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 Department of Health and Human Services Centers for Medicare & Medicaid Services 42 CFR Part 412
[CMS-1551-P]
RIN 0938-AO63
 AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
 ACTION: Proposed rule.
 SUMMARY: This proposed rule would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2008 (for discharges occurring on or after October 1, 2007 and on or before September 30, 2008) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). Section 1886(j)(5) of the Act requires the Secretary to publish in the 
                            **Federal Register**
                             on or before the August 1 that precedes the start of each fiscal year, the classification and weighting factors for the IRF prospective payment system's (PPS) case-mix groups and a description of the methodology and data used in computing the prospective payment rates for that fiscal year. We are proposing to revise existing policies regarding the PPS within the authority granted under section 1886(j) of the Act.
 DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on July 2, 2007.
 ADDRESSES: In commenting, please refer to file code CMS-1551-P. Because of staff and resource limitations, we cannot accept comments by facsimile (Fax) transmission. You may submit comments in one of four ways (no duplicates, please): 1. Electronically. You may submit electronic comments on specific issues in this regulation to 
                            *http://www.cms.hhs.gov/​eRulemaking*. Click on the link “Submit electronic comments on CMS regulations with an open comment period.” (Attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word.) 2. 
                            *By regular mail*. You may mail written comments (one original and two copies) to the following address only:  Centers for Medicare & Medicaid Services, Department of Health and Human Services, 
                            *Attention:*
                             CMS-1551-P,  P.O. Box 8012,  Baltimore, MD 21244-8012.  Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. 
                            *By express or overnight mail.*
                             You may send written comments (one original and two copies) to the following address only:  Centers for Medicare & Medicaid Services, Department of Health and Human Services, 
                            *Attention:*
                             CMS-1551-P, Mail Stop C4-26-05,  7500 Security Boulevard,  Baltimore, MD 21244-8012. 4. 
                            *By hand or courier*. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard,  Baltimore, MD 21244-1850. (Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. For information on viewing public comments, see the beginning of the 
                            **SUPPLEMENTARY INFORMATION**
                             section.
 FOR FURTHER INFORMATION CONTACT: Pete Diaz, (410) 786-1235, for information regarding the 75 percent rule. Susanne Seagrave, (410) 786-0044, for information regarding the payment policies.  Zinnia Ng, (410) 786-4587, for information regarding the wage index and prospective payment rate calculation.


SUPPLEMENTARY INFORMATION: *Submitting Comments:*
                         We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS-1551-P and the specific “issue identifier” that precedes the section on which you choose to comment. *Inspection of Public Comments:*
                         All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: 
                        *http://www.cms.hhs.gov/​eRulemaking*. Click on the link “Electronic Comments on CMS Regulations” on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. Table of Contents I. Background A. Historical Overview of the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) for Fiscal Years (FYs) 2002 through 2007 B. Requirements for Updating the IRF PPS Rates C. Operational Overview of the Current IRF PPS D. Brief Summary of Proposed Revisions to the IRF PPS for FY 2008 II. 75 Percent Rule Policy III. Classification System for the Inpatient Rehabilitation Facility Prospective Payment System IV. Proposed FY 2008 IRF PPS Federal Prospective Payment Rates A. Proposed FY 2008 IRF Market Basket Increase Factor and Labor-Related Share B. Proposed Area Wage Adjustment C. Description of the Proposed IRF Standard Payment Conversion Factor and Proposed Payment Rates for FY 2008 D. Example of the Methodology for Adjusting the Proposed Federal Prospective Payment Rates V. Update to Payments for High-Cost Outliers Under the IRF PPS A. Proposed Update to the Outlier Threshold Amount for FY 2008 B. Update to the IRF Cost-to-Charge Ratio Ceilings VI. Clarification to the Regulations Text for Special Payment Provisions for Patients That Are Transferred VII. Provisions of a Proposed Regulation VIII. Collection of Information Requirement IX. Response to Public Comments X. Regulatory Impact Analysis A. Overall Impact B. Anticipated Effects of the Proposed Rule C. Anticipated Effects of the 75 Percent Rule Policy D. Alternatives Considered E. Accounting Statement F. Conclusion Regulation Text Addendum 
                            ( print page 26231) Acronyms Because of the many terms to which we refer by acronym in this proposed rule, we are listing the acronyms used and their corresponding terms in alphabetical order below. ASCA—Administrative Simplification Compliance Act of 2002, Pub. L. 107-105 BBA—Balanced Budget Act of 1997, Pub. L. 105-33 BBRA—Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L. 106-113 BIPA—Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Benefits Improvement and Protection Act of 2000, Pub. L. 106-554 CBSA—Core-Based Statistical Area CCR—Cost-to-Charge Ratio CFR—Code of Federal Regulations CMG—Case-Mix Group DRA—Deficit Reduction Act of 2005, Pub. L. 109-171 DSH—Disproportionate Share Hospital ECI—Employment Cost Indexes FI—Fiscal Intermediary FR—Federal Register FY—Federal Fiscal Year GDP—Gross Domestic Product HHH—Hubert H. Humphrey Building HIPAA—Health Insurance Portability and Accountability Act, Pub. L. 104-191 IFMC—Iowa Foundation for Medical Care IPPS—Inpatient Prospective Payment System IRF—Inpatient Rehabilitation Facility IRF-PAI—Inpatient Rehabilitation Facility-Patient Assessment Instrument IRF PPS—Inpatient Rehabilitation Facility Prospective Payment System IRVEN—Inpatient Rehabilitation Validation and Entry LIP—Low-Income Percentage MEDPAR—Medicare Provider Analysis and Review MMA—Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) MSA—Metropolitan Statistical Area NAICS—North American Industrial Classification System OMB—Office of Management and Budget PAI—Patient Assessment Instrument PPS—Prospective Payment System RAND—RAND Corporation RFA—Regulatory Flexibility Act, Pub. L. 96-354 RIA—Regulation Impact Analysis RIC—Rehabilitation Impairment Category RPL—Rehabilitation, Psychiatric, and Long-Term Care Hospital Market Basket SCHIP—State Children's Health Insurance Program SIC—Standard Industrial Code TEFRA—Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248 I. Background [If you choose to comment on issues in this section, please include the caption “Background” at the beginning of your comments.] A. Historical Overview of the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) for Fiscal Years (FYs) 2002 through 2007 Section 4421 of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), as amended by section 125 of the Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and by section 305 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554), provides for the implementation of a per discharge prospective payment system (PPS), through section 1886(j) of the Social Security Act (the Act), for inpatient rehabilitation hospitals and inpatient rehabilitation units of a hospital (hereinafter referred to as IRFs). Payments under the IRF PPS encompass inpatient operating and capital costs of furnishing covered rehabilitation services (that is, routine, ancillary, and capital costs) but not costs of approved educational activities, bad debts, and other services or items outside the scope of the IRF PPS. Although a complete discussion of the IRF PPS provisions appears in the August 7, 2001 final rule (66 FR 41316) as revised in the FY 2006 IRF PPS final rule (70 FR 47880), we are providing below a general description of the IRF PPS for fiscal years (FYs) 2002 through 2005. Under the IRF PPS from FY 2002 through FY 2005, as described in the August 7, 2001 final rule, the Federal prospective payment rates were computed across 100 distinct case-mix groups (CMGs). We constructed 95 CMGs using rehabilitation impairment categories (RICs), functional status (both motor and cognitive), and age (in some cases, cognitive status and age may not be a factor in defining a CMG). In addition, we constructed five special CMGs to account for very short stays and for patients who expire in the IRF. For each of the CMGs, we developed relative weighting factors to account for a patient's clinical characteristics and expected resource needs. Thus, the weighting factors accounted for the relative difference in resource use across all CMGs. Within each CMG, we created tiers based on the estimated effects that certain comorbidities would have on resource use. We established the Federal PPS rates using a standardized payment conversion factor (formerly referred to as the budget neutral conversion factor). For a detailed discussion of the budget neutral conversion factor, please refer to our August 1, 2003 final rule (68 FR 45674, 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 47880), we discussed in detail the methodology for determining the standard payment conversion factor. We applied the relative weighting factors to the standard payment conversion factor to compute the unadjusted Federal prospective payment rates. Under the IRF PPS from FYs 2002 through 2005, we then applied adjustments for geographic variations in wages (wage index), the percentage of low-income patients, and location in a rural area (if applicable) to the IRF's unadjusted Federal prospective payment rates. In addition, we made adjustments to account for short-stay transfer cases, interrupted stays, and high cost outliers. For cost reporting periods that began on or after January 1, 2002 and before October 1, 2002, we determined the final prospective payment amounts using the transition methodology prescribed in section 1886(j)(1) of the Act. Under this provision, IRFs transitioning into the PPS were paid a blend of the Federal IRF PPS rate and the payment that the IRF would have received had the IRF PPS not been implemented. This provision also allowed IRFs to elect to bypass this blended payment and immediately be paid 100 percent of the Federal IRF PPS rate. The transition methodology expired as of cost reporting periods beginning on or after October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100 percent of the Federal IRF PPS rate. We established a CMS Web site as a primary information resource for the IRF PPS. The Web site URL is 
                        *http://www.cms.hhs.gov/​InpatientRehabFacPPS/​*
                         and may be accessed to download or view publications, software, data specifications, educational materials, and other information pertinent to the IRF PPS. Section 1886(j) of the Act confers broad statutory authority to propose refinements to the IRF PPS. We finalized the refinements described in this section in the FY 2006 IRF PPS final rule (70 FR 47880). The provisions of the FY 2006 IRF PPS final rule became effective for discharges beginning on or after October 1, 2005. We published correcting amendments to the FY 2006 IRF PPS final rule in the 
                        **Federal Register**
                         on September 30, 2005 (70 FR 57166). Any reference to the FY 2006 IRF PPS final rule in this proposed rule also includes the provisions effective in the correcting amendments. 
                        ( print page 26232) In the FY 2006 final rule (70 FR 47880 and 70 FR 57166), we finalized a number of refinements to the IRF PPS case-mix classification system (the CMGs and the corresponding relative weights) and the case-level and facility-level adjustments. These refinements were based on analyses by the RAND Corporation (RAND), a non-partisan economic and social policy research group, using calendar year 2002 and FY 2003 data. These were the first significant refinements to the IRF PPS since its implementation. In conducting the analysis, RAND used claims and clinical data for services furnished after the IRF PPS implementation. These newer data sets were more complete, and reflected improved coding of comorbidities and patient severity by IRFs. The researchers were able to use new data sources for imputing missing values and more advanced statistical approaches to complete their analyses. The RAND reports supporting the refinements made to the IRF PPS are available on the CMS Web site at: 
                        *http://www.cms.hhs.gov/​InpatientRehabFacPPS/​09_​Research.asp*. The final key policy changes, effective for discharges occurring on or after October 1, 2005, are discussed in detail in the FY 2006 IRF PPS final rule (70 FR 47880 and 70 FR 57166). The following is a brief summary of the key policy changes: Adopted the Office of Management and Budget's (OMB's) Core-Based Statistical Area (CBSA) market area definitions in a budget neutral manner.
                    Implemented a budget-neutral three-year hold harmless policy for IRFs that had been classified as rural in FY 2005, but became urban in FY 2006.
                    Implemented a payment adjustment to account for changes in coding that did not reflect real changes in case mix. We reduced the standard payment amount by 1.9 percent to account for such changes in coding following implementation of the IRF PPS.
                    Modified the CMGs, tier comorbidities, and relative weights in a budget-neutral manner. The five special CMGs remained the same as they had been before FY 2006 and continued to account for very short stays and for patients who expire in the IRF.
                    Implemented a teaching status adjustment in a budget neutral manner for IRFs, similar to the one adopted for inpatient psychiatric facilities.
                    Revised and rebased the market basket and labor-related share to reflect the operating and capital cost structures for rehabilitation, psychiatric, and long-term care (RPL) hospitals to update IRF payment rates.
                    Updated the rural adjustment from 19.14 percent to 21.3 percent in a budget neutral manner.
                    Updated the low-income percentage (LIP) adjustment from an exponent of 0.484 to an exponent of 0.6229 in a budget neutral manner.
                    Updated the outlier threshold amount from $11,211 to $5,129. As noted above, a detailed discussion of the final key policy changes for FY 2006 appears in the FY 2006 IRF PPS final rule (70 FR 47880 and 70 FR 57166). In the FY 2007 final rule (71 FR 48354) we made the following revisions and updates: Updated the relative weight and average length of stay tables based on re-analysis of the data by CMS and our contractor, the RAND Corporation.
                    Reduced the standard payment amount by 2.6 percent to account more fully for coding changes that do not reflect real changes in case mix.
                    Updated the IRF PPS payment rates by the FY 2007 estimates of the market basket and the labor-related share.
                    Updated the IRF PPS payment rates by the FY 2007 wage indexes.
                    Applied the second year of the hold harmless policy in a budget neutral manner.
                    Updated the outlier threshold from $5,129 to $5,534.
                    Updated the urban and rural national cost-to-charge ratio ceilings for the purposes of determining outlier payments under the IRF PPS and clarified the methodology described in the regulations text.
