteria for

recognition of obligated capital have been

met by the later of the end of the hospital’s

first cost reporting period subject to the

capital prospective payment system or 9

months after the receipt of the hospital’s

notification. The amount that is recognized

as old capital is limited to the lesser of the

actual allowable costs when the asset is put

in use for patient care or the estimated costs

of the capital expenditure at the time it was

obligated. We have substantial information

regarding fiscal intermediary determinations

of projected aggregate obligated capital

amounts. However, we still do not know

when these projects will actually be put into

use for patient care, the actual amount that

will be recognized as obligated capital when

the project is put into use, or the Medicare

share of the recognized costs. Therefore, we

do not know actual obligated capital

commitments for purposes of the FY 2001

capital cost projections. In Appendix B of

this proposed rule, we discuss the

assumptions and computations that we

employ to generate the amount of obligated

capital commitments for use in the FY 2001

capital cost projections.

In Table III of this section, we present the

redistributive effects that are expected to

occur between ‘‘hold-harmless’’ hospitals

and ‘‘fully prospective’’ hospitals in FY 2001.

In addition, we have integrated sufficient

hospital-specific information into our

actuarial model to project the impact of the

proposed FY 2001 capital payment policies

by the standard prospective payment system

hospital groupings. While we now have

actual information on the effects of the

transition payment methodology and interim

payments under the capital prospective

payment system and cost report data for most

hospitals, we still need to randomly generate

numbers for the change in old capital costs,

new capital costs for each year, and obligated

amounts that will be put in use for patient

care services and recognized as old capital

each year. We continue to be unable to

predict accurately FY 2001 capital costs for

individual hospitals, but with the most

recent data on hospitals’ experience under

the capital prospective payment system,

there is adequate information to estimate the

aggregate impact on most hospital groupings.

B. Projected Impact Based on the Proposed

FY 2001 Actuarial Model

1. Assumptions

In this impact analysis, we model

dynamically the impact of the capital

prospective payment system from FY 2000 to

FY 2001 using a capital cost model. The FY

2001 model, as described in Appendix B of

this proposed rule, integrates actual data

from individual hospitals with randomly

generated capital cost amounts. We have

capital cost data from cost reports beginning

in FY 1989 through FY 1998 as reported on

the December 1999 update of HCRIS, interim

payment data for hospitals already receiving

capital prospective payments through

PRICER, and data reported by the

intermediaries that include the hospitalspecific rate determinations that have been

made through January 1, 2000 in the

provider-specific file. We used these data to

determine the proposed FY 2001 capital

rates. However, we do not have individual

hospital data on old capital changes, new

capital formation, and actual obligated

capital costs. We have data on costs for

capital in use in FY 1998, and we age that

capital by a formula described in Appendix

B. Therefore, we need to randomly generate

only new capital acquisitions for any year

after FY 1998. All Federal rate payment

parameters are assigned to the applicable

hospital.

For purposes of this impact analysis, the

proposed FY 2001 actuarial model includes

the following assumptions:

• Medicare inpatient capital costs per

discharge will change at the following rates

during these periods:

AVERAGE PERCENTAGE CHANGE IN

CAPITAL COSTS PER DISCHARGE

Fiscal year Percentage

change

1999 .......................................... 3.16

2000 .......................................... 2.34

2001 .......................................... 1.99

• We estimate that the Medicare case-mix

index will increase by 0.5 percent in FY 2000

and in FY 2001.

26420 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

• The Federal capital rate and the hospitalspecific rate were updated in FY 1996 by an

analytical framework that considers changes

in the prices associated with capital-related

costs and adjustments to account for forecast

error, changes in the case-mix index,

allowable changes in intensity, and other

factors. The proposed FY 2001 update is 0.9

percent (see section IV. of the Addendum to

this proposed rule).

2. Results

We have used the actuarial model to

estimate the change in payment for capitalrelated costs from FY 2000 to FY 2001. Table

III shows the effect of the capital prospective

payment system on low capital cost hospitals

and high capital cost hospitals. We consider

a hospital to be a low capital cost hospital

if, based on a comparison of its initial

hospital-specific rate and the applicable

Federal rate, it will be paid under the fully

prospective payment methodology. A high

capital cost hospital is a hospital that, based

on its initial hospital-specific rate and the

applicable Federal rate, will be paid under

the hold-harmless payment methodology.

Based on our actuarial model, the breakdown

of hospitals is as follows:

CAPITAL TRANSITION PAYMENT METHODOLOGY FOR FY 2001

Type of hospital Percent of

hospitals

Percent of

discharges

Percent of

capital costs

Percent of

capital

payments

Low Cost Hospital ............................................................................................ 67 62 56 61

High Cost Hospital ........................................................................................... 33 38 44 39

A low capital cost hospital may request to

have its hospital-specific rate redetermined

based on old capital costs in the current year,

through the later of the hospital’s cost

reporting period beginning in FY 1994 or the

first cost reporting period beginning after

obligated capital comes into use (within the

limits established in § 412.302(e) for putting

obligated capital into use for patient care). If

the redetermined hospital-specific rate is

greater than the adjusted Federal rate, these

hospitals will be paid under the holdharmless payment methodology. Regardless

of whether the hospital became a holdharmless payment hospital as a result of a

redetermination, we continue to show these

hospitals as low capital cost hospitals in

Table III.

Assuming no behavioral changes in capital

expenditures, Table III displays the

percentage change in payments from FY 2000

to FY 2001 using the above described

actuarial model. With the proposed Federal

rate, we estimate aggregate Medicare capital

payments will increase by 5.89 percent in FY

2001. This increase is noticeably higher than

last year’s (3.34 percent) due to the

combination of the increase in the number of

hospital admissions, the increase in casemix, and the increase in the Federal blend

percentage from 90 percent to 100 percent

and a decrease in the hospital-specific rate

percentage from 10 percent to 0 percent for

fully prospective payment hospitals.

We project that low capital cost hospitals

paid under the fully prospective payment

methodology will experience an average

increase in payments per case of 6.67

percent, and high capital cost hospitals will

experience an average increase of 1.07

percent. These results are due to the change

in the blended percentages to the payment

system to 100 percent adjusted Federal rate

and 0 percent hospital-specific rate.

For hospitals paid under the fully

prospective payment methodology, the

Federal rate payment percentage will

increase from 90 percent to 100 percent and

the hospital-specific rate payment percentage

will decrease from 10 to 0 percent in FY

2001. The Federal rate payment percentage

for hospitals paid under the hold-harmless

payment methodology is based on the

hospital’s ratio of new capital costs to total

capital costs. The average Federal rate

payment percentage for high cost hospitals

receiving a hold-harmless payment for old

capital will increase from 74.15 percent to

81.77 percent. We estimate the percentage of

hold-harmless hospitals paid based on 100

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26421

percent of the Federal rate will increase from

87.78 percent to 88.92 percent. We estimate

that the few remaining high cost holdharmless hospitals (176) will experience an

increase in payments of 1.14 percent from FY

2000 to FY 2001. This increase reflects our

estimate that exception payments per

discharge will increase 70.81 percent from

FY 2000 to FY 2001 for high cost holdharmless hospitals. While we estimate that

this group’s regular hold-harmless payments

for old capital will decline by 26.87 percent

due to the retirement of old capital, we

estimate that its high overall capital costs

will cause an increase in these hospitals’

exceptions payments from $56.83 per

discharge in FY 2000 to $97.07 per discharge

in FY 2001. This is primarily due to the

estimated decrease in outlier payments,

which will cause an estimated increase in

exceptions payments to cover unmet capital

costs.

We expect that the average hospitalspecific rate payment per discharge will

decrease from $32.44 in FY 2000 to $0.00 in

FY 2001. This decrease is due to the decrease

in the hospital-specific rate payment

percentage from 10 percent in FY 2000 to 0

percent in FY 2001 for fully prospective

payment hospitals.

We are proposing no changes in our

exceptions policies for FY 2001. As a result,

the minimum payment levels would be—

• 90 percent for sole community hospitals;

• 80 percent for urban hospitals with 100

or more beds and a disproportionate share

patient percentage of 20.2 percent or more; or

• 70 percent for all other hospitals.

We estimate that exceptions payments will

increase from 1.62 percent of total capital

payments in FY 2000 to 2.02 percent of

payments in FY 2001. The projected

distribution of the exception payments is

shown in the chart below:

ESTIMATED FY 2001 EXCEPTIONS PAYMENTS

Type of hospital Number of

hospitals

Percent of

exceptions

payments

Low Capital Cost ..................................................................................................................................................... 186 46

High Capital Cost ..................................................................................................................................................... 191 54

Total .................................................................................................................................................................. 377 100

C. Cross-Sectional Comparison of Capital

Prospective Payment Methodologies

Table IV presents a cross-sectional

summary of hospital groupings by capital

prospective payment methodology. This

distribution is generated by our actuarial

model.

BILLING CODE 4120–01–P

26422 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26423

BILLING CODE 4120–01–C

As we explain in Appendix B of this

proposed rule, we were not able to use 61 of

the 4,836 hospitals in our database due to

insufficient (missing or unusable) data.

Consequently, the payment methodology

distribution is based on 4,775 hospitals.

These data should be fully representative of

the payment methodologies that will be

applicable to hospitals.

The cross-sectional distribution of hospital

by payment methodology is presented by: (1)

Geographic location; (2) region; and (3)

payment classification. This provides an

indication of the percentage of hospitals

within a particular hospital grouping that

will be paid under the fully prospective

payment methodology and the hold-harmless

payment methodology.

The percentage of hospitals paid fully

Federal (100 percent of the Federal rate) as

hold-harmless hospitals is expected to

increase to 32.9 percent in FY 2001.

Table IV indicates that 63.1 percent of

hospitals will be paid under the fully

prospective payment methodology. (This

figure, unlike the figure of 67 percent for low

cost capital hospitals in the chart on ‘‘Capital

Transition Payment Methodology for FY

2001,’’ in section VII.B.2. of this impact

analysis takes into account the effects of

redeterminations. In other words, this figure

does not include low cost hospitals that,

following a hospital-specific rate

redetermination, are now paid under the

hold-harmless methodology.) As expected, a

relatively higher percentage of rural and

governmental hospitals (74.0 percent and

76.7 percent, respectively by payment

classification) are being paid under the fully

prospective payment methodology. This is a

reflection of their lower than average capital

costs per case. In contrast, only 35.3 percent

of proprietary hospitals are being paid under

the fully prospective methodology. This is a

reflection of their higher than average capital

costs per case. (We found at the time of the

August 30, 1991 final rule (56 FR 43430) that

62.7 percent of proprietary hospitals had a

capital cost per case above the national

average cost per case.)

D. Cross-Sectional Analysis of Changes in

Aggregate Payments

We used our FY 2001 actuarial model to

estimate the potential impact of our proposed

changes for FY 2001 on total capital

payments per case, using a universe of 4,775

hospitals. The individual hospital payment

parameters are taken from the best available

data, including: the January 1, 2000 update

to the provider-specific file, cost report data,

and audit information supplied by

intermediaries. In Table V we present the

results of the cross-sectional analysis using

the results of our actuarial model and the

aggregate impact of the proposed FY 2001

payment policies. Columns 3 and 4 show

estimates of payments per case under our

model for FY 2000 and FY 2001. Column 5

shows the total percentage change in

payments from FY 2000 to FY 2001. Column

6 presents the percentage change in

payments that can be attributed to Federal

rate changes alone.