                    Revised the regulation text in § 412.23(b)(2)(i) and § 412.23(b)(2)(ii) to reflect the statutory changes in section 5005 of the Deficit Reduction Act of 2005 (DRA,Pub. L. 109-171). The regulation text change prolongs the overall duration of the phased transition to the full 75 percent threshold established in § 412.23(b)(2)(i) and § 412.23(b)(2)(ii), by extending the transition's 60 percent phase for an additional 12 months. In addition to the above DRA requirements pertaining to the applicable compliance percentage requirements under § 412.23(b)(2), we also permitted a comorbidity that meets the criteria as specified in (b)(2)(i) to continue to be used before the 75 percent compliance threshold must be met. B. Requirements for Updating the IRF PPS Rates On August 7, 2001, we published a final rule titled “Medicare Program; Prospective Payment System for Inpatient Rehabilitation Facilities” in the 
                        **Federal Register**
                         (66 FR 41316) that established a PPS for IRFs as authorized under section 1886(j) of the Act and codified at subpart P of part 412 of the Medicare regulations. In the August 7, 2001 final rule, we set forth the per discharge Federal prospective payment rates for FY 2002, which provided payment for inpatient operating and capital costs of furnishing covered rehabilitation services (that is, routine, ancillary, and capital costs) but not costs of approved educational activities, bad debts, and other services or items that are outside the scope of the IRF PPS. The provisions of the August 7, 2001 final rule were effective for cost reporting periods beginning on or after January 1, 2002. On July 1, 2002, we published a correcting amendment to the August 7, 2001 final rule in the 
                        **Federal Register**
                         (67 FR 44073). Any references to the August 7, 2001 final rule in this proposed rule include the provisions effective in the correcting amendment. Section 1886(j)(5) of the Act and § 412.628 of the regulations require the Secretary to publish in the 
                        **Federal Register**
                        , on or before the August 1 that precedes the start of each new FY, the classifications and weighting factors for the IRF CMGs and a description of the methodology and data used in computing the prospective payment rates for the upcoming FY. On August 1, 2002, we published a notice in the 
                        **Federal Register**
                         (67 FR at 49928) to update the IRF Federal prospective payment rates from FY 2002 to FY 2003 using the methodology as described in § 412.624. As stated in the August 1, 2002 notice, we used the same classifications and weighting factors for the IRF CMGs that were set forth in the August 7, 2001 final rule to update the IRF Federal prospective payment rates from FY 2002 to FY 2003. We continued to update the prospective payment rates in accordance with the methodology set forth in the August 7, 2001 final rule for each succeeding FY up to and including FY 2005. For FY 2006, however, we published a final rule that revised several IRF PPS policies (70 FR 47880). The provisions of the FY 2006 IRF PPS final rule became effective for discharges occurring on or after October 1, 2005. We published correcting amendments to the FY 2006 IRF PPS final rule in the 
                        **Federal Register**
                         (70 FR 57166). Any reference to the FY 2006 IRF PPS final rule in this proposed rule includes the provisions effective in the correcting amendments. In the final rule for FY 2007, we updated the IRF Federal prospective payment rates. In addition, we updated the cost-to-charge ratio ceilings and the outlier threshold. We implemented a 2.6 
                        ( print page 26233)
                        percent reduction to the FY 2007 standard payment amount to account more fully for changes in coding practices that do not reflect real changes in case mix. We revised the tier comorbidities and the relative weights to ensure that IRF PPS payments reflect, as closely as possible, the costs of caring for patients in IRFs. The final FY 2007 Federal prospective payment rates were effective for discharges occurring on or after October 1, 2006 and on or before September 30, 2007. C. Operational Overview of the Current IRF PPS As described in the August 7, 2001 final rule, upon the admission and discharge of a Medicare Part A fee-for-service patient, the IRF is required to complete the appropriate sections of a patient assessment instrument, the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI). All required data must be electronically encoded into the IRF-PAI software product. Generally, the software product includes patient grouping programming called the GROUPER software. The GROUPER software uses specific Patient Assessment Instrument (PAI) data elements to classify (or group) patients into distinct CMGs and account for the existence of any relevant comorbidities. The GROUPER software produces a five-digit CMG number. The first digit is an alpha-character that indicates the comorbidity tier. The last four digits represent the distinct CMG number. (Free downloads of the Inpatient Rehabilitation Validation and Entry (IRVEN) software product, including the GROUPER software, are available on the CMS Web site at 
                        *http://www.cms.hhs.gov/​InpatientRehabFacPPS/​06_​Software.asp*). Once a patient is discharged, the IRF completes the Medicare claim (UB-92 or its equivalent) using the five-digit CMG number and sends it to the appropriate Medicare fiscal intermediary (FI). Claims submitted to Medicare must comply with both the Administrative Simplification Compliance Act (ASCA, Pub. L. 107-105), and the Health Insurance Portability and Accountability Act of 1996 (HIPAA, Pub. L. 104-191). Section 3 of the ASCA amends section 1862(a) of the Act by adding paragraph (22) which requires the Medicare program, subject to section 1862(h) of the Act, to deny payment under Part A or Part B for any expenses for items or services “for which a claim is submitted other than in an electronic form specified by the Secretary.” Section 1862(h) of the Act, in turn, provides that the Secretary shall waive such denial in two types of cases and may also waive such denial “in such unusual cases as the Secretary finds appropriate.” See also the final rule on Electronic Submission of Medicare Claims (70 FR 71008, November 25, 2005). Section 3 of the ASCA operates in the context of the administrative simplification provisions of HIPAA, which include, among others, the requirements for transaction standards and code sets codified as 45 CFR parts 160 and 162, subparts A and I through R (generally known as the Transactions Rule). The Transactions Rule requires covered entities, including covered providers, to conduct covered electronic transactions according to the applicable transaction standards. (See the program claim memoranda issued and published by CMS at: 
                        *http://www.cms.hhs.gov/​ElectronicBillingEDITrans/​*
                         and listed in the addenda to the Medicare Intermediary Manual, Part 3, section 3600. Instructions for the limited number of claims submitted to Medicare on paper are published by CMS at: 
                        *http://www.cms.hhs.gov/​manuals/​downloads/​clm104c25.pdf*. The Medicare FI processes the claim through its software system. This software system includes pricing programming called the PRICER software. The PRICER software uses the CMG number, along with other specific claim data elements and provider-specific data, to adjust the IRF's prospective payment for interrupted stays, transfers, short stays, and deaths, and then applies the applicable adjustments to account for the IRF's wage index, percentage of low-income patients, rural location, and outlier payments. For discharges occurring on or after October 1, 2005, the IRF PPS payment also reflects the new teaching status adjustment that became effective as of FY 2006, as discussed in the FY 2006 IRF PPS final rule (70 FR 47880). D. Brief Summary of Proposed Revisions to the IRF PPS for FY 2008 In this proposed rule, we are proposing to make the following revisions, updates, and clarifications: Update the FY 2008 IRF PPS payment rates by the proposed market basket, as discussed in section IV.A.
                    Update the FY 2008 IRF PPS payment rates by the proposed wage index and the labor related share in a budget neutral manner, as discussed in section IV.A and B.
                    Update the pre-reclassified and pre-floor wage indexes based on the applicable Office of Management and Budget (OMB) bulletins that add or delete Core-Based Statistical Areas (CBSAs) numbers and title changes, as discussed in section IV.B.
                    Implement the final year of the 3-year hold harmless policy adopted in the FY 2006 IRF PPS final rule (70 FR 47880, 47923 through 47926) in a budget neutral manner, as discussed in section IV.B.
                    Update the outlier threshold amount for FY 2008 to $7,522, as discussed in section V.A.
                    Update the cost-to-charge ratio ceiling and the national average urban and rural cost-to-charge ratios for purposes of determining outlier payments under the IRF PPS, as discussed in section V.B.
                    Clarify the regulations text for the special payment provisions for patients that are transferred, as discussed in section VI. II. 75 Percent Rule Policy [If you choose to comment on issues in this section, please include the caption “75 Percent Rule Policy” at the beginning of your comments.] In order to be excluded from the acute care inpatient hospital PPS specified in § 412.1(a)(1) and instead be paid under the IRF PPS, a hospital or rehabilitation unit of an acute care hospital must meet the requirements for classification as an IRF stipulated in subpart B of part 412. As discussed in previous 
                        **Federal Register**
                         publications (68 FR 26786 (May 16, 2003), 68 FR 53266 (September 9, 2003), 69 FR 25752 (May 7, 2004), 70 FR 36640 (June 24, 2005), and 71 FR 48354 (August 18, 2006)), § 412.23(b)(2) specifies one criterion which Medicare uses for classifying a hospital or unit of a hospital as an IRF. The criterion is that a minimum percentage of a facility's total inpatient population must require intensive rehabilitative services for the treatment of at least one of 13 medical conditions listed in § 412.23(b)(2)(iii) in order for the facility to be classified as an IRF. In addition, for cost reporting periods beginning on or after July 1, 2004, and before July 1, 2008, a patient with a comorbidity as defined at § 412.602 may be included in the inpatient population that counts toward the required applicable percentage if certain requirements are met. The minimum percentage is known as the “compliance threshold.” Prior to the May 7, 2004 final rule (69 FR 25752), § 412.23(b)(2) stipulated that the compliance threshold was 75 percent. Therefore, the compliance threshold was commonly referred to as the “75 percent rule.” In addition, prior to the May 7, 2004 final rule the regulation only specified 10 medical conditions. However, in the May 7, 2004 final rule we revised § 412.23(b)(2), and 
                        ( print page 26234)
                        that revision increased the number of medical conditions to 13, as well as temporarily lowered the compliance threshold while at the same time specified a transition period at the end of which IRFs would once again have to meet a compliance threshold of 75 percent. Also, the revised regulation specified that during the compliance threshold transition period a patient's comorbidity may be used to determine if a provider met the compliance threshold provided certain applicable requirements were met. In § 412.602 a comorbidity is defined as a specific patient condition that is secondary to the patient's principal diagnosis. A patient's principal diagnosis is the primary reason for the patient being admitted to an IRF, and this diagnosis is used to determine if the patient had a medical condition that can be counted towards meeting the compliance threshold. As specified in the May 7, 2004 final rule, in order for an inpatient with a certain comorbidity to be included in the inpatient population that counts toward the applicable percentage the following criteria must be met: The patient is admitted for inpatient rehabilitation for a condition that is not one of the conditions listed in § 412.23(b)(2)(iii).
                    The patient also has a comorbidity that falls in one of the conditions listed in § 412.23(b)(2)(iii).
                    The comorbidity has caused significant decline in functional ability in the individual such that, even in the absence of the admitting condition, the individual would require the intensive rehabilitation treatment that is unique to inpatient rehabilitation facilities paid under the IRF PPS and that cannot be appropriately performed in another care setting covered under this Title. In accordance with the May 7, 2004 final rule, IRFs would have to meet a compliance threshold of 75 percent for cost reporting periods starting on or after July 1, 2007. However, Section 5005 of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171 modified the applicable time periods when the various compliance thresholds, as originally specified in the May 7, 2004 final rule, must be met.) The net effect of the DRA was extension of the compliance threshold transition period. Due to the DRA, the transition period was extended to include cost reporting periods starting on or after July 1, 2004, and before July 1, 2008. Therefore, in order to conform the regulations to the DRA, we revised § 412.23(b)(2) and stipulated that an IRF with a cost reporting period starting on or after July 1, 2008, instead of July 1, 2007, must meet the 75 percent compliance threshold. In addition, we also permitted a comorbidity that meets the criteria as specified in (b)(2)(i) to continue to be used to determine the compliance threshold for cost reporting periods beginning before July 1, 2008 instead of July 1, 2007. (For a complete description of all the changes made, see the FY 2007 IRF PPS final rule (71 FR 48354)). For cost reporting periods beginning on or after July 1, 2008, comorbidities will not be eligible for inclusion in the calculations used to determine if the provider meets the 75 percent compliance threshold specified in § 412.23(b)(2)(ii). As the 75 percent rule is only partially phased in at this time and there are limitations to the policy conclusions that can be drawn from currently available claim and patient assessment data, this rule maintains existing policy. However, in the May 7, 2004 final rule (69 FR 25762), we encouraged research evaluating the continued use of comorbidities in determining compliance with the 75 percent rule. Therefore, we are soliciting comments supporting current policy or other options, including use of some or all of the existing comorbidities in calculating the compliance percentage for an additional fixed period of one or more years or to integrate the inclusion of some or all of the existing comorbidities on a permanent basis. In addition, we are soliciting comments that include clinical data based on scientifically sound research that provide evidence on these and other options. III. Classification System for the Inpatient Rehabilitation Facility Prospective Payment System [If you choose to comment on issues in this section, please include the caption “Classification System for the Inpatient Rehabilitation Facility Prospective Payment System” at the beginning of your comments.] For the FY 2008 IRF PPS, we will use the same case-mix classification system that we used for FY 2007, as set forth in the FY 2007 IRF PPS final rule (71 FR 48354). Table 1 below, “Relative Weights and Average Lengths of Stay for Case-Mix Groups”, presents the CMGs, the comorbidity tiers, the corresponding relative weights, and the average length of stay value for each CMG and tier. The average length of stay for each CMG is used to determine when an IRF discharge meets the definition of a short-stay transfer, which results in a per diem case level adjustment. Because these data elements are not changing, Table 1 shown below is identical to Table 4 that was published in the FY 2007 IRF PPS final rule (71 FR 48354, 48364 through 48370). The methodology we used to construct the data elements in Table 1 is described in detail in the FY 2007 IRF PPS final rule (71 FR 48354). 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  IV. Proposed FY 2008 IRF PPS Federal Prospective Payment Rates [If you choose to comment on issues in this section, please include the caption “Proposed FY 2008 IRF PPS Federal Prospective Payment Rates” at the beginning of your comments.] A. Proposed FY 2008 IRF PPS Market Basket Increase Factor and Labor-Related Share Section 1886(j)(3)(C) of the Act requires the Secretary to establish an increase factor that reflects changes over 
                        ( print page 26243)
                        time in the prices of an appropriate mix of goods and services included in the covered IRF services, which is referred to as a market basket index. In updating the FY 2008 payment rates outlined in this proposed rule, CMS applied an appropriate increase factor to the FY 2007 IRF PPS payment rates that is based on the rehabilitation, psychiatric, and long-term care hospital (RPL) market basket. In constructing the RPL market basket, we used the methodology set forth in the FY 2006 IRF PPS final rule (70 FR 47880, 47908 through 47915). As discussed in that final rule, the RPL market basket primarily uses the Bureau of Labor Statistics' (BLS) data as price proxies, which are grouped in one of the three BLS categories: Producer Price Indexes (PPI), Consumer Price Indexes (CPI), and Employment Cost Indexes (ECI). We evaluated and selected these particular price proxies using the criteria of reliability, timeliness, availability, and relevance, and believe they continue to be the best measures of price changes for the cost categories. As discussed in the FY 2007 IRF PPS proposed rule, beginning April 2006 with the publication of March 2006 data, the BLS” ECI has used a different classification system, the North American Industrial Classification System (NAICS), instead of the Standard Industrial Codes (SIC). We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the RPL market basket and did not make any changes. This proposed rule's estimated FY 2008 IRF market basket increase factor and labor-related share will be updated for the final rule based on the most recent data available from the BLS. We will use the same methodology described in the FY 2006 IRF PPS final rule to compute the FY 2008 IRF market basket increase factor and labor-related share. For this proposed rule, the FY 2008 IRF market basket increase factor is 3.3 percent. This is based on Global Insight, Inc.’s forecast for the first quarter of 2007 (2007q1) with historical data through the fourth quarter of 2006 (2006q4). We propose to update the market basket with more recent data for the final rule to the extent it is available. However, we note that the President's budget includes a proposal for a zero percent update in the IRF market basket for FY 2008, and that the provisions outlined in this proposed rule would need to reflect any legislation that the Congress enacts to adopt this proposal. In addition, we have used the methodology described in the FY 2006 IRF PPS final rule to update the labor-related share for FY 2008. In FY 2004, we updated the 1992 market basket data to 1997 based on the methodology described in the August 1, 2003 final rule (68 FR 45688 through 45689). As discussed in the FY 2006 IRF PPS final rule (70 FR 47880, 47915 through 47917), we rebased and revised the market basket for FY 2006 using the 2002-based cost structures for IRFs, IPFs, and LTCHs to determine the FY 2006 labor-related share. For FY 2007, we used the same methodology discussed in the FY 2006 IRF PPS final rule (70 FR 47880, 47908 through 47917) to determine the FY 2007 IRF labor-related share. For FY 2008, we continue to use the same methodology discussed in the FY 2006 IRF PPS final rule. As shown in Table 2, the total FY 2008 RPL labor-related share is 75.846 percent in this proposed rule. We propose to update the labor-related share with more recent data for the final rule to the extent it is available. Table 2.—Proposed FY 2008 IRF Labor-Related Share Relative Importance
Cost category
Proposed FY 2008 IRF labor-related relative 
                                 importanceWages and salaries
52.640Employee benefits
14.149Professional fees
2.907All other labor intensive services
2.147Subtotal
71.843Labor-related share of capital costs
4.003Total
75.846SOURCE: Global Insight, Inc, 1st Qtr, 2007; @USMACRO/CONTROL0307 @CISSIM/TL0207.SIM Historical Data through 4th QTR, 2006
 B. Proposed Area Wage Adjustment Section 1886(j)(6) of the Act requires the Secretary to adjust the proportion (as estimated by the Secretary from time to time) of rehabilitation facilities' costs attributable to wages and wage-related costs by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the rehabilitation facility compared to the national average wage level for those facilities. The Secretary is required to update the wage index on the basis of information available to the Secretary on the wages and wage-related costs to furnish rehabilitation services. Any adjustments or updates made under section 1886(j)(6) of the Act for a FY are made in a budget neutral manner. In the FY 2007 IRF PPS final rule, we maintained the methodology described in the FY 2006 IRF PPS final rule to determine the wage index, labor market area definitions, and hold harmless policy consistent with the rationale outlined in that final rule (70 FR 47880, 47917 through 47933). In the FY 2006 IRF PPS final rule, we adopted a 3-year hold harmless policy specifically for rural IRFs whose labor market designations changed from rural to urban under the CBSA-based labor market area designations. This policy specifically applied to IRFs that had been previously designated rural and which, effective for discharges on or after October 1, 2005, would otherwise have become ineligible for the 19.14 percent rural adjustment. For FY 2008, the third and final year of the 3-year phase-out of the budget-neutral hold harmless policy, we will no longer apply an adjustment for IRFs that meet the criteria described in the FY 2006 final rule (70 FR 47880, 47923 through 47926). For FY 2008, we propose to maintain the policies and methodologies described in the FY 2007 IRF PPS final rule relating to the labor market area definitions, the wage index methodology for areas with wage data, and hold harmless policy consistent with the rationale outlined in the FY 2006 IRF PPS final rule (70 FR 47880, 47917 through 47933). Therefore, this proposed rule continues to use the Core-Based Statistical Area (CBSA) labor market area definitions and the pre-reclassification and pre-floor hospital wage index based on 2003 cost report data. In addition, the budget neutral hold harmless policy established in the FY 2006 final rule will expire for discharges occurring on or after October 1, 2007. In adopting the CBSA geographic designations in FY 2006, we provided a one-year transition with a blended wage index for all providers. For FY 2006, the wage index for each provider consisted of a blend of 50 percent of the FY 2006 MSA-based wage index and 50 percent of the FY 2006 CBSA-based wage index (both using FY 2001 hospital data). We referred to the blended wage index as the FY 2006 IRF PPS transition wage index. As discussed in the FY 2006 IRF PPS final rule (70 FR 47880, 47926), subsequent to the expiration of this one-year transition on September 30, 2006, we used the full CBSA-based wage index values as published in the Addendum of the FY 2007 IRF PPS final rule (71 FR 48354) and in the Addendum of this proposed rule. 
                        ( print page 26244) When adopting OMB's new labor market designations, we identified some geographic areas where there were no hospitals and, thus, no hospital wage index data on which to base the calculation of the IRF PPS wage index (70 FR 47880). In this proposed rule, we are proposing to revise our methodology to determine a proxy for rural areas without hospital wage data. Under the CBSA labor market areas, there are no rural hospitals in rural Massachusetts and rural Puerto Rico. Because there was no rural proxy for more recent rural data within those areas, we used the FY 2006 wage index value in both FY 2006 and FY 2007 for rural Massachusetts and rural Puerto Rico. Due to the use of the same wage index value (from FY 2006) for these areas for two fiscal years, we believe it is appropriate at this point to consider alternatives in our methodology to update the wage index for rural areas without rural hospital wage index data. We believe that the best imputed proxy would 1) use pre-floor, pre-reclassified hospital data, 2) be easy to evaluate, 3) use the most local data, and 4) be easily updateable from year-to-year. Since the implementation of the IRF PPS, we have used the pre-floor, pre-reclassified hospital wage data that is easy to evaluate and is updateable from year-to-year. In addition, the IRF PPS wage index is based on hospitals' cost report data, which reflects local available data. Therefore, we believe the imputed proxy for a rural area without hospital wage data is consistent with our past methodology and other post-acute PPS wage index policy. Although our current methodology uses rural pre-floor, pre-reclassified hospital wage data, this method is not updateable from year-to-year. Therefore, in cases where there is a rural area without rural hospital wage data, we propose using the average wage index from all contiguous CBSAs to represent a reasonable proxy for the rural area within a State. While this approach does not use rural data, it does use pre-floor, pre-reclassified hospital wage data, it is easy to evaluate, it is updateable from year-to-year, and it uses the most local data available. In determining an imputed rural wage index, we interpret the term “contiguous” to mean sharing a border. For example, in the case of Massachusetts, the entire rural area consists of Dukes and Nantucket counties. We have determined that the borders of Dukes and Nantucket counties are local and contiguous with Barnstable and Bristol counties. Under the proposed methodology, the wage indexes for the counties of Barnstable (CBSA 12700: 1.2539) and Bristol (CBSA 39300: 1.0783) are averaged, resulting in an imputed rural wage index of 1.1661 for rural Massachusetts for FY 2008. While we believe that this policy could be readily applied to other rural areas that lack hospital wage data (possibly due to hospitals converting to a different provider type, such as a CAH, that does not submit the appropriate wage data), we may re-examine this policy should a similar situation arise in the future. However, we do not believe that this policy is appropriate for Puerto Rico. There are sufficient economic differences between hospitals in the United States and those in Puerto Rico (including the payment of hospitals in Puerto Rico using blended Federal/Commonwealth-specific rates) that a separate and distinct policy for Puerto Rico is necessary. Consequently, any alternative methodology for imputing a wage index for rural Puerto Rico would need to take into account these economic differences and the payment rates hospitals receive in Puerto Rico. Our policy of imputing a rural wage index based on the wage index(es) of CBSAs contiguous to the rural area in question does not recognize the unique circumstances of Puerto Rico. While we have not yet identified an alternative methodology for imputing a wage index for rural Puerto Rico, we will continue to evaluate the feasibility of using existing hospital wage data and, possibly, wage data from other sources. By maintaining our current policy for Puerto Rico, we will maintain consistency with other post-acute care PPS wage index policies. Accordingly, we propose to continue using the most recent wage index previously available for Puerto Rico; that is, a wage index of 0.4047. We solicit comments on our proposal to maintain the current wage index policy for rural Puerto Rico. In the FY 2006 IRF PPS final rule (70 FR 47880, 47920), we notified the public that the Office of Management and Budget (OMB) published a bulletin that changed the titles to certain CBSAs after the publication of our FY 2006 IRF PPS proposed rule (70 FR 30186). Since the publication of the FY 2006 IRF PPS final rule, OMB published additional bulletins that updated the CBSAs. Specifically, OMB added or deleted certain CBSA numbers and revised certain titles. Accordingly, in this proposed rule, we are proposing to clarify that this and all subsequent IRF PPS rules and notices are considered to incorporate the CBSA changes published in the most recent OMB bulletin that applies to the hospital wage data used to determine the current IRF PPS wage index. The OMB bulletins may be accessed online at 
                        *http://www.whitehouse.gov/​omb/​bulletins/​index.html*. To calculate the wage-adjusted facility payment for the payment rates set forth in this proposed rule, we multiply the unadjusted Federal prospective payment by the proposed FY 2008 RPL labor-related share (75.846 percent) to determine the labor-related portion of the Federal prospective payments. We then multiply this labor-related portion by the applicable proposed IRF wage index shown in Table 1 for urban areas and Table 2 for rural areas in the Addendum. Adjustments or updates to the IRF wage index made under section 1886(j)(6) of the Act must be made in a budget neutral manner; therefore, we calculated a budget neutral wage adjustment factor as established in the August 1, 2003 final rule and codified at § 412.624(e)(1), and described in the steps below. We propose to use the following steps to ensure that the FY 2008 IRF standard payment conversion factor reflects the update to the proposed wage indexes (based on the FY 2003 pre-reclassified and pre-floor hospital wage data) and the proposed labor-related share in a budget neutral manner: *Step 1*
                         Determine the total amount of the estimated FY 2007 IRF PPS rates, using the FY 2007 standard payment conversion factor and the labor-related share and the wage indexes from FY 2007 (as published in the FY 2007 IRF PPS final rule). *Step 2*
                         Calculate the total amount of estimated IRF PPS payments, using the FY 2007 standard payment conversion factor and the proposed FY 2008 labor-related share and proposed CBSA urban and rural wage indexes. *Step 3*
                         Divide the amount calculated in step 1 by the amount calculated in step 2, which equals the FY 2008 budget neutral wage adjustment factor of 1.0026. *Step 4*
                         Apply the FY 2008 budget neutral wage adjustment factor from step 3 to the FY 2007 IRF PPS standard payment conversion factor after the application of the estimated market basket update to determine the FY 2008 standard payment conversion factor. C. Description of the Proposed IRF Standard Payment Conversion Factor and Proposed Payment Rates for FY 2008 To calculate the proposed standard payment conversion factor for FY 2008 and as illustrated in Table 3 below, we begin by applying the estimated market 
                        ( print page 26245)
                        basket increase factor (3.3 percent) to the standard payment conversion factor for FY 2007 ($12,981), which equals $13,409. We then apply the proposed combined budget neutrality factor for the wage index and labor related share and final year of the hold harmless policy of 1.0040 (1.0026 * 1.0014 = 1.0040), which would result in a proposed standard payment conversion factor of $13,463. Table 3.—Calculations To Determine the Proposed FY 2008 Standard Payment Conversion Factor
Explanation for adjustment
CalculationsFY 2007 Standard Payment Conversion Factor
12,981Proposed FY 2008 Market Basket Increase Factor
× 1.033Subtotal
= 13,409Proposed Budget Neutrality Factor for the Wage Index, Labor-Related Share, and the Hold Harmless Provision
× 1.0040Proposed FY 2008 Standard Payment Conversion Factor
= $13,463
 After the application of the relative weights, the resulting proposed unadjusted IRF prospective payment rates for FY 2008 are shown below in Table 4, “Proposed FY 2008 Payment Rates.”  
 
  
 
  
 
  D. Example of the Methodology for Adjusting the Proposed Federal Prospective Payment Rates Table 5 illustrates the proposed methodology for adjusting the Federal prospective payments (as described in sections IV.A through C of this proposed rule). The examples below are based on two hypothetical Medicare beneficiaries, both classified into CMG 0110 (without comorbidities). The unadjusted Federal prospective payment rate for CMG 0110 (without comorbidities) can be found in Table 4 above. One beneficiary is in Facility A, an IRF located in rural Spencer County, Indiana, and another beneficiary is in Facility B, an IRF located in urban Harrison County, Indiana. Facility A, a non-teaching hospital, has a disproportionate share hospital (DSH) percentage of 5 percent (which results in a LIP adjustment of 1.0309), a wage index of 0.8538, and an applicable rural adjustment of 21.3 percent. Facility B, a teaching hospital, has a DSH percentage of 15 percent (which results in a LIP adjustment of 1.0910), a wage index of 0.9118, and an applicable teaching status adjustment of 0.109. To calculate each IRF's labor and non-labor portion of the Federal prospective payment, we begin by taking the unadjusted Federal prospective payment rate for CMG 0110 (without comorbidities) from Table 4 above. Then, we multiply the estimated labor-related share (75.846) described in section IV.A by the unadjusted Federal prospective payment rate. To determine the non-labor portion of the Federal prospective payment rate, we subtract the labor portion of the Federal payment from the unadjusted Federal prospective payment. To compute the wage-adjusted Federal prospective payment, we multiply the result of the labor portion of the Federal payment by the appropriate wage index found in the Addendum in Tables 1 and 2, which will result in the wage-adjusted amount. Next, we compute the wage-adjusted Federal payment by adding the wage-adjusted amount to the non-labor portion. To adjust the Federal prospective payment by the facility-level adjustments, there are several steps. First, we take the wage-adjusted Federal prospective payment and multiply it by the appropriate rural and LIP adjustments (if applicable). Then, to determine the appropriate amount of additional payment for the teaching status adjustment (if applicable), we multiply the teaching status adjustment (0.109, in this example) by the wage-adjusted and rural-adjusted amount (if applicable). Finally, we add the additional teaching status payments (if applicable) to the wage, rural, and LIP-adjusted Federal prospective payment rate. Table 5 illustrates the components of the proposed adjusted payment calculation. 