Federal rate changes represented in

Column 6 include the 1.60 percent increase

in the Federal rate, a 0.5 percent increase in

case mix, changes in the adjustments to the

Federal rate (for example, the effect of the

new hospital wage index on the geographic

adjustment factor), and reclassifications by

the MGCRB. Column 5 includes the effects of

the Federal rate changes represented in

Column 6. Column 5 also reflects the effects

of all other changes, including the change

from 90 percent to 100 percent in the portion

of the Federal rate for fully prospective

hospitals, the hospital-specific rate update,

changes in the proportion of new to total

capital for hold-harmless hospitals, changes

in old capital (for example, obligated capital

put in use), hospital-specific rate

redeterminations, and exceptions. The

comparisons are provided by: (1) Geographic

location, (2) region, and (3) payment

classification.

The simulation results show that, on

average, capital payments per case can be

expected to increase 4.2 percent in FY 2001.

The results show that the effect of the Federal

rate change alone is to increase payments by

0.9 percent. In addition to the increase

attributable to the Federal rate change, a 3.3

percent increase is attributable to the effects

of all other changes.

Our comparison by geographic location

shows an overall increase in payments to

hospitals in all areas. This comparison also

shows that urban and rural hospitals will

experience slightly different rates of increase

in capital payments per case (3.9 percent and

5.9 percent, respectively). This difference is

due to the lower rate of increase for urban

hospitals relative to rural hospitals (0.6

percent and 2.7 percent, respectively) from

the Federal rate changes alone. Urban

hospitals will gain approximately the same as

rural hospitals (3.3 percent versus 3.2

percent, respectively) from the effects of all

other changes.

26424 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

All regions are estimated to receive

increases in total capital payments per case,

partly due to the increased share of payments

that are based on the Federal rate (from 90

to 100 percent). Changes by region vary from

a minimum of 2.6 percent increase (Middle

Atlantic urban region) to a maximum of 7.5

percent increase (East North Central rural

region).

By type of ownership, government

hospitals are projected to have the largest rate

of increase of total payment changes (5.6

percent, a 1.4 percent increase due to the

Federal rate changes, and a 4.2 percent

increase from the effects of all other changes).

Payments to voluntary hospitals will increase

4.0 percent (a 0.9 percent increase due to

Federal rate changes, and a 3.1 percent

increase from the effects of all other changes)

and payments to proprietary hospitals will

increase 3.6 percent (a 0.4 percent increase

due to Federal rate changes, and a 3.2 percent

increase from the effects of all other changes).

Section 1886(d)(10) of the Act established

the MGCRB. Hospitals may apply for

reclassification for purposes of the

standardized amount, wage index, or both

and for purposes of DSH for FYs 1999

through 2001. Although the Federal capital

rate is not affected, a hospital’s geographic

classification for purposes of the operating

standardized amount does affect a hospital’s

capital payments as a result of the large

urban adjustment factor and the

disproportionate share adjustment for urban

hospitals with 100 or more beds.

Reclassification for wage index purposes

affects the geographic adjustment factor,

since that factor is constructed from the

hospital wage index.

To present the effects of the hospitals being

reclassified for FY 2001 compared to the

effects of reclassification for FY 2000, we

show the average payment percentage

increase for hospitals reclassified in each

fiscal year and in total. For FY 2001

reclassifications, we indicate those hospitals

reclassified for standardized amount

purposes only, for wage index purposes only,

and for both purposes. The reclassified

groups are compared to all other

nonreclassified hospitals. These categories

are further identified by urban and rural

designation.

Hospitals reclassified for FY 2001 as a

whole are projected to experience a 5.9

percent increase in payments (a 2.4 percent

increase attributable to Federal rate changes

and a 3.5 percent increase attributable to the

effects of all other changes). Payments to

nonreclassified hospitals will increase

slightly less (4.2 percent) than reclassified

hospitals (5.9 percent) overall. Payments to

nonreclassified hospitals will increase less

than reclassified hospitals from the Federal

rate changes (0.9 percent compared to 2.4

percent), but they will gain about the same

from the effects of all other changes (3.3

percent compared to 3.5 percent).

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26425

26426 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

BILLING CODE 4120–01–C

Appendix B: Technical Appendix on the

Capital Cost Model and Required

Adjustments

Under section 1886(g)(1)(A) of the Act, we

set capital prospective payment rates for FY

1992 through FY 1995 so that aggregate

prospective payments for capital costs were

projected to be 10 percent lower than the

amount that would have been payable on a

reasonable cost basis for capital-related costs

in that year. To implement this requirement,

we developed the capital acquisition model

to determine the budget neutrality

adjustment factor. Even though the budget

neutrality requirement expired effective with

FY 1996, we must continue to determine the

recalibration and geographic reclassification

budget neutrality adjustment factor and the

reduction in the Federal and hospital-specific

rates for exceptions payments. To determine

these factors, we must continue to project

capital costs and payments.

We used the capital acquisition model

from the start of prospective payments for

capital costs through FY 1997. We now have

7 years of cost reports under the capital

prospective payment system. For FY 1998,

we developed a new capital cost model to

replace the capital acquisition model. This

revised model makes use of the data from

these cost reports.

The following cost reports are used in the

capital cost model for this proposed rule: The

December 31, 1999 update of the cost reports

for PPS–IX (cost reporting periods beginning

in FY 1992), PPS–X (cost reporting periods

beginning in FY 1993), PPS–XI (cost

reporting periods beginning in FY 1994),

PPS–XII (cost reporting periods beginning in

FY 1995), PPS–XIII (cost reporting periods

beginning in FY 1996), PPS–XIV (cost

reporting periods beginning in FY 1997), and

PPS–XV (cost reporting periods beginning in

FY 1998). In addition, to model payments,

we use the January 1, 2000 update of the

provider-specific file, and the March 1994

update of the intermediary audit file.

Since hospitals under alternative payment

system waivers (that is, hospitals in

Maryland) are currently excluded from the

capital prospective payment system, we

excluded these hospitals from our model.

We developed FY 1992 through FY 2000

hospital-specific rates using the providerspecific file and the intermediary audit file.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26427

(We used the cumulative provider-specific

file, which includes all updates to each

hospital’s records, and chose the latest record

for each fiscal year.) We checked the

consistency between the provider-specific

file and the intermediary audit file. We

ensured that increases in the hospitalspecific rates were at least as large as the

published updates (increases) for the

hospital-specific rates each year. We were

able to match hospitals to the files as shown

in the following table:

Source

Number

of hospitals

Provider-Specific File Only ........... 129

Provider-Specific and Audit File ... 4,707

Total ....................................... 4,836

Eighty-two of the 4,836 hospitals had

unusable or missing data, or had no cost

reports available. For 20 of the 82 hospitals,

we were unable to determine a hospitalspecific rate from the available cost reports.

However, there was adequate cost

information to determine that these hospitals

were paid under the hold-harmless

methodology. Since the hospital-specific rate

is not used to determine payments for

hospitals paid under the hold-harmless

methodology, there was sufficient cost report

information available to include these 20

hospitals in the analysis. We were able to

estimate hospital-specific amounts for one

additional hospital from the PPS–IX cost

reports. Hence we were able to use 21 of the

82 hospitals. We used 4,775 hospitals for the

analysis. Sixty-one hospitals could not be

used in the analysis because of insufficient

information. These hospitals account for less

than 0.7 percent of admissions. Therefore,

any effects from the elimination of their cost

report data should be minimal.

We analyzed changes in capital-related

costs (depreciation, interest, rent, leases,

insurance, and taxes) reported in the cost

reports. We found a wide variance among

hospitals in the growth of these costs. For

hospitals with more than 100 beds, the

distribution and mean of these cost increases

were different for large changes in bed-size

(greater than ±20 percent). We also analyzed

changes in the growth in old capital and new

capital for cost reports that provided this

information. For old capital, we limited the

analysis to decreases in old capital. We did

this since the opportunity for most hospitals

to treat ‘‘obligated’’ capital put into service as

old capital has expired. Old capital costs

should decrease as assets become fully

depreciated and as interest costs decrease as

the loan is amortized.

The new capital cost model separates the

hospitals into three mutually exclusive

groups. Hold-harmless hospitals with data on

old capital were placed in the first group. Of

the remaining hospitals, those hospitals with

fewer than 100 beds comprise the second

group. The third group consists of all

hospitals that did not fit into either of the

first two groups. Each of these groups

displayed unique patterns of growth in

capital costs. We found that the gamma

distribution is useful in explaining and

describing the patterns of increase in capital

costs. A gamma distribution is a statistical

distribution that can be used to describe

patterns of growth rates, with the greatest

proportion of rates being at the low end. We

use the gamma distribution to estimate

individual hospital rates of increase as

follows:

(1) For hold-harmless hospitals, old capital

cost changes were fitted to a truncated

gamma distribution, that is, a gamma

distribution covering only the distribution of

cost decreases. New capital costs changes

were fitted to the entire gamma distribution,

allowing for both decreases and increases.

(2) For hospitals with fewer than 100 beds

(small), total capital cost changes were fitted

to the gamma distribution, allowing for both

decreases and increases.

(3) Other (large) hospitals were further

separated into three groups:

• Bed-size decreases over 20 percent

(decrease).

• Bed-size increases over 20 percent

(increase).

• Other (no change).

Capital cost changes for large hospitals

were fitted to gamma distributions for each

bed-size change group, allowing for both

decreases and increases in capital costs. We

analyzed the probability distribution of

increases and decreases in bed size for large

hospitals. We found the probability

somewhat dependent on the prior year

change in bed size and factored this

dependence into the analysis. Probabilities of

bed-size change were determined. Separate

sets of probability factors were calculated to

reflect the dependence on prior year change

in bed size (increase, decrease, and no

change).

The gamma distributions were fitted to

changes in aggregate capital costs for the

entire hospital. We checked the relationship

between aggregate costs and Medicare per

discharge costs. For large hospitals, there was

a small variance, but the variance was larger

for small hospitals. Since costs are used only

for the hold-harmless methodology and to

determine exceptions, we decided to use the

gamma distributions fitted to aggregate cost

increases for estimating distributions of cost

per discharge increases.

Capital costs per discharge calculated from

the cost reports were increased by random

numbers drawn from the gamma distribution

to project costs in future years. Old and new

capital were projected separately for holdharmless hospitals. Aggregate capital per

discharge costs were projected for all other

hospitals. Because the distribution of

increases in capital costs varies with changes

in bed size for large hospitals, we first

projected changes in bed size for large

hospitals before drawing random numbers

from the gamma distribution. Bed-size

changes were drawn from the uniform

distribution with the probabilities dependent

on the previous year bed-size change. The

gamma distribution has a shape parameter

and a scaling parameter. (We used different

parameters for each hospital group, and for

old and new capital.)

We used discharge counts from the cost

reports to calculate capital cost per discharge.

To estimate total capital costs for FY 1999

(the MedPAR data year) and later, we use the

number of discharges from the MedPAR data.

Some hospitals had considerably more

discharges in FY 1999 than in the years for

which we calculated cost per discharge from

the cost report data. Consequently, a hospital

with few cost report discharges would have

a high capital cost per discharge, since fixed

costs would be allocated over only a few

discharges. If discharges increase

substantially, the cost per discharge would

decrease because fixed costs would be

allocated over more discharges. If the

projection of capital cost per discharge is not

adjusted for increases in discharges, the

projection of exceptions would be overstated.

We address this situation by recalculating the

cost per discharge with the MedPAR

discharges if the MedPAR discharges exceed

the cost report discharges by more than 20

percent. We do not adjust for increases of less

than 20 percent because we have not

received all of the FY 1999 discharges, and

we have removed some discharges from the

analysis because they are statistical outliers.

This adjustment reduces our estimate of

exceptions payments, and consequently, the

reduction to the Federal rate for exceptions

is smaller. We will continue to monitor our

modeling of exceptions payments and make

adjustments as needed.