 
  Thus, the proposed adjusted payment for Facility A would be $32,405.16 and the proposed adjusted payment for Facility B would be $32,635.56. V. Update to Payments for High-Cost Outliers Under the IRF PPS [If you choose to comment on issues in this section, please include the caption “High-Cost Outliers Under the IRF PPS” at the beginning of your comments.] A. Proposed Update to the Outlier Threshold Amount for FY 2008 Section 1886(j)(4) of the Act provides the Secretary with the authority to make payments in addition to the basic IRF prospective payments for cases incurring extraordinarily high costs. A case qualifies for an outlier payment if the estimated cost of the case exceeds the adjusted outlier threshold. We calculate the adjusted outlier threshold by adding the IRF PPS payment for the case (that is, the CMG payment adjusted by all of the relevant facility-level adjustments) and the adjusted threshold amount (also adjusted by all of the relevant facility-level adjustments). Then, we calculate the estimated cost of a case by multiplying the IRF's overall cost-to-charge ratio (CCR) by the Medicare allowable covered charge. If the estimated cost of the case is higher than the adjusted outlier threshold, we make an outlier payment for the case equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold. In the August 7, 2001 final rule (66 FR 41316, 41362 through 41363), we discussed our rationale for setting the outlier threshold amount for the IRF PPS so that estimated outlier payments would equal 3 percent of total estimated payments. Subsequently, we updated the IRF outlier threshold amount in the FYs 2006 and 2007 IRF PPS final rules (70 FR 47880 and 71 FR 48354) to maintain estimated outlier payments at 3 percent of total estimated payments, 
                        ( print page 26250)
                        and we also stated that we would continue to analyze the estimated outlier payments for subsequent years and adjust the outlier threshold amount as appropriate to maintain the 3 percent target. For this proposed rule, we performed an updated analysis of FY 2005 claims and IRF-PAI data using the same methodology we used to set the initial outlier threshold amount when we first implemented the IRF PPS in the August 7, 2001 final rule (66 FR 41316), which is also the same methodology we used to update the outlier threshold amounts for FYs 2006 and 2007. Using the updated FY 2005 claims and IRF-PAI data, we estimate that IRF outlier payments as a percentage of total estimated payments for FY 2007 increased from 3 percent using the FY 2004 data to approximately 3.8 percent using the updated FY 2005 data. We are still investigating the reasons for the change in estimated outlier payments between FY 2004 and FY 2005, and will carefully evaluate all possible reasons for this change. Based on the updated analysis using FY 2005 data, and consistent with the broad statutory authority conferred upon the Secretary in sections 1886(j)(4)(A)(i) and 1886(j)(4)(A)(ii) of the Act, we propose to update the outlier threshold amount to $7,522 to decrease estimated outlier payments from approximately 3.8 to 3 percent of total estimated aggregate IRF payments for FY 2008. The outlier threshold amount for FY 2008 is subject to change in the final rule based on analysis of updated data. B. Update to the IRF Cost-to-Charge Ratio Ceilings In accordance with the methodology stated in the August 1, 2003 final rule (68 FR 45692 through 45694), we apply a ceiling to IRFs' cost-to-charge ratios (CCRs). Using the methodology described in that final rule, we propose to update the national urban and rural CCRs for IRFs. We apply the national urban and rural CCRs in the following situations: New IRFs that have not yet submitted their first Medicare cost report.
                    IRFs whose overall CCR is in excess of 3 standard deviations above the corresponding national geometric mean, which we propose to set at 1.55 (based on the current estimate) for FY 2008.
                    Other IRFs for whom accurate data with which to calculate an overall CCR are not available. Specifically, for FY 2008, we estimate a proposed national CCR of 0.589 for rural IRFs and 0.475 for urban IRFs. For new facilities, we use these national ratios until the data become available for us to compute the facility's actual CCR using the first tentative settled or final settled cost report data, which we will then use for the subsequent cost reporting period. We note that the proposed national average rural and urban CCRs and our estimate of 3 standard deviations above the corresponding national geometric mean in this section are subject to change in the final rule based on updated analysis and data. C. Adjustment of IRF Outlier Payments In the August 1, 2003 final rule (68 FR 45674, 45693 through 45694), we finalized a proposal to make IRF outlier payments subject to reconciliation when IRFs' cost reports are settled, consistent with the policy adopted for IPPS hospitals in the June 9, 2003 IPPS final rule (68 FR 34494, 34501). The revised methodology provides for retroactive adjustments to IRF outlier payments to account for differences between the CCRs from the latest settled cost report and the actual CCRs computed at the time the cost report that coincides with the date of discharge is settled using the cost and charge data from that cost report. This revised methodology addresses vulnerabilities found in the IPPS and the IRF outlier payment policies, which may have resulted in outlier payments that were too high or too low. Along these lines, we are analyzing IRF outlier payments from the beginning of the IRF PPS through FY 2005, obtained from IRFs' cost report filings, to identify specific payment vulnerabilities in the IRF outlier payment policy. Under this policy, which is outlined in § 412.624(e)(5), which in turn references § 412.84(i) and § 412.84(m) of the IPPS regulations, outlier payments will be processed on an interim basis throughout the year using IRFs' CCRs based on the best information available at the time. When an IRF's cost report is settled, any reconciliation of outlier payments by fiscal intermediaries will be based on the relationship between an IRF's costs and charges at the time a particular discharge actually occurred. This revised methodology ensures that the final outlier payments reflect an accurate assessment of the actual costs the IRF incurred for treating the case. We have not yet issued instructions to the fiscal intermediaries regarding IRF outlier reconciliation because we have been analyzing the data and assessing the systems changes necessary to conduct the reconciliation. Thus, we will soon issue instructions to fiscal intermediaries to begin reconciling IRF outlier payments upon settlement of IRF cost reports. VI. Clarification to the Regulation Text for Special Payment Provisions for Patients That Are Transferred [If you choose to comment on issues in this section, please include the caption “Clarification to the Regulation Text for Special Payment Provisions for Patients that are Transferred” at the beginning of your comments.] Section 125(a)(3) of the BBRA amended Section 1886(j)(1) of the Act by adding a paragraph (E) that states “Construction relating to transfer authority—Nothing in this subsection shall be construed as preventing the Secretary from providing for an adjustment to payments to take into account the early transfer of a patient from a rehabilitation facility to another site of care.” In the FY 2002 proposed and final IRF PPS rules, we proposed and adopted the transfer payment policy under § 412.624(f). The transfer policy provides payments that more accurately reflect facility resources used and services delivered for patients that transfer to another site of care as discussed in the FY 2002 IRF PPS final rule (66 FR 41316, 41353 through 41355). We are proposing to revise our regulations text to clarify our existing policy under § 412.624(f). In the FY 2002 IRF PPS final rule (66 FR 41316, 41353 through 41355), we discuss our rationale, criteria for defining a transfer case, and the methodology to determine the unadjusted Federal prospective payment for the transfer case. In addition, we discuss several adjustments that we apply to the unadjusted Federal prospective payment rate. The final adjustments described in the FY 2002 IRF PPS final rule (65 FR 66304, 66347 through 66357) include the area wage adjustment, rural adjustment, the LIP adjustment, and the high-cost outlier adjustment. In our FY 2006 IRF PPS final rule (70 FR 47880), we refined the facility level adjustments and also adopted a teaching status adjustment. We define a transfer under § 412.602 to mean the release of a Medicare inpatient from an IRF to another IRF, a short-term, acute-care prospective payment hospital, a long-term care hospital as described in § 412.23(e), or a nursing home that qualifies to receive Medicare or Medicaid payment. In order to receive a transfer payment under § 412.624(f), a patient must be transferred to another site of care as defined in § 412.602 and had to have stayed in the IRF for less than the average length of stay for the case-mix 
                        ( print page 26251)
                        group (CMG). Table 1 in this proposed rule presents the CMGs, the comorbidity tiers, the corresponding relative weights, and the average length of stay value for each CMG and tier. We use the average length of stay for each CMG to determine when an IRF discharge meets the definition of a transfer, which results in a per diem case level adjustment. Since the implementation of the IRF PPS, we determine whether a claim meets the high-cost outlier policy under § 412.624(e)(5), as revised in the FY 2007 IRF PPS final rule (71 FR 48354, 48382 through 48383). A case qualifies for an outlier payment if the estimated cost of the case exceeds the adjusted outlier threshold, in which case we make an outlier payment equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold. Since the implementation of the IRF PPS, we have provided an additional high-cost outlier payment to both transfer cases and full CMG cases when applicable. We propose to clarify the regulations text to articulate the transfer policy more clearly. Specifically, we propose to add the phrase “subject to paragraph (e)(5)” at the end of the paragraph under § 412.624(f)(2)(v). The proposed revised § 412.624(f)(2)(v) will read, “By applying the adjustment described in paragraphs (e)(1), (e)(2), (e)(3), (e)(4), and (e)(7) of this section to the unadjusted payment amount determined in paragraph (f)(2)(iv) of this section to equal the adjusted transfer payment amount, subject to paragraph (e)(5).” VII. Provisions of the Proposed Regulation [If you choose to comment on issues in this section, please include the caption “Provisions of the Proposed Regulations” at the beginning of your comments.] We are proposing to make revisions to the regulation text in order to implement the proposed policy changes for IRFs for FY 2007 and subsequent fiscal years. Specifically, we are proposing to make conforming changes in 42 CFR part 412. We discuss these proposed revisions and others in detail below. A. Section 412.624 Methodology for Calculating the Federal Prospective Payment Rates In this section, we are proposing to revise the current regulations text in paragraph (f)(2)(v) to clarify that we determine whether a high-cost outlier payment would be applicable for transfer cases. We emphasize that this is not a change to our current methodology for determining whether a high-cost outlier payment applies to transfer cases. B. Additional Proposed Changes Update the FY 2008 IRF PPS payment rates by the proposed market basket, as discussed in section IV.A.
                    Update the FY 2008 IRF PPS payment rates by the proposed wage index and the labor related share in a budget neutral manner, as discussed in section IV.A and B.
                    Update the pre-reclassified and pre-floor wage indexes based on the CBSA changes published in the most recent OMB bulletins that apply to the hospital wage data used to determine the current IRF PPS wage index, as discussed in section IV.B.
                    Implement the final year of the three-year hold harmless policy adopted in the FY 2006 IRF PPS final rule (70 FR 47880, 447923 through 47926) in a budget neutral manner, as discussed in section IV.B.
                    Update the outlier threshold amount for FY 2008 to $7,522, as discussed in section V.A.
                    Update the cost-to-charge ratio ceiling and the national average urban and rural cost-to-charge ratios for purposes of determining outlier payments under the IRF PPS, as discussed in section V.B. VIII. Collection of Information Requirements This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995. IX. Response to Public Comments Because of the large number of public comments we normally receive on 
                        **Federal Register**
                         documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the 
                        **DATES**
                         section of this preamble and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document. X. Regulatory Impact Analysis [If you choose to comment on issues in this section, please include the caption “Regulatory Impact Analysis” at the beginning of your comments.] A. Overall Impact We have examined the impacts of this proposed rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA, September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). This proposed rule is a major rule, as defined in Title 5, United States Code, section 804(2), because we estimate the impact to the Medicare program, and the annual effects to the overall economy, would be more than $100 million. We estimate that the total impact of these proposed changes for estimated FY 2008 payments compared to estimated FY 2007 payments would be an increase of approximately $150 million (this reflects a $200 million increase from the update to the payment rates and a $50 million decrease due to the proposed update to the outlier threshold amount to decrease estimated outlier payments from approximately 3.8 percent in FY 2007 to 3 percent in FY 2008). The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government jurisdictions. Most IRFs and most other providers and suppliers are considered small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any one year. (For details, see the Small Business Administration's final rule that set forth size standards for health care industries, at 65 FR 69432, November 17, 2000.) Because we lack data on individual hospital receipts, we cannot determine the number of small proprietary IRFs or the proportion of IRFs' revenue that is derived from Medicare payments. Therefore, we assume that all IRFs (an approximate total of 1,200 IRFs, of which approximately 60 percent are nonprofit facilities) are considered small entities and that Medicare payment constitutes the majority of their revenues. The Department of Health and Human 
                        ( print page 26252)
                        Services generally uses a revenue impact of 3 to 5 percent as a significance threshold under the RFA. As shown in Table 6, we estimate that the net revenue impact of this proposed rule on all IRFs is to increase estimated payments by about 2.4 percent, with an estimated increase in payments of 3 percent or higher for some categories of IRFs (such as rural freestanding IRFs, urban IRFs in the East North Central and Mountain regions, and rural IRFs in the Middle Atlantic and East South Central regions). Thus, we anticipate that this proposed rule may have a significant impact on a substantial number of small entities. However, the estimated impact of this proposed rule is a net increase in revenues across all categories of IRFs, so we believe that this proposed rule would not impose a significant burden on small entities. Medicare fiscal intermediaries and carriers are not considered to be small entities. Individuals and States are not included in the definition of a small entity. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. As discussed in detail below, the rates and policies set forth in this proposed rule would not have an adverse impact on rural hospitals based on the data of the 199 rural units and 20 rural hospitals in our database of 1,234 IRFs for which data were available. Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any one year of $100 million in 1995, updated annually for inflation. That threshold level is currently approximately $120 million. This proposed rule would not mandate any requirements for State, local, or tribal governments, nor would it affect private sector costs. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. As stated above, this proposed rule would not have a substantial effect on State and local governments. B. Anticipated Effects of the Proposed Rule We discuss below the impacts of this proposed rule on the budget and on IRFs. 1. Basis and Methodology of Estimates This proposed rule sets forth updates of the IRF PPS rates contained in the FY 2007 final rule, proposes an update to the outlier threshold for high-cost cases, and proposes an adjustment to the wage index methodology. Based on the above, we estimate that the FY 2008 impact would be a net increase of $150 million in payments to IRF providers (this reflects a $200 million estimated increase from the proposed update to the payment rates and a $50 million estimated decrease due to the proposed update to the outlier threshold amount to decrease the estimated outlier payments from approximately 3.8 percent in FY 2007 to 3 percent in FY 2008). The impact analysis in Table 6 of this proposed rule represents the projected effects of the proposed policy changes in the IRF PPS for FY 2008 compared with estimated IRF PPS payments in FY 2007 without the proposed policy changes. We estimate the effects by estimating payments while holding all other payment variables constant. We use the best data available, but we do not attempt to predict behavioral responses to these proposed changes, except where noted, and we do not make adjustments for future changes in such variables as number of discharges or case-mix, except where noted. We note that certain events may combine to limit the scope or accuracy of our impact analysis, because such an analysis is future-oriented and, thus, susceptible to forecasting errors because of other changes in the forecasted impact time period. Some examples could be legislative changes made by the Congress to the Medicare program that would impact program funding, or changes specifically related to IRFs. In addition, changes to the Medicare program may continue to be made as a result of the BBA, the BBRA, the BIPA, the MMA, the DRA, or new statutory provisions. Although these changes may not be specific to the IRF PPS, the nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon IRFs. In updating the rates for FY 2008, we proposed a number of standard annual revisions and clarifications mentioned elsewhere in this proposed rule (for example, the update to the wage and market basket indexes used to adjust the Federal rates). We estimate that these proposed revisions would increase payments to IRFs by approximately $200 million. The aggregate change in estimated payments associated with this proposed rule is estimated to be an increase in payments to IRFs of $150 million for FY 2008. The market basket increase of $200 million and the $50 million decrease due to the proposed update to the outlier threshold amount to decrease estimated outlier payments from approximately 3.8 percent in FY 2007 to 3.0 percent in FY 2008 would result in a net change in estimated payments from FY 2007 to FY 2008 of $150 million. The effects of the proposed changes that affect IRF PPS payment rates are shown in Table 6. The following proposed changes that affect the IRF PPS payment rates are discussed separately below: The effects of the proposed update to the outlier threshold amount to decrease total estimated outlier payments from approximately 3.8 to 3 percent of total estimated payments for FY 2008, consistent with section 1886(j)(4) of the Act.