The average national capital cost per

discharge generated by this model is the

combined average of many randomly

generated increases. This average must equal

the projected average national capital cost

per discharge, which we projected separately

(outside this model). We adjusted the shape

parameter of the gamma distributions so that

the modeled average capital cost per

discharge matches our projected capital cost

per discharge. The shape parameter for old

capital was not adjusted since we are

modeling the aging of ‘‘existing’’ assets. This

model provides a distribution of capital costs

among hospitals that is consistent with our

aggregate capital projections.

Once each hospital’s capital-related costs

are generated, the model projects capital

payments. We use the actual payment

parameters (for example, the case-mix index

and the geographic adjustment factor) that

are applicable to the specific hospital.

To project capital payments, the model

first assigns the applicable payment

methodology (fully prospective or holdharmless) to the hospital as determined from

the provider-specific file and the cost reports.

The model simulates Federal rate payments

using the assigned payment parameters and

hospital-specific estimated outlier payments.

The case-mix index for a hospital is derived

from the FY 1999 MedPAR file using the FY

2001 DRG relative weights included in

section VI. of the Addendum to this proposed

rule. The case-mix index is increased each

year after FY 1999 based on analysis of past

experiences in case-mix increases. Based on

analysis of recent case-mix increases, we

estimate that case-mix will increase 0.5

percent in FY 2000. We project that case-mix

will increase 0.5 percent in FY 2001. (Since

we are using FY 1999 cases for our analysis,

the FY 1999 increase in case-mix has no

effect on projected capital payments.)

26428 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

Changes in geographic classification and

revisions to the hospital wage data used to

establish the hospital wage index affect the

geographic adjustment factor. Changes in the

DRG classification system and the relative

weights affect the case-mix index.

Section 412.308(c)(4)(ii) requires that the

estimated aggregate payments for the fiscal

year, based on the Federal rate after any

changes resulting from DRG reclassifications

and recalibration and the geographic

adjustment factor, equal the estimated

aggregate payments based on the Federal rate

that would have been made without such

changes. For FY 2000, the budget neutrality

adjustment factors were 1.00142 for the

national rate and 1.00134 for the Puerto Rico

rate.

Since we implemented a separate

geographic adjustment factor for Puerto Rico,

we applied separate budget neutrality

adjustments for the national geographic

adjustment factor and the Puerto Rico

geographic adjustment factor. We applied the

same budget neutrality factor for DRG

reclassifications and recalibration nationally

and for Puerto Rico. Separate adjustments

were unnecessary for FY 1998 and earlier

since the geographic adjustment factor for

Puerto Rico was implemented in FY 1998.

To determine the factors for FY 2001, we

first determined the portions of the Federal

national and Puerto Rico rates that would be

paid for each hospital in FY 2001 based on

its applicable payment methodology. Using

our model, we then compared, separately for

the national rate and the Puerto Rico rate,

estimated aggregate Federal rate payments

based on the FY 2000 DRG relative weights

and the FY 2000 geographic adjustment

factor to estimated aggregate Federal rate

payments based on the FY 2000 relative

weights and the FY 2001 geographic

adjustment factor. In making the comparison,

we held the FY 2001 Federal rate portion

constant and set the other budget neutrality

adjustment factor and the exceptions

reduction factor to 1.00. To achieve budget

neutrality for the changes in the national

geographic adjustment factor, we applied an

incremental budget neutrality adjustment of

0.99846 for FY 2001 to the previous

cumulative FY 2000 adjustment of 1.00142,

yielding a cumulative adjustment of 0.99988

through FY 2001. For the Puerto Rico

geographic adjustment factor, we applied an

incremental budget neutrality adjustment of

1.00312 for FY 2001 to the previous

cumulative FY 2000 adjustment of 1.00134,

yielding a cumulative adjustment of 1.00446

through FY 2001. We then compared

estimated aggregate Federal rate payments

based on the FY 2000 DRG relative weights

and the FY 2001 geographic adjustment

factors to estimated aggregate Federal rate

payments based on the FY 2001 DRG relative

weights and the FY 2001 geographic

adjustment factors. The incremental

adjustment for DRG classifications and

changes in relative weights would be 1.00019

nationally and for Puerto Rico. The

cumulative adjustments for DRG

classifications and changes in relative

weights and for changes in the geographic

adjustment factors through FY 2001 would be

1.00007 nationally and 1.00465 for Puerto

Rico. The following table summarizes the

adjustment factors for each fiscal year:

BUDGET NEUTRALITY ADJUSTMENT FOR DRG RECLASSIFICATIONS AND RECALIBRATION AND THE GEOGRAPHIC

ADJUSTMENT FACTORS

Fiscal year

National Puerto Rico

Incremental adjustment

Cumulative

Incremental adjustment

Geographic Cumulative

adjustment

factor

DRG reclassifications

and

recalibration

Combined

Geographic

adjustment

factor

DRG reclassifications

and

recalibration

Combined

1992 ................................. .................... .................... .................... 1.00000 .................... .................... .................... ....................

1993 ................................. .................... .................... 0.99800 0.99800 .................... .................... .................... ....................

1994 ................................. .................... .................... 1.00531 1.00330 .................... .................... .................... ....................

1995 ................................. .................... .................... 0.99980 1.00310 .................... .................... .................... ....................

1996 ................................. .................... .................... 0.99940 1.00250 .................... .................... .................... ....................

1997 ................................. .................... .................... 0.99873 1.00123 .................... .................... .................... ....................

1998 ................................. .................... .................... 0.99892 1.00015 .................... .................... .................... 1.00000

1999 ................................. 0.99944 1.00335 1.00279 1.00294 0.99898 1.00335 1.00233 1.00233

2000 ................................. 0.99857 0.99991 0.99848 1.00142 0.99910 0.99991 0.99901 1.00134

2001 ................................. 0.99846 1.00019 0.99865 1.00007 1.00312 1.00019 1.00331 1.00465

The methodology used to determine the

recalibration and geographic (DRG/GAF)

budget neutrality adjustment factor is similar

to that used in establishing budget neutrality

adjustments under the prospective payment

system for operating costs. One difference is

that, under the operating prospective

payment system, the budget neutrality

adjustments for the effect of geographic

reclassifications are determined separately

from the effects of other changes in the

hospital wage index and the DRG relative

weights. Under the capital prospective

payment system, there is a single DRG/GAF

budget neutrality adjustment factor (the

national rate and the Puerto Rico rate are

determined separately) for changes in the

geographic adjustment factor (including

geographic reclassification) and the DRG

relative weights. In addition, there is no

adjustment for the effects that geographic

reclassification has on the other payment

parameters, such as the payments for serving

low-income patients or the large urban addon payments.

In addition to computing the DRG/GAF

budget neutrality adjustment factor, we used

the model to simulate total payments under

the prospective payment system.

Additional payments under the exceptions

process are accounted for through a

reduction in the Federal and hospital-specific

rates. Therefore, we used the model to

calculate the exceptions reduction factor.

This exceptions reduction factor ensures that

aggregate payments under the capital

prospective payment system, including

exceptions payments, are projected to equal

the aggregate payments that would have been

made under the capital prospective payment

system without an exceptions process. Since

changes in the level of the payment rates

change the level of payments under the

exceptions process, the exceptions reduction

factor must be determined through iteration.

In the August 30, 1991 final rule (56 FR

43517), we indicated that we would publish

each year the estimated payment factors

generated by the model to determine

payments for the next 5 years. The table

below provides the actual factors for FYs

1992 through 2000, the proposed factors for

FY 2001, and the estimated factors that

would be applicable through FY 2005. We

caution that these are estimates for FYs 2001

and later, and are subject to revisions

resulting from continued methodological

refinements, receipt of additional data, and

changes in payment policy. We note that in

making these projections, we have assumed

that the cumulative national DRG/GAF

budget neutrality adjustment factor will

remain at 1.00007 (1.00465 for Puerto Rico)

for FY 2001 and later because we do not have

sufficient information to estimate the change

that will occur in the factor for years after FY

2001.

The projections are as follows:

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APPENDIX C—REPORT TO

CONGRESS

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Appendix D: Recommendation of

Update Factors for Operating Cost

Rates of Payment for Inpatient Hospital

Services

I. Background

Several provisions of the Act address the

setting of update factors for inpatient services

furnished in FY 2001 by hospitals subject to

the prospective payment system and by

hospitals or units excluded from the

prospective payment system. Section

1886(b)(3)(B)(i)(XVI) of the Act sets the FY

2001 percentage increase in the operating

cost standardized amounts equal to the rate

of increase in the hospital market basket

minus 1.1 percent for prospective payment

hospitals in all areas. Section

1886(b)(3)(B)(iv) of the Act sets the FY 2001

percentage increase in the hospital-specific

rates applicable to sole community and

Medicare-dependent, small rural hospitals

equal to the rate set forth in section

1886(b)(3)(B)(i) of the Act. For Medicaredependent, small rural hospitals, the

percentage increase is the same update factor

as all other hospitals subject to the

prospective payment system, or the rate of

increase in the market basket minus 1.1

percentage points. Section 406 of Public Law

106–113 amended section 1886(b)(3)(B)(i) of

the Act to provide that, for sole community

hospitals, the rate of increase in the hospitalspecific rates for FY 2001 only is equal to the

market basket percentage increase. Prior to

FY 2001, sole community hospitals were

subject to the same percentage increase to

their hospital-specific rates as all other

hospitals subject to the prospective payment

system set forth in section 1886(b)(3)(B)(i) of

the Act.

Under section 1886(b)(3)(B)(ii) of the Act,

the FY 2001 percentage increase in the rateof-increase limits for hospitals and units

excluded from the prospective payment

system ranges from the percentage increase

in the excluded hospital market basket less

a percentage between 0 and 2.5 percentage

points, depending on the hospital’s or unit’s

costs in relation to its limit for the most

recent cost reporting period for which

information is available, or 0 percentage

point if costs do not exceed two-thirds of the

limit.

In accordance with section 1886(d)(3)(A) of

the Act, we are proposing to update the

standardized amounts, the hospital-specific

rates, and the rate-of-increase limits for

hospitals and units excluded from the

prospective payment system as provided in

section 1886(b)(3)(B) of the Act. Based on the

first quarter 2000 forecast of the FY 2001

market basket increase of 3.1 percent for

hospitals and units subject to the prospective

payment system, the proposed update to the

standardized amounts is 2.0 percent (that is,

the market basket rate of increase minus 1.1

percent percentage points) for hospitals in

both large urban and other areas. The

proposed update to the hospital-specific rate

applicable to Medicare-dependent, small

rural hospitals is also 2.0 percent. The

proposed update to the hospital-specific rate

applicable to sole community hospitals is 3.1

percent. The proposed update for hospitals

and units excluded from the prospective

payment system would range from the

percentage increase in the excluded hospital

market basket (currently estimated at 3.1

percent) minus a percentage between 0 and

2.5 percentage points, or 0 percentage point,

resulting in an increase in the rate-of-increase

limit between 0.6 and 3.1 percent, or 0

percent.

Section 1886(e)(4) of the Act requires that

the Secretary, taking into consideration the

recommendations of the Medicare Payment

Advisory Commission (MedPAC),

recommend update factors for each fiscal

year that take into account the amounts

necessary for the efficient and effective

delivery of medically appropriate and

necessary care of high quality. Under section

1886(e)(5) of the Act, we are required to

publish the update factors recommended

under section 1886(e)(4) of the Act.

Accordingly, this appendix provides the

recommendations of appropriate update

factors and the analysis underlying our

recommendations.

In its March 1, 2000 report, MedPAC did

not make a specific update recommendation

for FY 2001 payments for Medicare acute

inpatient hospitals. However, at its April 13,

2000 public meeting, MedPAC announced

that it was recommending a combined update

between 3.5 percent and 4.0 percent for

operating and capital-related payments for

FY 2001. This recommendation is higher

than the current law amount as prescribed by

Public Law 105–33 and proposed in this rule.