                    The effects of the annual market basket update (using the RPL market basket) to IRF PPS payment rates, as required by sections 1886(j)(3)(A)(i) and 1886(j)(3)(C) of the Act.
                    The effects of applying the budget-neutral labor-related share and wage index adjustment, including a proposal to revise our methodology to determine a proxy for rural areas without hospital wage data (as described in section IV of this proposed rule), as required under section 1886(j)(6) of the Act.
                    The effects of the final year of the 3-year budget-neutral hold-harmless policy for IRFs that were rural under § 412.602 during FY 2005, but are urban under § 412.602 beginning FY 2006 and lose the rural adjustment, resulting in a decrease in the estimated IRF PPS payments if not for the hold harmless policy.
                    The total proposed change in estimated payments based on the FY 2008 proposed policies relative to estimated FY 2007 payments without the proposed policies. 2. Description of Table 6 The table below categorizes IRFs by geographic location, including urban or rural location and location with respect to CMS's nine census divisions (as defined on the cost report) of the country. In addition, the table divides IRFs into those that are separate 
                        ( print page 26253)
                        rehabilitation hospitals (otherwise called freestanding hospitals in this section), those that are rehabilitation units of a hospital (otherwise called hospital units in this section), rural or urban facilities, ownership (otherwise called for-profit, non-profit, and government), and by teaching status. The top row of the table shows the overall impact on the 1,234 IRFs included in the analysis. The next 12 rows of Table 6 contain IRFs categorized according to their geographic location, designation as either a freestanding hospital or a unit of a hospital, and by type of ownership; all urban, which is further divided into urban units of a hospital, urban freestanding hospitals, and by type of ownership; and all rural, which is further divided into rural units of a hospital, rural freestanding hospitals, and by type of ownership. There are 1,015 IRFs located in urban areas included in our analysis. Among these, there are 816 IRF units of hospitals located in urban areas and 199 freestanding IRF hospitals located in urban areas. There are 219 IRFs located in rural areas included in our analysis. Among these, there are 199 IRF units of hospitals located in rural areas and 20 freestanding IRF hospitals located in rural areas. There are 419 for-profit IRFs. Among these, there are 340 IRFs in urban areas and 79 IRFs in rural areas. There are 748 non-profit IRFs. Among these, there are 624 urban IRFs and 124 rural IRFs. There are 67 government-owned IRFs. Among these, there are 51 urban IRFs and 16 rural IRFs. The remaining three parts of Table 6 show IRFs grouped by their geographic location within a region, and the last part groups IRFs by teaching status. First, IRFs located in urban areas are categorized with respect to their location within a particular one of the nine CMS geographic regions. Second, IRFs located in rural areas are categorized with respect to their location within a particular one of the nine CMS geographic regions. In some cases, especially for rural IRFs located in the New England, Mountain, and Pacific regions, the number of IRFs represented is small. Finally, IRFs are grouped by teaching status, including non-teaching IRFs, IRFs with an intern and resident to average daily census (ADC) ratio less than 10 percent, IRFs with an intern and resident to ADC ratio greater than or equal to 10 percent and less than or equal to 19 percent, and IRFs with an intern and resident to ADC ratio greater than 19 percent. The estimated impacts of each proposed change to the facility categories listed above are shown in the columns of Table 6. The description of each column is as follows: Column (1) shows the facility classification categories described above. Column (2) shows the number of IRFs in each category. Column (3) shows the number of cases in each category. Column (4) shows the estimated effect of the proposed adjustment to the outlier threshold amount so that estimated outlier payments decrease from approximately 3.8 percent in FY 2007 to 3 percent of total estimated payments for FY 2008. Column (5) shows the estimated effect of the market basket update to the IRF PPS payment rates. Column (6) shows the estimated effect of the update to the IRF labor-related share, wage index, and the final year of the hold harmless policy, in a budget neutral manner. Column (7) compares our estimates of the payments per discharge, incorporating all of the proposed changes reflected in this proposed rule for FY 2008, to our estimates of payments per discharge in FY 2007 (without these proposed changes). The average estimated increase for all IRFs is approximately 2.4 percent. This estimated increase includes the effects of the 3.3 percent market basket update. It also includes the 0.9 percent overall estimated decrease in estimated IRF outlier payments from the proposed update to the outlier threshold amount. Because we are making the remainder of the proposed changes outlined in this proposed rule in a budget-neutral manner, they would not affect total estimated IRF payments in the aggregate. However, as described in more detail in each section, they would affect the estimated distribution of payments among providers. 
 
  
 
 3. Impact of the Proposed Update to the Outlier Threshold Amount (Column 4, Table 6) In the FY 2007 IRF PPS final rule (71 FR 48354), we used FY 2004 patient-level claims data (the best, most complete data available at that time) to set the outlier threshold amount for FY 2007 so that estimated outlier payments would equal 3 percent of total estimated payments for FY 2007. For this proposed rule, we are proposing to update our analysis using FY 2005 data. Using the updated FY 2005 data, we now estimate that IRF outlier payments as a percentage of total estimated payments for FY 2007 increased from 3 percent using the FY 2004 data to approximately 3.8 percent using the updated FY 2005 data. Thus, we are proposing to adjust the outlier threshold amount for FY 2008 to $7,522 to set total estimated outlier payments equal to 3 percent of total estimated payments in FY 2008. The proposed estimated change in total payments between FY 2007 and FY 2008, therefore, includes a 0.9 percent (rounded from 0.85 percent) overall estimated decrease in payments because the estimated outlier portion of total payments is estimated to decrease from approximately 3.8 percent to 3 percent. The impact of this proposed update (as shown in column 4 of Table 6) is to decrease estimated overall payments to IRFs by 0.9 percent. We do not estimate that any group of IRFs would experience an increase in payments from this proposed update. We estimate the largest decrease in payments to be a 1.7 percent decrease in estimated payments to rural IRFs in the Mountain region. 4. Impact of the Proposed Market Basket Update to the IRF PPS Payment Rates (Column 5, Table 6) In column 5 of Table 6, we present the estimated effects of the proposed market basket update to the IRF PPS payment rates. In the aggregate, and across all hospital groups, the proposed update would result in a 3.3 percent increase in overall estimated payments to IRFs. 5. Impact of the Proposed CBSA Wage Index, Labor-Related Share, and the Hold Harmless Policy for FY 2008 (Column 6, Table 6). In column 6 of Table 6, we present the effects of the proposed budget neutral update of the wage index, labor-related share, and the final year of the hold harmless policy. In FY 2006, we provided a 1-year blended wage index and a 3-year phase out of the rural adjustment for IRFs that changed designation because of the change from MSAs to CBSAs (referenced as the hold harmless policy). We applied the blended wage index to all IRFs and the hold harmless policy to those IRFs that qualify, as described in § 412.624(e)(7), in order to mitigate the impact of the change from the MSA-based labor area definitions to the CBSA-based labor area definitions for IRFs. As discussed in the FY 2007 IRF PPS final rule (71 FR 48345), the blended wage index expired in FY 2007 and will not be applied for discharges occurring on or after October 1, 2006. In addition, FY 2008 is the third and final year of the hold harmless policy, and we are continuing to apply this policy as described in the FY 2006 final rule in a budget neutral manner. As discussed in this proposed rule, we are proposing to revise our methodology to impute a rural wage index value for rural areas without hospital wage data and update the wage index based on the CBSA-based labor market area definitions in a budget neutral manner. We are also applying the third and final year of the hold harmless policy in a budget neutral manner. Thus, in the aggregate, the estimated impact of the proposed update to the wage index and labor-related share is zero percent. In the aggregate and for all urban IRFs, we do not estimate that these proposed changes would affect overall estimated payments to IRFs. However, we estimate that these proposed changes would have small distributional effects. We estimate a 0.2 percent increase in estimated payments to rural IRFs. We estimate the largest increase in payments to be a 0.7 percent increase for urban IRFs in the Mountain region and for rural IRFs in the Middle Atlantic region. We estimate the largest decrease in payments to be a 0.9 percent decrease for rural IRFs in the New England region. C. Anticipated Effects of the 75 Percent Rule Policy The existing policy for classifying a facility as an IRF, which is described in § 412.23(b)(2), allows the inclusion of comorbidities meeting certain requirements in the calculations used to determine the compliance percentage for cost reporting periods beginning on or after July 1, 2004, and before July 1, 2008. However, for cost reporting periods beginning on or after July 1, 2008, comorbidities will not be eligible for inclusion in the calculations used to determine if the provider meets the 75 percent compliance threshold. As discussed in section II of this proposed rule, we are not proposing to change existing policy. On or after July 1, 2008, we anticipate that IRFs would make adjustments to their admission and coding practices to continue to meet the compliance threshold. Data limitations and two important sources of uncertainty prevent a precise estimate of the effect of this policy at this time. One source of uncertainty is what proportion of patients who would no longer be treated in IRFs would instead be treated by other, lower-cost post-acute care settings such as skilled nursing facilities or home health agencies. Another source of uncertainty is determining how providers will make adjustments on or after July 1, 2008. While we cannot make a precise estimate at this time, we anticipate modest decreases in Medicare payments beginning on or after July 1, 2008. D. Alternatives Considered Because we have determined that this proposed rule would have a significant economic impact on IRFs and on a substantial number of small entities, we will discuss the alternative changes to the IRF PPS that we considered. Section 1886(j)(3)(C) of the Act requires the Secretary to update the IRF PPS payment rates by an increase factor that reflects changes over time in the prices of an appropriate mix of goods and services included in the covered IRF services. As discussed above, we estimate the RPL market basket increase factor for FY 2008 to be 3.3 percent. This increase factor represents the majority of the impact on IRF providers shown in Table 6. Thus, we believe this estimated net increase in payments across all categories of IRFs represents a benefit to IRF providers and, thus, to IRFs that are small entities. We considered maintaining the existing outlier threshold amount for FY 2008 because this proposed update would have a negative impact on IRF providers and, therefore, on small entities. If we maintain the FY 2007 outlier threshold amount, more outlier cases would have qualified for the additional outlier payments in FY 2008. However, analysis of updated FY 2005 data indicates that estimated outlier payments would not equal 3 percent of estimated total payments for FY 2008 unless we proposed to update the outlier threshold amount. Also, we estimate that the effect of this proposal on estimated payments to IRFs is small (less than 1 percent). E. Accounting Statement As required by OMB Circular A-4 (available at 
                        *http://www.whitehouse.gov/​omb/​circulars/​a004/​a-4.pdf*), in Table 8 below, we 
                        ( print page 26256)
                        have prepared an accounting statement showing the classification of the expenditures associated with the provisions of this proposed rule. This table provides our best estimate of the increase in Medicare payments under the IRF PPS as a result of the proposed changes presented in this proposed rule based on the data for 1,234 IRFs in our database. All estimated expenditures are classified as transfers to Medicare providers (that is, IRFs). Table 8.—Accounting Statement: Classification of Estimated Expenditures, from the 2007 IRF PPS Rate Year to the 2008 IRF PPS Rate Year (in Millions)
Category
TransfersAnnualized Monetized Transfers
$150 million.From Whom To Whom?
Federal Government to IRF Medicare Providers.
 F. Conclusion (Column 7, Table 6) Overall, the estimated payments per discharge for IRFs in FY 2008 are projected to increase by 2.4 percent, compared with those in FY 2007, as reflected in column 7 of Table 6. We estimate that IRFs in urban areas would experience a 2.4 percent increase in estimated payments per discharge compared with FY 2007. We estimate that IRFs in rural areas would experience a 2.7 percent increase in estimated payments per discharge compared with FY 2007. We estimate that rehabilitation units and freestanding rehabilitation hospitals in urban areas would both experience a 2.4 percent increase in estimated payments per discharge. We estimate that rehabilitation units in rural areas would experience a 2.6 percent increase in estimated payments per discharge, while freestanding rehabilitation hospitals in rural areas would experience a 3.1 percent increase in estimated payments per discharge. Overall, we estimate that the largest payment increase would be 3.4 percent among rural IRFs in the Middle Atlantic region. We do not estimate that any group of IRFs would experience an overall decrease in payments from the proposed changes in this proposed rule. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. List of Subjects in 42 CFR Part 412 Administrative practice and procedure
Health facilities
Medicare
Puerto Rico
Reporting and recordkeeping requirements
 For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as follows: PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES 1. The authority citation for part 412 continues to read as follows: Authority:
                            Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). Subpart P—Prospective Payment for Inpatient Rehabilitation Hospitals and Rehabilitation Units
 2. Section 412.624 is amended by revising paragraph (f)(2)(v) to read as follows: § 412.624
  
 (f) * * * (2) * * * (v) By applying the adjustment described in paragraphs (e)(1), (e)(2), (e)(3), (e)(4), and (e)(7) of this section to the unadjusted payment amount determined in paragraph (f)(2)(iv) of this section to equal the adjusted transfer payment amount, subject to paragraph (e)(5) of this section.
 (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplemental Medical Insurance Program). Dated: March 22, 2007. Leslie V. Norwalk, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: April 3, 2007. Michael O. Leavitt, Secretary.