Because of the timing of the announcement

and our need for ample time to perform a

proper analysis of the recommendation, we

will address the comparison of HCFA’s

update recommendation and MedPAC’s

update recommendation in the FY 2001 final

rule in August 2000 when we will have had

the opportunity to review the data analyses

that substantiate MedPAC’s recommendation.

We describe the basis for our FY 2001

update recommendation (Table 1) in section

II. of this Appendix.

II. Secretary’s Recommendations

Under section 1886(e)(4) of the Act, we are

recommending that an appropriate update

factor for the standardized amounts is 2.0

percentage points for hospitals located in

large urban and other areas. We are also

recommending an update of 2.0 percentage

points to the hospital-specific rate for

Medicare-dependent, small rural hospitals. In

addition, we are recommending an update of

3.1 percentage points to the hospital-specific

rate for sole community hospitals. We believe

these recommended update factors would

ensure that Medicare acts as a prudent

purchaser and provide incentives to hospitals

for increased efficiency, thereby contributing

to the solvency of the Medicare Part A Trust

Fund.

We recommend that hospitals excluded

from the prospective payment system receive

an update of between 0.6 and 3.1 percentage

points, or 0 percentage points. The update for

excluded hospitals and units is equal to the

increase in the excluded hospital operating

market basket less a percentage between 0

and 2.5 percentage points, or 0 percentage

points, depending on the hospital’s or unit’s

costs in relation to its rate-of-increase limit

for the most recent cost reporting period for

which information is available. The market

basket rate of increase for excluded hospitals

and units is currently forecast at 3.1 percent.

Our update recommendation of 2.0 percent

(market basket increase minus 1.1 percent)

for prospective payment system operating

costs standardized amounts is supported by

the following analyses that measure changes

in hospital productivity, scientific and

technological advances, practice pattern

changes, and changes in case-mix:

A. Productivity

Service level productivity is defined as the

ratio of total service output to full-time

equivalent employees (FTEs). While we

recognize that productivity is a function of

many variables (for example, labor, nonlabor

material, and capital inputs), we use a labor

productivity measure since this update

framework applies to operating payment. To

recognize that we are apportioning the shortrun output changes to the labor input and not

considering the nonlabor inputs, we weight

our productivity measure for operating costs

by the share of direct labor services in the

market basket to determine the expected

effect on cost per case.

Our recommendation for the service

productivity component is based on

historical trends in productivity and total

output for both the hospital industry and the

general economy, and projected levels of

future hospital service output. MedPAC’s

predecessor, the Prospective Payment

Assessment Commission (ProPAC), estimated

cumulative service productivity growth to be

4.9 percent from 1985 through 1989, or 1.2

percent annually. At the same time, ProPAC

estimated total output growth at 3.4 percent

annually, implying a ratio of service

productivity growth to output growth of 0.35.

Since it is not possible at this time to

develop a productivity measure specific to

Medicare patients, we examined productivity

(output per hour) and output (gross domestic

product) for the economy. Depending on the

exact time period, annual changes in

productivity range from 0.3 to 0.35 percent

of the change in output (that is, a 1.0 percent

increase in output would be correlated with

a 0.3 to 0.35 percent change in output per

hour).

Under our framework, the recommended

update is based in part on expected

productivity—that is, projected service

output during the year, multiplied by the

historical ratio of service productivity to total

service output, multiplied by the share of

labor in total operating inputs, as calculated

in the hospital market basket. This method

estimates an expected labor productivity

improvement in the same proportion to

expected total service growth that has

occurred in the past and assumes that, at a

minimum, growth in FTEs changes

proportionally to the growth in total service

output. Thus, the recommendation allows for

unit productivity to be smaller than the

historical averages in years that output

growth is relatively low and larger in years

that output growth is higher than the

historical averages. Based on the above

estimates from both the hospital industry and

the economy, we have chosen to employ the

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules 26435

range of ratios of productivity change to

output change of 0.30 to 0.35.

The expected change in total hospital

service output is the product of projected

growth in total admissions (adjusted for

outpatient usage), projected real case-mix

growth, expected quality-enhancing intensity

growth, and net of expected decline in

intensity due to reduction of cost-ineffective

practice. Case-mix growth and intensity

numbers for Medicare are used as proxies for

those of the total hospital, since case-mix

increases (used in the intensity measure as

well) are unavailable for non-Medicare

patients. Thus, expected output growth is

simply the sum of the expected change in

intensity (0.0 percent), projected admissions

change (1.6 percent for FY 2001), and

projected real case-mix growth (0.5 percent),

or 2.1 percent. The share of direct labor

services in the market basket (consisting of

wages, salaries, and employee benefits) is

61.4 percent.

Multiplying the expected change in total

hospital service output (2.1 percent) by the

ratio of historical service productivity change

to total service growth of 0.30 to 0.35 and by

the direct labor share percentage 61.4,

provides our productivity standard of ¥0.5

to ¥0.4 percent.

B. Intensity

We base our intensity standard on the

combined effect of three separate factors:

changes in the use of quality enhancing

services, changes in the use of services due

to shifts in within-DRG severity, and changes

in the use of services due to reductions of

cost-ineffective practices. For FY 2001, we

recommend an adjustment of 0.0 percent.

The basis of this recommendation is

discussed below.

We have no empirical evidence that

accurately gauges the level of qualityenhancing technology changes. A study

published in the Winter 1992 issue of the

Health Care Financing Review,

‘‘Contributions of case mix and intensity

change to hospital cost increases’’ (pp. 151–

163), suggests that one-third of the intensity

change is attributable to high-cost

technology. The balance was unexplained

but the authors speculated that it is

attributable to fixed costs in service delivery.

Typically, a specific new technology

increases cost in some uses and decreases

cost in other uses. Concurrently, health status

is improved in some situations while in other

situations it may be unaffected or even

worsened using the same technology. It is

difficult to separate out the relative

significance of each of the cost-increasing

effects for individual technologies and new

technologies.

Other things being equal, per-discharge

fixed costs tend to fluctuate in inverse

proportion to changes in volume. Fixed costs

exist whether patients are treated or not. If

volume is declining, per-discharge fixed

costs will rise, but the reverse is true if

volume is increasing.

Following methods developed by HCFA’s

Office of the Actuary for deriving hospital

output estimates from total hospital charges,

we have developed Medicare-specific

intensity measures based on a 5-year average

using FYs 1995 through 1999 MedPAR

billing data. Case-mix constant intensity is

calculated as the change in total Medicare

charges per discharge adjusted for changes in

the average charge per unit of service as

measured by the CPI for hospital and related

services and changes in real case-mix. Thus,

in order to measure changes in intensity, one

must measure changes in real case-mix.

For FYs 1995 through 1999, observed casemix index change ranged from a low of ¥0.3

percent to a high of 1.7 percent, with a 5-year

average change of 0.6 percent. Based on

evidence from past studies of case-mix

change, we estimate that real case-mix

change fluctuates between 1.0 and 1.4

percent and the observed values generally

fall in this range, although some years the

figures fall outside this range. The average

percentage change in charge per discharge

was 3.6 percent and the average annual

change in the CPI for hospital and related

services was 4.1 percent. Dividing the change

in charge per discharge by the quantity of the

real case-mix index change and the CPI for

hospital and related services yields an

average annual change in intensity of ¥1.9

percent. Assuming the technology/fixed cost

ratio still holds (.33), technology would

account for a ¥0.6 percent annual decline

while fixed costs would account for a ¥1.3

percent annual decline. The decline in fixed

costs per discharge makes intuitive sense as

volume, measured by total discharges, has

increased during the period. In the past, we

have not recommended a negative intensity

adjustment. Although we are not

recommending a negative adjustment for FY

2001, we are reflecting the possible range that

such a negative adjustment could span, based

on our analysis. Accordingly, for FY 2001,

we are recommending an intensity

adjustment between 0 percent and ¥0.6

percent.

C. Change in Case-Mix

Our analysis takes into account projected

changes in case-mix, adjusted for changes

attributable to improved coding practices.

For our FY 2001 update recommendation, we

are projecting a 0.5 percent increase in the

case-mix index. We define real case-mix as

actual changes in the mix (and resources

requirements) of Medicare patients as

opposed to changes in coding behavior that

results in assignment of cases to higher

weighted DRGS, but do not reflect greater

resource requirements. Unlike in past years,

where we differentiated between ‘‘real’’ casemix increase and increases attributable to

changes in coding behavior, we do not feel

changes in coding behavior will impact the

overall case-mix in FY 2001. As such for FY

2001, we estimate that real case-mix is equal

to projected change in case-mix. Thus, we are

recommending a 0.0 adjustment for case-mix.

D. Effect of FY 1999 DRG Reclassification

and Recalibration

We estimate that DRG reclassification and

recalibration for FY 1999 resulted in a 0.0

percent change in the case-mix index when

compared with the case-mix index that

would have resulted if we had not made the

reclassification and recalibration changes to

the GROUPER.

E. Forecast Error Correction

We make a forecast error correction if the

actual market basket changes differ from the

forecasted market basket by 0.25 percentage

points or more. There is a 2-year lag between

the forecast and the measurement of forecast

error. Our update framework for FY 2001

does not reflect a forecast error correction

because, for FY 1999, there was less than a

0.25 percentage point difference between the

actual market basket and the forecasted

market basket.

As we explained in section I. of this

Appendix, a comparison of our update

recommendation to MedPAC’s

recommendation is unavailable for this

proposed rule. MedPAC did not announce its

recommendation for a combined update of

between 3.5 percent and 4.0 percent for

operating and capital-related payments for

FY 2001 until its April 13, 2000 public

meeting. This recommendation is higher than

the current law amount as prescribed by

Public Law 105–33 and proposed in this rule.

Because of the timing of the announcement

and our need for ample time to perform a

proper analysis of the recommendation, we

will address the comparison of HCFA’s

update recommendation and MedPAC’s

update recommendation in the FY 2001 final

rule in August 2000 when we will have had

the opportunity to review the data analyses

that substantiate MedPAC’s recommendation.

The following is a summary of the update

range supported by our analyses:

26436 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Proposed Rules

TABLE 1.—HHS’ FY 2001 UPDATE RECOMMENDATION

Market basket MB

Policy Adjustments Factors:

Productivity ....................................................................................................................................................................... ¥0.5 to ¥0.4

Intensity ............................................................................................................................................................................ 0.0 to ¥0.6

Subtotal ..................................................................................................................................................................... ¥0.5 to ¥1.0

Case-Mix Adjustment Factors:

Projected Case-Mix Change ............................................................................................................................................ ¥0.5

Real Across DRG Change ............................................................................................................................................... 0.5

Subtotal ..................................................................................................................................................................... 0.0

Effect of 1999 Reclassification and Recalibration ................................................................................................................... 0.0

Forecast Error Correction ........................................................................................................................................................ 0.0

Total Recommended Update ................................................................................................................................................... MB ¥0.5 to MB ¥1.0

Consistent with current law, we are

recommending an update of market basket

increase minus 1.1 percentage points (or 2.0

percent). We note that this approximates the

lower bound of the range suggested by our

framework when accounting for a negative

intensity change.

For FY 2001, we believe that a 2.0 update

factor appropriately reflects current trends in

health care delivery, including the recent

decreases in the use of hospital inpatient

services and the corresponding increase in

the use of hospital outpatient and postacute

care services. We also recommend that the

hospital-specific rates applicable to

Medicare-dependent, small rural hospitals be

increased by the same update, 2.0 percentage

points. Furthermore, we recommend that the

hospital-specific rates applicable to sole

community hospitals be increased by an

update of 3.1 percentage points.

[FR Doc. 00–10874 Filed 5–4–00; 8:45 am]

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