 
 
 The following addendum will not appear in the Code of Federal Regulations. Addendum This addendum contains the tables referred to throughout the preamble of this proposed rule.  The tables presented below are as follows:
 Table 1.—Proposed Inpatient Rehabilitation Facility Wage Index for Urban Areas for Discharges Occurring from October 1, 2007 through September 30, 2008 Table 2.—Proposed Inpatient Rehabilitation Facility Wage Index for Rural Areas for Discharges Occurring from October 1, 2007 through September 30, 2008 Table 1.—Proposed Inpatient Rehabilitation Facility Wage Index for Urban Areas for Discharges Occurring From October 1, 2007 Through September 30, 2008
CBSA code
Urban area (constituent counties)
Wage index10180
Abilene, TX
0.8000Callahan County, TXJones County, TXTaylor County, TX10380
Aguadilla-Isabela-San Sebastián, PR
0.3915Aguada Municipio, PRAguadilla Municipio, PRAñasco Municipio, PRIsabela Municipio, PRLares Municipio, PRMoca Municipio, PRRincón Municipio, PRSan Sebastián Municipio, PR10420
Akron, OH
0.8654Portage County, OHSummit County, OH10500
Albany, GA
0.8991Baker County, GADougherty County, GALee County, GATerrell County, GAWorth County, GA10580
Albany-Schenectady-Troy, NY
0.8720Albany County, NYRensselaer County, NYSaratoga County, NYSchenectady County, NYSchoharie County, NY10740
Albuquerque, NM
0.9458Bernalillo County, NMSandoval County, NMTorrance County, NMValencia County, NM10780
Alexandria, LA
0.8006Grant Parish, LARapides Parish, LA10900
Allentown-Bethlehem-Easton, PA-NJ
0.9947Warren County, NJCarbon County, PALehigh County, PANorthampton County, PA11020
Altoona, PA
0.8812Blair County, PA11100
Amarillo, TX
0.9169Armstrong County, TXCarson County, TXPotter County, TXRandall County, TX11180
Ames, IA
0.9760Story County, IA11260
Anchorage, AK
1.2023Anchorage Municipality, AKMatanuska-Susitna Borough, AK11300
Anderson, IN
0.8681Madison County, IN11340
Anderson, SC
0.9017Anderson County, SC11460
Ann Arbor, MI
1.0826Washtenaw County, MI11500
Anniston-Oxford, AL
0.7770Calhoun County, AL( print page 26258)11540
Appleton, WI
0.9455Calumet County, WIOutagamie County, WI11700
Asheville, NC
0.9216Buncombe County, NCHaywood County, NCHenderson County, NCMadison County, NC12020
Athens-Clarke County, GA
0.9856Clarke County, GAMadison County, GAOconee County, GAOglethorpe County, GA12060
Atlanta-Sandy Springs-Marietta, GA
0.9762Barrow County, GABartow County, GAButts County, GACarroll County, GACherokee County, GAClayton County, GACobb County, GACoweta County, GADawson County, GADeKalb County, GADouglas County, GAFayette County, GAForsyth County, GAFulton County, GAGwinnett County, GAHaralson County, GAHeard County, GAHenry County, GAJasper County, GALamar County, GAMeriwether County, GANewton County, GAPaulding County, GAPickens County, GAPike County, GARockdale County, GASpalding County, GAWalton County, GA12100
Atlantic City, NJ
1.1831Atlantic County, NJ12220
Auburn-Opelika, AL
0.8096Lee County, AL12260
Augusta-Richmond County, GA-SC
0.9667Burke County, GAColumbia County, GAMcDuffie County, GARichmond County, GAAiken County, SCEdgefield County, SC12420
Austin-Round Rock, TX
0.9344Bastrop County, TXCaldwell County, TXHays County, TXTravis County, TXWilliamson County, TX12540
Bakersfield, CA
1.0725Kern County, CA12580
Baltimore-Towson, MD
1.0088Anne Arundel County, MDBaltimore County, MDCarroll County, MDHarford County, MDHoward County, MDQueen Anne's County, MDBaltimore City, MD12620
Bangor, ME
0.9711( print page 26259)Penobscot County, ME12700
Barnstable Town, MA
1.2539Barnstable County, MA12940
Baton Rouge, LA
0.8084Ascension Parish, LAEast Baton Rouge Parish, LAEast Feliciana Parish, LAIberville Parish, LALivingston Parish, LAPointe Coupee Parish, LASt. Helena Parish, LAWest Baton Rouge Parish, LAWest Feliciana Parish, LA12980
Battle Creek, MI
0.9762Calhoun County, MI13020
Bay City, MI
0.9251Bay County, MI13140
Beaumont-Port Arthur, TX
0.8595Hardin County, TXJefferson County, TXOrange County, TX13380
Bellingham, WA
1.1104Whatcom County, WA13460
Bend, OR
1.0743Deschutes County, OR13644
Bethesda-Frederick-Gaithersburg, MD
1.0903Frederick County, MDMontgomery County, MD13740
Billings, MT
0.8712Carbon County, MTYellowstone County, MT13780
Binghamton, NY
0.8786Broome County, NYTioga County, NY13820
Birmingham-Hoover, AL
0.8894Bibb County, ALBlount County, ALChilton County, ALJefferson County, ALSt. Clair County, ALShelby County, ALWalker County, AL13900
Bismarck, ND
0.7240Burleigh County, NDMorton County, ND13980
Blacksburg-Christiansburg-Radford, VA
0.8213Giles County, VAMontgomery County, VAPulaski County, VARadford City, VA14020
Bloomington, IN
0.8533Greene County, INMonroe County, INOwen County, IN14060
Bloomington-Normal, IL
0.8944McLean County, IL14260
Boise City-Nampa, ID
0.9401Ada County, IDBoise County, IDCanyon County, IDGem County, IDOwyhee County, ID14484
Boston-Quincy, MA
1.1679Norfolk County, MAPlymouth County, MASuffolk County, MA14500
Boulder, CO
1.0350Boulder County, CO14540
Bowling Green, KY
0.8148Edmonson County, KY( print page 26260)Warren County, KY14740
Bremerton-Silverdale, WA
1.0913Kitsap County, WA14860
Bridgeport-Stamford-Norwalk, CT
1.2659Fairfield County, CT15180
Brownsville-Harlingen, TX
0.9430Cameron County, TX15260
Brunswick, GA
1.0164Brantley County, GAGlynn County, GAMcIntosh County, GA15380
Buffalo-Niagara Falls, NY
0.9424Erie County, NYNiagara County, NY15500
Burlington, NC
0.8674Alamance County, NC15540
Burlington-South Burlington, VT
0.9474Chittenden County, VTFranklin County, VTGrand Isle County, VT15764
Cambridge-Newton-Framingham, MA
1.0970Middlesex County, MA15804
Camden, NJ
1.0392Burlington County, NJCamden County, NJGloucester County, NJ15940
Canton-Massillon, OH
0.9031Carroll County, OHStark County, OH15980
Cape Coral-Fort Myers, FL
0.9342Lee County, FL16180
Carson City, NV
1.0025Carson City, NV16220
Casper, WY
0.9145Natrona County, WY16300
Cedar Rapids, IA
0.8888Benton County, IAJones County, IALinn County, IA16580
Champaign-Urbana, IL
0.9644Champaign County, ILFord County, ILPiatt County, IL16620
Charleston, WV
0.8542Boone County, WVClay County, WVKanawha County, WVLincoln County, WVPutnam County, WV16700
Charleston-North Charleston, SC
0.9145Berkeley County, SCCharleston County, SCDorchester County, SC16740
Charlotte-Gastonia-Concord, NC-SC
0.9554Anson County, NCCabarrus County, NCGaston County, NCMecklenburg County, NCUnion County, NCYork County, SC16820
Charlottesville, VA
1.0125Albemarle County, VAFluvanna County, VAGreene County, VANelson County, VACharlottesville City, VA16860
Chattanooga, TN-GA
0.8948Catoosa County, GADade County, GAWalker County, GA( print page 26261)Hamilton County, TNMarion County, TNSequatchie County, TN16940
Cheyenne, WY
0.9060Laramie County, WY16974
Chicago-Naperville-Joliet, IL
1.0751Cook County, ILDeKalb County, ILDuPage County, ILGrundy County, ILKane County, ILKendall County, ILMcHenry County, ILWill County, IL17020
Chico, CA
1.1053Butte County, CA17140
Cincinnati-Middletown, OH-KY-IN
0.9601Dearborn County, INFranklin County, INOhio County, INBoone County, KYBracken County, KYCampbell County, KYGallatin County, KYGrant County, KYKenton County, KYPendleton County, KYBrown County, OHButler County, OHClermont County, OHHamilton County, OHWarren County, OH17300
Clarksville, TN-KY
0.8436Christian County, KYTrigg County, KYMontgomery County, TNStewart County, TN17420
Cleveland, TN
0.8109Bradley County, TNPolk County, TN17460
Cleveland-Elyria-Mentor, OH
0.9400Cuyahoga County, OHGeauga County, OHLake County, OHLorain County, OHMedina County, OH17660
Coeur d'Alene, ID
0.9344Kootenai County, ID17780
College Station-Bryan, TX
0.9045Brazos County, TXBurleson County, TXRobertson County, TX17820
Colorado Springs, CO
0.9701El Paso County, COTeller County, CO17860
Columbia, MO
0.8542Boone County, MOHoward County, MO17900
Columbia, SC
0.8933Calhoun County, SCFairfield County, SCKershaw County, SCLexington County, SCRichland County, SCSaluda County, SC17980
Columbus, GA-AL
0.8239Russell County, ALChattahoochee County, GAHarris County, GAMarion County, GA( print page 26262)Muscogee County, GA18020
Columbus, IN
0.9318Bartholomew County, IN18140
Columbus, OH
1.0107Delaware County, OHFairfield County, OHFranklin County, OHLicking County, OHMadison County, OHMorrow County, OHPickaway County, OHUnion County, OH18580
Corpus Christi, TX
0.8564Aransas County, TXNueces County, TXSan Patricio County, TX18700
Corvallis, OR
1.1546Benton County, OR19060
Cumberland, MD-WV
0.8446Allegany County, MDMineral County, WV19124
Dallas-Plano-Irving, TX
1.0075Collin County, TXDallas County, TXDelta County, TXDenton County, TXEllis County, TXHunt County, TXKaufman County, TXRockwall County, TX19140
Dalton, GA
0.9093Murray County, GAWhitfield County, GA19180
Danville, IL
0.9266Vermilion County, IL19260
Danville, VA
0.8451Pittsylvania County, VADanville City, VA19340
Davenport-Moline-Rock Island, IA-IL
0.8846Henry County, ILMercer County, ILRock Island County, ILScott County, IA19380
Dayton, OH
0.9037Greene County, OHMiami County, OHMontgomery County, OHPreble County, OH19460
Decatur, AL
0.8159Lawrence County, ALMorgan County, AL19500
Decatur, IL
0.8172Macon County, IL19660
Deltona-Daytona Beach-Ormond Beach, FL
0.9263Volusia County, FL19740
Denver-Aurora, CO
1.0930Adams County, COArapahoe County, COBroomfield County, COClear Creek County, CODenver County, CODouglas County, COElbert County, COGilpin County, COJefferson County, COPark County, CO19780
Des Moines-West Des Moines, IA
0.9214Dallas County, IAGuthrie County, IAMadison County, IA( print page 26263)Polk County, IAWarren County, IA19804
Detroit-Livonia-Dearborn, MI
1.0281Wayne County, MI20020
Dothan, AL
0.7381Geneva County, ALHenry County, ALHouston County, AL20100
Dover, DE
0.9847Kent County, DE20220
Dubuque, IA
0.9133Dubuque County, IA20260
Duluth, MN-WI
1.0042Carlton County, MNSt. Louis County, MNDouglas County, WI20500
Durham, NC
0.9826Chatham County, NCDurham County, NCOrange County, NCPerson County, NC20740
Eau Claire, WI
0.9630Chippewa County, WIEau Claire County, WI20764
Edison, NJ
1.1190Middlesex County, NJMonmouth County, NJOcean County, NJSomerset County, NJ20940
El Centro, CA
0.9076Imperial County, CA21060
Elizabethtown, KY
0.8697Hardin County, KYLarue County, KY21140
Elkhart-Goshen, IN
0.9426Elkhart County, IN21300
Elmira, NY
0.8240Chemung County, NY21340
El Paso, TX
0.9053El Paso County, TX21500
Erie, PA
0.8827Erie County, PA21604
Essex County, MA
1.0418Essex County, MA21660
Eugene-Springfield, OR
1.0876Lane County, OR21780
Evansville, IN-KY
0.9071Gibson County, INPosey County, INVanderburgh County, INWarrick County, INHenderson County, KYWebster County, KY21820
Fairbanks, AK
1.1059Fairbanks North Star Borough, AK21940
Fajardo, PR
0.4036Ceiba Municipio, PRFajardo Municipio, PRLuquillo Municipio, PR22020
Fargo, ND-MN
0.8250Cass County, NDClay County, MN22140
Farmington, NM
0.8589San Juan County, NM22180
Fayetteville, NC
0.8945Cumberland County, NCHoke County, NC22220
Fayetteville-Springdale-Rogers, AR-MO
0.8865Benton County, ARMadison County, AR( print page 26264)Washington County, ARMcDonald County, MO22380
Flagstaff, AZ
1.1601Coconino County, AZ22420
Flint, MI
1.0969Genesee County, MI22500
Florence, SC
0.8388Darlington County, SCFlorence County, SC22520
Florence-Muscle Shoals, AL
0.7843Colbert County, ALLauderdale County, AL22540
Fond du Lac, WI
1.0063Fond du Lac County, WI22660
Fort Collins-Loveland, CO
0.9544Larimer County, CO22744
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
1.0133Broward County, FL22900
Fort Smith, AR-OK
0.7731Crawford County, ARFranklin County, ARSebastian County, ARLe Flore County, OKSequoyah County, OK23020
Fort Walton Beach-Crestview-Destin, FL
0.8643Okaloosa County, FL23060
Fort Wayne, IN
0.9517Allen County, INWells County, INWhitley County, IN23104
Fort Worth-Arlington, TX
0.9569Johnson County, TXParker County, TXTarrant County, TXWise County, TX23420
Fresno, CA
1.0943Fresno County, CA23460
Gadsden, AL
0.8066Etowah County, AL23540
Gainesville, FL
0.9277Alachua County, FLGilchrist County, FL23580
Gainesville, GA
0.8958Hall County, GA23844
Gary, IN
0.9334Jasper County, INLake County, INNewton County, INPorter County, IN24020
Glens Falls, NY
0.8324Warren County, NYWashington County, NY24140
Goldsboro, NC
0.9171Wayne County, NC24220
Grand Forks, ND-MN
0.7949Polk County, MNGrand Forks County, ND24300
Grand Junction, CO
0.9668Mesa County, CO24340
Grand Rapids-Wyoming, MI
0.9455Barry County, MIIonia County, MIKent County, MINewaygo County, MI24500
Great Falls, MT
0.8598Cascade County, MT24540
Greeley, CO
0.9602Weld County, CO24580
Green Bay, WI
0.9787Brown County, WI( print page 26265)Kewaunee County, WIOconto County, WI24660
Greensboro-High Point, NC
0.8866Guilford County, NCRandolph County, NCRockingham County, NC24780
Greenville, NC
0.9432Greene County, NCPitt County, NC24860
Greenville, SC
0.9804Greenville County, SCLaurens County, SCPickens County, SC25020
Guayama, PR
0.3235Arroyo Municipio, PRGuayama Municipio, PRPatillas Municipio, PR25060
Gulfport-Biloxi, MS
0.8915Hancock County, MSHarrison County, MSStone County, MS25180
Hagerstown-Martinsburg, MD-WV
0.9038Washington County, MDBerkeley County, WVMorgan County, WV25260
Hanford-Corcoran, CA
1.0282Kings County, CA25420
Harrisburg-Carlisle, PA
0.9402Cumberland County, PADauphin County, PAPerry County, PA25500
Harrisonburg, VA
0.9073Rockingham County, VAHarrisonburg City, VA25540
Hartford-West Hartford-East Hartford, CT
1.0894Hartford County, CTLitchfield County, CTMiddlesex County, CTTolland County, CT25620
Hattiesburg, MS
0.7430Forrest County, MSLamar County, MSPerry County, MS25860
Hickory-Lenoir-Morganton, NC
0.9010Alexander County, NCBurke County, NCCaldwell County, NCCatawba County, NC25980
Hinesville-Fort Stewart, GA 1
0.9178Liberty County, GALong County, GA26100
Holland-Grand Haven, MI
0.9163Ottawa County, MI26180
Honolulu, HI
1.1096Honolulu County, HI26300
Hot Springs, AR
0.8782Garland County, AR26380
Houma-Bayou Cane-Thibodaux, LA
0.8082Lafourche Parish, LATerrebonne Parish, LA26420
Houston-Sugar Land-Baytown, TX
1.0008Austin County, TXBrazoria County, TXChambers County, TXFort Bend County, TXGalveston County, TXHarris County, TXLiberty County, TXMontgomery County, TXSan Jacinto County, TX( print page 26266)Waller County, TX26580
Huntington-Ashland, WV-KY-OH
0.8997Boyd County, KYGreenup County, KYLawrence County, OHCabell County, WVWayne County, WV26620
Huntsville, AL
0.9007Limestone County, ALMadison County, AL26820
Idaho Falls, ID
0.9088Bonneville County, IDJefferson County, ID26900
Indianapolis-Carmel, IN
0.9895Boone County, INBrown County, INHamilton County, INHancock County, INHendricks County, INJohnson County, INMarion County, INMorgan County, INPutnam County, INShelby County, IN26980
Iowa City, IA
0.9714Johnson County, IAWashington County, IA27060
Ithaca, NY
0.9928Tompkins County, NY27100
Jackson, MI
0.9560Jackson County, MI27140
Jackson, MS
0.8271Copiah County, MSHinds County, MSMadison County, MSRankin County, MSSimpson County, MS27180
Jackson, TN
0.8853Chester County, TNMadison County, TN27260
Jacksonville, FL
0.9165Baker County, FLClay County, FLDuval County, FLNassau County, FLSt. Johns County, FL27340
Jacksonville, NC
0.8231Onslow County, NC27500
Janesville, WI
0.9655Rock County, WI27620
Jefferson City, MO
0.8332Callaway County, MOCole County, MOMoniteau County, MOOsage County, MO27740
Johnson City, TN
0.8043Carter County, TNUnicoi County, TNWashington County, TN27780
Johnstown, PA
0.8620Cambria County, PA27860
Jonesboro, AR
0.7662Craighead County, ARPoinsett County, AR27900
Joplin, MO
0.8605Jasper County, MONewton County, MO28020
Kalamazoo-Portage, MI
1.0704Kalamazoo County, MIVan Buren County, MI( print page 26267)28100
Kankakee-Bradley, IL
1.0083Kankakee County, IL28140
Kansas City, MO-KS
0.9495Franklin County, KSJohnson County, KSLeavenworth County, KSLinn County, KSMiami County, KSWyandotte County, KSBates County, MOCaldwell County, MOCass County, MOClay County, MOClinton County, MOJackson County, MOLafayette County, MOPlatte County, MORay County, MO28420
Kennewick-Richland-Pasco, WA
1.0343Benton County, WAFranklin County, WA28660
Killeen-Temple-Fort Hood, TX
0.8901Bell County, TXCoryell County, TXLampasas County, TX28700
Kingsport-Bristol-Bristol, TN-VA
0.7985Hawkins County, TNSullivan County, TNBristol City, VAScott County, VAWashington County, VA28740
Kingston, NY
0.9367Ulster County, NY28940
Knoxville, TN
0.8249Anderson County, TNBlount County, TNKnox County, TNLoudon County, TNUnion County, TN29020
Kokomo, IN
0.9669Howard County, INTipton County, IN29100
La Crosse, WI-MN
0.9426Houston County, MNLa Crosse County, WI29140
Lafayette, IN
0.8931Benton County, INCarroll County, INTippecanoe County, IN29180
Lafayette, LA
0.8289Lafayette Parish, LASt. Martin Parish, LA29340
Lake Charles, LA
0.7914Calcasieu Parish, LACameron Parish, LA29404
Lake County-Kenosha County, IL-WI
1.0570Lake County, ILKenosha County, WI29460
Lakeland, FL
0.8879Polk County, FL29540
Lancaster, PA
0.9589Lancaster County, PA29620
Lansing-East Lansing, MI
1.0088Clinton County, MIEaton County, MIIngham County, MI29700
Laredo, TX
0.7811Webb County, TX29740
Las Cruces, NM
0.9273Dona Ana County, NM( print page 26268)29820
Las Vegas-Paradise, NV
1.1430Clark County, NV29940
Lawrence, KS
0.8365Douglas County, KS30020
Lawton, OK
0.8065Comanche County, OK30140
Lebanon, PA
0.8679Lebanon County, PA30300
Lewiston, ID-WA
0.9853Nez Perce County, IDAsotin County, WA30340
Lewiston-Auburn, ME
0.9126Androscoggin County, ME30460
Lexington-Fayette, KY
0.9181Bourbon County, KYClark County, KYFayette County, KYJessamine County, KYScott County, KYWoodford County, KY30620
Lima, OH
0.9042Allen County, OH30700
Lincoln, NE
1.0092Lancaster County, NESeward County, NE30780
Little Rock-North Little Rock, AR
0.8890Faulkner County, ARGrant County, ARLonoke County, ARPerry County, ARPulaski County, ARSaline County, AR30860
Logan, UT-ID
0.9022Franklin County, IDCache County, UT30980
Longview, TX
0.8788Gregg County, TXRusk County, TXUpshur County, TX31020
Longview, WA
1.0011Cowlitz County, WA31084
Los Angeles-Long Beach-Glendale, CA
1.1760Los Angeles County, CA31140
Louisville, KY-IN
0.9118Clark County, INFloyd County, INHarrison County, INWashington County, INBullitt County, KYHenry County, KYJefferson County, KYMeade County, KYNelson County, KYOldham County, KYShelby County, KYSpencer County, KYTrimble County, KY31180
Lubbock, TX
0.8613Crosby County, TXLubbock County, TX31340
Lynchburg, VA
0.8694Amherst County, VAAppomattox County, VABedford County, VACampbell County, VABedford City, VALynchburg City, VA31420
Macon, GA
0.9519Bibb County, GACrawford County, GA( print page 26269)Jones County, GAMonroe County, GATwiggs County, GA31460
Madera, CA
0.8154Madera County, CA31540
Madison, WI
1.0840Columbia County, WIDane County, WIIowa County, WI31700
Manchester-Nashua, NH
1.0243Hillsborough County, NHMerrimack County, NH31900
Mansfield, OH
0.9271Richland County, OH32420
Mayagüez, PR
0.3848Hormigueros Municipio, PRMayagüez Municipio, PR32580
McAllen-Edinburg-Pharr, TX
0.8773Hidalgo County, TX32780
Medford, OR
1.0818Jackson County, OR32820
Memphis, TN-MS-AR
0.9373Crittenden County, ARDeSoto County, MSMarshall County, MSTate County, MSTunica County, MSFayette County, TNShelby County, TNTipton County, TN32900
Merced, CA
1.1471Merced County, CA33124
Miami-Miami Beach-Kendall, FL
0.9812Miami-Dade County, FL33140
Michigan City-La Porte, IN
0.9118LaPorte County, IN33260
Midland, TX
0.9786Midland County, TX33340
Milwaukee-Waukesha-West Allis, WI
1.0218Milwaukee County, WIOzaukee County, WIWashington County, WIWaukesha County, WI33460
Minneapolis-St. Paul-Bloomington, MN-WI
1.0946Anoka County, MNCarver County, MNChisago County, MNDakota County, MNHennepin County, MNIsanti County, MNRamsey County, MNScott County, MNSherburne County, MNWashington County, MNWright County, MNPierce County, WISt. Croix County, WI33540
Missoula, MT
0.8928Missoula County, MT33660
Mobile, AL
0.7913Mobile County, AL33700
Modesto, CA
1.1729Stanislaus County, CA33740
Monroe, LA
0.7997Ouachita Parish, LAUnion Parish, LA33780
Monroe, MI
0.9707Monroe County, MI33860
Montgomery, AL
0.8009Autauga County, AL( print page 26270)Elmore County, ALLowndes County, ALMontgomery County, AL34060
Morgantown, WV
0.8423Monongalia County, WVPreston County, WV34100
Morristown, TN
0.7933Grainger County, TNHamblen County, TNJefferson County, TN34580
Mount Vernon-Anacortes, WA
1.0517Skagit County, WA34620
Muncie, IN
0.8562Delaware County, IN34740
Muskegon-Norton Shores, MI
0.9941Muskegon County, MI34820
Myrtle Beach-Conway-North Myrtle Beach, SC
0.8810Horry County, SC34900
Napa, CA
1.3374Napa County, CA34940
Naples-Marco Island, FL
0.9941Collier County, FL34980
Nashville-Davidson—Murfreesboro, TN
0.9847Cannon County, TNCheatham County, TNDavidson County, TNDickson County, TNHickman County, TNMacon County, TNRobertson County, TNRutherford County, TNSmith County, TNSumner County, TNTrousdale County, TNWilliamson County, TNWilson County, TN35004
Nassau-Suffolk, NY
1.2662Nassau County, NYSuffolk County, NY35084
Newark-Union, NJ-PA
1.1892Essex County, NJHunterdon County, NJMorris County, NJSussex County, NJUnion County, NJPike County, PA35300
New Haven-Milford, CT
1.1953New Haven County, CT35380
New Orleans-Metairie-Kenner, LA
0.8831Jefferson Parish, LAOrleans Parish, LAPlaquemines Parish, LASt. Bernard Parish, LASt. Charles Parish, LASt. John the Baptist Parish, LASt. Tammany Parish, LA35644
New York-Wayne-White Plains, NY-NJ
1.3177Bergen County, NJHudson County, NJPassaic County, NJBronx County, NYKings County, NYNew York County, NYPutnam County, NYQueens County, NYRichmond County, NYRockland County, NYWestchester County, NY35660
Niles-Benton Harbor, MI
0.8915Berrien County, MI( print page 26271)35980
Norwich-New London, CT
1.1932New London County, CT36084
Oakland-Fremont-Hayward, CA
1.5819Alameda County, CAContra Costa County, CA36100
Ocala, FL
0.8867Marion County, FL36140
Ocean City, NJ
1.0472Cape May County, NJ36220
Odessa, TX
1.0073Ector County, TX36260
Ogden-Clearfield, UT
0.8995Davis County, UTMorgan County, UTWeber County, UT36420
Oklahoma City, OK
0.8843Canadian County, OKCleveland County, OKGrady County, OKLincoln County, OKLogan County, OKMcClain County, OKOklahoma County, OK36500
Olympia, WA
1.1081Thurston County, WA36540
Omaha-Council Bluffs, NE-IA
0.9450Harrison County, IAMills County, IAPottawattamie County, IACass County, NEDouglas County, NESarpy County, NESaunders County, NEWashington County, NE36740
Orlando, FL
0.9452Lake County, FLOrange County, FLOsceola County, FLSeminole County, FL36780
Oshkosh-Neenah, WI
0.9315Winnebago County, WI36980
Owensboro, KY
0.8748Daviess County, KYHancock County, KYMcLean County, KY37100
Oxnard-Thousand Oaks-Ventura, CA
1.1546Ventura County, CA37340
Palm Bay-Melbourne-Titusville, FL
0.9443Brevard County, FL37460
Panama City-Lynn Haven, FL
0.8027Bay County, FL37620
Parkersburg-Marietta, WV-OH
0.7977Washington County, OHPleasants County, WVWirt County, WVWood County, WV37700
Pascagoula, MS
0.8215George County, MSJackson County, MS37860
Pensacola-Ferry Pass-Brent, FL
0.8000Escambia County, FLSanta Rosa County, FL37900
Peoria, IL
0.8982Marshall County, ILPeoria County, ILStark County, ILTazewell County, ILWoodford County, IL37964
Philadelphia, PA
1.0996Bucks County, PA( print page 26272)Chester County, PADelaware County, PAMontgomery County, PAPhiladelphia County, PA38060
Phoenix-Mesa-Scottsdale, AZ
1.0287Maricopa County, AZPinal County, AZ38220
Pine Bluff, AR
0.8383Cleveland County, ARJefferson County, ARLincoln County, AR38300
Pittsburgh, PA
0.8674Allegheny County, PAArmstrong County, PABeaver County, PAButler County, PAFayette County, PAWashington County, PAWestmoreland County, PA38340
Pittsfield, MA
1.0266Berkshire County, MA38540
Pocatello, ID
0.9400Bannock County, IDPower County, ID38660
Ponce, PR
0.4842Juana Díaz Municipio, PRPonce Municipio, PRVillalba Municipio, PR38860
Portland-South Portland-Biddeford, ME
0.9908Cumberland County, MESagadahoc County, MEYork County, ME38900
Portland-Vancouver-Beaverton, OR-WA
1.1416Clackamas County, ORColumbia County, ORMultnomah County, ORWashington County, ORYamhill County, ORClark County, WASkamania County, WA38940
Port St. Lucie-Fort Pierce, FL
0.9833Martin County, FLSt. Lucie County, FL39100
Poughkeepsie-Newburgh-Middletown, NY
1.0911Dutchess County, NYOrange County, NY39140
Prescott, AZ
0.9836Yavapai County, AZ39300
Providence-New Bedford-Fall River, RI-MA
1.0783Bristol County, MABristol County, RIKent County, RINewport County, RIProvidence County, RIWashington County, RI39340
Provo-Orem, UT
0.9537Juab County, UTUtah County, UT39380
Pueblo, CO
0.8753Pueblo County, CO39460
Punta Gorda, FL
0.9405Charlotte County, FL39540
Racine, WI
0.9356Racine County, WI39580
Raleigh-Cary, NC
0.9864Franklin County, NCJohnston County, NCWake County, NC39660
Rapid City, SD
0.8833Meade County, SD( print page 26273)Pennington County, SD39740
Reading, PA
0.9622Berks County, PA39820
Redding, CA
1.3198Shasta County, CA39900
Reno-Sparks, NV
1.1963Storey County, NVWashoe County, NV40060
Richmond, VA
0.9177Amelia County, VACaroline County, VACharles City County, VAChesterfield County, VACumberland County, VADinwiddie County, VAGoochland County, VAHanover County, VAHenrico County, VAKing and Queen County, VAKing William County, VALouisa County, VANew Kent County, VAPowhatan County, VAPrince George County, VASussex County, VAColonial Heights City, VAHopewell City, VAPetersburg City, VARichmond City, VA40140
Riverside-San Bernardino-Ontario, CA
1.0904Riverside County, CASan Bernardino County, CA40220
Roanoke, VA
0.8647Botetourt County, VACraig County, VAFranklin County, VARoanoke County, VARoanoke City, VASalem City, VA40340
Rochester, MN
1.1408Dodge County, MNOlmsted County, MNWabasha County, MN40380
Rochester, NY
0.8994Livingston County, NYMonroe County, NYOntario County, NYOrleans County, NYWayne County, NY40420
Rockford, IL
0.9989Boone County, ILWinnebago County, IL40484
Rockingham County-Strafford County, NH
1.0159Rockingham County, NHStrafford County, NH40580
Rocky Mount, NC
0.8854Edgecombe County, NCNash County, NC40660
Rome, GA
0.9193Floyd County, GA40900
Sacramento—Arden-Arcade—Roseville, CA
1.3372El Dorado County, CAPlacer County, CASacramento County, CAYolo County, CA40980
Saginaw-Saginaw Township North, MI
0.8874Saginaw County, MI41060
St. Cloud, MN
1.0362Benton County, MNStearns County, MN( print page 26274)41100
St. George, UT
0.9265Washington County, UT41140
St. Joseph, MO-KS
1.0118Doniphan County, KSAndrew County, MOBuchanan County, MODeKalb County, MO41180
St. Louis, MO-IL
0.9005Bond County, ILCalhoun County, ILClinton County, ILJersey County, ILMacoupin County, ILMadison County, ILMonroe County, ILSt. Clair County, ILCrawford County, MOFranklin County, MOJefferson County, MOLincoln County, MOSt. Charles County, MOSt. Louis County, MOWarren County, MOWashington County, MOSt. Louis City, MO41420
Salem, OR
1.0438Marion County, ORPolk County, OR41500
Salinas, CA
1.4337Monterey County, CA41540
Salisbury, MD
0.8953Somerset County, MDWicomico County, MD41620
Salt Lake City, UT
0.9402Salt Lake County, UTSummit County, UTTooele County, UT41660
San Angelo, TX
0.8362Irion County, TXTom Green County, TX41700
San Antonio, TX
0.8844Atascosa County, TXBandera County, TXBexar County, TXComal County, TXGuadalupe County, TXKendall County, TXMedina County, TXWilson County, TX41740
San Diego-Carlsbad-San Marcos, CA
1.1354San Diego County, CA41780
Sandusky, OH
0.9302Erie County, OH41884
San Francisco-San Mateo-Redwood City, CA
1.5165Marin County, CASan Francisco County, CASan Mateo County, CA41900
San Germán-Cabo Rojo, PR
0.4885Cabo Rojo Municipio, PRLajas Municipio, PRSabana Grande Municipio, PRSan Germán Municipio, PR41940
San Jose-Sunnyvale-Santa Clara, CA
1.5543San Benito County, CASanta Clara County, CA41980
San Juan-Caguas-Guaynabo, PR
0.4452Aguas Buenas Municipio, PRAibonito Municipio, PRArecibo Municipio, PRBarceloneta Municipio, PR( print page 26275)Barranquitas Municipio, PRBayamón Municipio, PRCaguas Municipio, PRCamuy Municipio, PRCanóvanas Municipio, PRCarolina Municipio, PRCataño Municipio, PRCayey Municipio, PRCiales Municipio, PRCidra Municipio, PRComerío Municipio, PRCorozal Municipio, PRDorado Municipio, PRFlorida Municipio, PRGuaynabo Municipio, PRGurabo Municipio, PRHatillo Municipio, PRHumacao Municipio, PRJuncos Municipio, PRLas Piedras Municipio, PRLoíza Municipio, PRManatí Municipio, PRMaunabo Municipio, PRMorovis Municipio, PRNaguabo Municipio, PRNaranjito Municipio, PROrocovis Municipio, PRQuebradillas Municipio, PRRío Grande Municipio, PRSan Juan Municipio, PRSan Lorenzo Municipio, PRToa Alta Municipio, PRToa Baja Municipio, PRTrujillo Alto Municipio, PRVega Alta Municipio, PRVega Baja Municipio, PRYabucoa Municipio, PR42020
San Luis Obispo-Paso Robles, CA
1.1598San Luis Obispo County, CA42044
Santa Ana-Anaheim-Irvine, CA
1.1473Orange County, CA42060
Santa Barbara-Santa Maria-Goleta, CA
1.1091Santa Barbara County, CA42100
Santa Cruz-Watsonville, CA
1.5457Santa Cruz County, CA42140
Santa Fe, NM
1.0824Santa Fe County, NM42220
Santa Rosa-Petaluma, CA
1.4464Sonoma County, CA42260
Sarasota-Bradenton-Venice, FL
0.9868Manatee County, FLSarasota County, FL42340
Savannah, GA
0.9351Bryan County, GAChatham County, GAEffingham County, GA42540
Scranton—Wilkes-Barre, PA
0.8347Lackawanna County, PALuzerne County, PAWyoming County, PA42644
Seattle-Bellevue-Everett, WA
1.1434King County, WASnohomish County, WA42680
Sebastian-Vero Beach, FL
0.9573Indian River County, FL43100
Sheboygan, WI
0.9026Sheboygan County, WI43300
Sherman-Denison, TX
0.8502Grayson County, TX43340
Shreveport-Bossier City, LA
0.8865( print page 26276)Bossier Parish, LACaddo Parish, LADe Soto Parish, LA43580
Sioux City, IA-NE-SD
0.9200Woodbury County, IADakota County, NEDixon County, NEUnion County, SD43620
Sioux Falls, SD
0.9559Lincoln County, SDMcCook County, SDMinnehaha County, SDTurner County, SD43780
South Bend-Mishawaka, IN-MI
0.9842St. Joseph County, INCass County, MI43900
Spartanburg, SC
0.9174Spartanburg County, SC44060
Spokane, WA
1.0447Spokane County, WA44100
Springfield, IL
0.8890Menard County, ILSangamon County, IL44140
Springfield, MA
1.0079Franklin County, MAHampden County, MAHampshire County, MA44180
Springfield, MO
0.8469Christian County, MODallas County, MOGreene County, MOPolk County, MOWebster County, MO44220
Springfield, OH
0.8593Clark County, OH44300
State College, PA
0.8784Centre County, PA44700
Stockton, CA
1.1442San Joaquin County, CA44940
Sumter, SC
0.8083Sumter County, SC45060
Syracuse, NY
0.9691Madison County, NYOnondaga County, NYOswego County, NY45104
Tacoma, WA
1.0789Pierce County, WA45220
Tallahassee, FL
0.8942Gadsden County, FLJefferson County, FLLeon County, FLWakulla County, FL45300
Tampa-St. Petersburg-Clearwater, FL
0.9144Hernando County, FLHillsborough County, FLPasco County, FLPinellas County, FL45460
Terre Haute, IN
0.8765Clay County, INSullivan County, INVermillion County, INVigo County, IN45500
Texarkana, TX-Texarkana, AR
0.8104Miller County, ARBowie County, TX45780
Toledo, OH
0.9586Fulton County, OHLucas County, OHOttawa County, OHWood County, OH( print page 26277)45820
Topeka, KS
0.8730Jackson County, KSJefferson County, KSOsage County, KSShawnee County, KSWabaunsee County, KS45940
Trenton-Ewing, NJ
1.0835Mercer County, NJ46060
Tucson, AZ
0.9202Pima County, AZ46140
Tulsa, OK
0.8103Creek County, OKOkmulgee County, OKOsage County, OKPawnee County, OKRogers County, OKTulsa County, OKWagoner County, OK46220
Tuscaloosa, AL
0.8542Greene County, ALHale County, ALTuscaloosa County, AL46340
Tyler, TX
0.8811Smith County, TX46540
Utica-Rome, NY
0.8396Herkimer County, NYOneida County, NY46660
Valdosta, GA
0.8369Brooks County, GAEchols County, GALanier County, GALowndes County, GA46700
Vallejo-Fairfield, CA
1.5137Solano County, CA47020
Victoria, TX
0.8560Calhoun County, TXGoliad County, TXVictoria County, TX47220
Vineland-Millville-Bridgeton, NJ
0.9832Cumberland County, NJ47260
Virginia Beach-Norfolk-Newport News, VA-NC
0.8790Currituck County, NCGloucester County, VAIsle of Wight County, VAJames City County, VAMathews County, VASurry County, VAYork County, VAChesapeake City, VAHampton City, VANewport News City, VANorfolk City, VAPoquoson City, VAPortsmouth City, VASuffolk City, VAVirginia Beach City, VAWilliamsburg City, VA47300
Visalia-Porterville, CA
0.9968Tulare County, CA47380
Waco, TX
0.8633McLennan County, TX47580
Warner Robins, GA
0.8380Houston County, GA47644
Warren-Troy-Farmington Hills, MI
1.0054Lapeer County, MILivingston County, MIMacomb County, MIOakland County, MISt. Clair County, MI47894
Washington-Arlington-Alexandria, DC-VA-MD-WV
1.1054( print page 26278)District of Columbia, DCCalvert County, MDCharles County, MDPrince George's County, MDArlington County, VAClarke County, VAFairfax County, VAFauquier County, VALoudoun County, VAPrince William County, VASpotsylvania County, VAStafford County, VAWarren County, VAAlexandria City, VAFairfax City, VAFalls Church City, VAFredericksburg City, VAManassas City, VAManassas Park City, VAJefferson County, WV47940
Waterloo-Cedar Falls, IA
0.8408Black Hawk County, IABremer County, IAGrundy County, IA48140
Wausau, WI
0.9722Marathon County, WI48260
Weirton-Steubenville, WV-OH
0.8063Jefferson County, OHBrooke County, WVHancock County, WV48300
Wenatchee, WA
1.0346Chelan County, WADouglas County, WA48424
West Palm Beach-Boca Raton-Boynton Beach, FL
0.9649Palm Beach County, FL48540
Wheeling, WV-OH
0.7010Belmont County, OHMarshall County, WVOhio County, WV48620
Wichita, KS
0.9063Butler County, KSHarvey County, KSSedgwick County, KSSumner County, KS48660
Wichita Falls, TX
0.8311Archer County, TXClay County, TXWichita County, TX48700
Williamsport, PA
0.8139Lycoming County, PA48864
Wilmington, DE-MD-NJ
1.0684New Castle County, DECecil County, MDSalem County, NJ48900
Wilmington, NC
0.9835Brunswick County, NCNew Hanover County, NCPender County, NC49020
Winchester, VA-WV
1.0091Frederick County, VAWinchester City, VAHampshire County, WV49180
Winston-Salem, NC
0.9276Davie County, NCForsyth County, NCStokes County, NCYadkin County, NC49340
Worcester, MA
1.0722Worcester County, MA49420
Yakima, WA
0.9847( print page 26279)Yakima County, WA49500
Yauco, PR
0.3854Guánica Municipio, PRGuayanilla Municipio, PRPeñuelas Municipio, PRYauco Municipio, PR49620
York-Hanover, PA
0.9397York County, PA49660
Youngstown-Warren-Boardman, OH-PA
0.8802Mahoning County, OHTrumbull County, OHMercer County, PA49700
Yuba City, CA
1.0730Sutter County, CAYuba County, CA49740
Yuma, AZ
0.9109Yuma County, AZ1
                             At this time, there are no hospitals located in this CBSA-based urban area on which to base a wage index.  Therefore, the wage index value is based on the methodology described in the August 15, 2005 final rule (70 FR 47880).  The wage index value for this area is the average wage index for all urban areas within the state.
 Table 2.—Proposed Inpatient Rehabilitation Facility Wage Index for Rural Areas for Discharges Occurring From October 1, 2007 Through September 30, 2008
CBSA code
Nonurban area
Wage index01
Alabama
0.759102
Alaska
1.066103
Arizona
0.890804
Arkansas
0.730705
California
1.145406
Colorado
0.932507
Connecticut
1.170908
Delaware
0.970510
Florida
0.859411
Georgia
0.759312
Hawaii
1.044813
Idaho
0.812014
Illinois
0.832015
Indiana
0.853816
Iowa
0.868117
Kansas
0.799818
Kentucky
0.776819
Louisiana
0.743820
Maine
0.844321
Maryland
0.892622
Massachusetts 2
1.166123
Michigan
0.906224
Minnesota
0.915325
Mississippi
0.773826
Missouri
0.792727
Montana
0.859028
Nebraska
0.867729
Nevada
0.894430
New Hampshire
1.085331
New Jersey 132
New Mexico
0.833233
New York
0.823234
North Carolina
0.858835
North Dakota
0.721536
Ohio
0.865837
Oklahoma
0.762938
Oregon
0.975339
Pennsylvania
0.832040
Puerto Rico 3
0.404741
Rhode Island 142
South Carolina
0.856643
South Dakota
0.848044
Tennessee
0.782745
Texas
0.796546
Utah
0.814047
Vermont
0.974448
Virgin Islands
0.846749
Virginia
0.794050
Washington
1.026351
West Virginia
0.760752
Wisconsin
0.955353
Wyoming
0.929565
Guam
0.96111
                             All counties within the State are classified as urban.2
                             Massachusetts has areas designated as rural; however, no short-term, acute care hospitals are located in the area(s) for FY 2008.  As discussed in the preamble in Section IV.B, we are proposing to impute a wage index value for rural Massachusettes based on the average wage index from all contiguous CBSAs.3
                             Puerto Rico has areas designated as rural; however, no short-term, acute care hospitals are located in the area(s) for FY 2008.  As discussed in the preamble in Section IV.B, we are proposing to continue to use the most recent wage index previously available for Puerto Rico as discussed in the FY 2006 IRF PPS final rule (70 FR 47880).


BILLING CODE 4120-07-P BILLING CODE 4120-07-C [FR Doc. 07-2241 Filed 5-2-07; 8:45 am] BILLING CODE 4120-01-P